Legislature(2009 - 2010)BUTROVICH 205

04/10/2009 03:30 PM RESOURCES


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03:36:35 PM Start
03:37:08 PM Confirmation Hearing - Judge Karl Johnstone, Board of Fisheries
04:02:40 PM Overview: Fischer-tropsch Synthetic Fuels Pilot Program
04:53:33 PM SB177
04:56:14 PM SB108
05:12:39 PM HB134
06:02:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Confirmation Hearing:
Judge Karl Johnstone - Board of Fish
= SB 177 NO REPEAL OF SPORT FISH GUIDE LICENSING
Moved CSSB 177(RES) Out of Committee
+= SB 108 STAMPEDE STATE RECREATION AREA TELECONFERENCED
Moved CSSB 108(RES) Out of Committee
= HB 134 CRUISE SHIP WASTEWATER DISCHARGE PERMITS
Moved SCS CSHB 134(RES) Out of Committee
Overview: Alaska Fischer-Tropsch
+ Synthetic Fuels Pilot Program TELECONFERENCED
Mark K. Iden, Deputy Director,
Operations Defense Energy Support Center
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         April 10, 2009                                                                                         
                           3:36 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lesil McGuire, Co-Chair                                                                                                 
Senator Bill Wielechowski, Co-Chair                                                                                             
Senator Charlie Huggins, Vice Chair                                                                                             
Senator Hollis French                                                                                                           
Senator Gary Stevens                                                                                                            
Senator Thomas Wagoner                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Confirmation Hearing - Judge Karl Johnstone - Board of Fisheries                                                                
     Confirmation Advanced                                                                                                      
                                                                                                                                
Overview: Fischer-Tropsch Synthetic Fuels Pilot Program                                                                         
     Heard                                                                                                                      
                                                                                                                                
SENATE BILL NO. 177                                                                                                             
"An Act repealing  the termination of licensing  and regulation of                                                              
sport fishing  operators  and sport fishing  guides and  licensing                                                              
and registration  of sport fishing  vessels; and providing  for an                                                              
effective date."                                                                                                                
     MOVED CSSB 177(RES) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 108                                                                                                             
"An Act creating the Stampede State Recreation Area."                                                                           
     MOVED CSSB 108(RES) OUT OF COMMITTEE                                                                                       
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 134(RES)                                                                                
"An  Act  relating  to the  terms  and  conditions  of  commercial                                                              
passenger vessel  permits for the discharge of  graywater, treated                                                              
sewage,  and other  wastewater;  establishing  a science  advisory                                                              
panel  on  wastewater  treatment   and  effluent  quality  in  the                                                              
Department  of Environmental  Conservation; and  providing for  an                                                              
effective date."                                                                                                                
     MOVED SCS CSHB 134(RES) OUT OF COMMITTEE                                                                                   
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 177                                                                                                                  
SHORT TITLE: NO REPEAL OF SPORT FISH GUIDE LICENSING                                                                            
SPONSOR(s): SENATOR(s) MEYER                                                                                                    
                                                                                                                                
04/01/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/01/09       (S)       RES, FIN                                                                                               
04/06/09       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/06/09       (S)       Heard & Held                                                                                           
04/06/09       (S)       MINUTE(RES)                                                                                            
04/10/09       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: SB 108                                                                                                                  
SHORT TITLE: STAMPEDE STATE RECREATION AREA                                                                                     
SPONSOR(s): SENATOR(s) THOMAS                                                                                                   
                                                                                                                                
02/17/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/17/09       (S)       RES, FIN                                                                                               
03/20/09       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/20/09       (S)       -- MEETING CANCELED --                                                                                 
03/27/09       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/27/09       (S)       Heard & Held                                                                                           
03/27/09       (S)       MINUTE(RES)                                                                                            
04/10/09       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
BILL: HB 134                                                                                                                  
SHORT TITLE: CRUISE SHIP WASTEWATER DISCHARGE PERMITS                                                                           
SPONSOR(s): REPRESENTATIVE(s) HARRIS                                                                                            
                                                                                                                                
02/13/09       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/09       (H)       CRA, RES                                                                                               
02/17/09       (H)       CRA AT 8:00 AM BARNES 124                                                                              
02/17/09       (H)       Moved CSHB 134(CRA) Out of Committee                                                                   
02/17/09       (H)       MINUTE(CRA)                                                                                            
02/18/09       (H)       CRA RPT CS(CRA) NT 5DP                                                                                 
02/18/09       (H)       DP: HARRIS, MILLETT, KELLER, HERRON,                                                                   
                         MUNOZ                                                                                                  
03/02/09       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/02/09       (H)       Heard & Held                                                                                           
03/02/09       (H)       MINUTE(RES)                                                                                            
03/16/09       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/16/09       (H)       Heard & Held                                                                                           
03/16/09       (H)       MINUTE(RES)                                                                                            
03/25/09       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/30/09       (H)       DP: WILSON, JOHNSON, NEUMAN                                                                            
03/30/09       (H)       NR: OLSON, EDGMON, GUTTENBERG, TUCK                                                                    
03/30/09       (H)       RES RPT CS(RES) NT 3DP 1DNP 4NR 1AM                                                                    
03/30/09       (H)       AM: SEATON                                                                                             
03/30/09       (H)       DNP: KAWASAKI                                                                                          
04/01/09       (H)       CORRECTED RES RPT CS(RES) NT 3DP 4NR                                                                   
                         2AM                                                                                                    
04/01/09       (H)       KAWASAKI SIGNED AM                                                                                     
04/02/09       (H)       MOTION TO RETURN TO SECOND FOR AM 1                                                                    
                         WITHDRAWN                                                                                              
04/02/09       (H)       TRANSMITTED TO (S)                                                                                     
04/02/09       (H)       VERSION: CSHB 134(RES)                                                                                 
04/03/09       (S)       RES, FIN                                                                                               
04/03/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JUDGE KARL JOHNSTONE, Nominee                                                                                                   
Board of Fisheries                                                                                                              
POSITION STATEMENT: Presented background and qualifications.                                                                  
                                                                                                                                
MEL MORRIS, Member                                                                                                              
Board of Fisheries                                                                                                              
Kodiak, AK                                                                                                                      
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
JOHN JENSON, Chair                                                                                                              
Board of Fisheries                                                                                                              
Petersburg, AK                                                                                                                  
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
THERESA WISER, President                                                                                                        
Sitka Charter Boat Operators Association                                                                                        
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
MONTE ROBERTS, President                                                                                                        
Kenai River Professional Guide Association                                                                                      
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
RICKIE DEES, Executive Director                                                                                                 
Kenai River Sport Fishing Association                                                                                         
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
STANLEY MALCOLM                                                                                                                 
Petersburg Charter Boat Association                                                                                             
POSITION STATEMENT:  Supported Mr. Johnstone's appointment  to the                                                            
Board of Fisheries.                                                                                                             
                                                                                                                                
MARK K. IDEN, Deputy Director                                                                                                   
Operations                                                                                                                      
Defense Energy Support Center (DESC)                                                                                            
Department of Defense                                                                                                           
POSITION   STATEMENT:   Presented  overview   of   Fischer-Tropsch                                                            
Synthetic fuels pilot program.                                                                                                  
                                                                                                                                
SENATOR MEYER                                                                                                                   
State Capital Bldg.                                                                                                             
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 177.                                                                                      
                                                                                                                                
JOE HARDENBROOK                                                                                                                 
Staff to Senator Thomas                                                                                                         
State Capital Bldg.                                                                                                             
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Available to answer  questions on SB  108 and                                                            
said   the   sponsor   opposed   the   administration's   proposed                                                              
amendment.                                                                                                                      
                                                                                                                                
MARY SIROKI, Special Assistant to the Commissioner                                                                              
Department of Transportation and Public Facilities (DOTPF)                                                                      
POSITION  STATEMENT:   Supported  SB  108   with  administration's                                                            
amendment.                                                                                                                      
                                                                                                                                
JEFF FARBER, Board Member                                                                                                       
Sitka, Alaska Long Line Fishing Association (ALFA)                                                                              
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
provision (e) on page 2, line 7.                                                                                                
                                                                                                                                
JENNIFER GIBBONS, Executive Director                                                                                            
Prince William Soundkeeper                                                                                                      
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
CAROLYN ROSEBURY, representing herself                                                                                          
Cordova, AK                                                                                                                     
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
ERIC LEON, representing himself                                                                                                 
Member, Cordova District Fishermen United                                                                                       
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
STEVE SMITH                                                                                                                     
Cordova District Fishermen United                                                                                               
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
JOHN FALKNER                                                                                                                    
POSITION  STATEMENT:  Supported  CSHB 134(RES)  without  a  sunset                                                            
date for (e).                                                                                                                   
                                                                                                                                
DON HERNANDEZ, representing himself                                                                                             
Petersburg, AK                                                                                                                  
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
PAULA TERREL                                                                                                                    
Alaska Trollers Association                                                                                                     
Juneau, AK                                                                                                                      
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
KARLA HART, representing herself                                                                                                
Juneau, AK                                                                                                                      
POSITION  STATEMENT: Supported  CSHB  134(RES)  with a  seven-year                                                            
sunset for (e) from the time of the vote.                                                                                       
                                                                                                                                
JOHN BINKLEY, President                                                                                                         
Alaska Cruise Association                                                                                                       
POSITION STATEMENT:  Supported CSHB 134(RES) without  a sunset for                                                            
provision (e).                                                                                                                  
                                                                                                                                
GERSHON COHEN                                                                                                                   
Campaign to Safeguard America's Waters (CSAW)                                                                                   
Haines, AK                                                                                                                      
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
ROD PFLEIGER, Manager                                                                                                           
Membership and Community Relations                                                                                              
Alaska Cruise Association                                                                                                       
POSITION  STATEMENT: Supported  CSHB 134(RES)  without the  sunset                                                            
for (e).                                                                                                                        
                                                                                                                                
TAMMY GRIFFIN                                                                                                                   
Alaska Hotel Lodging Association                                                                                                
POSITION  STATEMENT: Supported  CSHB 134(RES)  without the  sunset                                                            
for (e).                                                                                                                        
                                                                                                                                
TIM JUNE, representing himself                                                                                                  
Haines, AK                                                                                                                      
POSITION  STATEMENT: Supported  CSHB  134(RES) with  a sunset  for                                                            
(e) on page 2, line 7.                                                                                                          
                                                                                                                                
ALPHEUS BULLARD, Legislative Counsel                                                                                            
Legislative Affairs Agency                                                                                                      
Alaska State Legislature                                                                                                        
POSITION  STATEMENT: Explained  how the  sunset amendment  changes                                                            
the intent language of HB 134.                                                                                                  
                                                                                                                                
TELITHA and HANNA WILSON                                                                                                        
Alaska Youth for Environmental Action                                                                                           
POSITION STATEMENT:  Presented statement in support  of investment                                                            
in renewable energy technologies in Alaska.                                                                                     
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:36:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LESIL  MCGUIRE  called  the  Senate  Resources  Standing                                                            
Committee meeting  to order  at 3:36 p.m.  Present at the  call to                                                              
order  were  Senators  Wagoner,   French,  Stevens,  Wielechowski,                                                              
Huggins and McGuire.                                                                                                            
                                                                                                                                
^Confirmation Hearing - Judge Karl Johnstone, Board of Fisheries                                                                
Confirmation Hearing - Judge Karl Johnstone, Board of Fisheries                                                             
                                                                                                                              
3:37:08 PM                                                                                                                    
CO-CHAIR  MCGUIRE announced  the  confirmation  hearing for  Judge                                                              
Karl Johnstone,  nominee  for the  Board of Fisheries,  to  be the                                                              
first order of business.                                                                                                        
                                                                                                                                
3:37:45 PM                                                                                                                    
KARL  JOHNSTONE said  he has  been in  Alaska since  1967 and  has                                                              
been a  user of the  resource. He is  intensely interested  in the                                                              
Alaska's fisheries,  and finds it to be challenging.  He thinks he                                                              
could do  a good  job, and it  gives him  an opportunity  to "give                                                              
back" to the state that has been very good to him.                                                                              
                                                                                                                                
3:39:40 PM                                                                                                                    
SENATOR WAGONER  asked what his  position is on the  Board meeting                                                              
throughout  the  state of  Alaska  on  issues pertaining  to  each                                                              
particular region.  Currently, the Board doesn't seem  to have the                                                              
wherewithal to do that.                                                                                                         
                                                                                                                                
MR. JOHNSTONE  answered that there  are many factors  to consider.                                                              
The   area   has  to   have   adequate   infrastructure,   hotels,                                                              
restaurants, Internet  and cell phone service,  emergency services                                                              
and  airline services.  After  that  the number  of  stakeholders,                                                              
cultural impacts,  and economic impacts on the  relevant community                                                              
should be  considered. It's  not cut and  dried he said,  and he's                                                              
all for  having hearings  in the  area that  the proposals  affect                                                              
once the basics are met.                                                                                                        
                                                                                                                                
SENATOR WAGONER asked if he lives in Arizona right now.                                                                         
                                                                                                                                
MR. JOHNSTONE  answered yes; he  lives in Prescott, but  he spends                                                              
more time in  Alaska; it's close  to 50/50. He would expect  to be                                                              
spending even more time in Alaska because of the Board meetings.                                                                
                                                                                                                                
3:45:32 PM                                                                                                                    
SENATOR  HUGGINS said  a commercial  fishing group  in Cook  Inlet                                                              
filed a suit that  might impact Alaskan dip netters  and he wanted                                                              
his view on that issue.                                                                                                         
                                                                                                                                
MR. JOHNSTONE  replied that he would  hate to see any  impact that                                                              
would  take  allocations  away  from  the  personal  use  dip  net                                                              
fishery,  particularly in  the Kenai  River, where  a lot  of fish                                                              
are  harvested for  personal use.  Upper  Cook Inlet  has a  fully                                                              
allocated fishery,  but he  would hate to  see it go  away. People                                                              
use them for personal consumption throughout the year.                                                                          
                                                                                                                                
SENATOR HUGGINS  asked if he had  any thoughts on the  priority of                                                              
protecting  fish  versus allocation  of  them  in the  Cook  Inlet                                                              
area.                                                                                                                           
                                                                                                                                
MR.  JOHNSTONE replied  that  the  Board's rules  and  regulations                                                              
require  it to  address the  stocks  when they  become "stocks  of                                                              
concern."  He wants  to make  sure  none of  those stocks  becomes                                                              
totally depleted in  the first place - using  science. The Chinook                                                              
salmon fishery in  upper Cook Inlet is of concern  and people have                                                              
to  share  equally  in  the  cutbacks  in  order  to  sustain  the                                                              
resource.                                                                                                                       
                                                                                                                                
3:50:15 PM                                                                                                                    
SENATOR  HUGGINS said  he had  a number  of complimentary  e-mails                                                              
about Judge Johnstone.  On the other hand, he  specifically wanted                                                              
to know  this year about  the Deshka River  where it  appears that                                                              
up until  mid-June  people will  not be  able to  keep a fish  for                                                              
four  days out of  the week.  What sort  of thoughts  come to  his                                                              
mind in terms as  fish management when a fish can't  be kept for a                                                              
majority of the week?                                                                                                           
                                                                                                                                
MR.  JOHNSTONE  replied that  is  going  to  be necessary  on  the                                                              
Deshka River,  as well as at  Alexander Creek. That  fishery looks                                                              
like it is  slowly going away, and  if it does, none  of them will                                                              
have fulfilled  their constitutional  mandate. Everybody  is going                                                              
to have to share in getting it back on its feet.                                                                                
                                                                                                                                
3:52:41 PM                                                                                                                    
SENATOR  STEVENS asked  what he  has done to  prepare himself  for                                                              
serving on the Board.                                                                                                           
                                                                                                                                
MR.   JOHNSTONE  replied   other   than  having   an   inquisitive                                                              
background  and using his  background as  a judge in  interpreting                                                              
information, he has  put in a lot of hours in  learning the ropes,                                                              
regulations and statutes that pertain to the Board.                                                                             
                                                                                                                                
3:54:06 PM                                                                                                                    
SENATOR  WAGONER suggested  that he  look at  the Kenai system  in                                                              
the 60s when it  was totally shut down for a number  of years, and                                                              
that helped it recover pretty well.                                                                                             
                                                                                                                                
MR. JOHNSTONE  said he wouldn't  hesitate to  do that again  if it                                                              
becomes necessary and the science backs up that decision.                                                                       
                                                                                                                                
3:55:01 PM                                                                                                                    
SENATOR WAGONER  asked if he cared  to discuss the  appointment of                                                              
Richard McVey as the Coroner.                                                                                                   
                                                                                                                                
MR. JOHNSTONE  said  as the presiding  judge,  he was required  to                                                              
hire a lot  of people and one  of them was the coroner.  He wasn't                                                              
very  happy  with any  of  the applicants.  Chief  Justice  Daniel                                                              
Moray told him about  Richard Mr. McVey's interest  in the job. He                                                              
is a former  U.S. attorney, a  former legislator for the  State of                                                              
Alaska,  former city  attorney  and a  well-known  lawyer that  he                                                              
respected; so  he offered him the  job. He didn't want  to take up                                                              
any  more time  on  the issue.  This  was a  mistake,  but he  was                                                              
reprimanded  by the  Supreme Court  for giving  the appearance  of                                                              
impropriety, but Mr. McVey is still a great choice.                                                                             
                                                                                                                                
3:56:57 PM                                                                                                                    
MEL MORRIS,  member, Board of Fisheries,  said he lives  in Kodiak                                                              
and  supported Judge  Johnstone's  appointment.  He  comes to  the                                                              
meetings  prepared and  he is  impressed with  his performance  on                                                              
the Board so far.                                                                                                               
                                                                                                                                
3:58:22 PM                                                                                                                    
JOHN JENSON, Chair,  Board of Fisheries, said he is  a resident of                                                              
Petersburg  and  is  a  commercial  fisherman.  He  supported  Mr.                                                              
Johnstone's  appointment for  the  reasons stated  by Mr.  Morris.                                                              
He's great to work with and comes to meetings prepared.                                                                         
                                                                                                                                
THERESA   WISER,   President,   Sitka   Charter   Boat   Operators                                                              
Association,   Sitka  lodge  owner,   supported  Mr.   Johnstone's                                                              
appointment  to  the  Board  of  Fisheries  for  all  the  reasons                                                              
already  stated.  He  is  very  articulate  and  cares  about  the                                                              
resource.                                                                                                                       
                                                                                                                                
3:59:50 PM                                                                                                                    
MONTE   ROBERTS,  President,   Kenai   River  Professional   Guide                                                              
Association, supported  Mr. Johnstone's  appointment to  the Board                                                              
of Fisheries. He's a great choice.                                                                                              
                                                                                                                                
RICKIE  DEES,  Executive  Director,   Kenai  River  Sport  Fishing                                                              
Association, fully  supported Mr.  Johnstone's appointment  to the                                                              
Board of  Fisheries. He  takes a comprehensive  view and  is well-                                                              
informed and balanced. He puts the resource first.                                                                              
                                                                                                                                
4:00:58 PM                                                                                                                    
STANLEY MALCOLM,  Petersburg Charter  Boat Association,  supported                                                              
Mr.  Johnstone's appointment  to the  Board of  Fisheries. He  had                                                              
good information  and was  interested in  listening to  the people                                                              
in  front of  him.  He  didn't show  preference  to  any one  user                                                              
group.                                                                                                                          
                                                                                                                                
SENATOR STEVENS said  in accordance with AS 39.05.080,  the Senate                                                              
Resources  Committee had  reviewed the  Governor's appointment  of                                                              
Karl  Johnstone to  the Board  of Fisheries  and recommended  that                                                              
his  name be  forwarded  to  a joint  session  for  consideration.                                                              
There were no objections and it was so ordered.                                                                                 
#                                                                                                                             
                                                                                                                              
^Overview: Fischer-Tropsch Synthetic Fuels Pilot Program                                                                        
    Overview: Fischer-Tropsch Synthetic Fuels Pilot Program                                                                 
                                                                                                                              
4:02:40 PM                                                                                                                    
CO-CHAIR   MCGUIRE   announced    the   Fischer-Tropsch   overview                                                              
presented  by Mark  Iden.  She reminded  members  that Alaska  had                                                              
been included  in a pilot  project for synthetic  fuels production                                                              
by the  Department of Defense  with a deadline  of 2014  for 50/50                                                              
synfuels.                                                                                                                       
                                                                                                                                
MARK  K.  IDEN,   Deputy  Director,  Operations,   Defense  Energy                                                              
Support   Center   (DESC),  Defense   Agency   Logistics   Agency,                                                              
Department  of Defense  (DOD), introduced  Major  John Martin  who                                                              
takes care of the day to day energy business in Alaska for DESC.                                                                
                                                                                                                                
4:03:23 PM                                                                                                                    
MR.  IDEN  said DESC  is  part  of the  Defense  Agency  Logistics                                                              
Agency  within  the Department  of  Defense.  DESC is  called  the                                                              
"petroleum purchasing  arm" for the Pentagon. Their  mission is to                                                              
buy fuel for the  DOD customers - Army, Navy, Air  Force, Marines.                                                              
DESC is more  than just fuels;  it is an energy  support customer.                                                              
They  are involved  in  installing  energy  - natural  gas,  coal,                                                              
electricity and a  whole series of services. As a  matter of fact,                                                              
they privatized  12  utility systems  here last  year at the  Army                                                              
locations  (Fort Wainwright,  Fort  Greely,  and Fort  Richardson)                                                              
for $1-plus  billion,  and now they  are buying  back energy  from                                                              
Doyon, the  new provider. The bottom  line is that they  perform a                                                              
very broad range of missions for their customers.                                                                               
                                                                                                                                
DESC  sells  about  130 million/barrels   of fuel  a  year,  which                                                              
equates to  about 4.5-5  billion gallons  of fuel;  this is  a big                                                              
part of  their business. They  are engaging  more and more  on the                                                              
installation  energy side  to the  tune of  $1 billion/year.  They                                                              
are  a small  organization  by  Washington, D.C.  standards,  with                                                              
about  1,000  people world-wide  doing  $15-17.5  billion/year  of                                                              
business.  They  support  war  fighters   and  a  lot  of  federal                                                              
civilian agencies throughout the United States.                                                                                 
                                                                                                                                
4:05:37 PM                                                                                                                    
(Slide  5) MR.  IDEN said  he would  now talk  about the  Fischer-                                                              
Tropsch Synthetic  Fuels Pilot program, an Alaskan  pilot program.                                                              
DESC had  an industry  summit in  Anchorage on  March 11-12  where                                                              
they introduced this  program to the state and to  the industry in                                                              
particular. They  had been working  on the background of  this for                                                              
a couple of  years and elected to  pick the State of  Alaska to go                                                              
forward  with this  particular  initiative  for reasons  he  would                                                              
talk about  later. A series of  experts from DESC were  present to                                                              
talk about how  the contract would be worked,  how proposals would                                                              
be structured,  how they  would be evaluated,  and all  the issues                                                              
associated  with this initiative.  It is  very complex  in nature.                                                              
There  are a lot  of pricing  and financial  matters, and  quality                                                              
and environmental  considerations that need to be  addressed. They                                                              
were  very  pleased  with  the  conference;  the  second  day  saw                                                              
individual breakout sessions with a number of firms present.                                                                    
                                                                                                                                
(Slide 6) DESC picked  the state of Alaska for  this pilot because                                                              
natural gas and  coal are two of the primary feed  stocks that can                                                              
be used  in the Fischer-Tropsch  process and Alaska has  plenty of                                                              
both. The other  aspect of their decision is that  they needed all                                                              
of their customers  to agree to go to this different  fuel instead                                                              
of the typical JP8  fuel that is currently used,  and this area is                                                              
somewhat self-contained.                                                                                                        
                                                                                                                                
SENATOR  STEVENS  asked  for  a   little  bit  of  history  behind                                                              
Fischer-Tropsch fuel.                                                                                                           
                                                                                                                                
MR.  IDEN answered  that  Fischer-Tropsch  is a  chemical  process                                                              
where  different feedstocks  - coal,  natural gas  and bio-mass  -                                                              
are converted  to a  liquid-based fuel.  Fischer-Tropsch  is named                                                              
after  the two Germans  who developed  this process.  It was  used                                                              
significantly by Germany  at the end of WWII when  they lost their                                                              
oil reserves  out of Romania  and had to  use coal,  basically, to                                                              
create liquid  fuels. South Africa,  all through  apartheid, could                                                              
not get crude oil  supplies and they used their  coal resources to                                                              
create  liquid  fuels also.  So,  it's  a proven  technology  that                                                              
hasn't been applied before because crude oil is so plentiful.                                                                   
                                                                                                                                
Anything that is  a diesel burner can use JP8 fuel  in the eyes of                                                              
the  military,  and  that  is  the   predominant  fuel  DESC  buys                                                              
worldwide. It  is equivalent  to commercial jet  A1 fuel.  The one                                                              
difference  is   that  special  additives  are  used   because  of                                                              
military applications.                                                                                                          
                                                                                                                                
4:09:45 PM                                                                                                                    
SENATOR WAGONER  asked the  difference between  this fuel  and the                                                              
diesel that is currently produced that is low sulfur.                                                                           
                                                                                                                                
MR. IDEN  said that  is an  interesting question.  It's gotten  to                                                              
the point  now where  aviation fuel  is no  longer considered  the                                                              
clean pristine  fuel, and the  ultra-low sulfur diesel  fuels have                                                              
been found to be  cleaner burning. JP8 is their  current fuel; the                                                              
synfuel blend  that they  are looking  to buy  in the future  will                                                              
actually help  them become  a cleaner grade  fuel. It is  so clean                                                              
that  it   lowers  the   emissions  criteria.  Stricter   emission                                                              
standards  are coming  down the  federal pike  soon and this  fuel                                                              
will help the state meet those requirements.                                                                                    
                                                                                                                                
SENATOR  WAGONER said  he understands  that, but  everyone in  the                                                              
state is  required, whether  it's a  fishing boat  or a  truck, to                                                              
use the low sulfur  diesel. He thought Mr. Iden said  they use the                                                              
JP8 as a base  fuel for ground operations. "So what's  good for us                                                              
is not necessarily good for the federal government?"                                                                            
                                                                                                                                
MR.  IDEN said  he  was  correct. They  use  JP8 for  ground  fuel                                                              
applications. "It is what it is."                                                                                               
                                                                                                                                
4:11:42 PM                                                                                                                    
CO-CHAIR MCGUIRE asked what the additives are in Jet A1 fuel.                                                                   
                                                                                                                                
MR. IDEN  replied that  JP8 is very  similar to the  international                                                              
commercial jet fuel  (Jet A1). There is a Jet A  fuel in the Lower                                                              
48  that is  slightly  different;  it has  a  lesser freeze  point                                                              
restriction than Jet  A1 does. JP8 has an identical  freeze point;                                                              
the  additives  are  things  like  fuel  system  icing  inhibitor,                                                              
corrosion inhibitor,  and lubricity improver. These  additives are                                                              
unique  to military  systems and  the performance  characteristics                                                              
of their weapons systems.                                                                                                       
                                                                                                                                
MR.  IDEN  said they  do  not  have synthetic  fuel  plants  built                                                              
throughout  the  United  States,  because  it is  a  large  dollar                                                              
investment. Right  now they do their  business round the  world on                                                              
annual  contracts.  They have  the  ability  to  go up  to  5-year                                                              
contracts with five  1-year options on top of that  for a total of                                                              
10 years, but industry has asked for up to 20-year contracts.                                                                   
                                                                                                                                
The  Fischer-Tropsch process  is  easily adaptable  for them.  The                                                              
key point  is that  they are  looking to  go "feedstock  neutral,"                                                              
which means  they won't be  telling anyone  what to use  - leaving                                                              
it to industry  to figure out what  makes the most sense  to them.                                                              
But  they  do require  a  50/50  blend  of  synthetic/conventional                                                              
fuel,  because that  is what all  the weapons  systems are  using.                                                              
DESC's distribution  system  cannot blend,  so the suppliers  will                                                              
have to provide that function.                                                                                                  
                                                                                                                                
4:14:04 PM                                                                                                                    
JP8 pricing  needs to  be competitive, he  said, but  industry has                                                              
said it could do this even when oil was at $140/barrel.                                                                         
                                                                                                                                
SENATOR  HUGGINS asked  what  other locations  are  going to  have                                                              
demonstration projects.                                                                                                         
                                                                                                                                
MR. IDEN replied  they are using Alaska as the  pilot project, and                                                              
they will  eventually apply the  success from this,  hopefully, to                                                              
the Lower  48. The Air Force  requires 50 percent of  its domestic                                                              
fuel  to  be blended  50/50  by  2016.  In  the Lower  48  he  has                                                              
hundreds of customers  and they are not all on board  yet, and the                                                              
detail  of  having  a  location  where  he  can  get  all  of  his                                                              
customers on board is critical; so the focus is on Alaska.                                                                      
                                                                                                                                
4:15:59 PM                                                                                                                    
CO-CHAIR  MCGUIRE said  what makes  this pilot  project unique  is                                                              
that Alaska has  all the five military bases together  in one spot                                                              
and they are all  in agreement. She wanted to know  how this could                                                              
encourage  economic   development  in  Alaska  and   get  fuel  to                                                              
Alaskans in a more affordable fashion.                                                                                          
                                                                                                                                
SENATOR  WAGONER  asked  if  this   is  the  only  process  he  is                                                              
accepting proposals on at this time.                                                                                            
                                                                                                                                
MR.  IDEN  replied  they  are  focusing   on  the  Fischer-Tropsch                                                              
process  because that  is what is  happening  right now. They  are                                                              
looking  at other  initiatives,  but  those are  high  in the  R&D                                                              
side. They  have a 2016 deadline,  so they need a  technology that                                                              
is already up and running.                                                                                                      
                                                                                                                                
4:18:22 PM                                                                                                                    
He said  Section 526 of the  Energy Independence and  Security Act                                                              
of 2007  talks about life-cycle  green house gas  requirements and                                                              
it  says when  they  buy  this fuel  for  other than  testing  and                                                              
certification  procedures,  they need  to  insure  that the  life-                                                              
cycle green  house gas requirements  of the blended fuel  are less                                                              
than or  equal to a conventional  petroleum product. So  when they                                                              
start  talking about  feedstocks  of coal  and  natural gas,  they                                                              
need to look at, basically,  the CO footprint  and make sure it is                                                              
                                   2                                                                                            
no higher  than the  existing process  for conventional  petroleum                                                              
products.  Natural gas  comes in  with a very  good footprint.  It                                                              
basically starts  out in a  positive arena;  coal has a  very high                                                              
carbon  footprint,  which  becomes a  potential  problem.  Blended                                                              
fuels are basically cleaner than conventional fuel.                                                                             
                                                                                                                                
4:20:03 PM                                                                                                                    
CO-CHAIR  MCGUIRE  asked  if  part  of  the  pilot  project  is  a                                                              
recognition  that at  some point  there will  be a  cap and  trade                                                              
association with carbon.                                                                                                        
                                                                                                                                
MR. IDEN  answered  they aren't  actively engaged  in the  cap and                                                              
trade  aspect. They  want to  identify  the model  and tell  folks                                                              
what the standard is.                                                                                                           
                                                                                                                                
4:20:59 PM                                                                                                                    
(Slide  7) For a  little more  background on  this initiative,  he                                                              
said it's  a DOD-level  program with  the Air  Force as  the lead.                                                              
The Air Force is  the biggest customer of DESC  products, and they                                                              
have indicated  they  want to certify  all of  their platforms  by                                                              
2011  on this  50/50 blend  product. They  have already  certified                                                              
and tested  the B52, the  B1 Bomber, the  C17 Cargo  Aircraft, and                                                              
they are  in the  process of getting  ready to  test all  of their                                                              
fighter aircraft,  also. The Army is currently  testing its ground                                                              
fuel and aviation  equipment, helicopters in  particular. Everyone                                                              
is wanting to  get their equipment tested and  certified and ready                                                              
to go within a short period of time.                                                                                            
                                                                                                                                
4:21:42 PM                                                                                                                    
MR. IDEN said this  process was started 2.5-3 years  ago when they                                                              
went to industry  with two requests for information  (RFI); and in                                                              
2006 they  received 28  responses moving  forward in this  general                                                              
area. Twenty-seven  came back saying  that Fischer-Tropsch  is the                                                              
way  to  go.  They  also  talked  about  the  price  concerns  and                                                              
financial issues.  In 2007 DESC  did another more detailed  RFI to                                                              
industry:   could they blend fuel  for them and put  additives in,                                                              
and were there concerns about the contract duration.                                                                            
                                                                                                                                
4:22:29 PM                                                                                                                    
(Slide 8)   They decided back  then that they could  approach this                                                              
from two  ways. The short  term acquisition was  for certification                                                              
and testing; they  awarded two series of contracts.  The first one                                                              
was over  300,000 gallons  of GTL product  to Shell  Malaysia that                                                              
has all been used.                                                                                                              
                                                                                                                                
Because DESC  used gas for the  first go-round, in June  2006 they                                                              
had  a 60,000  gallon  requirement  specifically  for testing  the                                                              
other  fuel, coal.  That was awarded  to the  South African  State                                                              
Oil  Company  (SASOL).  DESC  awarded  a  follow-on  contract  for                                                              
another 300,000-plus  gallons  - not because  they mandated  coal,                                                              
but because  it was just the  cheapest feedstock available  at the                                                              
time.  That fuel  is in  their distribution  process  right now  -                                                              
again  for testing  and  certification  programs.  That gets  them                                                              
over the "initial hump." Now they need "to go operational."                                                                     
                                                                                                                                
4:24:01 PM                                                                                                                    
MR. IDEN  said about  70 percent of  the oil in  the U.S.  is from                                                              
foreign  locations, and  their goal  was  to get  away from  using                                                              
foreign  oil and  on  to using  domestic  production. Building  in                                                              
Alaska will  be different than  in the  Gulf Coast area,  but once                                                              
the  plant  is  up  and  operational,   the  requirement  will  be                                                              
sustainable.                                                                                                                    
                                                                                                                                
4:25:03 PM                                                                                                                    
(Slide  9)  Why do  this?  It's  energy security.  The  department                                                              
looked at  this in  the late  70s/early 80s  during some  Arab oil                                                              
embargos, but it  was really a price-related issue  then. Now it's                                                              
energy   security.   It   wants   domestic   resources   and   has                                                              
environmental considerations,  and this will help  them get headed                                                              
in  that  direction.  These  plants  take  upwards  of  3-5  years                                                              
depending  on the  size,  scope  and location  to  build; so  they                                                              
literally need to start now.                                                                                                    
                                                                                                                                
Current  petroleum  providers like  BP's  Nikiski  plant could  do                                                              
this,  but they  are  really looking  at  the  new synthetic  fuel                                                              
suppliers -  like the ones  that attended their  Anchorage summit.                                                              
But participation by both is needed.                                                                                            
                                                                                                                                
4:25:56 PM                                                                                                                    
CO-CHAIR  MCGUIRE  asked if  he  was  going  to address  what  the                                                              
criteria will  be for  processing the bids,  and whether  he would                                                              
weigh domestic companies more heavily.                                                                                          
                                                                                                                                
MR. IDEN  said that  subject is  a few charts  ahead. Chart  10 is                                                              
the map  and bulk fuel business  locations in Alaska.  Their major                                                              
customers  are  Elmendorf  and  Eielson  where JP8  fuel  will  be                                                              
replaced. He explained  that JP4 is an older version  of fuel that                                                              
was used  during the Viet  Nam war, and  now only a  few locations                                                              
use it because of associated cold property issues.                                                                              
                                                                                                                                
Eielson JP8 is  a little bit unique because some  separate federal                                                              
earmark money  might be building  a CTL  plant there. But  if that                                                              
plant  is built, it  will be  done separately  and Eielson's  fuel                                                              
requirements  will  probably be  met  by the  DESC  contract.   He                                                              
further  explained   that  this  CTL  program,  which   is  called                                                              
enhanced  use lease  (EUL), was  looked  at in  the Malmstrom  Air                                                              
Force  Base  in Montana  where  essentially  the base  would  just                                                              
provide the  property for  a plant  to be sighted  on. So  if that                                                              
initiative  goes forward, there  is the  potential for  sighting a                                                              
CTL  plant on  Eielson Air  Force  Base. However,  the ability  to                                                              
sell  the   fuel  from   that  facility  is   not  part   of  that                                                              
arrangement. Some  other vehicle would  have to actually  sell the                                                              
fuel  to the  government  or  other  people, and  DESC's  contract                                                              
would be that vehicle.                                                                                                          
                                                                                                                                
4:28:28 PM                                                                                                                    
CO-CHAIR MCGUIRE  asked if the supply  will be born out  of an RFP                                                              
process that  will be  open and  competitive not  only to  the CTL                                                              
Eielson project,  but to  anyone who  might be  looking at  GTL or                                                              
biomass to liquids.                                                                                                             
                                                                                                                                
MR. IDEN  responded that was  absolutely correct. They  have other                                                              
programs  that  buy smaller  volumes  of  fuel  in the  state,  an                                                              
annual  requirement of  about 70-80  million gallons  of fuel  has                                                              
been identified  so far. This  sounds impressive, but  compared to                                                              
Anchorage  International  Airport  that  uses  more  than  800-900                                                              
million  gallons/year, their  requirements  are relatively  small.                                                              
Fairbanks   uses  about  100-200   million  gallons/year.   DESC's                                                              
requirements  within DOD are  not enough  to build a  proper-sized                                                              
plant,  so it  is  critical  from his  point  of view  that  other                                                              
commercial  requirements  are  looked  at  to  make  this  project                                                              
feasible  -  like  Anchorage,  Fairbanks,   and  the  state  ferry                                                              
system.                                                                                                                         
                                                                                                                                
SENATOR  WAGONER asked  what overall  negative  affect this  would                                                              
have  on the  North  Pole Tesoro  Refineries.  It  sounds like  he                                                              
would be going directly into competition with them eventually.                                                                  
                                                                                                                                
MR.  IDEN  replied  that  is a  great  question.  The  50  percent                                                              
synfuel is displacing  some of the existing  petroleum refineries'                                                              
capabilities.  They  were invited  to  their  summit,  but he  has                                                              
adopted a wait-and-see  approach. He hasn't received  any negative                                                              
input  from them. This  might be  a positive  for some  refineries                                                              
because they might  have to expand or do additional  work. Another                                                              
thing  is the emission  standards  are going  up, and the  current                                                              
jet fuels are going to have a problem meeting those criteria.                                                                   
                                                                                                                                
4:32:37 PM                                                                                                                    
SENATOR  HUGGINS asked  if the  producers  would start  certifying                                                              
the engines at some point.                                                                                                      
                                                                                                                                
MR. IDEN answered  that work is going  on right now. A  lot of the                                                              
engines the  military uses,  the bombers  and the cargo  aircraft,                                                              
are  very similar  to  what the  commercial  aircraft  use. He  is                                                              
working hand  in hand  with Commercial  Aviation Alternative  Fuel                                                              
Initiative  (CAFFI) on  this process.  "This is  not a DOD  go-it-                                                              
alone effort."                                                                                                                  
                                                                                                                                
4:34:04 PM                                                                                                                    
A question  was raised  earlier  today about  the diesel engine  -                                                              
Cummins  and Detroit  Diesel  - and  he knows  the  Army is  doing                                                              
similar  testing and  certification  on their  diesel engines.  He                                                              
assumed a  bridge would be built  between the commercial  side and                                                              
DOD, "because  a lot of  similar motors  are used out  there." But                                                              
he has been more focused on the aviation side so far.                                                                           
                                                                                                                                
(Slide 11)  They had their summit  in March and their  goal was to                                                              
explain their  concept and  approach, solicit  input and  feedback                                                              
from industry, which  they got a lot of. They are  going to refine                                                              
their acquisition  strategy,  issue an RFP,  get offers,  evaluate                                                              
the offers  and eventually award  a contract. They expect  it will                                                              
take 4-5  years to actually build  a plant, depending on  where it                                                              
is  located. From  an operational  point of  view, their  contract                                                              
will start  once fuel is  delivered; so  they won't "eat  into our                                                              
contract duration" during the construction time.                                                                                
                                                                                                                                
4:34:55 PM                                                                                                                    
(Slide 12)  The "Notional Timeline"  is how they  traditionally do                                                              
business  in  their bulk  fuels  business.  The  idea was  to  put                                                              
something  on the wall  so people  could "pick  at it."  The issue                                                              
solicitation  of June  1, 2009 and  first delivery  of product  in                                                              
2014  were  okay,  but  in  between there  was  a  lot  of  input.                                                              
Industry  said it needed  18 months  to put  a proposal  together.                                                              
DESC knew  a 60-day solicitation  wasn't right, but  it stimulated                                                              
discussion. They  may go through  a "pre-feasibility" or  a "down-                                                              
select  process" to  let people  know how they  are going  forward                                                              
and how  they can  discuss their  projects with  them. They  would                                                              
down-select two  or three viable  alternatives and then  issue the                                                              
formal  solicitation   that  says,   "Now  I  need   your  pricing                                                              
proposal, now I need your real specifics."                                                                                      
                                                                                                                                
CO-CHAIR MCGUIRE  asked him  to let the  committee know  what date                                                              
they come up with.                                                                                                              
                                                                                                                                
4:36:43 PM                                                                                                                    
(Slide  13) Industry  Summit Summation.  They  achieved what  they                                                              
wanted to  do in  Anchorage; they  got a  lot of people  together,                                                              
and  categorized  the  feedback  into three  broad  areas  and  10                                                              
specific items.  They are following  up with legislative  hearings                                                              
and continue  to work this issue  inside the Beltway with  the Air                                                              
Force, the  Pentagon and  other people  to refine their  strategy.                                                              
This is a  difficult complex initiative  and they are going  to do                                                              
it right.                                                                                                                       
                                                                                                                                
He said a  show stopper is  if they can't get  commercial industry                                                              
involved. The  synfuel could be  produced up here  and potentially                                                              
be  shipped to  the Pacific  Rim, but  those transportation  costs                                                              
will make it cost prohibitive. It must have in-state use.                                                                       
                                                                                                                                
(Slide 14) The three broad categories are:                                                                                      
   · defining the requirement quantity/location, commercial                                                                     
     sector  requirements,  feedstock  source/plant  restrictions,                                                              
     and Eielson AFB requirements.                                                                                              
   · structuring the RFP for success: They can't go forward                                                                     
     until  the 526  environmental criteria  are fully  specified;                                                              
     the  DESC, the EPA  and the  Air Force  are working  on them.                                                              
     That's  why they  may  do the  interim  process  of the  down                                                              
     select. He  said that Nikiski  produces a syncrude  that goes                                                              
     to  a traditional  petroleum  refinery  that  blends it  with                                                              
     traditional crude oil for a finished product.                                                                              
   · pricing structure: They thought they would price their                                                                     
     product just  like regular JP8  that they buy. When  they buy                                                              
     it  in  Alaska  they  use  existing  market  indexes.  Alaska                                                              
     doesn't  have a  big trading  environment; so  when they  buy                                                              
     for Alaska they  work their pricing structure  off an average                                                              
     of  a  San  Francisco/Los   Angeles/Seattle  set  of  pricing                                                              
     criteria  - like a  Platts Oilgram.  They thought  they would                                                              
     do  the  same  thing  for   this  because  it  is  a  drop-in                                                              
     replacement product.  The people who want to  produce using a                                                              
     coal stream  said they prefer  their coal-derived  product be                                                              
     priced  according to  the coal  market place;  the folks  who                                                              
     are  producing product  from a  gas point  of view prefer  to                                                              
     use  a syn-component  according to a  natural gas  structure.                                                              
     The  bottom  line is  that  everyone  needs to  be  evaluated                                                              
    fairly - a coal offer and a gas offer at the same time.                                                                     
   · proceed by establishing a timeline of acquisition and go                                                                   
     through  the   pre-feasibility/down  select  process   as  he                                                              
     described previously.                                                                                                      
                                                                                                                                
4:40:49 PM                                                                                                                    
(Slide 15) Areas for state assistance:                                                                                          
   · financial incentives to industry to participate through tax                                                                
     credits and loan guarantees.                                                                                               
   · encourage the commercial aviation industry with incentives                                                                 
     for participation  and price considerations. They  are the 90                                                              
     percent player in this game.                                                                                               
   · streamline regulatory requirements for permitting and                                                                      
     easements and environmental standards.                                                                                     
                                                                                                                                
4:42:21 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  asked if this project is  definitely moving                                                              
forward.                                                                                                                        
                                                                                                                                
MR.  IDEN  answered  that  it doesn't  have  the  final  stamp  of                                                              
approval,  but they  are moving  in  that direction.  It has  many                                                              
complex  levels, but  right now  everyone remains  onboard and  it                                                              
appears  to  be  a  feasible  approach.  They  have  to  know  the                                                              
environmental guidelines first.                                                                                                 
                                                                                                                                
CO-CHAIR  WIELECHOWSKI  remarked that  this  is a  great  project;                                                              
it's better  than shipping  our product  out of  state. Why  do we                                                              
need  to incentivize  this project,  because it  sounds like  it's                                                              
going  already? Is  30,000  gallons/day enough  for  one plant  to                                                              
produce?                                                                                                                        
                                                                                                                                
MR.  IDEN  answered  the DOD's  requirements  in-state  are  2,500                                                              
gallons/day  and   the  industry  has  identified   a  good  sized                                                              
economic  plant  would be  about  25,000  gallons/day.  DESC is  a                                                              
tenth  of the  overall  requirement; the  commercial  side of  the                                                              
house makes  up the difference.  The commercial aviation  industry                                                              
is saying  it's not  paying an extra  penny for  a gallon  of fuel                                                              
because their  costs are already  so high.  That is where  he sees                                                              
part of the incentives going.                                                                                                   
                                                                                                                                
There are a  lot of good reasons  to do this from the  state point                                                              
of  view, from  DOD's point  of view  and an  American's point  of                                                              
view.  Now they  need to put  it together  and figure  out how  to                                                              
best package  it. They  want to  go forward,  but he doesn't  have                                                              
enough horse-power  in terms  of requirements  to make  it happen.                                                              
Incentives the state  might provide potentially will  be reaped in                                                              
the  benefits  of  bringing  that industry  here  and  having  the                                                              
workforce to  build the plants.  West Virginia estimated  it would                                                              
take 2-3,000 people  over a 3-4 year period of  time. People would                                                              
have to  run this plant  on a  continual basis. More  construction                                                              
is associated with  delivering the feedstock. "If  it doesn't make                                                              
sense, industry will  be the first to tell us,  because they won't                                                              
bid on our efforts and they'll back out of it."                                                                                 
                                                                                                                                
4:46:38 PM                                                                                                                    
SENATOR WAGONER  said the figures on  slide 10 add up  to a little                                                              
less  than 5,000  barrels/day, but  that's  a blend.  So, only  50                                                              
percent of  that figure  would come  from the plant's  production.                                                              
Mr. Iden indicated that was correct. Then he asked where the CO                                                                 
                                                                 2                                                              
would be sequestered;  the state has very few areas  right now for                                                              
that.                                                                                                                           
                                                                                                                                
MR.  IDEN  said  he  isn't  involved  in  the  valuation  of  that                                                              
project, but  he could  offer some  generalizations. You  can pump                                                              
the CO  into wells  and help the flow.  A CTL plant would  have to                                                              
      2                                                                                                                         
meet that criterion.                                                                                                            
                                                                                                                                
4:48:07 PM                                                                                                                    
(Slide  19)  Environmental  Considerations:  He said  Section  526                                                              
language  applies  to  a  federal   agency  like  him.  So,  these                                                              
criteria  do not  apply to  whomever  buys the  fuel at  Anchorage                                                              
International Airport,  and the  state and local  entities haven't                                                              
defined  their criteria  yet. He  is a  little bit  like the  tail                                                              
wagging the dog.                                                                                                                
                                                                                                                                
The following  charts showed some  of the complexities  they would                                                              
meet in the Lower 48.                                                                                                           
                                                                                                                                
4:50:51 PM                                                                                                                    
CO-CHAIR  MCGUIRE thanked  him  and said  the  Senate sent  Eugene                                                              
Arnett to their  forum and he brought material back;  she met with                                                              
Representative  Neuman yesterday to  coordinate efforts.  They are                                                              
excited about the program.                                                                                                      
                                                                                                                                
         SB 177-NO REPEAL OF SPORT FISH GUIDE LICENSING                                                                     
                                                                                                                                
4:53:33 PM                                                                                                                    
CO-CHAIR MCGUIRE announced SB 177 to be up for consideration.                                                                   
                                                                                                                                
SENATOR  MEYER, sponsor  of SB  177, said  he thought  they had  a                                                              
pretty  good  discussion  of  this  bill on  Monday,  and  he  was                                                              
available  for  questions.  It continues  an  existing  successful                                                              
program.                                                                                                                        
                                                                                                                                
SENATOR   HUGGINS   said   that   some   people   have   mentioned                                                              
establishing a sunset  date of 2015, and asked if  he would object                                                              
to that.                                                                                                                        
                                                                                                                                
SENATOR HUGGINS  moved to adopt  conceptual Amendment 1  to extend                                                              
the sunset  to 2015. There  was no objection  and Amendment  1 was                                                              
adopted.                                                                                                                        
                                                                                                                                
CO-CHAIR  MCGUIRE announced  that  she had  already closed  public                                                              
testimony on this  bill and she apologized for that,  but if there                                                              
are  new aspects  of testimony  to offer,  she would  be happy  to                                                              
receive  them  at   465-2267.  There  was  no   further  committee                                                              
discussion.                                                                                                                     
                                                                                                                                
SENATOR HUGGINS moved  to report SB 177 as amended  from committee                                                              
with  individual  recommendations  and  attached  fiscal  note(s).                                                              
There being no objection, CSSB 177(RES) moved from committee.                                                                   
                                                                                                                                
             SB 108-STAMPEDE STATE RECREATION AREA                                                                          
                                                                                                                              
4:56:14 PM                                                                                                                    
CO-CHAIR MCGUIRE announced SB 108 to be up for consideration.                                                                   
                                                                                                                                
CO-CHAIR  WIELECHOWSKI moved  to  adopt the  committee  substitute                                                              
(CS) to  SB 108, labeled 26-LS0568\R.  There was no  objection and                                                              
version R was before the committee.                                                                                             
                                                                                                                                
JOE  HARDENBROOK, staff  to  Senator Thomas,  sponsor  of SB  108,                                                              
said  the  bill  had  already been  heard  once  before,  and  the                                                              
administration  wanted  to  make  a statement  on  their  proposed                                                              
amendment.                                                                                                                      
                                                                                                                                
CO-CHAIR MCGUIRE  said because  of the lateness  of the  hour, she                                                              
asked Ms. Siroki  to present the amendment in  the next committee,                                                              
which is Finance,  but she agreed that it is important  to get the                                                              
administration's  position on the  record on  what the  bill would                                                              
be without the amendment.                                                                                                       
                                                                                                                                
4:57:35 PM                                                                                                                  
MARY SIROKI, Special  Assistant, Department of  Transportation and                                                              
Public  Facilities  (DOTPF), said  they  worked  with  the DNR  to                                                              
assure they  were on the same  page and put together  an amendment                                                              
that  had  legislative  intent  as  well  as  specific  clarifying                                                              
language  that  identified transportation  and  utility  right-of-                                                              
ways.  The  intent  meets  the  needs  of  Department  of  Natural                                                              
Resources  (DNR) and  says  the DOTPF  will  issue to  the DNR  an                                                              
easement permit  for their  management of recreational  activities                                                              
and  the  construction  of  recreational   facilities  within  the                                                              
transportation  right-of-way.  The   second  part  of  the  intent                                                              
language  clearly says  that the  DOTPF will  move and/or  pay for                                                              
the relocation of  infrastructure should DNR have  constructed any                                                              
such infrastructure  in the  right-of-way. The  third part  of the                                                              
intent language  states that  the commissioners  of DNR  and DOTPF                                                              
may  relocate the  right-of-way within  the Stampede  Recreational                                                              
area.                                                                                                                           
                                                                                                                                
The  actual amendment  specifically  states that  the DOTPF  would                                                              
have a  utilities and transportation  right-of-way that  exists in                                                              
the space  of 500 ft. on either  side of the  RS2477 right-of-way;                                                              
it  would go  to the  park  boundary and  then  parallel the  park                                                              
boundary  and come  back in where  the RS2477  trail reenters  the                                                              
recreation  area.  It  also  states  that  upon  completion  of  a                                                              
transportation   or  utility  improvement   within  the   Stampede                                                              
Recreation Area the Department will only retain such right-of-                                                                  
way as necessary  for the operation of that route  and will vacate                                                              
the rest of it.                                                                                                                 
                                                                                                                                
5:00:23 PM                                                                                                                  
She said  it is the administration's  position that  the inclusion                                                              
of  a transportation  and  utility easement  right-of-way  through                                                              
this recreation area is necessary for its support of this bill.                                                                 
                                                                                                                                
SENATOR  FRENCH,  to understand  the  nature of  the  disagreement                                                              
they  have  before  them,  he asked  how  the  sponsor  views  the                                                              
administration's request for an amendment.                                                                                      
                                                                                                                                
MR. HARDENBROOK  replied that Senator Thomas introduced  this bill                                                              
to  reflect the  wishes  of the  Denali  Borough  and its  elected                                                              
Assembly and administration.  He has circulated to  the members of                                                              
the  committee  a  memo  from  the   Denali  Borough  Mayor,  Dave                                                              
Talerico,  stating opposition  to  the proposed  right-of-way.  So                                                              
most people  who will  be most impacted  by this amendment  oppose                                                              
it and so does Senator Thomas.                                                                                                  
                                                                                                                              
SENATOR  WAGONER said  this  could  be taken  care  of later,  but                                                              
asked if the Denali Borough is a second or first class borough.                                                                 
                                                                                                                                
MR.  HARDENBROOK replied  that  they are  a  second class  borough                                                              
without road powers.                                                                                                            
                                                                                                                                
SENATOR WAGONER  stated if they  don't have road powers,  the only                                                              
person who  is going to  be building a  road through there  is the                                                              
State  of  Alaska. He  understands  why  the  state needs  a  road                                                              
right-of-way, but  he didn't understand  why they needed it  to be                                                              
that big.                                                                                                                       
                                                                                                                                
MS.  SIROKI  replied that  the  DOTPF  believes that  a  1,000-ft.                                                              
right-of-way gives  them enough room to  be able to locate  a road                                                              
in the best  area possible - so  they could look at  substrate and                                                              
avoid wetlands and historic and archeological sites.                                                                            
                                                                                                                                
SENATOR WAGONER  suggested letting the next committee  of referral                                                              
look at it.                                                                                                                     
                                                                                                                                
At ease from 5:02 p.m. to 5:10 p.m.                                                                                             
                                                                                                                                
5:10:55 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  moved to report SB 108  from committee with                                                              
individual  recommendations  and  attached fiscal  note(s).  There                                                              
being no objection, CSSB 108(RES) moved from committee.                                                                         
                                                                                                                                
     CSHB 134(RES)-CRUISE SHIP WASTEWATER DISCHARGE PERMITS                                                                 
                                                                                                                                
5:12:39 PM                                                                                                                    
CO-CHAIR   MCGUIRE  announced   CSHB   134(RES)  to   be  up   for                                                              
consideration.  She said  they already had  public testimony,  but                                                              
she  would open  it up  briefly  to see  if  people had  something                                                              
different to say than they said before.                                                                                         
                                                                                                                                
5:13:33 PM                                                                                                                    
JEFF FARBER, Alaska  Long Line Fishing Association  (ALFA), Sitka,                                                              
had a  letter that  she asked  him to  summarize. He supported  HB
134. He is  a 10-year resident  of Sitka and a  20-year commercial                                                              
fisherman.  He values  pristine  clear waters  that Alaska's  fish                                                              
are  harvested from.  They have  worked  really hard  to get  that                                                              
message  out to  the  public and  don't want  that  message to  be                                                              
degraded  or  compromised.  They   are  committed  to  being  good                                                              
stewards  of Alaska's resources  and expect  that same  commitment                                                              
from other  users. He supported a  sunset on the mixing  zones for                                                              
cruise ship discharges.                                                                                                         
                                                                                                                                
5:15:28 PM                                                                                                                    
JENNIFER  GIBBONS,   Executive  Director,  Prince   William  Sound                                                              
Keepers,  and  serves on  the  Board  of  the Cordova  Chamber  of                                                              
Commerce.  She   sees  this  issue  from  both   an  environmental                                                              
perspective  and   tourist  perspective.   They  have   made  good                                                              
progress in allowing  industry some flexibility with  the timeline                                                              
and  that  is both  realistic  and  fair.  But  that needs  to  be                                                              
balanced with protecting  our Alaskan waters by  insuring there is                                                              
a deadline  that will sunset the  waivers allowed in  Section (e).                                                              
They know  that both from  the technology conference  earlier this                                                              
year  and  from  DEC's  March 2  report  that  the  technology  is                                                              
advancing,  that  the  deadline  has been  the  driving  incentive                                                              
behind progress  and that it is  possible to meet the  goal within                                                              
the next several years.                                                                                                         
                                                                                                                                
5:17:06 PM                                                                                                                    
CAROLYN ROSEBURY,  representing  herself, Cordova, urged  amending                                                              
section (e) to sunset  in 3-5 years, because this  deadline is the                                                              
only incentive for compliance.                                                                                                  
                                                                                                                                
ERIC LEON,  representing himself, said  he is a member  of Cordova                                                              
District  Fishermen  United,  agreed  with  previous  comments  in                                                              
support of sunsetting section (e).                                                                                              
                                                                                                                                
STEVE  SMITH, Board  Member,  Cordova District  Fishermen  United,                                                              
supported  HB  134  and  sunsetting  section  (e)  in  3-5  years.                                                              
Everything depends  on fishing for him, so the  cleanliness of our                                                              
waters is paramount.                                                                                                            
                                                                                                                                
JOHN  FALKNER,  representing  himself,  Homer,  supported  passing                                                              
CSHB  134(RES) without  the sunset  amendment.  He operates  three                                                              
hotel properties  on the Kenai Peninsula,  and has worked  hard to                                                              
develop ground-based  motor coach tours with the  cruise companies                                                              
there.  They are  very price-sensitive  and are  the first  things                                                              
visitors cancel  when the price  of their trip increases.  In 2009                                                              
he   had  600   more  room   cancelations  than   in  2008.   More                                                              
importantly, he said  the entire Clean Water Initiative  should be                                                              
under review  by this committee,  because the process  was "flawed                                                              
to the core."                                                                                                                   
                                                                                                                                
5:20:47 PM                                                                                                                    
He is  totally ignorant  of chemicals  and mixing  zones,  and his                                                              
research shows  that those  who voted for  this initiative  had no                                                              
idea what  they were  voting on. Secondly,  how can  an initiative                                                              
be  considered   valid  if  what  the  initiative   implements  is                                                              
unachievable?                                                                                                                   
                                                                                                                                
5:21:36 PM                                                                                                                    
DON  HERNANDEZ,  representing  himself, Petersburg,  said  he  had                                                              
been a  commercial gillnet  fisherman in  Southeast Alaska  for 27                                                              
years and very  much opposed allowing mixing zones  in its waters.                                                              
He supported  the sunset section  (e) in 3-5 years  and monitoring                                                              
at the point of release.                                                                                                        
                                                                                                                                
He  has three  major concerns:  one is  that he  fishes in  waters                                                              
where cruise  ships are  transiting. So he  is concerned  with how                                                              
their  discharges  affect his  nets,  with  how they  pollute  our                                                              
waters and  they affect  public perception  in the marketplace  of                                                              
how pristine our waters are.                                                                                                    
                                                                                                                                
5:22:58 PM                                                                                                                    
PAULA  TERREL,  Alaska  Trollers  Association, said  she  and  her                                                              
husband had been  commercial fisherman in Southeast  Alaska for 30                                                              
years.  She complimented  everyone on  the compromise  in HB  134,                                                              
but, she  said, section  (e) on  the mixing  zone waivers  needs a                                                              
sunset. She said  if the industry for some reason  can't implement                                                              
the  technology,  the  sunset  provision   could  be  extended  or                                                              
removed  later, but  for now  there needs  to be  a level  playing                                                              
field.                                                                                                                          
                                                                                                                                
5:24:45 PM                                                                                                                    
KARLA  HART,  representing  herself,  Juneau, asked  to  give  the                                                              
industry  no  more than  seven  years  from  the date  the  Alaska                                                              
voters  passed the  cruise  ship  initiative for  compliance.  The                                                              
cruise  industry excels  at marketing  and  public relations,  and                                                              
the will  use the  economic crisis  and its  impact on  tourism to                                                              
give them  added leverage in asking  to roll back elements  of the                                                              
voter-approved initiative.                                                                                                      
                                                                                                                                
She has worked  around Alaska tourism since the  1960s; she served                                                              
on  the  Alaska  Tourism  Marketing   Council  in  the  1990s  and                                                              
regularly  follows the  cruise industry  and Alaska  tourism  as a                                                              
matter  of interest.  Although  there  appear to  be  quite a  few                                                              
cruise  industry players  in Alaska,  it boils  down to three;  of                                                              
those,  Carnival Corporation  has  about two-thirds  of the  ships                                                              
operating  under  the  Princess,   Holland  America  and  Carnival                                                              
brands. Carnival  is a  publicly traded company;  and this  is one                                                              
company that has the resources to actually get this technology.                                                                 
                                                                                                                                
Carnival's 2008  annual report indicated  that globally  they have                                                              
$33 billion in  assets, 88 ships, capacity of  170,000 passengers,                                                              
86,000 employees;  they transport  over 8 million  passengers with                                                              
revenues  of  $14.5  billion,  and  have  a  net  income  of  $2.3                                                              
billion. They  have over $9  billion of  vessels on order  as they                                                              
"continue to  grow their  global footprint" as  they say.   Alaska                                                              
voters  said they  don't want  that global  footprint rimmed  with                                                              
sewer sludge and  toxic waste. Cruise lines have  the resources to                                                              
address this but  they lack the will. Their 2008  report said they                                                              
are improving fuel  efficiencies, reducing their  carbon footprint                                                              
and helping their  bottom line. The problem is  that meeting clean                                                              
water standards does not improve the corporate bottom line.                                                                     
                                                                                                                                
She  stated   that  Mick  Aaronson,  Carnival's,   largest  single                                                              
shareholder,  recently announced  pulling  a ship  from Alaska  in                                                              
2010  due  to  the  $50/head  tax  also  included  in  this  voter                                                              
initiative.  She believes this  is part  of their announced  cost-                                                              
cutting   measures  that   include   leveraging   all  ships   for                                                              
purchasing  and negotiating contracts  in Alaska.  It's a  game of                                                              
strategy and  strategic investment.  If he took  all of  his ships                                                              
and went  home, Alaska  tourism  would survive.  There would  be a                                                              
crisis for  the businesses  that have  become dependent  on cruise                                                              
lines,  but there  would  also be  an opportunity  to  restructure                                                              
Alaska  tourism  from  current   monopolistic  foreign  controlled                                                              
tourism  to  a diverse  resilient  locally  owned  and  controlled                                                              
tourism economy.                                                                                                                
                                                                                                                                
5:28:02 PM                                                                                                                    
JOHN  BINKLEY,  President,  Alaska Cruise  Association,  said  the                                                              
volumes the cruise  ships discharge is relatively  low compared to                                                              
municipal systems.  The ships  are not in  a line and  discharging                                                              
in  spurts  one  after  the  other.   They  discharge  continually                                                              
whether at dock  or under way; as they produce the  clean water it                                                              
is discharged from  the ship. Because it is extremely  clean it is                                                              
allowed  to discharge  continuously  with  a few  exceptions,  one                                                              
being Glacier Bay.                                                                                                              
                                                                                                                                
An  EPA study  indicated  that an  average  ship discharges  about                                                              
143,000 gallons  per 24-hour period  -compare that  to communities                                                              
like Juneau  that discharges over  9 million gallons in  a 24-hour                                                              
period.  It  would  take  53  cruise  ships  parked  in  Gastineau                                                              
Channel to equal what Juneau puts into the channel in one day.                                                                  
                                                                                                                                
MR. BINKLEY  said copper  is another  item of  concern and  cruise                                                              
ships  under  the  existing  regulations  produce  far  less  than                                                              
communities  in Southeast  or Southcentral  Alaska. The amount  of                                                              
copper in  parts per  billion is  much lower  in any given  gallon                                                              
that goes out and the gallons are far lower.                                                                                    
                                                                                                                                
It's  disconcerting  to him  to  hear  so  much concern  from  the                                                              
fishing  industry, because  it is  very important  to the  visitor                                                              
industry  and   cruise  ships   specifically  to  maintain   clean                                                              
pristine waters, not  only for Alaska, but for the  world. That is                                                              
the  livelihood of  the ships,  and  if they  don't maintain  that                                                              
they  are  out  of  business,  just  like  those  in  the  fishing                                                              
industry.                                                                                                                       
                                                                                                                                
He said they  take great pride  in bringing visitors to  Alaska to                                                              
promote  wild  clean   Alaska  seafood.  Many  cruise   lines  buy                                                              
millions of dollars  of seafood and promote it so  that people who                                                              
go  home have  a desire  to continue  to buy  Alaskan seafood.  He                                                              
said it's  simply not  true that  cruise ships  are polluting  the                                                              
waters of Alaska.                                                                                                               
                                                                                                                                
5:31:51 PM                                                                                                                    
Further,  Mr. Binkley  said  that  sunsetting provision  (e)  will                                                              
have  the exact  opposite effect.  Industry  has already  invested                                                              
over  $200 million  complying with  the initiative  would have  no                                                              
further incentive to  invest if a set standard  is not attainable.                                                              
Instead they  investment in getting  around Alaska  regulations by                                                              
holding more  waste water,  altering itineraries  to discharge  in                                                              
waters beyond  Alaska and  simply ignoring  the permitting  system                                                              
that Alaska has  in place. He opposed the amendment  and supported                                                              
allowing the  compromise to go through  as it is, so  the industry                                                              
can  continue  to  work  with  the  regulators  to  improve  their                                                              
existing systems.                                                                                                               
                                                                                                                                
5:33:20 PM                                                                                                                    
GERSHON  COHEN, Campaign  to  Safeguard America's  Waters  (CSAW),                                                              
said  he  is  one  of the  sponsors  of  the  cruise  ship  ballot                                                              
initiative, Haines,  and he studied the issue of  mixing zones for                                                              
nearly  20 years.  At the last  hearing  there was  a lot of  talk                                                              
about the  mechanics of mixing zones  - how much pollution  can be                                                              
absorbed, how big  a mixing zone should be, who  has mixing zones,                                                              
the impacts,  et cetera.  Unfortunately,  most of these  questions                                                              
cannot be  answered with any  certainty, because mixing  zones are                                                              
not a  matter of science  where you control  a set  of conditions,                                                              
change one thing and make observations.                                                                                         
                                                                                                                                
Mixing  zones  are  a  risk  analysis   with  a  laundry  list  of                                                              
variables. For each  ship and course setting you need  to know the                                                              
size of  the mixing  zone, the  rate of  the discharge,  the speed                                                              
and  design  of  the ship,  the  water  body  depth,  temperature,                                                              
salinity and  topography, the number  of ships discharging  in the                                                              
same   area,   the   chemical   relationships   between   multiple                                                              
pollutants,  detailed   profiles  of  local  biota   in  terms  of                                                              
tolerance  potential  for  avoidance  and  proximity  to  a  ship,                                                              
whether   someone  is   harvesting   and  consuming   contaminated                                                              
organisms, how the  food will be prepared, and on  and on. DEC has                                                              
never  to his  knowledge  answered most  of  these questions  when                                                              
approving a mixing  zone nor does it routinely  measure pollutants                                                              
at the boundaries of a mixing zone or the impacts within it.                                                                    
                                                                                                                                
The bottom  line is the benefits  of mixing zones are  received by                                                              
the  polluter; but  the risks  are borne  by the  public. He  said                                                              
it's not  true that this bill  is an acceptable compromise  to all                                                              
parties. The  point of  discharge phrase  was reinserted,  but the                                                              
original  concept  has  been  replaced  with  a  temporary  waiver                                                              
provision  and  no sunset  date.  In  practical terms,  without  a                                                              
deadline  there is  no  incentive for  the  rest of  the ships  to                                                              
improve performance.                                                                                                            
                                                                                                                                
Contrary to what  was said a few moments ago,  nearly one-third of                                                              
last  summer's sampling  events  demonstrated ships  can meet  the                                                              
so-called  impossible  standards.  DEC  has  documented  that  the                                                              
technologies exist  to meet the water quality  standards, although                                                              
some need to be reconfigured to fit on a ship.                                                                                  
                                                                                                                                
MR.  COHEN  concluded  that  he   thought  a  compromise  and  the                                                              
fundamental principal  of the bill  can be reached if  it contains                                                              
a reasonable  sunset of the  temporary waiver provision.  Then the                                                              
sponsors of the cruise initiative will support the bill.                                                                        
                                                                                                                                
5:36:43 PM                                                                                                                    
ROD  PFLEIGER,   Manager,  Membership  and   Community  Relations,                                                              
Alaska Cruise Association,  said the complications of  a sunset to                                                              
an ongoing  business for  planning purposes  and itineraries  will                                                              
continue  to  add  a negative  impact  on  the  family  businesses                                                              
throughout   the   state.   Forty-five    communities,   including                                                              
governmental   agencies,   the   Alaska  Municipal   League,   the                                                              
Southeast  Conference, and  approximately  30 other  organizations                                                              
represented  by communities  from chambers  and visitors  bureaus,                                                              
throughout  the  state have  agreed  on  CSHB 134(RES)  without  a                                                              
sunset clause for (e).                                                                                                          
                                                                                                                                
5:38:35 PM                                                                                                                    
TAMMY GRIFFIN,  Alaska Hotel  Lodging Association,  said she  is a                                                              
director of  operations for  a hotel  management company  that has                                                              
eight  hotels in  Alaska. She  is  a life-long  Alaskan and  cares                                                              
about keeping the  tourism industry healthy. She is  having a very                                                              
difficult  time   understand  why   they  are  not   allowing  the                                                              
regulatory agency,  DEC, to manage  such things. Why let  a ballot                                                              
initiative create  laws when DEC  manages from a  scientific point                                                              
of  view? It  is  not a  mere  threat that  ships  can be  leaving                                                              
Alaska because the  return on investment is not  making sense. She                                                              
supported CSHB 134(RES) without the sunsetting provision (e).                                                                   
                                                                                                                                
TIM  JUNE,   representing  himself,   Haines,  AK,  said   he  was                                                              
originally on  the cruise ship  initiative committee and  has been                                                              
a member of two  Governor's Water Quality Task Forces,  has been a                                                              
commercial fisherman  for 25 years in Southeast Alaska,  and was a                                                              
2001  special  assistant  to  Governor   Knowles  for  Oceans  and                                                              
Watersheds.  He  encouraged the  committee  to respect  the  voter                                                              
initiative that  passed by 58  percent, but more  significantly it                                                              
passed  with one  side spending$8,000  while  the cruise  industry                                                              
spent $1.4  million. There  is tremendous  passion behind  passing                                                              
this initiative.                                                                                                                
                                                                                                                                
He  addressed  the  issue  of  copper,  specifically,  saying  the                                                              
aquatic life standard  for copper is 2.9 parts per  billion. It is                                                              
significant in  that a  2001 study showed  that cruise  ships were                                                              
putting  about 7100  parts  per billion  before  treatment at  the                                                              
high end, for  an average of 850  parts per billion. The  point is                                                              
that copper  "totally screws up"  a salmon's olfactory  senses and                                                              
their ability  to come back  to where they  were born and  to ward                                                              
of  predators.  The  presence  of   high  copper  levels  is  very                                                              
significant  and they  should  not  let it  be  discharged into  a                                                              
mixing zone.                                                                                                                    
                                                                                                                                
MR. JUNE  reminded them that  these ships are mobile  dischargers,                                                              
they  are not  like  a  town or  city  where  they know  what  the                                                              
discharge point  is. They  discharge commonly  in waters  that are                                                              
frequented by  sensitive life  cycle of salmon  fry that  are even                                                              
more sensitive to copper.                                                                                                       
                                                                                                                                
He said  they can  use the  existing DEC  variance position  until                                                              
this technology  is available to  ships. It is available  to land-                                                              
based systems  now. They have  ways to get  rid of the  metals and                                                              
the ammonia,  but it  has to be  adapted to the  ship. It  is good                                                              
for the  DEC to work  with the industry  and the sunset  clause is                                                              
very important to do that.                                                                                                      
                                                                                                                                
In  closing, he  reminded  the committee  that  this industry  has                                                              
been  very successful  in terms  of  major campaign  contributions                                                              
and has access to the legislature.                                                                                              
                                                                                                                                
CO-CHAIR MCGUIRE responded that many people who have testified                                                                  
here on this subject also have offered campaign donations, and                                                                  
they appreciate his testimony.                                                                                                  
                                                                                                                                
5:44:58 PM                                                                                                                    
CO-CHAIR MCGUIRE closed public testimony.                                                                                       
                                                                                                                                
CO-CHAIR WIELECHOWSKI moved to adopt Amendment 1 identified as                                                                  
26-LS0570\W.3.                                                                                                                  
                                                                                                                                
                                                      26-LS0570\W.3                                                             
                                                            Bullard                                                             
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
                                                                                                                                
     OFFERED IN THE SENATE              BY THE SENATE RESOURCES                                                                 
                                                      COMMITTEE                                                                 
     TO:  CSHB 134(RES), Draft Version "W"                                                                                      
                                                                                                                                
                                                                                                                                
     Page 1, line 11:                                                                                                           
          Delete "if the"                                                                                                       
          Insert ". The"                                                                                                        
                                                                                                                                
     Page 1, lines 12 - 14:                                                                                                     
          Delete ", in consultation with its science                                                                            
     advisory panel on wastewater treatment, determines                                                                         
     that compliance with those limits or standards is the                                                                      
     most technologically effective and economically                                                                            
     feasible"                                                                                                                  
          Insert "shall establish and consult with a                                                                            
     science  advisory  panel  on   wastewater  treatment  to                                                                   
     evaluate   the   most  technologically   effective   and                                                                   
     economically feasible treatment options."                                                                                  
                                                                                                                                
     Page 2, following line 18:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 3.  AS 46.03.462(b), as amended by  sec. 2 of                                                               
     this Act, is amended to read:                                                                                              
          (b)  The minimum standard terms and conditions                                                                        
     for  all   discharge  permits   authorized  under   this                                                                   
     section require that the owner or operator                                                                                 
               (1)  may not discharge untreated sewage,                                                                         
     treated  sewage, graywater,  or other  wastewaters in  a                                                                   
     manner that  violates any applicable effluent  limits or                                                                   
     standards under  state or federal law,  including Alaska                                                                   
     Water  Quality  Standards  governing  pollution  at  the                                                                   
     point  of discharge  [,  EXCEPT AS  PROVIDED  IN (e)  OF                                                                   
     THIS SECTION];                                                                                                             
               (2)  shall maintain records and provide the                                                                      
     reports required under AS 46.03.465(a);                                                                                    
               (3)  shall collect and test samples as                                                                           
     required under  AS 46.03.465(b) and (d) and  provide the                                                                   
     reports   with  respect   those   samples  required   by                                                                   
     AS 46.03.475(c);                                                                                                           
               (4)  shall report discharges in accordance                                                                       
     with AS 46.03.475(a);                                                                                                      
               (5)  shall allow the department access to                                                                        
     the  vessel   at  the  time  samples  are   taken  under                                                                   
     AS 46.03.465 for  purposes of taking the samples  or for                                                                   
     purposes  of verifying  the  integrity  of the  sampling                                                                   
     process; and                                                                                                               
               (6)  shall submit records, notices, and                                                                          
     reports   to   the   department   in   accordance   with                                                                   
     AS 46.03.475(b), (d), and (e)."                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 4, line 2:                                                                                                            
          Delete "2014"                                                                                                         
          Insert "2015"                                                                                                         
                                                                                                                                
     Page 4, line 17: It will be difficult because                                                                              
          Delete "2014"                                                                                                         
          Insert "2015"                                                                                                         
                                                                                                                                
     Page 4, line 26:                                                                                                           
          Delete "AS 46.03.464 is"                                                                                              
          Insert "AS 46.03.462(e), 46.03.462(f), and                                                                            
     46.03.464 are"                                                                                                             
                                                                                                                                
     Page 4, line 27:                                                                                                           
          Delete all material and insert:                                                                                       
        "* Sec. 8.  Sections 3 and 7 of this  Act take effect                                                               
     January 1, 2015."                                                                                                          
                                                                                                                                
     Page 4, line 28:                                                                                                           
         Delete "Sections 1 through 5 of this Act take"                                                                         
          Insert "Except as provided in sec. 8 of this Act,                                                                     
     this Act takes"                                                                                                            
                                                                                                                                
CO-CHAIR MCGUIRE objected.                                                                                                      
                                                                                                                                
CO-CHAIR WIELECHOWSKI  said he  thought this  would be  a one-line                                                              
amendment, but  it's two-pages. This  is a major  policy decision;                                                              
and they need  to remember people voted overwhelmingly.  This is a                                                              
compromise  to accommodate  the industry  by adding  six years  to                                                              
comply, and they  have already had three. This  sunset clause will                                                              
give them nine years  to comply from the time voters  voted on it.                                                              
The initiative sponsors  support it, the sponsor  supports it, and                                                              
he  has  been  told  the  Governor   supported  it  at  her  press                                                              
conference today.                                                                                                               
                                                                                                                                
ALPHEUS   BULLARD,   Legislative  Counsel,   Legislative   Affairs                                                              
Agency, explained  the amendment substantially changes  the intent                                                              
language that  prefaces the W version  of this bill. Page  1, line                                                              
13,  of the  amendment  provides what  AS  46.03.462(b) will  look                                                              
like  once  January  1,  2015  rolls   around.  The  rest  of  the                                                              
amendment beginning  on page  2, line  14, is conforming  language                                                              
that  changes  some  of the  sections  dealing  with  the  Science                                                              
Advisory Committee,  making their last report in 2016.  On line 22                                                              
the  amendment repeals  AS 46.03.462(f)  and AS  46.03.464 all  in                                                              
2015. He offered to answer questions.                                                                                           
                                                                                                                                
SENATOR  FRENCH asked  how  all  of those  are  repealed in  2015,                                                              
specifically language on page 2, lines 22-24.                                                                                   
                                                                                                                                
MR. BULLARD  directed him  to page  4, line 26,  of the  version W                                                              
where section  6 provides that AS  46.03.464 is repealed.  This is                                                              
the  section  dealing   with  the  Science  Advisory   Panel.  The                                                              
amendment  amends   AS  46.03.462(e)   and  (f);  those   are  the                                                              
exceptions. Another  subsection provides for how  the exception to                                                              
the  water  discharge  standards   at  point  of  discharge  work.                                                              
Section 7  provides that all of  this will take effect  as amended                                                              
in 2015.                                                                                                                        
                                                                                                                                
5:50:10 PM                                                                                                                    
CO-CHAIR MCGUIRE announced an at ease.                                                                                          
                                                                                                                                
5:50:22 PM                                                                                                                    
CO-CHAIR MCGUIRE called the meeting back to order at 5:50.                                                                      
                                                                                                                                
SENATOR FRENCH  said as Mr.  Bullard was  reaching the end  of his                                                              
description,  he  had  trouble tracking  exactly  how  the  repeal                                                              
works,  and  specifically  referenced   page  4,  line  26,  [CSHB
134(RES) version W]  that says "AS 46.03.464 is  repealed," but it                                                              
gives no date.                                                                                                                  
                                                                                                                                
MR. BULLARD  explained  that the  next line of  the bill  provides                                                              
when that section takes effect.                                                                                                 
                                                                                                                                
SENATOR FRENCH  said he got  it now. It's  the same  mechanism for                                                              
inserting the sunset.                                                                                                           
                                                                                                                                
MR. BULLARD  answered yes.  That large block  at the  beginning of                                                              
the  amendment  on page  1,  line  13  through  page 2,  line  10,                                                              
provides  that  would  occur  at the  moment  those  sections  are                                                              
repealed,  which  brings  that  provision  back into  line  as  it                                                              
existed before the effective date of this act.                                                                                  
                                                                                                                                
SENATOR FRENCH thanked him.                                                                                                     
                                                                                                                                
5:52:28 PM                                                                                                                    
SENATOR   HUGGINS  admitted   that   he  didn't   vote  for   this                                                              
initiative;  it makes  him uncomfortable  when they  do things  to                                                              
the  other guy  - Juneau  has  one standard  and  we have  another                                                              
standard for  those who come to visit  us if they are  riding on a                                                              
cruise ship.  Everyone wants pristine  waters; and  it disappoints                                                              
him that  fishermen want  a different  standard for cruise  ships.                                                              
It's a double  standard and society  has said over and  over again                                                              
"equal  opportunity, equal  standards  for equal  people." But  he                                                              
would reluctantly  support the  amendment, because it's  important                                                              
to move the bill along.                                                                                                         
                                                                                                                                
5:54:57 PM                                                                                                                    
CO-CHAIR  MCGUIRE added  that their  job  as policy  makers is  to                                                              
balance  development, the  management  of  the state's  resources,                                                              
the economy,  the jobs  and all  of the things  out there.  She is                                                              
also troubled by  the prevailing theme in Alaska in  the last five                                                              
years  that is  anti-industry and  anti  those who  want to  spend                                                              
money and invest  in this state. "We do want  business," and these                                                              
cruise ships  bring between  almost one  million people  to visit.                                                              
Jobs  throughout  Alaska  are  100   percent  dependent  on  their                                                              
participation  in its  economy. The  state is  going to  see a  40                                                              
percent  decline   in  the  tourism  industry,   bankruptcies  and                                                              
businesses closing. Part  of it is due to the economy  and part is                                                              
due to  the direct impact  of the decisions  that the  cruise ship                                                              
industry has made  with respect to investment in  this state. This                                                              
is the place to argue about it.                                                                                                 
                                                                                                                                
She  agreed with  Senator  Huggins that  she  values the  pristine                                                              
waters of our  state, but they need  to be very careful  when they                                                              
start  to  impose  standards  that  are  not  only  different  and                                                              
distinct,  but  technologically   impossible.  She  would  not  be                                                              
supporting the amendment,  but she understands the  sentiment with                                                              
which it is offered.                                                                                                            
                                                                                                                                
CO-CHAIR MCGUIRE  asked if CO-CHAIR  WIELECHOWSKI if he  wanted to                                                              
look at the new version of the amendment.                                                                                       
                                                                                                                                
CO-CHAIR WIELECHOWSKI  responded that his staff put  this language                                                              
together  to   help  facilitate   the  dialogue.  It   places  the                                                              
amendment into the bill; it is not a different version.                                                                         
                                                                                                                                
5:57:56 PM                                                                                                                    
SENATOR  HUGGINS   clarified  that  this  is  a   six-year  sunset                                                              
provision.                                                                                                                      
                                                                                                                                
CO-CHAIR WIELECHOWSKI wanted that verified by Mr. Bullard.                                                                      
                                                                                                                                
MR. BULLARD  answered that  this amendment  moves the  sunset date                                                              
to January 1, 2015.                                                                                                             
                                                                                                                                
A roll  call vote  was taken. Senators  Huggins, French,  Stevens,                                                              
and  Wielechowski  voted  yea;   Senator  McGuire  voted  nay;  so                                                              
Amendment 1 was adopted.                                                                                                        
                                                                                                                                
5:59:03 PM                                                                                                                    
SENATOR FRENCH  moved to  report CS for  HB 134(RES),  as amended,                                                              
from  committee  with  individual   recommendations  and  attached                                                              
fiscal  note(s).  There  being no  objection,  SCS  CSHB  134(RES)                                                              
moved from committee.                                                                                                           
                                                                                                                                
At ease from 5:59 p.m. to 6:00 p.m.                                                                                             
                                                                                                                                
6:00:27 PM                                                                                                                    
CO-CHAIR  MCGUIRE   invited  Telitha  and  Hanna   Wilson,  Juneau                                                              
Douglas,  High School  students,  Alaska Youth  for  Environmental                                                              
Action, to come before the committee.                                                                                           
                                                                                                                                
TELITHA WILSON,  Alaska Youth for Environmental Action,  said this                                                              
year their  focus is  on renewable  energy in  Alaska. As  part of                                                              
this campaign  they collected over  600 signatures from  youth and                                                              
adults  across the  state from  both rural  and urban  communities                                                              
who support investment in renewable energy technology.                                                                          
                                                                                                                                
6:01:33 PM                                                                                                                    
HANNA  WILSON, Alaska  Youth for  Environmental  Action, read  the                                                              
petition  that  basically  said   they  support  renewable  energy                                                              
because it  provides a brighter  future of Alaska. It  will create                                                              
long-lasting   jobs,   stabilize   energy  costs,   lower   carbon                                                              
emissions  and   protect  Alaska's   wild  beauty.   They  support                                                              
expending the  $100 million  that was  appropriated last  year for                                                              
renewable  energy projects,  passing the  proposed additional  $50                                                              
million for  the Renewable  Energy Fund in  the 2009  state budget                                                              
and  supporting a  strong federal  renewable electricity  standard                                                              
that will benefit Alaska.                                                                                                       
                                                                                                                                
CO-CHAIR MCGUIRE thanked them for their presentation.                                                                           
                                                                                                                                
6:02:14 PM                                                                                                                    
Finding no further business to come before the committee, Chair                                                                 
McGuire adjourned the meeting at 6:02 p.m.                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
Synthetic Fuels Update - April 10 2009.ppt SRES 4/10/2009 3:30:00 PM