Legislature(2015 - 2016)CAPITOL 17
03/17/2015 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Open Discussion with Prince Rupert Mayor, Lee Brain | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 17, 2015
1:09 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Benjamin Nageak
Representative Louise Stutes
Representative Matt Claman
Representative Dan Ortiz
MEMBERS ABSENT
Representative Shelley Hughes, Co-Chair
Representative Charisse Millett
COMMITTEE CALENDAR
OPEN DISCUSSION WITH PRINCE RUPERT MAYOR~ LEE BRAIN
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LEE BRAIN, Mayor
Prince Rupert, British Columbia
Canada
POSITION STATEMENT: Testified during an open discussion of
proposed projects in Prince Rupert.
MIKE NEUSSL, Deputy Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Testified during an open discussion of
projects in Prince Rupert.
ACTION NARRATIVE
1:09:49 PM
CO-CHAIR NEAL FOSTER called the House Transportation Standing
Committee meeting to order at 1:09 p.m. Representatives Claman,
Nageak, Stutes and Foster were present at the call to order.
Representative Ortiz arrived as the meeting was in progress.
^Open Discussion with Prince Rupert Mayor, Lee Brain
Open Discussion with Prince Rupert Mayor, Lee Brain
1:10:13 PM
CO-CHAIR FOSTER announced that the only order of business would
be an Open Discussion with the Prince Rupert Mayor, Lee Brain.
1:11:34 PM
LEE BRAIN, Mayor, Prince Rupert, British Columbia, stated he is
the new mayor of Prince Rupert. He said the purpose today is to
discuss the Alaska Marine Highway System (AMHS) and to present
an opportunity that may help with the fiscal situation in
Alaska. Prince Rupert was one of the founding fathers of the
marine highway system in 1958, at a time when the intention was
to have British Columbia (BC) ferries run to Prince Rupert and
Alaska ferries run to Prince Rupert, creating a
Canadian/American "gateway" system.
1:13:50 PM
MAYOR BRAIN explained that British Columbia lost its pulp mill
just as Ketchikan lost its mill, and British Columbia's fishing
industry has also declined so Prince Rupert is no stranger to
hard times. He has joined and is part of the legacy of the
Alaska and Prince Rupert collaboration. He asked to report some
happenings in Prince Rupert, such that it has approved a $250
million continuing facility expansion for Prince Rupert, which
currently is the fastest growing port in all of North America.
He highlighted that Prince Rupert is working on $60-100 billion
in liquefied natural gas facility proposals. Thus Prince Rupert
is poised for an economic boom, which makes it a very exciting
time to be in Prince Rupert, especially since not much
development has happened in the area in the past twenty years.
MAYOR BRAIN said that Prince Rupert believes an opportunity
exists for Alaska due to three major liquefied natural gas
proponents: ExxonMobil Corporation, Woodside, an Australian
liquefied natural gas company, and Nexen Energy, a subsidiary of
CNOOC, China's oil company proposed project.
MAYOR BRAIN briefly pointed out the geography just east of
Prince Rupert to the First Nations reserve of Lax-Kw'alaams/
Port Simpson and Metlakatla, a First Nation community that lies
just across the harbor from Prince Rupert. Prince Rupert has an
airport and a BC ferry system, but each of these three
communities have separate ferries to serve them. However,
Prince Rupert has been working on the Tsimshian Access Project
for the past twenty years, a project that will create a road
network to connect the entire loop, which would allow people to
drive to the airport and connect the First Nation communities to
the Prince Rupert mainland to open up access.
MAYOR BRAIN said that due to the potential liquefied natural gas
project that Exxon, Woodside, and Nexen propose, it now seems
feasible to create the road system to connect the communities.
These major oil and gas companies have initiated a major LNG
"GO" planning central logistical coordination in the Prince
Rupert area to get ready for growth. He anticipated that the
potential investment by Exxon, Woodside, and Nexen will be
significant.
MAYOR BRAIN recalled that years ago, Alaska once considered
moving the Alaska Marine Highway System (AMHS) from Prince
Rupert to Port Simpson. He explained that Ketchikan to Port
Simpson would be about a three-hour ferry route, whereas the
current AMHS route is a six-hour run, since it is necessary to
go to Prince Rupert. By June 2015, a decision will be made on
one of the liquefied natural gas facilities and if that happens
this road network could be built within the next year or two.
1:16:12 PM
MAYOR BRAIN said that this leads him to extend an invitation to
consider moving the Alaska ferry terminal from Prince Rupert to
Port Simpson/Lax-Kw'alaams. He said that doing so could
increase trade, commerce, tourism, and create new economic
opportunities for Alaska and Canada. For example, Prince Rupert
could send its ferry to Ketchikan to be refitted in the new
shipyard. Further, shaving ferry route times will also reduce
costs. He anticipated it is possible to have a plan available
for the legislature's review in May.
1:17:14 PM
MAYOR BRAIN reported that Prince Rupert does not necessarily
agree with [Canada's] federal government's decision with respect
to the "Buy America" provisions. Finally, he directed attention
to the Prince Rupert delegates from various organizations who
also wish to advocate for a potential opportunity that may
materialize between Prince Rupert and Alaska.
1:18:30 PM
REPRESENTATIVE CLAMAN asked for clarification on the "Buy
America" issue. He recalled the issue was related to steel and
port construction issues.
MAYOR BRAIN offered his belief that a "little bit of political
posturing" has been happening, but once the October election in
Canada is held, the current project to renovate the Alaska
marine highway terminal in Prince Rupert [will move forward].
1:19:39 PM
REPRESENTATIVE CLAMAN interjected by asking for more detail.
1:19:43 PM
MAYOR BRAIN related his understanding that Alaska wanted to use
the "Buy American" provision in its contract with Prince Rupert
for the marine terminal renovation. However, that meant using
American steel and contracting to build the facility since
Alaska is funding the project, he said, but when Canada received
the notice, the federal government objected to using the "Buy
American" provision since it would like to use local contractors
and materials in projects in Canada. The dispute, which he
believed related to an America-wide policy that requires use to
American steel, goods, and services. Again, since the project
is on Canadian soil and on [Canadian] federally-regulated land,
the Canadian federal government didn't agree to the provision.
1:20:55 PM
REPRESENTATIVE CLAMAN recapped his understanding, that Alaska is
trying to upgrade its port, that U.S. federal funds are
involved, which requires U.S. American made materials and labor,
but the Canadian government at a local or federal level did not
agree to use foreign labor and materials on a port on Canadian
soil.
MAYOR BRAIN clarified that it is a Canadian federal decision
since Prince Rupert doesn't have any jurisdiction over the
process. He said Prince Rupert is actually caught in the middle
of this dispute, which is one reason why Prince Rupert came to
Juneau to advocate at a local level. First, Prince Rupert
values its relationship with Alaska and does not believe it is
critical that the "Buy America" provision is used. Instead,
Prince Rupert seeks a flourishing local economy and an enhanced,
more efficient relationship with the government in Alaska, in
Ketchikan, and Southeast Alaska.
MAYOR BRAIN said that Prince Rupert would like to outline a
potential solution to the problem. Prince Rupert believes that
if its road network can be constructed within the same timeframe
as Alaska renovating its marine terminal that relocating the
facility could create even greater access for Alaska. He
characterized British Columbia as being Canada's gateway to
Alaska. He didn't view it as being travel between Prince Rupert
and Ketchikan as it is about improving access between Canada and
Alaska. In fact, Prince Rupert wants to be the "on the ground
logistical coordinators" on Alaska's behalf. He reiterated that
Prince Rupert believes it can have a plan that will be ready by
May to present to Alaska for its consideration.
1:22:56 PM
MAYOR BRAIN said that if there is ever a chance to change the
paradigm of how Alaska and Canada coexist, [it is now].
Ultimately, Prince Rupert believes that the proposal will save
time and money and open up new trade and commerce opportunities
on the ground, regardless of what the [Canadian] federal
government is considering. After the [Canadian] federal
elections are held in October, there will likely be a change in
leadership. Thus Prince Rupert hopes to help find solutions.
MAYOR BRAIN reported that currently thousands of travelers
travel between Prince Rupert and Alaska every year, which
increases the economies of both areas. However, beginning in
July there could potentially be only one {AMHS] weekly sailing,
which would severely impact Prince Rupert's economy at a time
when the community is working to grow and expand. He offered
his belief that Alaska has an opportunity to capitalize on that
growth and expansion, as well as for trade opportunities due to
the strategic location in the Asia Pacific Rim, noting that
Prince Rupert represents a three-day shorter trip to Asia.
Given the potential port authority project in Prince Rupert, it
could result in a more robust regional economy.
1:24:21 PM
REPRESENTATIVE CLAMAN said it sounds like he can't predict what
the [Canadian] federal government will or won't do with respect
to the US federal "Buy American" requirement.
MAYOR BRAIN answered that is correct.
1:24:38 PM
CO-CHAIR FOSTER understood a plan will ready for a presentation
in May 2015. He asked whether it is possible to obtain a one-
page summary, a white paper, next week. He further asked if he
has any figures for the number of travelers going from Prince
Rupert to Alaska. Finally, he asked Mayor Brain to introduce
his delegation to members.
1:25:34 PM
MAYOR BRAIN introduced his delegation: John Farrell, the
outgoing president of the Prince Rupert Chamber of Commerce;
Scott Farwell, president of Tourism for Prince Rupert; Rosa
Miller, the incoming president of the Prince Rupert Chamber of
Commerce; Herb Pond, Prince Rupert Chamber of Commerce and the
previous mayor of Prince Rupert; and Maynard Angus, representing
the Prince Rupert Port Authority.
1:26:22 PM
MAYOR BRAIN stated that the Port Simpson plan was previously
proposed by Alaska so the documents are available. In addition,
the Tsimshian Access Project is part of a 20-year plan in
process so all of the engineering and design for the project has
been completed, which he could share. Although the planning has
been ongoing for many years, the timing seems right for Prince
Rupert right now.
MAYOR BRAIN answered that 15,000 travelers use the ferry from
Prince Rupert to Alaska, which could significantly grow with
faster access and a much more efficient route. Further, many
Canadians don't know that travel is possible to Alaska via
Prince Rupert, which could change with marketing and branding
Prince Rupert as Canada's gateway to Alaska.
1:27:33 PM
MAYOR BRAIN reviewed a small map distributed to members entitled
"Prince Rupert." He pointed out Prince Rupert Harbor where
Exxon Mobil's proposed project and facility will be built. If
this occurs it will be the largest industrial project in North
America, estimated to cost $50 billion. The project would
consist of a bridge, the beginning of the Tsimshian Access
Project, with a new road constructed through the Prince Rupert
Harbor. He pointed out Port Simpson on the second map, which
illustrated the road to Port Simpson would be a 15 minute drive.
Currently there a road exists, but it requires a five-minute
ferry ride. In fact, Alaska is visible from Port Simpson, which
is directly across from Ketchikan. He characterized the link
between Port Simpson and Ketchikan as being a quick back-and-
forth trip. He directed attention to the small map and
highlighted the proposed Tsimshian Access Project. Under the
plan, the road would go to Port Simpson and connect by bridge to
the airport on Digby Island. The bridge design is finished and
would need a small deviation to include ExxonMobil Corporation's
proposed port project. With respect to the logistical redesign,
the good news for Prince Rupert is the potential investment of
hundreds of millions in funding by six different companies who
all need this access, in particular, the three aforementioned
[oil and gas/liquefied natural gas] companies. These companies
are discussing a potential investment of $100-$200 million each
into the Prince Rupert area. Further, Prince Rupert will be
presenting this plan to the province and to the federal
government [Canada].
1:30:12 PM
MAYOR BRAIN characterized the economic climate as accelerating,
with a substantial focus on Prince Rupert. He emphasized that
Prince Rupert wants to add Alaska as promoters, too, since [Port
Simpson] has the potential to save Alaskans money and time.
This potential solution could work for Alaska, Canada, and
Prince Rupert. He said, "The stars are kind of aligning so to
speak at the moment for this to occur." He reiterated that
Prince Rupert's intention is to present an opportunity -
although nothing is set in stone at the moment - and he will
prepare documents for the proposal to be considered. In the
meantime, he hoped that Prince Rupert and Alaska could operate
in "business as usual." Certainly, Alaska must proceed with its
budget, but he hoped the Alaska Marine Highway System will
continue with its regular schedule to allow Prince Rupert time
to finalize its plans.
1:31:39 PM
MAYOR BRAIN recommended forming a small committee to continue
this conversation and regularly hold dialogue. He suggested
that this proposal could take [Prince Rupert and Alaska] to a
new level regionally. He emphasized that Prince Rupert has
always viewed Alaska as a partner, having had a great
relationship since 1958. He acknowledged that he is a young
mayor, but he is very interested in continuing this
relationship.
1:32:19 PM
CO-CHAIR FOSTER asked for further clarification on who would
serve on the small committee.
MAYOR BRAIN offered to have the House Transportation Standing
Committee participate. Currently, Prince Rupert has
commissioned KPMG to provide a logistical design and report.
Once finished, he envisioned the committee will be able to
identify time and cost savings, new facility costs, and leasing
of the existing facility. He predicted that all of these
details could be worked out in a short order and the entire plan
could be solidified in anticipation of investment decisions that
will occur in June 2015. The plan is called a "GO" plan since
Prince Rupert hopes to hit the "GO" button on July 1, 2015. At
that point all of the oil and gas companies, the province, the
[Canadian] federal government, and Alaska could consider one
central project, including engineering. While this is an
audacious plan with a large scope, the types of investment
coming to the Prince Rupert area could make it possible and that
time is now.
1:34:09 PM
CO-CHAIR FOSTER wondered if the proposed working group
membership would consist of a combination of legislators and
DOT&PF staff, but that can be further discussed.
1:34:24 PM
REPRESENTATIVE ORTIZ apologized for his late arrival, noting he
was attending a Southeast Conference meeting. He said the
proposed Prince Rupert plan sounds interesting. He asked
whether Mayor Brain could summarize time savings if the AMHS
marine facility were to move to Port Simpson.
MAYOR BRAIN answered that it would be save approximately 3.5
hours in time and it will consist of a three-hour sailing to
Ketchikan. Currently his delegation couldn't take ferry from
Prince Rupert to Juneau without a one week delay due to the
schedule. Thus, the delegation chartered a seaplane. Otherwise
the delegation would need to fly to Vancouver with a stop in
Seattle before arriving in Juneau. However, if the vessel
sailing was a three hour run, travelers could technically leave
on a Friday morning and return on Sunday night. Of course,
numerous factors must be considered with this proposal,
including existing union contracts for the Alaska Marine Highway
System. Still, with a potential three-hour sailing, the
benefits can be enormous for both areas. Further, this could
foster improved commerce and economic trade since the drive from
Port Simpson to Prince Rupert would be a short 15-minute drive.
Even though this would limit his tax base, it would
significantly improve the regional transportation link, he said.
1:36:37 PM
REPRESENTATIVE ORTIZ asked whether the community supports this
since it may have a negative impact on Prince Rupert, although
he noted the road will create the basic infrastructure for
Prince Rupert.
MAYOR BRAIN answered yes. He characterized the [proposed Port
Simpson facility] as highly anticipated and welcome by all the
stakeholders, particularly First Nations, who absolutely support
road access to the mainland. Further, Prince Rupert wants road
access to its airport. He concluded that a lot of pieces could
be solved by this project. Further, it could set up Prince
Rupert and Alaska for another 50 years of a great relationship.
REPRESENTATIVE ORTIZ said that growing up in Ketchikan he
frequently traveled through Prince Rupert and his family has
always valued the relationship between Ketchikan and Prince
Rupert.
1:38:20 PM
CO-CHAIR FOSTER asked whether there would be a time savings from
Prince Rupert to Seattle if the port was moved.
MAYOR BRAIN answered that the sailing from Port Simpson to
Bellingham would be the same route.
1:39:47 PM
MIKE NEUSSL, Deputy Commissioner, Department of Transportation &
Public Facilities (DOT&PF), stated that the Alaska Marine
Highway System (AMHS) currently has a 50-year long-term lease
with the existing ferry terminal building in the town of Prince
Rupert. He indicated that the DOT&PF would need to review it in
terms of a move to Port Simpson.
MR. NEUSSL reviewed the issue of the "Buy America Steel Act."
He related his understanding that the DOT&PF put a project out
to replace the wooden ferry terminal structure - the marine
structure not the building - in Prince Rupert that was being
funded by Federal Highway Administration (FHWA) as a cost-share
with the state. As part of the federal funding, it required
"Buy America Steel Act" to be included in the contract, which is
what the Canadian federal government objected to; however, that
act requires that all the steel be purchased and processed
within the U.S. For example, for things such as galvanizing,
bending, welding, and drilling, but it does not require U.S.
labor to install it in Canada. In fact, of the bids received
but not opened, three of the four were from Canadian companies
and the fourth was from a U.S. company with a Canadian
affiliate. Essentially the Canadian affiliate would have
handled the project. However, the bids were not opened and the
bid was canceled when the Canadian federal government
implemented the Federal Extraterritorial Measures Act, which
prohibited compliance with the "Buy America" act. He said this
temporarily halted the project and it is still a pending issue.
1:41:50 PM
MR. NEUSSL, in terms of Port Simpson instead of [Prince Rupert]
to Ketchikan, agreed it would shorten the running time; however,
he was not certain of the mileage, but it would eliminate going
around Digby Island. He clarified that the AMHS does not
currently run directly between Prince Rupert and Bellingham. He
explained that the runs are from Ketchikan to Bellingham and
from Prince Rupert to Ketchikan.
1:42:22 PM
MAYOR BRAIN apologized that he wasn't fully aware of the details
of the "Buy America" provision. He asked to leave the committee
with a final message. In his experience, when the British
Columbia (BC) ferries cut sailings mid-schedule, it impacted the
entire tourism economy, in particular, for those who had
prearranged schedules, as well as adversely affecting its
reputation. He cautioned members to consider the impact on the
system. For example, if the sailings for July 1 are cut, it may
result in unintended consequences.
MAYOR BRAIN related his understanding that some Alaskans may not
see the full benefits of this connection, but he characterized
this proposal as a major economic generator for Alaska and
Canada. He encouraged members to travel on the route to see the
vital link that connects two economies. At the local level, it
is important not only to Ketchikan and Prince Rupert, but also
to British Columbia, Canada, and Alaska. Currently the American
dollar is very strong so it is very good time to travel to
Canada. He encouraged the [Alaska Marine Highway System} to
continue on as normal while Prince Rupert accelerates its
proposal process. He viewed the proposed [Port Simpson] project
and the economic acceleration in Prince Rupert as providing an
opportunity. He said if the "stars align" Prince Rupert hopes
that there can be a collaborative effort to move forward. In
closing, he said that Prince Rupert adamantly cares about
Alaska, and he hopes that Alaska feels the same.
1:45:42 PM
CO-CHAIR FOSTER looked forward to receiving more information
from Prince Rupert for the committee.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 1:45
p.m.
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