Legislature(2003 - 2004)
03/14/2003 01:03 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 14, 2003
1:03 p.m.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Hugh Fate, Co-Chair
Representative Beverly Masek, Vice Chair
Representative Carl Gatto
Representative Bob Lynn
Representative Kelly Wolf
Representative David Guttenberg
Representative Beth Kerttula
MEMBERS ABSENT
Representative Cheryll Heinze
COMMITTEE CALENDAR
HOUSE BILL NO. 160
"An Act relating to the emission control permit program;
relating to fees for that program and to the accounting of
receipts deposited in the emission control permit receipts
account; and providing for an effective date."
- MOVED HB 160 OUT OF COMMITTEE
HOUSE BILL NO. 163
"An Act relating to an annual wildlife conservation pass and the
fee for that pass; relating to nonresident and nonresident alien
big game tag fees; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 160
SHORT TITLE:EMISSION CONTROL PERMIT PROGRAM
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0430 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0430 (H) RES, FIN
03/05/03 0430 (H) FN1: (DEC)
03/05/03 0430 (H) GOVERNOR'S TRANSMITTAL LETTER
03/14/03 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 163
SHORT TITLE:NONRES.GAME TAG FEES/WILDLIFE TOUR PASS
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0433 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0433 (H) RES, FIN
03/05/03 0433 (H) FN1: (DFG)
03/05/03 0433 (H) FN2: (DFG)
03/05/03 0434 (H) GOVERNOR'S TRANSMITTAL LETTER
03/05/03 0434 (H) REFERRED TO RESOURCES
03/14/03 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
ERNESTA BALLARD, Commissioner
Department of Environmental Conservation (DEC)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 160.
TOM CHAPPLE, Acting Director
Division of Air and Water Quality
Department of Environmental Conservation
Anchorage, Alaska
POSITION STATEMENT: Assisted with presentation of HB 160 and
answered questions.
JOHN KUTERBACH, Program Manager
Air Permits
Division of Air & Water Quality
Department of Environmental Conservation
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 160.
TADD OWENS, Executive Director
Resource Development Council
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 160.
CHARLOTTE MacCAY, Member
Air Permits Work Group
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 160.
MARILYN CROCKETT, Deputy Director
Alaska Oil & Gas Association
Anchorage, Alaska
POSITION STATEMENT: During hearing on HB 160, testified that
following the work group's recommendations DEC will be able to
maintain a high level of protection while concurrently making
air permitting more attractive to developers and industry.
KEVIN DUFFY, Acting Commissioner
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Presented HB 163 on behalf of the governor.
MICHELLE SYDEMAN, Assistant Director
Division of Wildlife Conservation
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 163.
ROBERT NAUHEIM, Assistant Attorney General
Natural Resources Section
Civil Division (Anchorage)
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions pertaining to HB 163.
KEVIN BROOKS, Director
Division of Administrative Services
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Answered questions about vendors and
permits proposed in HB 163.
WAYNE REGELIN
Juneau, Alaska
POSITION STATEMENT: Offered background and reasons he believes
HB 163 was introduced; suggested that Alaskans pay the fee as
well, and that the effective date be January 1.
SARAH DUNLAP
Juneau, Alaska
POSITION STATEMENT: Testified on HB 163 as co-owner of a small
guiding business primarily involved in wildlife viewing;
requested that the legislature move carefully and slowly;
expressed concern about beginning midseason, requested an
exemption for areas under "fee demo programs," and highlighted
the unfairness if the money mostly disappears into the general
fund.
BOB JANES, Owner
Gastineau Guiding Company
Douglas, Alaska
POSITION STATEMENT: Expressed concerns about HB 163; didn't
necessarily oppose a pass, but spoke against applying it just to
commercial operators and questioned the fairness for smaller
operators; suggested all visitors should get the pass, and
perhaps residents should be considered as well; questioned where
the funds will go and how this will be administered.
GEORGE H. REIFENSTEIN JR., General Manager
Mount Roberts Tramway
Juneau, Alaska
POSITION STATEMENT: Testified on HB 163, conveying concern
about adding $15 to the $22 cost of a tram ride.
MARK MORONES, Communications Director
Alaska Travel Industry Association (ATIA)
Anchorage, Alaska
POSITION STATEMENT: Expressed concern that HB 163 will result
in a negative image for the state and be difficult to administer
and enforce; related ATIA's preference for a broad-based funding
mechanism and said ATIA doesn't support the proposed wildlife
conservation pass.
ACTION NARRATIVE
TAPE 03-16, SIDE A
Number 0001
CO-CHAIR HUGH FATE called the House Resources Standing Committee
meeting to order at 1:03 p.m. Representatives Fate, Chenault
Masek, Gatto, Lynn, and Wolf were present at the call to order.
Representatives Guttenberg and Kerttula arrived as the meeting
was in progress. Representative Heinze was excused.
HB 160-EMISSION CONTROL PERMIT PROGRAM
CO-CHAIR FATE announced that the first order of business would
be HOUSE BILL NO. 160, "An Act relating to the emission control
permit program; relating to fees for that program and to the
accounting of receipts deposited in the emission control permit
receipts account; and providing for an effective date." [HB 160
was sponsored by the House Rules Standing Committee by request
of the governor.]
Number 0134
ERNESTA BALLARD, Commissioner, Department of Environmental
Conservation (DEC), testified, noting that John Kuterbach,
Program Manager, Air Permits, Division of Air and Water Quality,
and Tom Chapple, Acting Director, Division of Air and Water
Quality, were present to answer questions but would have to
leave later in the afternoon due to another commitment.
COMMISSIONER BALLARD talked about Governor Murkowski's
commitment to enhancing Alaska's economy through resource
development and his equal commitment to protecting Alaska's
environment. She said it is not an either/or proposition; a
strong economy will generate the revenue base to continue
funding the important regulatory programs.
COMMISSIONER BALLARD said that without a strong economy, one
cannot hope to have a strong government. She explained that
over the last 30 years, [the state] has learned much about the
environmental and health hazards associated with air pollution;
much had also been learned about emission-control technologies,
air modeling, and the need for and nature of ambient air-
protective standards. Through national and state legislation,
the shared value for environmental protection for citizens has
been recognized, along with many other core values that form the
framework for government regulatory programs. Environmental
protection is not incompatible with resource development, she
suggested; rather, it is as fundamental a component of resource
development as are labor and worker safety laws.
Number 0335
COMMISSIONER BALLARD said Governor Murkowski and members of his
cabinet recognize that Alaska's laws form the framework for a
successful resource development strategy. Environmental laws
are one of the equally important pieces of public policy. She
said this bill will improve the process and the function of
underlying state policy to protect the environment. It does
change the protective standards already in place and
administered by the department through existing regulation, she
explained. Through DEC's fiscal year 2004 (FY 04) budget, it
intends to sharpen its focus on the core permitting and
protection responsibilities. She said HB 160 is essential to
achieving the results promised in [the governor's] budget
proposal.
COMMISSIONER BALLARD noted that she had made a commitment to the
committee and each member personally to revisit [DEC's] core
mission of developing protective standards and implementing them
through efficient and fair regulations. She said this bill is
essential to her success in that undertaking.
Number 0423
COMMISSIONER BALLARD said this legislative proposal is based on
two important developments of the several years. One was a
benchmark study conducted in the department over the last two
years; the study reviewed funding and workforce allocation in
air programs of states that are considered comparable in
workload and complexity to Alaska. States compared with Alaska
were Colorado; New Mexico; California, which has two different
air quality programs because they're organized in air districts;
Oklahoma; Montana; Vermont; Washington; and Oregon. She said
states with small populations were chosen, as well as states
with resource development activities similar to [Alaska's],
although there is nothing comparable to Alaska.
Number 0494
COMMISSIONER BALLARD explained that it was felt that these
states formed a similar benchmark group. Alaska has an unusual
air [control] program, she explained. Although the state has a
small population, it has a high number of air permits - as many
operating permits as Colorado and as many new major permits as
New Jersey. She explained that this is because Alaska doesn't
have a power grid and thus has a far greater dependence on
diesel generation and a modern, well-organized air program. It
was discovered during the benchmark study that [DEC] hadn't
funded, staffed, or organized the program adequately to do the
job that the applicants expect. Commissioner Ballard said HB
160, and the program increase proposed by the department in the
governor's budget, will allow DEC to remodel the permit program
in line with the successful programs in other states.
Number 0577
COMMISSIONER BALLARD explained that the second development that
guided DEC's proposal for FY 04 and for the development of this
legislation was the Air Permits Work Group, a stakeholder group
convened by the department last year. The work group carefully
reviewed DEC's program against the federal Clean Air Act and
against the EPA [Environmental Protection Agency] rules that
have been amended several times in recent years, establishing
new programs and control concepts.
COMMISSIONER BALLARD reported that the state permitting program
hasn't kept pace with the national regime or with the needs of
Alaskan communities and industries. Noting that the work group
report is in the bill packet and that recommendations are
incorporated into HB 160, she offered her belief that this bill
will create a predictable, timely, and rational permitting
program. It will allow the regulation of minor sources by
standardizing permit conditions that are based on best
management practices. For example, the department currently has
a permit program that is a "self-management - implementing best
practices program" for oil drilling rigs, and wants to expand it
to include more situations. For Alaska's population size, there
are many more mobile and portable plants and machinery than in
most states. She said the [department] needs the tools to work
with this unusual but essential fleet. The bill will also
exempt sources from permitting to the extent allowed under
federal law, and it will achieve efficiency through adopting
several rules by reference.
Number 0778
COMMISSIONER BALLARD said there are many changes that [DEC] is
proposing to change the terminology in state statute; those are
essential to reflect federal terminology. If a federal rule is
adopted using a term of art and Alaska's statute uses a
different term for the same thing, that rule can't be adopted
easily; the [department] has to go through a more elaborate
rule-making process. Commissioner Ballard said this is time
consuming and does not give the advantage that "we believe our
permitting applicant's deserve." The efficiency that [the
department will achieve] will also make it easier for the
permitting of rural power plants in the state's small, outlying
Bush communities, she explained. She said the [department] will
be able to use the so-called "clean unit test" to avoid what is
done now, which is a detailed, site-by-site technology analysis.
Number 0778
COMMISSIONER BALLARD addressed the fiscal note and said the bill
itself does not warrant an increase in staffing; however,
without additional staff as proposed in [DEC's] budget for
FY 04, the important statutory changes that will be achieved
through the legislation cannot be delivered because [the
department] will not have adequate staff to implement them. In
order to operate an air permitting program that issues timely
permits, [DEC] has requested additional staff through the budget
process, she explained.
COMMISSIONER BALLARD said that, in the spirit of full
disclosure, the entire permit increment was put in this fiscal
note and the box was checked which stated that this amount is
[included] in the governor's FY 04 proposal. Therefore, the
fiscal note represents the cost for reinvigorating the entire
air-permitting program for the state. She told members that
while there is an increase in this very important program, other
services in the department have been reduced, so that only
services essential to [the department's] mission of protecting
public health and the environment are being provided. With this
increment, as well as several other small increases in core
permitting programs, the department still has an overall net
reduction of 13 full-time equivalent (FTE) employees and
$153,000. She said she was pleased to bring forward a true
example of what permit streamlining will look like.
Commissioner Ballard told the committee that [HB 160] represents
an effort to truly take advantage of "all of the tools in the
federal tool box," to the benefit of state permit applicants.
Number 0964
REPRESENTATIVE GUTTENBERG observed that the work group's final
report was very helpful and informative.
Number 1009
TOM CHAPPLE, Acting Director, Division of Air and Water Quality,
Department of Environmental Conservation, testified, noting that
Commissioner Ballard had given a good overview of the bill. He
mentioned that there are a lot of changes in definitions that
take advantage of the federal program. Mr. Chapple said the
sectional analysis provides a helpful "walkthrough" of the bill.
He offered to meet with committee members to help in their
understanding [of the changes].
Number 1068
REPRESENTATIVE KERTTULA referred to changes in the definitions
section and asked what's happening with stationary sources
versus mobile sources. She also asked if the mobile sources are
covered or if they are somehow removed from the permitting
process.
MR. CHAPPLE said the bill doesn't change the system. This bill
and the permitting program are designed principally for
stationary sources, he explained. Sources like oil drilling
rigs, asphalt plants, or soil-remediation units move around and
have been under state permit for a number of years, and will
continue to be so. The cutoffs for the size of the facility
that will be permitted won't change; however, some of those
currently listed in the "major source" category will be moved to
the newly created "minor source" permitting program for which
there is hope to accomplish more streamlining.
REPRESENTATIVE KERTTULA observed that "reconstruction" doesn't
seem to be included in the list of permits requiring a
construction permit. Therefore, she asked how reconstruction
situations will be addressed. She asked whether it will be
picked up in federal language.
MR. CHAPPLE deferred to Mr. Kuterbach.
Number 1223
JOHN KUTERBACH, Program Manager, Air Permits, Division of Air &
Water Quality, Department of Environmental Conservation,
explained that the term "reconstruction" wasn't used because it
isn't found in federal law for major source permits. Under
federal law, "reconstruction" is used to qualify changes at a
facility as a new facility. Therefore, the concept of
reconstruction would be carried through, although the term
itself wouldn't.
REPRESENTATIVE KERTTULA asked if the lack of the term
"reconstruction" would result in any change in the current
manner in which review occurs. She asked, "Would we drop
anything out?"
MR. KUTERBACH answered that currently reconstruction at the
federal level is under review, and some of the recently adopted
federal rule changes were intended to clarify what is
reconstruction versus routine maintenance. The state would
follow suit with those federal changes, and thus that change
would be reflected in the state's program. In further response
to Representative Kerttula, Mr. Kuterbach explained that a
reconstruction is a replacement of components at a facility
without necessarily increasing emissions. However, a
modification is an increase in emissions, and thus the
[department] would continue to regulate the modifications.
Number 1354
REPRESENTATIVE KERTTULA turned to Section 23, which says
adjudicatory hearings will only be allowed if a public hearing
process is required or solicited. She asked if anything is
being lost with the aforementioned language.
MR. KUTERBACH specified that current law provides that anyone
who wanted to appeal a decision made by the department [on a
permit] must have provided comment during the time a permit was
out for public review. He pointed out that another part of HB
160 gives the department discretion for minor sources for which
the department may choose not to have a public review.
Therefore, Section 23 specifies that [the department] isn't
removing the right of an individual to appeal a departmental
decision if there wasn't a comment period.
Number 1539
TADD OWENS, Executive Director, Resource Development Council
(RDC), began by informing the committee that RDC is a statewide
nonprofit trade association that represents Alaskan individuals
and companies in the mining, oil and gas, timber, tourism, and
fisheries industries. The mission of RDC is to help grow
Alaska's economy through the responsible development of the
state's natural resources. Mr. Owens said that while RDC didn't
formally participate in the work group referenced by
Commissioner Ballard, several of RDC's members were directly
involved in the process.
MR. OWENS reported that RDC is very pleased that the
administration and DEC have come forward with this legislation,
which is the implementation of many of the work group's
recommendations. The RDC believes that HB 160 is a very
important part of a comprehensive effort to streamline the
state's permitting regime. He noted that RDC has worked closely
with DEC and the legislature over the years in regard to
streamlining fees and making permit fees more predictable.
Furthermore, RDC has worked to move permitting toward general
permits based on best management practices, as well as to move
the agency toward consistency with federal requirements. As has
been stated, HB 160 achieves progress on all of the
aforementioned fronts, he told members. Therefore, RDC strongly
supports HB 160.
Number 1662
CHARLOTTE MacCAY, Member, Air Permits Work Group, began by
informing the committee that the work group emphasized the need
for air permitting that is more simplified, timely, and
predictable. This legislation removes the necessary obstacles
in order to allow DEC to follow the work group's
recommendations. However, the work to reconstruct is yet to be
done, and the (indisc.) will help enable this process to
continue. Ms. MacCay noted that DEC has been very open and
receptive to the outside suggestions that the work group has
been making. She related her belief that following the work
group's recommendations DEC will be able to maintain a high
level of protection while concurrently making air permitting
more attractive to developers and industry.
Number 1724
MARILYN CROCKETT, Deputy Director, Alaska Oil & Gas Association
(AOGA), noted that AOGA is a trade association whose members
represent the majority of the oil and gas activity in the state.
She informed the committee that AOGA was a participant in the
work group process and supports the recommendations coming out
of that process. Ms. Crockett mentioned that AOGA is in the
process of thoroughly analyzing HB 160 and was recently involved
in a meeting held by DEC to discuss the intent behind the
changes, which AOGA supports. She said DEC has done a good job
putting down on paper the changes necessary to get the state's
program to look more like a federal program, to make it easier
to administer, and to reduce the burden on the department as
well as the permittees. From that perspective, Ms. Crockett
said that AOGA supports the intent of HB 160, although it will
continue to review it and participate in future hearings.
Number 1862
REPRESENTATIVE KERTTULA directed attention to Section 17,
page 9, and relating her understanding that it deletes the
portion of the statute requiring the permit to be issued before
operation. Furthermore, Section 17 seems to allow a 12-month
operation before obtaining a permit for stationary source. She
asked if that's correct, or whether another section in federal
law requires that the permit be obtained before operating.
MR. KUTERBACH explained that the current federal law for major
operating permits doesn't require that the permit be issued
before the source can begin operation; rather, it allows for 12
months of operation to issue the permit. The federal major-
source operating permit does not authorize new pollution, but
merely collects existing requirements into a legal document.
[Alaska's] current statute established an additional deadline -
beyond federal law - for application for an operating permit,
not for issuance of an operating permit.
MR. KUTERBACH said the proposal is to eliminate the additional
application deadline that is currently in statute but not in
federal law, because with the change to the minor source
program, virtually all the major source operating permit
facilities first will have to obtain a construction permit.
Therefore, there is no need for an advanced application deadline
for those facilities. In further clarification, Mr. Kuterbach
specified that any entity [in those classified facilities] that
is [producing] new pollution will have to obtain either a major
or minor permit; for those, the authorization would be before
the new pollution happens. For an existing, operating minor
source, the department doesn't see the need to have that
[authorization] before operation.
Number 2031
REPRESENTATIVE KERTTULA highlighted that a construction permit
would have to be obtained before building the plant. The
[department] is just addressing the operating aspect for the
air.
MR. CHAPPLE said that is true. He pointed out that in Alaska [a
source of pollution] that is large relative to the amount of
pollution a year is required to obtain a permit, while [smaller
entities relative to the amount of pollution] aren't required to
do so. He explained that every state is obligated to determine
what size of sources will cause an air quality problem. He
related that in California, small sources of pollution such as
lawnmowers and household furnaces are regulated, while Alaska's
regulation targets larger sources of pollution. For those
sources that look large enough to necessitate obtaining a permit
[under the existing statutes], under the proposed changes the
construction permit would still be required, as would the
operating permit.
Number 2087
REPRESENTATIVE MASEK referred to a memorandum from the
commissioner of [DEC], which she quoted as follows: "Our state
permitting program has not kept pace with the national regime or
the needs of the Alaskan community or the industry." She asked
about the size of the backlog with this permit program.
MR. CHAPPLE answered that the department hasn't been able to
issue permits in the timeframe that it believes to be
responsible for business or community needs. In a multi-year
average for a construction permit, it takes 254 days to issue a
permit. The department believes that those permits should be
issued in 90-110 days. Furthermore, the EPA has notified Alaska
that Alaska isn't meeting the schedule for the relatively new
federal requirement for operating permits. He noted that the
department is under a commitment to complete all outstanding
permits by November 2003. Alaska is one of several states that
are lagging behind.
Number 2180
REPRESENTATIVE MASEK asked what industries HB 160 would impact
beyond the construction industry, the oil industry, and the
rural power plants.
MR. CHAPPLE said Representative Masek had identified the largest
entities impacted by this legislation. He pointed out that most
facilities in Alaska burn fuel and thus cause a large enough
emission to require a permit. He noted that all of the rural
hubs have power plants large enough to be identified as major
sources. The smaller rural communities are a mixed bag. He
mentioned that any significant seafood processing plant has
diesel-powered generators and other heat sources. Most mines in
Alaska have to generate their own power, and thus mines have
large enough power plants to require permits. He said that Mr.
Kuterbach could describe the size of communities that are
generally small enough that a permit isn't required and those
communities that are large enough and thus require a permit.
REPRESENTATIVE MASEK asked if, after the passage of HB 160,
Alaska would face any federal Clean Air Act or EPA rules and
thus more changes to the existing law would be required.
MR. CHAPPLE answered that the statutory changes have been
reviewed [and constructed] such that the statute would provide
the ability to adopt federal regulations and do so in a
streamlined manner. He related his expectation that there will
be other federal regulation changes. For instance, there are a
number of industrial classifications that the EPA will be
reviewing due to its obligation under the Clean Air Act. Some
of those industrial classifications will impact sources in
Alaska. Therefore, there will be new federal rules, he said.
Number 2315
REPRESENTATIVE GATTO highlighted that the word "contaminant" had
been replaced by the word "pollutant". He asked about the
definition of pollutant.
MR. KUTERBACH explained that the federal definition is that
pollutants are basically those compounds regulated under the
Clean Air Act. He said [the federal government regulates]
pollutants; he mentioned that there are six actual compounds,
and indicated 189 hazardous air pollutants are listed in the
Act. Thus [pollutants] are a well-defined set of chemical
compounds.
Number 2395
REPRESENTATIVE GATTO inquired as to what happens as more
[pollutants] are discovered. For example, if an individual
generates a pollutant that has never been identified, would that
pollutant have to be added to the list and be approved, and
meanwhile, could the pollutant be generated freely until added
to the list? Or is the pollutant covered until it's excluded?
MR. CHAPPLE responded that the statute would allow the
department to adopt changes that are necessary when the EPA has
defined a new pollutant. Mr. Chapple said, for these 189
hazardous air pollutants, that the EPA hasn't set what are safe
or hazardous levels to breathe, which it has for pollutants such
as sulfur dioxide and carbon monoxide. He explained that
sometimes the EPA takes a different approach: it suspects a
compound to be a carcinogen and there is fairly good medical
data to show that it's a carcinogen, and thus the EPA
establishes emission limitations for certain types of operations
that emit or process that [carcinogen]. When the EPA adopts
those new emission rules, this statute and the existing law
would allow Alaska to implement those requirements because they
are federally mandated and the state is obligated to implement
them. That would occur without another statutory change, he
noted.
MR. CHAPPLE highlighted that if Alaska is going to do something
different from federal law, there is a provision in current law
that places certain requirements on the department to show that
there is a compelling scientific need to do it and that the work
done by the department is peer-reviewed by another entity before
an action is taken.
Number 2523
REPRESENTATIVE GUTTENBERG turned to Section 30 and asked how
Title 5 defines "small business."
MR. CHAPPLE answered that generally "small business" is defined
as 25 employees or less, and there may be other requirements
linked to the definition. He noted that current statutes and
this legislation provide certain free services for small
businesses. When the statute was adopted originally in 1993, he
said Alaska thought it was necessary to have the small-business
assistance program efforts available for small rural
communities; however, most rural communities don't qualify
because they are a government [entity].
Number 2600
REPRESENTATIVE WOLF moved to report HB 160 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, HB 160 was reported from the House
Resources Standing Committee.
The committee took a brief at-ease at 1:41 p.m.
HB 163-NONRES.GAME TAG FEES/WILDLIFE TOUR PASS
CO-CHAIR FATE announced that the final order of business would
be HOUSE BILL NO. 163, "An Act relating to an annual wildlife
conservation pass and the fee for that pass; relating to
nonresident and nonresident alien big game tag fees; and
providing for an effective date."
Number 2657
KEVIN DUFFY, Acting Commissioner, Alaska Department of Fish &
Game (ADF&G), announced that he was presenting HB 163 on behalf
of the governor. He explained that HB 163 establishes
requirements for nonresidents; he mentioned commercial providers
of opportunities to view wildlife and obtaining a wildlife
conservation pass. Noting that the cost of the annual pass is
$15, he said this legislation also raises nonresident and
nonresident alien big-game tag fees for moose, caribou, sheep,
and goats. With regard to the wildlife pass, nonresidents under
age 16 and all nonresidents who hold any Alaska hunting or
fishing license prior to utilizing the commercial viewing
service will be exempt from purchasing this pass. The $15 fee
is estimated to raise approximately $7 million annually, he
related.
ACTING COMMISSIONER DUFFY informed the committee that the
department would like to work with the administration and the
legislature to secure a portion of these funds for use, in part
to match significant new federal dollars coming to Alaska
through state wildlife grant programs. Currently, Alaska's
federal funding for these programs amounts to around $3 million.
ACTING COMMISSIONER DUFFY reported that during the last session
of Congress, then-U.S. Senator Frank Murkowski and U.S.
Representative Don Young sponsored legislation known as the
Conservation and Reinvestment Act (CARA), to provide a new and
stable source for fish and wildlife management. In response to
this, he said, new federal dollars are coming to Alaska. He
noted that last year the state received approximately $4 million
in the new state wildlife grant funding source; this year the
state will receive around $3 million. He pointed out that the
federal dollars must be matched one-to-one with state dollars.
Number 2780
ACTING COMMISSIONER DUFFY expressed hope that HB 163 is the
vehicle, because [the department] believes this legislation
provides a way for visitors who use and enjoy Alaska's wildlife
- but don't purchase a hunting or fishing license - to help
support this program and ensure that Alaska maintains healthy
and productive wildlife populations. This legislation requires
visitors who take a commercial tour in order to view wildlife to
purchase an annual wildlife conservation pass. The funds from
the pass will be placed in a special account in the general
fund, and therefore may be appropriated for fish and wildlife
management, viewing, and educational programs.
ACTING COMMISSIONER DUFFY highlighted that the billion-dollar
tourism industry draws substantial revenue each year for
marketing Alaska's wildlife. Therefore, he opined that it's
only fair for visitors and the industry that most directly
benefits from [the fish and wildlife populations] to help
sustain those populations. The department believes that most
visitors will be happy to know that they're making a
contribution to wildlife conservation in Alaska, he added.
Number 2861
REPRESENTATIVE WOLF recalled that the tourism industry projected
two years ago that the state could have 1.6 million visitors
come to Alaska. He related his understanding that HB 163 would
impose a viewer fee on those taking tours. He asked whether
[this fee would be imposed on those] taking charters. He also
inquired as to [whether this fee would be imposed on those]
enjoying wildlife on the road from their recreational vehicles
(RVs).
ACTING COMMISSIONER DUFFY explained that the commercial
operators are the ones that [the department] is trying to work
with in order to generate this revenue for the state.
Therefore, those traveling through the state via an RV wouldn't
be required to [pay this fee].
REPRESENTATIVE WOLF asked if there is a way to include broader
participation [in the proposed fee].
ACTING COMMISSIONER DUFFY indicated the department would be
willing to work with the legislature to "cast a wider net."
Number 2955
REPRESENTATIVE LYNN asked if any consideration was given to a
reduced fee for children, seniors, and disabled individuals.
ACTING COMMISSIONER DUFFY answered that he believes residents
under 16 are exempt from this fee, as are those [60] or older
and those who purchase a hunting or fishing license. In further
response to Representative Lynn, Acting Commissioner Duffy said
he believes the current construction of HB 163 would require
nonresident seniors to pay this proposed fee.
CO-CHAIR FATE inquired as to the use of the CARA funds.
TAPE 03-16, SIDE B
Number 3011
MICHELLE SYDEMAN, Assistant Director, Division of Wildlife
Conservation, Alaska Department of Fish & Game, answered that
[CARA funds] are used for wildlife recreation, primarily
wildlife viewing, as well as wildlife-related educational
programs in the schools and community. Those funds also go
toward the conservation of species that aren't hunted, trapped,
or fished. The [federal CARA] legislation was to provide
funding for nontraditional wildlife programs not currently
funding with the Pittman-Robertson funds or license fees that
are now collected.
REPRESENTATIVE GUTTENBERG turned attention to a document in the
committee packet entitled "Background on H.B. 163 and S.B. 122:
An act relating to an annual Wildlife Conservation Pass". The
second paragraph of that document read:
For nearly a century, hunters and anglers have borne
most of the cost of wildlife management. While they
are willing to pay their fair share to conserve
wildlife populations, many have asked why other
wildlife enthusiasts have not stepped up to the plate.
REPRESENTATIVE GUTTENBERG said he thought the aforementioned to
be commendable, but didn't see HB 163 supporting those efforts
because the [proposed] fee is placed in the general fund;
furthermore, there aren't any wildlife conservation proposals on
the table. However, there do seem to be folks lining up for
money for programs that aren't wildlife conservation programs.
ACTING COMMISSIONER DUFFY acknowledged that there is a wider
range of usage of these fees. However, [the department]
anticipates that a certain portion of these fees would return to
the Division of Wildlife Conservation and specifically be used
as a match for federal money received for these wildlife viewing
programs. The match is required in order to expend the federal
funds, he noted.
Number 2895
REPRESENTATIVE GUTTENBERG remarked that the operative word is
"may". He asked if there have been any proposals for funding
wildlife conservation efforts.
ACTING COMMISSIONER DUFFY replied no, and explained that HB 163
was developed as part of revenue-generating measures that the
governor believes to be appropriate for the state. With regard
to whether the [department] has incorporated this into fiscal
notes for fiscal year 2004 [FY 04] in the division, that hasn't
been done yet, he specified. However, that is anticipated,
depending upon the outcome of HB 163.
Number 2850
REPRESENTATIVE GUTTENBERG noted that fish anglers and many other
[groups involved in the fishing industry] have representation on
the [Board of Fisheries and the Board of Game], which manage the
resources. Therefore, he inquired as to why, on the boards,
there isn't a group representing nonconsumptive users who are
now being asked to pay a fee to use the state facilities.
Representative Guttenberg reminded members that this nation
began with the notion of no taxation without representation, and
questioned how that relates to HB 163.
ACTING COMMISSIONER DUFFY said, with regard to representation on
the Board of Game, that dialogue often occurs between the
administration and the legislature. He stated that he didn't
believe a discussion of the representation of the Board of Game
relative to HB 163 was appropriate.
Number 2779
REPRESENTATIVE WOLF offered his belief that the Board of Game
includes a member representing nonconsumptive use. He asked
whether there is any wildlife animal that isn't hunted or
trapped in Alaska. He also asked whether this will continue to
promote the educational programs currently established within
ADF&G. Referencing an unspecified person who he said does a
fantastic job working with grade school children, he asked
whether this will continue to promote that person's program.
MS. SYDEMAN replied that the hope is to enhance those
educational programs, which work hand in hand with the needs of
[ADF&G's] biologists and wildlife managers. For instance, if a
moose population is in decline in a particular area, the
biologist may believe it would be helpful for people there to
understand that if they don't hunt cow moose for a certain
number of years, it will help the moose population to recover.
That is the kind of thing for which this educational program is
intended, as well as to continue programs in the schools, she
added.
REPRESENTATIVE WOLF spoke positively of two unspecified programs
in the department currently managed for both fish and game.
Number 2675
REPRESENTATIVE GUTTENBERG mentioned a supreme court case about
the differential between resident and nonresident hunting,
suggesting that the state is looking at a huge liability. He
asked whether there is any similarity here, since residents
aren't being charged the same as nonresidents.
Number 2617
ROBERT NAUHEIM, Assistant Attorney General, Natural Resources
Section, Civil Division (Anchorage), Department of Law, replied
that he thinks there is. He cited what he suggested is a very
helpful case, Shepherd v. State, Dep't of Fish & Game, a [1995
Alaska Supreme Court] case that challenged the statutory
preference for resident hunting of moose, elk, and deer. He
said it addressed whether that kind of resident preference was
permissible under the "privileges and immunities" clause of the
U.S. constitution and the commerce clause, as well as several
provisions of the Alaska constitution, including the equal
protection or equal rights clause and the equal application
clause.
MR. NAUHEIM explained that the court upheld that statute. The
essential holding with respect to the state constitutional
issues was this: residents and nonresidents aren't similarly
situated with respect to access to recreational use of fish and
game. The court declined to pursue any further analysis and
said the state can make distinctions between residents and
nonresidents for purposes of recreational access to fish and
game; it also noted that Article VIII, Section 2, of the
constitution seems to impose "a kind of obligation for the
state, in some cases, to require a preference, especially when
there's a shortage." He said the case doesn't specifically
address a shortage, but that he thought mentioning that
provision was helpful.
Number 2522
MR. NAUHEIM, with respect to federal constitutional issues,
reported that the court [in Shepherd] ruled that "articles of
unharvested fish and game" not destined to be articles bought
and sold in interstate commerce aren't subject to the kind of
analysis imposed by the court on laws that seem to discriminate
against interstate commerce. It essentially held that
unharvested moose and game aren't articles of interstate
commerce.
Number 2457
MR. NAUHEIM suggested that an argument made by the guides [in
Shepherd] has some degree of relevance with respect to this
bill. He explained:
It addressed an argument made by the guides that
because there was a disparate opportunity for
residents and nonresidents, ... any kind of burden
that it placed on the guides in terms of their
business - hurting their business if they ... catered
to nonresidents - was a de minimis kind of burden and
incidental, and so long as the state was attempting to
address a scarcity or some other reasonable objective
- reasonable state interest - that kind of
discrimination wasn't fatal to the law.
MR. NAUHEIM told members that the provision raised most often in
these kinds of cases is the privileges and immunities clause.
He reported that the Baldwin case - a U.S. Supreme Court case
well known to "fish and game" attorneys - said that a state can
distinguish between residents and nonresidents for purposes of
recreational access to fish and game; it did so on the basis
that the privileges and immunities clause of the federal
constitution was designed to protect those kinds of essential
activities or basic rights that are necessary to maintaining a
union of states, and it specifically found that hunting game
such as elk is not one of them. Mr. Nauheim added, "Our supreme
court relied specifically on that case to hold that our
preference for residents, in the case of certain big-game
hunting, was ... sustainable, was permissible under that
constitutional provision under Baldwin."
Number 2364
REPRESENTATIVE KERTTULA asked whether, in terms of viewing, this
is really talking about tourism. She also asked, "Aren't
Alaskans just as similarly situated as nonresidents, and isn't
that where we're going to really have our problem? ... That's
interstate commerce. And then we get shifted into a whole more
difficult analysis, don't we?"
MR. NAUHEIM acknowledged that as one argument, but said he
thinks the bill's real purpose is to equalize costs borne by
residents and nonresidents. He offered his understanding of the
policy objectives of the administration and ADF&G to be this:
the $15 fee reflects a difference in the amount the state can be
viewed as spending on residents versus nonresidents. He said
nonresidents [currently] don't pay anything unless they buy a
hunting or fishing license, for example, and yet there are costs
associated with managing fish and wildlife populations so that
they're healthy, and there is what he called the "incidental
benefits of viewing them" for both Alaskans and non-Alaskans.
MR. NAUHEIM noted that Alaskans do pay for government services
by virtue of the stream of oil taxes and other user fees that
the state charges and then allocates [through the general fund].
He cited the Carlson case as upholding "those kinds of efforts
to equalize the costs that are borne by residents, through the
diversion ... of various revenues from the general fund, and ...
has allowed the state to take those into account ... in looking
at how the costs of providing ... for fish and wildlife
opportunities is borne."
Number 2222
MR. NAUHEIM said he realizes separate treatment for residents
and nonresidents does raise constitutional issues, especially
with respect to the commerce clause. He expressed confidence
about advancing a vigorous case if it is challenged, but
acknowledged that there is no guarantee of the outcome,
especially for constitutional issues in a new area. Noting that
he wasn't aware of another instance in the country of an attempt
to assess [a fee for] a license for wildlife viewing, he
concluded by saying, "That's not to say that some of these
principles wouldn't apply with equal force. But it is ...
admittedly sort of a foray into a new area."
Number 2176
REPRESENTATIVE KERTTULA noted that she wasn't up on the most
recent permutation of the Carlson case, but requested
confirmation that the state has gone through quite an onerous
burden trying to justify the differential [between residents and
nonresidents]. Observing that the case has been around for
years, she asked, "That's just a risk, am I right?"
MR. NAUHEIM replied that he thinks it's a fair assessment. For
the bill, he suggested there are two advantages. First, it
isn't directly taxing a commercial operation, but is assessing a
user fee for those nonresidents who view wildlife, with an
enforcement mechanism through the use of commercial providers;
and, second, this bill doesn't have the fee disparity present in
the Carlson case, which involved taxing of a commercial activity
- commercial fishing - and in which the fee disparity was in the
hundreds of dollars. He acknowledged that if this case went to
court, the litigation could have a significant cost.
Number 2083
REPRESENTATIVE KERTTULA said she understands the arguments on
how [the state's] oil money goes towards roads and
infrastructure, for example, and thus can be counted as if it
were a tax on Alaskans. However, she questioned what Alaskans
pay specifically for [wildlife] viewing and how treating
nonresidents differently can be justified. She clarified that
she doesn't want to pay for being able to see wildlife, but is
concerned about what will happen if this is imposed on
nonresidents. She noted that under previous cruise ship
legislation, the proposed head tax clearly was on everybody,
which is how constitutionality problems were avoided. She
thanked Mr. Nauheim for his analysis.
Number 2022
REPRESENTATIVE GUTTENBERG referred to page 4, Section 7, which
indicates the commissioner may appoint agents. Noting that only
one part-time employee is being added, he asked whether that
same person would [be responsible for] Ketchikan, Anchorage, and
Fairbanks, for example.
ACTING COMMISSIONER DUFFY answered:
We already have, under our current structure, about
1,600 licensed vendors statewide. A number of those
people would be used [for] this program. So what
we're trying to do from our side of the equation is,
in terms of the personnel to do the specific
administrative structure, we're trying to keep that to
a minimum. That's why you have one part-time person
reflected in there. But we already have a structure
in place for the hunting licenses, and we anticipate
using a similar structure ... on this wildlife-viewing
fee.
Number 1955
REPRESENTATIVE GUTTENBERG noted that people might board a cruise
ship in Seattle and not get off until reaching Juneau, or might
fly to Fairbanks and board a tour bus. He asked where the
infrastructure would be built to collect the fees from people
who don't interact with hunting and fishing license vendors.
Number 1900
KEVIN BROOKS, Director, Division of Administrative Services,
Alaska Department of Fish & Game, replied that although the
expectation is to add some vendors such as cruise lines or tour
operators, the department would try to incorporate this into the
existing fish-and-game licensing system, which involves 1,500-
1,600 vendors as well as significant sales over the Internet.
REPRESENTATIVE KERTTULA asked whether Mr. Brooks has worked with
the tourism industry on this, and how they feel about it.
MR. BROOKS, noting that the genesis of the bill was fairly
recent, said, "We have not had any discussions with them to
date." He offered the expectation, if the bill moves forward,
that discussions would have to occur.
Number 1817
REPRESENTATIVE KERTTULA expressed concern about how the
effective date would impact the industry if this passes. She
related her understanding, from speaking with people from the
department, that [ADF&G] isn't averse to pushing that [date]
forward so companies won't have to charge people who have
already booked [tours] this year more money.
MR. BROOKS replied that if the bill [passes], the department
will have to order stock and do many things to gear up.
Pointing out that someone who holds a fishing or hunting license
is exempt from this, he said about 300,000 residents and an
equal number of nonresidents currently buy those types of
licenses. He added, "Yes, there will take some rollout, and you
could set a date at some time in the future that it might be a
smoother rollout, but I think we could put some efforts forth to
get it implemented ... this summer season coming up." He
acknowledged that it will take some work, and that there will be
a transition period. Noting that he couldn't speak to how
enforcement would occur in the first year, he surmised that "as
we're ramping up and getting stock out, ... there's got to be
some consideration given that it's a brand-new program."
Number 1729
REPRESENTATIVE GUTTENBERG asked how much in fees ADF&G envisions
collecting.
MR. BROOKS offered his belief that the fiscal note contained an
estimate based on the number of visitors minus the number who
currently buy fishing and hunting licenses. After being handed
a copy of the fiscal note, he paraphrased parts of the analysis,
which read [original punctuation provided]:
Annual revenue estimates are based on the following
assumptions:
1) About 1.2 million nonresidents will travel to
Alaska as tourists in FY04. Of these about 300,000
will purchase a hunting, fishing or trapping license
and therefore would not be required to purchase an
annual Wildlife Conservation Pass. Of the remaining
900,000 nonresidents (some of whom are under the age
of 16), we project that approximately 500,000 would
purchase the pass, generating about $7.5 million in
revenue.
2) We project that the number of pass purchasers will
increase by an estimated 5% annually based on
current tourism trends.
MR. BROOKS explained that ADF&G also had made efforts to
determine [the number of] people between the ages of 16 and 60,
which is really the target, since people younger than 16 and
older than 60 wouldn't need to buy this [pass].
Number 1588
WAYNE REGELIN testified on his own behalf, noting that he'd
recently retired from ADF&G, where he served for eight years as
the director and six years as the deputy director of the
Division of Wildlife [Conservation]. Saying he has been working
on this legislation at both the federal and state level for a
long time, he offered some background to explain why, in large
part, he believes the bill was introduced.
MR. REGELIN reported that in fiscal year 2001 (FY 01), Congress
began providing funds to all state fish-and-wildlife agencies
for the purposes of fish-and-wildlife education; management of
species that are hunted, trapped, or fished; and wildlife-
viewing programs. The International Association of Fish and
Game Agencies led the efforts to secure this funding, he said,
and Alaska had a significant role in getting this legislation
through Congress, since Congressman Don Young was the prime
sponsor in the U.S. House of Representatives and then-U.S.
Senator Frank Murkowski was the prime sponsor in the U.S.
Senate; they chaired the main committees of referral for the
federal legislation. Mr. Regelin said he'd worked closely with
the association and Alaska's congressional delegation to obtain
this funding.
MR. REGELIN, noting that this year Alaska will receive $3.88
million in state wildlife grants, pointed out that these must be
matched with state funds either at the 3-to-1 or 1-to-1 level,
depending on the project. He conveyed his strong belief that it
is in Alaska's best interest to expand these three programs. He
explained:
[To] ensure the long-term continuation of hunting and
trapping throughout the nation, we need to have an
educated and an informed public. And a lot of these
funds will be used to expand programs in our school
systems so that kids can understand the role of humans
in the natural systems, and for the older students,
for the role of hunting.
There are numerous anti-hunting groups that have or
are in the process of developing education programs
that they're pushing hard to get into our school
systems. And we need to provide an alternative. And
we're doing this across all of the states right now.
Number 1430
MR. REGELIN said many adults who have a strong desire to learn
about wildlife management and wildlife species urge the
department to provide more programs including hunting, viewing,
and outdoor-skills clinics. Suggesting that some of this
funding could be used for that, he said this bill would provide
the necessary match to the federal dollars in order to have a
strong fish-and-wildlife educational program in Alaska. There
also is a need to collect more information on species that
aren't hunted or trapped. "We have the responsibility to manage
all wildlife species in Alaska," he remarked, noting that of
Alaska's 485 species of birds and mammals, 45 are hunted and
trapped. He offered the following:
Each year, various states and the U.S. Fish and
Wildlife Service [are] petitioned repeatedly by,
basically, anti-development groups to list ... many
species as threatened or endangered. Most of these
species aren't in any trouble, but ... we lack data
about their population size and distribution. And
because of that lack of information, some get listed.
But even if they don't, it ... slows everything down;
it takes a lot of time and money to fight ... and go
out and get that information. And this bill would
provide ... the funds for us to get ahead of that
curve and collect the needed information on species of
special concern, ... to keep them from getting listed
... if it's not necessary.
Number 1312
MR. REGELIN continued:
The other thing the bill would do is provide funds to
expand the department's just-beginning program in
wildlife viewing. I think it would be a great help to
the tourist industry by enhancing opportunities for
people to see wildlife. I think the best tourist
marketing in the world is ... to send home happy and
satisfied customers to tell their friends and
neighbors that they should visit Alaska.
Also, the wildlife-viewing programs have a significant
economic potential for economic development in rural
Alaska. Many tourists are eager to visit small
villages and view the wildlife, see the lifestyle.
And villages that choose to develop a program that
[caters] to these visitors could make a lot of money
or at least have some income in that village. They
just need a little help to get started, and we can do
that through this program, with small grants and
expertise to help them get started.
MR. REGELIN said he can't believe a $15 fee will keep anyone
from coming to Alaska, and offered his belief that it will
enhance rather than hurt the tourism industry. He related his
experience, from talking to people across the state for many
years, that "most of them ... don't mind paying a small fee for
good wildlife management and enhanced viewing opportunities."
Number 1209
MR. REGELIN suggested two changes to the bill. First, he
wouldn't exempt Alaskans from the fee. He explained:
Remember, if a person buys a hunting or a fishing
license, they're already exempt, and it's only fair
that the nonconsumptive users pay their share, because
they put a lot of demands on the division and the
department, and they want services that cost money.
And hunters and fishermen have been paying the entire
bill for many, many years, and it's time for everybody
to step up and pay their share.
MR. REGELIN further suggested it would remove the
constitutionality problem with regard to the commerce clause if
everyone were charged. Second, he proposed changing the
effective date to January 1. He explained the difficulty for
the department of buying the license stock and getting it
printed, for example. He estimated that with a January 1 date,
it still would bring in 40 percent of the revenue for FY 04.
MR. REGELIN concluded by saying the department doesn't need the
$8 million he believes this fee will generate, but only needs
about $3 million to match the federal funds. Acknowledging that
[general] funds cannot be dedicated and may be used for
something else, he suggested that the sponsor statement from the
Office of the Governor shows a strong commitment to using these
funds to provide that match. He expressed confidence in the
legislature, especially since he said this will be identified as
a separate account within the general fund. He offered his
belief that the department's estimates for the fiscal note were
conservative.
Number 0983
SARAH DUNLAP testified, noting that she and her husband own a
small guiding business primarily involved in wildlife-viewing
opportunities. Pointing out that this definitely will affect
her business, she said she believes the idea has merit and
should be discussed, but emphasized the need for the legislature
to move carefully and slowly, rather than rush this as a
mechanism to increase the revenue stream for the budget.
MS. DUNLAP conveyed three concerns about the bill. First,
instituting it midseason this year will unduly burden businesses
that provide wildlife-watching opportunities, she said, noting
that her business already is committed to its clients for this
year to provide a guiding service that includes all the
necessary permits and fees. Therefore, if the pass is
instituted this summer, it will tax her business, rather than
the viewers themselves. She suggested it would be difficult to
explain [to customers] and institute in the short term. She
emphasized the desire to take time to put this forward as a
state so that visitors to Alaska are aware of it [ahead of
time].
MS. DUNLAP addressed her second concern. She requested a
possible exemption for areas visited by wildlife viewers that
already are under a particular "fee demo program." For example,
her business primarily takes people to Pack Creek to view bears,
which is under this program and has a fairly hefty fee of $50
per adult during the peak season. She reported that the 225
visitors her business took to Pack Creek last year paid a total
of about $4,730 in fees, and thus the clients already pay a
significant fee for wildlife viewing opportunities.
MS. DUNLAP explained her third concern: it won't be fair if the
revenue generated by the bill mostly will disappear into the
general fund and not truly go to enhancing watchable-wildlife
programs, for habitat conservation, or for promoting Alaska as a
tourism destination.
Number 0733
REPRESENTATIVE KERTTULA asked whether most smaller operators
provide services for a flat fee that takes care of everything.
MS. DUNLAP said she believes so; it is easier to sell a package
that includes all the services. She expressed concern even as
far as incorporating this in the future, noting that her
business is trying to hold the line with regard to rising
insurance and fuel costs, for example. There is a certain
feeling for what can be charged, she explained, "and we
personally feel like we work pretty close to that." Therefore,
she suggested that any fees like this will be split between the
business and the visitor. For wildlife viewing, she offered her
belief that many operators are like her husband and herself,
with small, family-owned or moderate-sized, Alaska-based
businesses. She proposed that this tax will fall more heavily
on small businesses than on the larger companies, and that
smaller businesses are more likely to be engaged in wildlife
viewing.
Number 0583
REPRESENTATIVE GATTO asked whether Ms. Dunlap charges her
clients Juneau's sales tax. He also asked whether she generally
would advertise the trip as "the cost plus tax and fees."
MS. DUNLAP replied that her company's trips take place outside
the borough and aren't subject to the sales tax. If she had to
deal with it, however, she surmised that she would roll it into
the total cost, since she doesn't break down other costs. In
response to a question from Representative Lynn, she specified
that the 5.5-hour guided tour [to Pack Creek] costs $475 per
person and includes all fees, guiding by naturalists, and the
flights. She voiced concern about pushing that cost any higher.
Number 0442
BOB JANES, Owner, Gastineau Guiding Company, informed members
that his company generally takes people on day hikes in [the
Juneau area]. He suggested that people at some time would be
willing to support this kind of a wildlife conservation pass,
but said this bill scares him - it is premature and the
ramifications haven't been considered thoroughly. Asking why it
applies only to commercial operators, he suggested all visitors
to Alaska should pay for the pass, because they come to Alaska
to view and enjoy the wildlife. Reporting that his company
includes sales tax in Juneau in its net price, he said none of
the taxes or trail-use fees are broken out and shown separately;
this would be a tax to the company as a commercial operator, he
said. Acknowledging that it is a tough question, he suggested
considering residents as possible viewers and enjoyers of
Alaska's wildlife as well.
MR. JANES also expressed concern about where the funds will go
and how this will be administered. Speaking in support of money
to gain federal matching dollars to help enhance wildlife
programs, he suggested it is unfair to push the burden onto
commercial tour operators, and that perhaps it could be
challenged in the long run. With regard to how it will be
administered, Mr. Janes offered his experience that if it is
enacted quickly, it will be a nightmare to collect the fees and
figure out how to get them [to the state]. He pointed out that
for his company's tours, some people arrive on cruise ships and
some by plane.
MR. JANES spoke against applying this only to commercial
operators. He asked how it will be assessed fairly if someone
takes a $4,000 tour, as opposed as someone who pays for a $30
hike from his company. He questioned how that would balance
out, noting that people who go up on the [Mount Roberts Tramway]
pay $22 for that, and would have to add another $15, nearly
doubling the price.
TAPE 03-17, SIDE A
Number 0001
MR. JANES said he didn't necessarily oppose a wildlife
conservation pass, which in the long term could have good
implications for a state like Alaska, but offered his belief
that such legislation hasn't passed in other states "because it
scared them too," since there are real operational and other
reasons that this hasn't been instituted in other states with
wildlife.
REPRESENTATIVE GATTO asked Mr. Janes whether he'd support it if
the cost were "15 percent of the fee or $15, whichever is less."
MR. JANES said he'd think about it. He added that if it is only
applied to commercial operators, he believes there will be a
need to balance it out, based on the price of different tours
and experiences. Foremost, he said, he believes that all
visitors should pay it, not just those who choose to go out on a
commercial trip.
REPRESENTATIVE GATTO asked whether Mr. Janes would support it if
it cost less.
MR. JANES replied, "If you can convince me that only commercial
operators should be paying it, then I guess I would support it.
But ... I don't believe that only commercial operators should be
paying it. At this point, I believe all visitors - if we're
going to have a pass - should be paying it as well."
Number 0204
MR. JANES, in response to a question from Co-Chair Fate, said
the majority [of his clients] now are from the cruise ships,
although the company is working hard to develop new "products"
for independent visitors because of having been told that it is
the market that the Juneau Convention & Visitors Bureau (JCVB)
is hoping to bring to Juneau, since those people are spending
"overnight dollars" staying at hotels, eating at restaurants,
and so forth.
Number 0277
CO-CHAIR FATE asked Ms. Dunlap whether many people in her
business come from the cruise ships.
MS. DUNLAP answered, "Not the majority." [The remainder of her
answer was indiscernible on tape.]
CO-CHAIR FATE conveyed his desire to move the bill from
committee that day. He asked that testifiers limit their
comments to about three minutes.
Number 0344
REPRESENTATIVE KERTTULA pointed out that this will have a lot of
impact on her constituents, and said there are major issues,
including constitutional and tax questions, as well as how to
help smaller operators. She expressed hope that the bill would
be considered at more than one hearing. She then asked how
Gastineau Guiding Company books tours.
MR. JANES said it is a mix. The tours can be purchased on the
cruise ships, from the company's web site, or through walk-up
sales at the counter in Juneau. The company does sales in
probably five different venues, he said, noting that other
travel agents sell his company's tours as well.
REPRESENTATIVE KERTTULA asked whether the target market is
independent travelers or locals who want the educational aspect.
MR. JANES replied, "We're there to provide education to people
that want it. ... We don't feel as a commercial operator that we
should be penalized, or penalize our customers that are there to
get ... educated by a professional in the field." He said he
thinks the independent market is the one that will affect most
operators in Alaska, because of the direct competition [for]
travelers who come to Alaska on their own and are trying to
decide whether to spend money on a tour. "And $15 doesn't sound
like much," he explained. "But if adds another $15 to a $60
tour, they're going to think twice about whether they want to go
out on that tour or whether they want to do it on their own.
And that's going to be lost revenue ... in many ways."
Number 0531
REPRESENTATIVE KERTTULA, noting that Mr. Janes has been an
operator for a long time and has extensive Alaskan knowledge,
asked him whether the independent market is what Juneau and
Southeast Alaska are trying to target. She noted that there is
a great cruise ship industry in Southeast Alaska already, but a
desire for a bigger independent market.
MR. JANES offered his belief that the independent market is
crucial in Juneau, since it brings money to other businesses in
Juneau.
Number 0607
REPRESENTATIVE GATTO asked whether most people who arrive in
Juneau on a cruise ship have stopped somewhere else [in Alaska]
beforehand.
MR. JANES surmised that 90 percent have. In further response,
he agreed that many cruise ship passengers would be taking more
than one excursion.
REPRESENTATIVE GATTO suggested that such a person already would
have a pass.
Number 0680
GEORGE H. REIFENSTEIN JR., General Manager, Mount Roberts
Tramway, noted that Mount Roberts Tramway is wholly owned by
Goldbelt, Incorporated ("Goldbelt"), the urban Native
corporation for the Juneau area. He indicated that of the
180,000 to 200,000 visitors who take the tramway yearly, about
60 percent are off cruise ships; others are independent
travelers who have arrived by ferry or airplane, and often
people go on the tram with family members who live in Juneau.
Indicating Goldbelt also operates Glacier Bay tours and cruises,
as well as cruises out of Ketchikan, he said the company is
making forays into the tourism market. He remarked:
What we see are very tight operating margins. And
particularly in recent years, we see visitors on a
budget. You just need to look around at what's going
on in, particularly, May and ... September, and you'll
see that the people up here are on very tight budgets;
they're choosing their tours very carefully. We've
seen in recent years where a tour that was $100 for a
short cruise, say, down to ... Tracy Arm, was taken up
by $15 and that elasticity wasn't there for the
public. And, consequently, numbers considerably fell
off in the following year.
Number 0788
MR. REIFENSTEIN noted that his company already has this year's
pricing information out, as others had testified similarly. He
mentioned bird watching, whale watching, and hiking as being
fairly low-priced, and confirmed that the tram ticket costs $22;
adding $15 [for the proposed pass] would create a real sales
challenge, resulting in great erosion for the company and
precluding the ability to make necessary payments on the $17-
million facility. He told members:
This is obviously a targeted measure that one would
call a "head tax." Tourism is already struggling in
this state. We're losing our market share. We have
this problem where we aren't getting the word out to
enough ... of the public out there in America, Europe,
wherever. And tourism has been flat, ... and many,
many venues are not seeing much at all.
This year, we're looking at a lot of uncertainty,
given ... the state of just international affairs.
And ... something like this [pass] could significantly
tip the scale. [All] it takes is a negative article
[in] one of the big New York papers or East Coast
papers, and people start -- you know, we don't look
real good. We don't need that in the tourism industry
right now. We're trying to do the right thing here.
We're the second-largest private employer in the
state. And we believe that ... the money that's
coming in through these tourism dollars does funnel
down around the state. And we would just ask for due
consideration as this progresses.
Number 0947
REPRESENTATIVE GATTO asked whether perhaps people who pay the
$15 might take additional trips because of not having to pay the
fee again.
MR. REIFENSTEIN said he didn't know.
Number 1056
REPRESENTATIVE WOLF referred to Mr. Reifenstein's figure that 60
percent of those using the tram are off cruise ships. He asked
whether these people already would have purchased the pass
[elsewhere].
MR. REIFENSTEIN said no, indicating that a number of people who
ride the cruise ships don't get off in port; he cited weather as
one factor. Noting that people on a budget may wander around
and select one tour, if any, he added, "They are not all going
on tours, and they aren't all doing something in every port."
He said it's very different from the way it used to be. In
response to a comment from Representative Wolf, he expressed
hope that the price structure of the tramway will be enough to
entice those people who do leave the ship.
Number 1084
REPRESENTATIVE GATTO asked where the [typical] independent
traveler in Southeast Alaska is from and what that person does.
MR. REIFENSTEIN said there are a lot of demographic studies, but
noted that a lot of people come from Washington, Oregon,
California, Florida, New York, and Illinois, as well as from
across the United States. Some years, he noted, a lot of
Italians visit, for example; there are variations in the foreign
visitors, which he suggested depends on how the currency is
valued against the U.S. dollar.
REPRESENTATIVE KERTTULA asked whether tramway tickets are sold
through the cruise line itself, and whether the company gets the
same return on such a ticket.
MR. REIFENSTEIN explained that the company has an arrangement
with the cruise lines, which go to work to sell the tickets on
board for a commission. Some travelers may opt not to buy on
the ship, however, and may come directly to his company's desk.
Number 1184
REPRESENTATIVE KERTTULA inquired about any occasions when prices
have gone up [on shore] without the ability to raise the same
prices on the ships. She also asked whether that risk exists
with a fee such as this.
MR. REIFENSTEIN noted that insurance prices have doubled this
year for many in the industry; he indicated that must be
absorbed by the industry, since the prices are set already. In
response to a further question, he added, "We probably have five
to ten people a day who call in and request information, and we
send that pricing information out to them; so we've already told
them what the price is for this year."
CO-CHAIR FATE announced the intention of hearing from a
testifier present from out of town; he expressed hope that
testifiers on teleconference that day would be able to
participate at the next hearing on Monday, March 17.
Number 1346
MARK MORONES, Communications Director, Alaska Travel Industry
Association (ATIA), told members that many of the points he'd
intended to make had been stated already by testifiers, since
ATIA has about 1,000 members and represents businesses from
those the size of cruise [lines] to mom-and-pop operations. He
said ATIA's membership includes a lot of small businesses that
he believes would be directly impacted by HB 163: 92 percent of
its membership is [from businesses of fewer than] 50 people, and
50 percent is [from businesses of fewer than] 5 people.
MR. MORONES acknowledged the significant state fiscal concerns
and expressed appreciation for the efforts of the administration
and the legislature to control spending and identify new funding
sources. However, he said that's about as far as he could go in
supporting this particular bill. He pointed out that from a
marketing perspective, the bill fosters a negative perception of
the state. As the person who oversees [ATIA's] public relations
contract, Mr. Morones cited testimony that this nonconsumptive-
user fee is a novel concept. Also pointing out the media's
tendency to remember unique things, he said this isn't the type
of message he wants to present to the national market of
potential visitors to Alaska.
Number 1497
MR. MORONES reported that ATIA has concerns about the
administration and policing [of the proposed pass], many of
which had been mentioned [by other testifiers]. He also
concurred with Mr. Reifenstein's characterization of this as a
targeted tax, saying the statewide association is against it
because it appears punitive in nature and goes against the
perception of Alaska as a destination. Suggesting it also is
divisive with respect to various sectors of the industry that
ATIA represents, he said:
We have been, as an organization, much more amenable
to the concept of broad-based taxes that would evenly
impact, across all sectors. We think that's probably,
from our standpoint, the fairest way that we can go
... and have everybody bear ... the cost of potential
revenue-generating devices.
Number 1619
MR. MORONES emphasized the desire to increase the market share
in Alaska through generating additional funding for [ATIA's]
tourism-marketing program. With regard to what the broad-based
funding mechanism could be, he said the board is looking at that
now, and will probably go to the administration and legislature
soon with some concepts about distributing that burden fairly
among various sectors in the communities. Acknowledging the
challenge of finding a solution, Mr. Morones expressed
confidence that there are potentially better solutions as far as
the amount of revenue that could be generated.
MR. MORONES pointed out that the fiscal note for HB 163
indicates there is 5 percent industry growth. However, he cited
a study conducted by [the McDowell Group] that looked by region
across Alaska, "through ATIA members and non-ATIA members," and
showed that growth has flattened out; he suggested the last time
there was 5 percent growth was probably 1997. He mentioned 3.1
percent [growth] in 1999, 0.8 percent in 2000, and 0.16 in 2001;
he offered the belief that it was flat in 2002. He suggested
that although the cruise industry had increased capacity through
moving more vessels from the Mediterranean and Europe,
increasing capacity by 12 percent, the actual increase in people
being brought up [to Alaska] was 4 percent. "We've seen a
significant decline in non-cruise traffic," he added,
reiterating the belief that there is a better mechanism to
generate revenue. He expressed the desire to be at the table
for that discussion. He specified that ATIA doesn't support
this [wildlife conservation] pass.
Number 1766
CO-CHAIR FATE asked when ATIA proposes to take the package that
its board has been working on to the governor.
MR. MORONES replied, "We're waiting for the ... details right
now." He said there are a lot of voices to be heard on this,
and expressed hope that it would be fairly soon. He reiterated
that the board is actively working on it.
Number 1806
REPRESENTATIVE KERTTULA recalled that the marketing structure
had been changed completely, and that the state does little
toward it, whereas ATIA has taken it over.
MR. MORONES explained that ATIA is a consolidation of the ATMC
[Alaska Tourism Marketing Council], the Alaska Visitors
Association, and components of the "division of tourism." He
said one concept envisioned in the "millennium plan" was looking
to increase tourism marketing overall "by reaching a point of
$10 million, which is our marketing budget for this year."
MR. MORONES reported that 60 percent of that budget comes from
[ATIA's] private membership - from membership fees, $2 million
in voluntary contributions from the cruise lines, and about
$900,000 from "our convention and visitor bureaus." Noting that
the industry has seriously taken on the challenge of seeing what
it can do to expand the marketing message, he remarked:
Quite frankly, we have just about ... tapped the level
of contribution that we can ask of our members and be
able to provide to them the kind of [cooperative]
marketing programs that they can participate in,
bearing in mind that the majority of our members are
pretty small [businesses], and that's why they're part
of our association, is to be able to leverage onto
that big marketing picture. So [as] a part of that
deal over these last few years, we have increased our
contribution and the state has decreased its
contribution. So we have $6 million in order to
generate the $4-million match from the state.
Number 1906
MR. MORONES concluded:
Under the current operating budget, that is where we
would be at again for the coming fiscal year. And so,
one of the concerns that we do have ... when we've
seen ... the proposal for the conservation pass and
the suggestion of a seasonal sales tax [also proposed
by the governor] that would generate $35 million in
revenue for the state - that's a potential double hit
to our industry, without seeing any kind of return to
our marketing program.
So we realize that there's a lot more movement ... to
go toward some sort of sustainable funding source. We
don't think that HB 163 is that vehicle, but ... we
would like to be at the table to meaningfully
participate in those conversations.
Number 1950
CO-CHAIR FATE thanked participants, suggesting there might be
areas in which the bill could be improved. [HB 163 was held
over.]
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:07 p.m.
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