Legislature(2007 - 2008)SENATE FINANCE 532
01/25/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Overview: Commercial Passenger Vessel Tax Program Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
January 25, 2008
9:06 a.m.
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:06:24 AM.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Kim Elton
Senator Joe Thomas
Senator Fred Dyson
MEMBERS ABSENT
Senator Olson
ALSO PRESENT
Joanne Bales, Deputy Director, Tax Division, Department of
Revenue; Lynn Kent, Director, Division of Water Quality,
Department of Environmental Conservation; Laura Beason,
Administrative Services Manager, Division of Information and
Administrative Services, Department of Environmental
Conservation; Jerry Burnett, Director, Division of
Administrative Services, Department of Revenue;
Representative Bill Thomas; Representative Carl Gatto
PRESENT VIA TELECONFERENCE
None
SUMMARY
^OVERVIEW: COMMERCIAL PASSENGER VESSEL TAX PROGRAM UPDATE
9:07:18 AM
Co-Chair Stedman related a short history of the Ocean Ranger
program. He pointed out there have been questions regarding
implementation.
9:10:48 AM
JOANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE, COMMERCIAL PASSENGER provided information and
observed that the division administers all tax types levied
by the State of Alaska, including the new Commercial
Passenger Excise Tax. She presented an overview of the Tax
Initiative since the completion of the first full cruise
ship season. There were "revenue" and "non-revenue" related
provisions, but she focused first on the revenue provisions
(Commercial Passenger Vessel Excise Tax handout, p.1, copy
on file). The initiative, effective December 17, 2006,
imposes a $46 Commercial Passenger Vessel Excise Tax on
passengers traveling on large cruise ships (over 250
berths). It also levies a tax at the rate of 33 percent of
adjusted gross income on the owner/operator of cruise ships
conducting gambling activities in Alaska waters. Cruise ship
companies are now also subject to Alaska's corporate net
income tax, although they have been exempt in the past. Ms.
Bales reported that this Initiative assesses a $4 per
passenger berth fee to cover the cost of the new Ocean
Ranger program, which Department of Environmental
Conservation (DEC) will elaborate on.
Ms. Bales remarked that the Department of Revenue (DOR) is
not responsible for enforcing the "other provisions" listed
in the Initiative (Initiative Overview, Other Provisions, p.
2, copy on file). These provisions require the cruise ship
operators to gather and report information and obtain a new
type of permit for sewage, graywater or other wastewater
before discharging in Alaska marine waters. The provision
also authorizes citizen lawsuits against an owner/operator
of a large cruise ship for alleged violations of any permit
condition. It further enables a person who provides
information leading to enforcement of a law to receive
twenty-five to fifty percent of fines imposed. Ms. Bales
remarked that additional requirements are also imposed on
disclosures about on-ship (shore-side) promotions. Ms. Bales
emphasized that Department of Revenue does not administer
the provisions, but the Department of Community and Economic
Development and the Department of Environmental Conservation
are jointly responsible to enforce the other provisions.
9:14:21 AM
Ms. Bales acknowledged she receives many questions about the
Commercial Passenger Vessel Excise Tax (head tax) amount.
The "head tax" is a $46 per passenger tax (Commercial
Passenger Vessel Excise Tax) plus a $4 per passenger Ocean
Ranger Fee, which totals $50 per passenger (CPV Revenues, p.
3, copy on file). The Department of Revenue administers the
$46 excise tax and the Department of Environmental
Conservation administers the $4 per passenger fee.
9:15:23 AM
Ms. Bales explained the Department of Revenue's
responsibilities in this Initiative (Department of Revenue
Responsibilities, p.4, copy on file). The Department of
Revenue administers and collects the Corporate Income Tax,
the Cruise Ship Gambling Tax, and the Commercial Passenger
Vessel Excise Tax (head tax.) The Department of Revenue
accounts for and disburses proceeds of the tax as directed
by the Legislature and drafts regulations for all tax types
in the Initiative. Ms. Bales explained that all corporations
are subject to the Corporate Income Tax, but, because of a
federal provision, foreign flag vessels have been exempt
from Alaska's Corporate Income Tax (Administer & Collect the
Corporate Net Income Tax, p. 5, copy on file). This
Initiative now requires those vessels that are corporations
be subject to the Alaska Corporate Income Tax. Money
collected from the Corporate Tax is deposited into the
General Fund. The Department of Revenue has no viable tax
estimates on the cruise lines given that they have never
before paid taxes in Alaska.
Ms. Bales indicated that the first Corporate Income Tax
returns are due April 15, 2008, which will then provide more
information on the amount of revenue expected from the
cruise industry. Ms. Bales continued that no revenue sharing
will be provided to municipalities from the Corporate Income
tax since all the money is deposited into the General Fund.
9:17:42 AM
Ms. Bales explained the second part of the Initiative
regarding the 33 percent Cruise Ship Gambling Tax
(Administer & Collect the 33 percent cruise ship gambling
tax, p. 6, copy on file). Some proposed Gambling Regulations
were drafted and sent out for public comment, starting in
November and ending February 7, 2008. The final Gambling Tax
Regulations, expected in April, will focus on the
administrative portions of the tax: who must file, when to
file, where to file. A tax return is currently being
designed, but the Gambling Regulations need to be finalized
before the form can be completed. Ms. Bales said the 33
percent tax on gambling is imposed on the Adjusted Gross
Income received from gambling activities conducted in Alaska
waters. Cruise ship companies must develop an "allocation"
method due to the fact that gambling takes place both inside
and outside Alaska waters. The adjusted gross income is
gross gambling proceeds, minus prizes paid out, and any
other federal and municipal taxes imposed on the gambling
income. Ms. Bales indicated the gambling income will be
filed in annual returns with the first return due on April
15, 2008. The Gambling Tax will be deposited into the
Commercial Vessel Passenger Tax Account, a sub account of
the General Fund.
9:20:13 AM
Ms. Bales commented that the $46 per passenger Commercial
Passenger Vessel Excise Tax has received the most focus
(Administer & Collect the $46 commercial passenger vessel
excise tax "head tax", p. 7, copy on file). This tax is
levied on cruise ship passengers per voyage. The cruise ship
owner/operator is required to collect the tax from the
passenger then remit it to the Department of Revenue. A tax
return must be filed by the owner/operator at the end of the
month following the month the voyage occurred. A voyage is
described as one lasting longer than seventy-two hours.
Cruise ship companies will be required to report the number
of passengers visiting each Alaska port of call.
9:21:49 AM
Ms. Bales explained that another Department of Revenue
function is to account for and disburse funds from the "head
tax" (Account for and disburse proceeds of the "head tax" as
directed by the Legislature, p. 8, copy on file). The
Initiative established a new tax account within the General
Fund called the Commercial Vessel Passenger Excise Tax
Account. The program is referred to as the Commercial
Passenger Vessel Tax program while the tax account is
referred to as the Commercial Vessel Passenger Tax Account.
During the 2007 cruise ship season, the total revenue
collected was $46.4 million based on 1,010,245 passengers
(Receipts from the Commercial Passenger Vessel Excise Tax,
p. 9, copy on file). In accordance with the Initiative, the
Commercial Vessel Passenger Tax Account keeps seventy-five
percent ($34.50 per person) of the proceeds while a sub-
fund, called the Regional Cruise Ship Impact Fund, keeps
twenty-five per cent ($11.50 per person). Ms. Bales
reiterated that the Gambling Tax will also be deposited into
the Commercial Vessel Passenger Tax Account although there
have been no filings or payments into this account at this
time.
9:24:08 AM
Ms. Bales reminded the Committee that the Initiative
designates how this money is to be spent, but everything is
subject to appropriation by the Legislature. The
disbursements are "two-fold" in this account. The first is
the "First Five Ports of Call" rule stating that the revenue
is to be shared by the first five ports of call on any
cruise voyage. Any remaining money in the account the
"legislature may appropriate money from this fund for state-
owned port and harbor facilities, other services to properly
provide for vessel or watercraft visit, to enhance the
safety and efficiency of interstate and foreign commerce and
such other lawful purposes" (Commercial Vessel Passenger Tax
Account, p. 10 copy on file). Ms. Bales acknowledged that
this provides some guidance on how the money is to be spent,
but emphasized that federal law also requires that the money
be used to enhance the visit of cruise ship passengers.
9:26:08 AM
Ms. Bales went on to explain the First Five Ports of Call
Rule (First 5 Ports of Call, p. 11, copy on file). The
original Initiative estimate was based on $5 per passenger,
to be shared with the first five ports (approximately $25
million to date). The Department of Revenue estimate,
revised by the restrictions in the wording of the Initiative
and the workings of the cruise ship industry, is now closer
to $10 million annually. Ms. Bales went on to explain that
most cruise ships do not visit five ports during a voyage.
Ms. Bales defined a "port of call" as a municipality or
borough (not a private organization or company) where
passengers embark or disembark, including lightering
passengers, but the port can not have its own passenger tax.
Ketchikan and Juneau are usually visited during each voyage,
but neither of these communities is entitled to receive
money under this specific provision because they have their
own passenger tax. Ms. Bales added that the Ketchikan
Gateway Borough can receive money under this provision
because the borough is not unified with the City of
Ketchikan. Ms. Bales specified that ports receiving funds
under the First Five Ports of Call Rule are not eligible to
receive Regional Cruise Ship Impact funds.
9:28AM
Ms. Bales referred to the total revenue collections per
month, based on the number of passengers (Total Revenue
Collections by Month, 2007 Cruise Ship Season, p. 12, copy
on file). The 2007 Cruise Ship Season collected over $46.4
million from 1,010,245 passengers.
9:29:37 AM
Ms. Bales pointed out that as of May the tax amounted to
$4.9 million, but only $3.8 million of that amount was
actually collected during FY 07. This distinction is an
important reflection on how the money to the first five
ports was disbursed. During the last legislative session an
appropriation in the FY 08 budget directed DOR to disperse
funds to communities under the First Five Ports of Call
Rule, but the money disbursed was supposed to be money
collected in FY 07. The Department of Revenue was not
expecting money to be collected in FY 07, but the majority
of cruise ship tax payers paid early making it possible to
disburse money to the communities in 2008. The Legislature
appropriated all proceeds collected in FY 07 and the funds
were disbursed to qualifying municipalities and boroughs in
December 2007 (Revenue Sharing, p. 13, copy on file). Money
collected in FY 08 (July 2007 to the present) is $42.6
million. All future disbursements must be appropriated by
the legislature.
Ms. Bales continued by showing the disbursements each
community received in December 2007 (FY 08 Disbursements,
first 5 ports of call, p. 14, copy on file). The Kenai
Peninsula Borough, Seward (not unified with Kenai Peninsula
Borough), and Ketchikan Borough received $2.50 per
passenger. The other Five Ports of Call cities received $5
per passenger.
9:32:2337 AM
Ms. Bales estimated the FY 09 First Five Ports of Call
disbursements based on the money collected during the 2007
Cruise Ship Season (FY 09 Estimated Disbursement, first 5
ports of call, p, 15, copy on file). The amount appropriated
to the communities in December 2009, if appropriations are
designated by the Legislature, will be drawn from the amount
collected in FY 08, including any money collected in May
2008.
9:35:24 AM
Ms. Bales referred to the Account Balances for the total
Commercial Vessel Passenger tax amount collected for the
2007 cruise ship season (Account Balances, 2007 Cruise Ship
Season, p. 16, copy on file). In December 2007, $744,580 was
disbursed to the first five ports of call. The Department of
Revenue expects to disburse another $9.2 million to the five
ports of call in October 2009. The remaining balance of
$24.8 million has not been appropriated. The Regional Cruise
Ship Impact Fund has $11.6 million designated to go to
municipalities and other government entities "impacted" by
cruise ship activity, but not to communities receiving money
under the First Five Ports of Call Rule. A total of $36.4
million has not been appropriated for any projects or
communities. Ms. Bales again stated that DOR is not tasked
with drafting regulations on how the funding is spent. The
legislature appropriates all money and no appropriations
have been made in FY 07 or FY 08.
9:37:34 AM
Senator Dyson inquired about Department of Revenue's
authority to audit cruise ship books.
Ms. Bales responded that DOR has complete authority to audit
cruise ship books and records.
Senator Dyson questioned if the ships must follow Alaska
gambling laws when they sail in Alaska waters. Ms. Bales
responded that gambling is illegal in Alaska, however, the
federal law allows gambling on cruise ships in marine waters
(3-mile limit of any port in Alaska); therefore, Alaska can
not prohibit cruise ship gambling.
Senator Elton asked what capabilities DOR has in collecting
the gambling tax. He believed very specific information
would be needed from the cruise lines to apply the tax.
Senator Dyson inquired if additional people were needed
within DOR to compile this information or was the cruise
ship information taken on faith. Ms. Bales replied that
auditing any tax type can be problematic, but she did not
perceive any additional difficulty from the cruise industry.
The Legislature had appropriated some new DOR positions to
help in these tasks.
Senator Elton suggested that with the present economy the
cruise ship industry numbers could decline in the 2008
Cruise Season. He inquired about the possibility for a
reduction of tax estimates.
9:42:47 AM
Ms. Bales agreed with Senator Elton that entertainment
budgets are often the first eliminated from personal
budgets, but Alaska is one of the cruise lines premier
destinations, which made it stronger and less likely to be
impacted.
9:43:49 AM
JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF REVENUE noted that he has attended
the Economic Forum at the Baranof and pointed out that the
dollar decline to the Euro over past few years makes
cruising in Alaska for people around the world much less
expensive.
9:44:48 AM
Co-Chair Hoffman inquired if any communities have notified
DOR about being "impacted" by the cruise ship industry. Ms.
Bales responded that some communities have made inquiries as
to how the money disbursements would work, but they have not
received requests for any specific projects.
Co-Chair Stedman asked Ms. Bales to elaborate on how DOR
plans to help the Legislature sort through the issue and
questioned the fact that DOR would not be writing any
regulations on the disbursement of funds. Ms. Bales
explained that DOR is not drafting regulations that deal
with the Commercial Vessel Passenger Tax Account (the
remaining $24.8 million). The Department is a tax collection
agency that does not make decisions on how the money is
spent. The Department of Revenue has talked to the
Department of Law about possible uses for the money. Cruise
ship industry concerns as well as federal constitutional
prohibitions will make drafting regulations difficult for
the Department.
Mr. Burnett added that the Legislature chose not to
appropriate the Regional Cruise Ship Impact Fund money to
DOR for disbursement in the FY 08 budget. The only money
appropriated to DOR for disbursement was the First Five
Ports of Call funds. Until the appropriation is made (in the
Governor's budget for FY 09) there is no urgency for DOR to
complete any regulations.
9:47:54 AM
Co-Chair Hoffman asked if any cruise ship voyages have more
than five ports of call. Ms. Bales replied that to her
knowledge there is only one cruise tour this season with
seven ports, but that is unusual.
Co-Chair Hoffman wondered if the additional ports could they
receive money under this provision when there were more than
five ports. He also inquired if there was a list of
communities that could be impacted by the cruise ship
industry.
Ms. Bales agreed with Co-Chair Hoffman that any community
impacted could qualify, but there is not presently a list of
potential impacted communities.
Mr. Burnett added that some unincorporated communities and
Native villages, who feel they have been impacted by the
cruise industry, have contacted DOR with questions about
including them in the disbursements.
Senator Thomas believed that it was important to identify
those unincorporated areas and Native villages to decide if
they should be included in the disbursements.
9:50:59 AM
Co-Chair Hoffman asked if there was a list of the remaining
"state owned" ports and harbors where the Commercial Vessel
Passenger Tax Account money may be appropriated.
Ms. Bales answered that there was no current list, but it
would be possible to compile a list with the help of the
Department of Transportation (DOT).
Co-Chair Stedman responded that the list is available and
the DOT could present the list.
Senator Thomas inquired how the proposed regulations for
cruise ship gambling were developed, since gambling is
illegal in the State of Alaska.
Ms. Bales said regulations were developed in line with every
other Alaska state tax program. She pointed out that taxing
an illegal activity did not make it legal.
Senator Thomas questioned the process "impacted" communities
would follow to receive the funds.
Ms. Bales responded that DOR does not have the expertise to
make community determinations, but a possible source could
be the Department of Community and Economic Development. Ms.
Bales added that DOR is not authorized to transfer
responsibilities to another department, which could only be
achieved through statute.
Co-Chair Hoffman asked about the language in relation to
"other state projects" and questioned if the term "specific
communities" was used. Ms. Bales said it does not say
"specific communities", but DOR understands it can be shared
with specific communities.
9:55:53 AM
Co-Chair Stedman questioned if the cruise ship industry was
working with the departments on "agreed upon" distribution
of funds.
Ms. Bales replied that there has been only limited dialogue
with the cruise ship industry. She pointed out that the City
of Juneau has established a task force, which includes
members of the cruise ship industry, to approve projects
before passing them to the Juneau Assembly. Ms. Bales
thought this arrangement could be possible on the state
level, but again, any change must be through statute.
9:57:09 AM
Senator Elton asked if the initiative prohibits or allows
the distribution of money to other state government
entities.
Ms. Bales believed it would allow distribution as long as it
enhanced the cruise visits. Senator Elton also inquired if
funds could be given to DOT if the projects were cruise ship
related. Ms. Bales believed it would be proper use of the
money.
Mr. Burnett added that use of funds by another department
would require legislative appropriation. Senator Elton
clarified the two ways to distribute funds to communities
were through a state agency or a direct grant approved by
the legislature. Mr. Burnett agreed that impact money could
be shared directly without a specific appropriation if the
money were appropriated to DOR, but he expressed concerned
because he was not sure how that would be done. Senator
Elton inquired if the Legislature could do a capital
appropriation to a community not directed through a state
agency. Mr. Burnett agreed.
10:00:40 AM
Co-Chair Stedman mentioned Ketchikan is interested in
plugging in the cruise ships to lower emissions. Mr. Burnett
agreed that internal DOR discussions have looked at using
this money to support a bond issue for a larger project and
it could be possible.
Senator Huggins commented that this sounds like an emerging
Rail Belt Energy Fund for which appropriations the past two
years have been vetoed.
Co-Chair Stedman agreed with his observation.
10:02:29 AM
LYNN KENT, DIRECTOR, DIVISION OF WATER, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION explained that the Citizen's
Initiative, Section 7, AS 46.03.476, required the Department
of Environmental Conservation (DEC) to implement the Ocean
Rangers program (Division of Water, Ocean Ranger Program
Revenue and Costs, January, 2008, p. 2, copy on file). The
Ocean Rangers are United States Coast Guard licensed marine
engineers required to be on board vessels when entering
Alaska waters. The Ocean Rangers monitor vessel compliance
with state and federal requirements for wastewater
discharge, other environmental rules, health, and sanitation
practices. The new fee for this program, found in Section 8,
AS 46.03.480(d), imposed $4 per passenger berth fee on all
large commercial passenger vessels. The law also states that
the Ocean Ranger program is subject to legislative
appropriation. Cruise ships subject to this tax are defined
as a commercial passenger vessel that provides overnight
accommodations for two hundred and fifty or more passengers.
During the 2007 cruise ship season, twenty-seven large
commercial passenger vessels made regular visits to Alaska.
The seven major cruise ship companies pay the bulk of the
fee. All cruise ship companies must register their ships
early in the calendar year and provide information to DEC on
the vessel size and number of planned voyages to Alaska. The
Department of Environmental Conservation uses this
information to calculate the ocean ranger fee for that
particular company and vessel. The Department invoices the
cruise lines for all of the season's voyages and the fee
collected is deposited into the Commercial Vessel Passenger
Fund in the fiscal year they are collected. The money
collected in FY 07 was $3.8 million. The Department of
Environmental Conservation is projecting a collection of $4
million in FY 08 and FY 09. The Legislature appropriated to
the Ocean Ranger program in FY 07, $124.7 thousand and the
current appropriation for FY 08 is $1.2 million.
10:07:09 AM
Ms. Kent reported that in the Governor's FY 09 requested
budget, the Ocean Ranger amount is $3.8 million. The
Department of Environmental Conservation plans to request,
in the Governor's amended budget, additional authorization
from the Commercial Passenger Vessel Fund up to the amount
of the projected revenues. In the first 2007 cruise season,
DEC considered the program "transitional" to observe the
needs of the program. The on board professionals gathered
information about the ships and determined the training
needs for the Ocean Ranger program. Later in the cruise
season, the program added Coast Guard licensed marine
engineers to refine the suggested check list and training.
The engineers visited all twenty-seven cruise ships that
regularly call in Alaska and traveled on portions of one
hundred and fourteen voyages.
10:09:06 AM
Ms. Kent indicated that DEC continually evaluates the Ocean
Ranger program to meet the stated requirements in statute.
Two options considered were to put the ocean ranger on
board, via a pilot boat, when entering Alaska waters or
embark the ocean ranger at the voyage point of origin. The
most cost effective approach appears to be embarking them at
point of origin although they would have no function or
authority on board until entering Alaska Waters. The
projected fee revenue of $4 million per year is not
sufficient to provide full voyage coverage on every vessel
coming into Alaska. The Department of Environmental
Conservation's best estimate to provide full voyage coverage
would be over $5 million per year. Ms. Kent maintained that
the plan was to implement the program as fully as possible
based on the Legislative appropriations. Ms. Kent listed
four different monitoring approaches for the Ocean Ranger
(Division of Water, Ocean Ranger Program Revenue and Costs,
January, 2008, p. 3):
(1) Embarks at the point of origin and sails the full
voyage.
(2) Embarks at first Alaska port and disembarks at the
last Alaska port.
(3) Ride from one Alaska port to the next Alaska port.
(4) Conduct in-port inspections only.
Ms. Kent remarked that in FY 08, only a portion of the $1.2
million appropriation has been used from the end of the last
cruise season. She believed (with the remaining $500,000)
ten ocean rangers could be hired, trained and equipped
providing a mix of these approaches, visiting about sixty-
eight of the ship's two hundred planned voyages this season.
For in-port only observations, the ocean rangers could
complete one hundred and seventy.
10:12:23 AM
Ms. Kent reported that full voyage observations could be
completed for the two hundred cruise ship voyages planned
for the remainder of this fiscal year by using the
anticipated receipts for FY 08. Co-Chair Hoffman questioned
if the $1.2 million authorized for the FY 08 budget was
adequate or if supplemental funds were needed. Ms. Kent
regarded the funding inadequate to meet the letter of the
law requiring Ocean Rangers on board each vessel entering
Alaska waters.
10:13:31 AM
Senator Elton wondered if there was money in the fund to
appropriate the supplemental requirements.
Ms. Kent replied that a sufficient amount remained in the
fund to appropriate the needs.
Senator Dyson questioned if the marine engineers were taking
samples.
Ms. Kent responded that existing regulations requires self
monitoring by the cruise ship to check the ship's wastewater
discharge and report the results to the Department of
Environmental Conservation.
Senator Dyson asked for clarification if the Ocean Rangers
would be taking samples independent of the cruise line to
verify the results. Ms. Kent said this was done through DEC,
not the ocean rangers, as they are not fully in place, but
affirmed that in the future the ocean rangers would
independently take samples.
Senator Huggins wondered how the Ocean Ranger would be
recognized on board. Ms. Kent explained that the Ocean
Ranger is just an observer on board and would not carry
tools or interfere with any on board action.
Senator Huggins inquired if the Alaska Marine Highway System
had Ocean Rangers on board.
10:17:14 AM
Ms. Kent responded that the Alaska Marine Highway ferry
system is covered by some of the commercial vessel
requirements and not others. The ferries do not pay the $4
per passenger fee, but they are responsible to monitor and
report information DEC.
Senator Huggins wanted clarification if Ocean Rangers would
be placed on the Alaska Marine Highway system. Ms. Kent
responded that Ocean Rangers will not be positioned on the
Alaska Marine Highway ferries.
10:18:02 AM
Co-Chair Stedman inquired about the program's contractor,
Crowley Marine, the unions employed and any possible impact
that may liable the State of Alaska. Ms. Kent replied that
DEC had just completed a thorough process selecting the
contractor for this program. Crowley Marine, the chosen
contractor, is working with a union in Florida to recruit
and train the ocean rangers.
Co-Chair Stedman wondered how the shifts, berthing, meals
and free time for the ocean rangers were being conducted.
Ms. Kent responded that the ocean rangers are considered
"paying" passengers berthed in passenger cabins. The actual
"work-day" details are still being discussed with Crowley
Marine.
10:19:56 AM
Co-Chair Stedman asked if the ocean rangers were part of DEC
or separate contractors. Ms. Kent replied they were separate
contractors providing observations that are reported back to
DEC.
Co-Chair Stedman questioned the guide lines for the ocean
rangers while on board. Ms. Kent responded that it would be
left to the contractor to provide the logistics of
scheduling. Co-Chair Stedman asked if qualified individuals
in Alaska were available for this program or would they have
to be imported. Ms. Kent pointed out that it is the
obligation of the contractor to provide the licensed marine
engineers for the program and they would probably be
recruited from the union in Florida. It is not known at this
time if they would hire locally.
10:21:43 AM
Senator Thomas observed that there is often the need to
monitor the monitors. He wondered if there was a better
method of collecting samples to assure security and prevent
the cruise ship from changing methods upon entering Alaska
waters. Ms. Kent mentioned that the ocean ranger had no
authority until arriving in Alaska waters because the fee
revenue is not sufficient to have the ocean ranger on board
for the full voyage. A possible pilot process could be
remote monitoring of discharging wastewater while in Alaska
waters.
10:24:41 AM
Senator Thomas considered remote monitoring a sound idea
similar to the trucking industry monitoring their driver's
from afar. He inquired if the ocean ranger accommodations
are "gratis" if they boarded prior to Alaska. Ms. Kent
responded that the berth for the ocean ranger must be
purchased for the entire voyage, even if was used for part a
partial voyage.
10:25:26 AM
Senator Elton pointed out the difficultly with funds when
the cruise ship season does not correspond with the Alaska
fiscal year. He thought Crowley Marine suggested the cost
for the 2009 calendar year would be $4.4 million, but the
Governor's request for FY 09 is $3.8 million. He questioned
if $3.8 million would be sufficient or would there be the
need for a supplemental.
10:27:12 AM
LAURA BEASON, ADMINISTRATIVE SERVICES MANAGER, DIVISION OF
INFORMATION AND ADMINISTRATIVE SERVICES, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION responded that money needed
depended if the ocean rangers rode the full voyage or a
voyage portion. The figure arrived at was a snapshot based
on known information, not a final figure for the year.
Senator Elton asked if DEC was presently making negotiations
with Crowley Marine. Senator Elton noted that Crowley Marine
projected that costs could decrease based on discount berth
negotiations with the cruise lines, but he could not see any
ship incentive to lower berth costs. Ms. Beason
acknowledged that there is no incentive for the ships to
lower berth fees. Senator Elton inquired if there had been
any negotiations about paying for a crew berth instead of a
passenger berth. Ms. Kent responded that discussions with
the Department of Law and the Cruise Ship companies
determined the ocean rangers must be put into a passenger
cabin as they were not a member of ship's crew.
10:29:37 AM
Co-Chair Hoffman questioned if all of the four proposed
methods met the requirements for the Initiative. Ms. Beason
answered that the cruise ship must have an ocean ranger when
entering Alaska waters to meet the letter of the law. Co-
Chair Hoffman asked which of the four methods complies with
the intent of law. Ms. Beason replied that putting the ocean
ranger on for the full voyage meets the letter of the law.
Ms. Kent responded that the program was looking at the
intent of the Initiative to monitor the ship's activities
while in Alaska waters and that required the ocean ranger to
be on for the entire voyage.
10:32:23 AM
Co-Chair Hoffman requested the costs for implementing each
of the proposed methods. Ms. Kent responded that $5.4
million per year would cover the costs for all ocean rangers
to board for the full voyages. Co-Chair Stedman questioned
the option for the ocean ranger to ride in the pilot boat
when it joined the ship entering Alaska waters. Ms. Kent
commented DEC considered this method to be the most
expensive option.
10:33:25 AM
Co-Chair Stedman remarked that with new technology
monitoring the location of every ship, it could be known
every time the ship's valves were opened for discharge.
Senator Elton asked that given the questions pursued by
Senator Hoffman regarding the letter of the law, he was
curious if any thought had been presented to bring the law
into alignment. Ms. Kent responded that no consideration was
being given to change the law.
10:34:50 AM
Co-Chair Hoffman reiterated that the law does not say ocean
rangers need be on board when the ship exits Alaska waters.
Ms. Kent agreed that it is not specified in the law. Co-
Chair Hoffman interpreted this to mean that ocean rangers
could get off at the mid-way point making a less expensive
program. Ms. Kent maintained that the full-voyage approach
meet the letter and of the law.
10:36:04 AM
Co-Chair Stedman understood that DEC planned to implement as
much of the program as possible with the funds available
without asking for additional funds, so he was curious if
those plans had changed. Ms. Kent expressed the intent of
DEC to operate the most credible program within the amounts
appropriated. The Department will seek the entire amount
generated by the Ocean Ranger fee in the FY 09 budget
request. Co-Chair Stedman wondered if DEC has researched the
costs of remote monitoring the ship's valve discharges. Ms.
Kent responded that DEC has not evaluated the cost of that
option, but a pilot program this summer (2008) would begin
to look at all options and costs. Ms. Kent agreed this could
be a possible solution for monitoring wastewater discharges,
but she reminded the committee that the Ocean Ranger program
went beyond wastewater discharge to also cover health and
sanitation practices and other environmental issues on board
the vessel. Senator Elton added that an appropriation
existed within the Alaska Marine Exchange to monitor vessel
speeds and locations for every Alaska State ferry down to
kayaks. He believed this appropriated money could help
refine this technology for other uses. He questioned if this
was being provided through DEC. Ms. Kent replied that the
Alaska Marine Exchange provided vessel location information
to the Department of Environmental Conservation that was
primarily aimed at providing coverage to "blind spots" in
the system.
10:39:38 AM
Co-Chair Hoffman questioned the report (Commercial Passenger
Vessel Environmental Compliance Fund, 2007 Cruise Ship
Season Revenue Collections, p. 4 and p. 7] noting two ships
[Carnival Spirit and the Summit] did not pay the amount
invoiced.
Ms. Beason responded that this situation was an internal
billing problem that had been corrected and the ships had
every intention of paying the newly sent invoice.
Co-Chair Stedman hoped that the intent and the letter of the
law would be met as the program moves forward with the goal
of meeting environmental concerns and lower costs.
ADJOURNMENT
The meeting was adjourned at 10:40 AM
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