SENATE BILL NO. 3 "An Act relating to the regulation of wastewater discharge from small commercial passenger vessels in state waters; relating to art requirements for certain public facilities; and providing for an effective date." 5:02:01 PM Co-Chair Foster invited Senator Stedman and his staff to the table. SENATOR BERT STEDMAN, SPONSOR, thanked the committee for the opportunity to present his bill. He read the sponsor statement: HCS SB 3(TRA) addresses marine vessels operating in Alaska waters. This legislation reinstates the statutory exemption from large cruise ship discharge requirements for small commercial passenger vessels. Small commercial passenger vessels and ferries with capacity to accommodate between 50 and 249 overnight passengers have been covered by a statutory exemption from the treatment system and discharge requirements for large cruise ships in Alaska. Instead they have operated under Best Management Practices (BMP) plans that are submitted to and approved by DEC. Operation under these plans has dramatically improved the quality of wastewater discharged from these vessels since the program was established. The exemption became law in 2004 and had a sunset date of January 1, 2016. Support for the exemption was provided by a 2004 DEC report on small cruise ships and Alaskan ferries that found meeting the terms for large cruise ships would be financially and feasibly prohibitive. SB 3 is necessary to reinstate the exemption, which was automatically repealed on January 1, 2016. Without the exemption, small cruise ships and ferries would be required to install and operate Advanced Wastewater Treatment Systems, which would be cost and space prohibitive. Department of Transportation and Public Facilities estimates the cost to retrofit ferries is over $5 million. Senator Stedman remarked that the bill was an extension of policy put in place by the legislature. He noted that it would be very difficult for the smaller ship if they did not get the proposed exemption. He wanted to see the industry encouraged to grow, as it was good for commerce in coastal Alaska. He opined that forcing smaller ships out of the market place was not good for anyone. In terms of the Alaska Marine Highway system, there was a budget struggle. The state was trying to operate a transportation system in the rail belt and on the coast. The state had an old fleet it was attempting to modernize. There were a couple of new vessels under construction presently. He believed that trying to make the older smaller vessels to comply rather than obtain extensions would not work. He was available for questions. Co-Chair Foster reviewed the available testifiers. Representative Kawasaki asked how many boats the legislation would apply to in the state. 5:07:27 PM AT EASE 5:07:52 PM RECONVENED Senator Stedman responded that there were about ten of the smaller ships. There was a list in the packets provided to members. Representative Kawasaki asked about any sunset provisions. Senator Stedman thought it was the first sunset. He recalled that there had been considerable debate regarding cruise ship discharge. In the process, a sunset date was included. He thought it should be dealt with right away. Representative Kawasaki asked if there was a current sunset in the bill. Senator Stedman responded in the negative. Representative Kawasaki asked if a new boat would automatically comply with requirements and, therefore, not need an exemption. Senator Stedman deferred to a representative from the Division of the Alaska Marine Highway System respond. 5:10:28 PM MICHAEL A. NEUSSL, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, responded that it did not apply to the two Alaska class ferries for the marine highway. The vessels had a Type 3 marine sanitation devise that held all discharge waters onboard discharging ashore. The legislation would apply to the proposed MV Tustumena replacement vessel, which met the standards for a small passenger vessel. The vessel was designed under the provisions of the best management practices statute. It had a MSD type 2 system to put an advanced wastewater treatment system onboard to comply with large cruise ship discharge standards. It would not fit in the marine sanitation devise room. It was three times the size and three times the weight of the system. The ship would need a redesign to accommodate it, which would be costly. Representative Kawasaki asked about the original exemption in 2004 and why there was a sunset in 2016. Mr. Neussl suggested the question be directed to Michelle Hale, Division of Water, Department of Environmental Conservation (DEC). Vice-Chair Gara suggested having the Senator's staff review the changes in the bill. Senator Stedman indicated he would be returning to the Senate Resources Committee. His staff could answer member's questions. Vice-Chair Gara asked about the differences of the current version of the bill and the version of the bill the committee previously heard. DAVE SCOTT, STAFF, SENATOR BERT STEDMAN, responded that the changes were minor. House Bill 151 had a retroactivity effective date, whereas, the Senate version did not. He reported that when he spoke with DEC, the department did not have a problem with the bill not having a retroactivity clause. Representative Pruitt mentioned that the bill previously had a different title and contained an additional piece. He inquired as to why the piece was removed. He noted there had been a discussion about 1 percent of monies for art on the ferries and another discussion relating to the cost of the new ferries. Mr. Scott spoke to the 1 percent for art. He indicated the amount was removed by the House Transportation Committee. There were three sections removed that all dealt with the 1 percent for art. He reported that the MV Taku was for sale and the FVF Chenega was tied up. The art in both vessels would be removed and placed on the new Alaska class ferries. Co-Chair Foster OPENED Public Testimony. 5:15:18 PM JAMEY CAGLE, ALASKAN DREAM CRUISES, SITKA (via teleconference), spoke in support of the bill as amended. He thought it was an integral part to the operation of his vessels. 5:15:58 PM PETER BUTZ, ALASKAN DREAM CRUISES, SITKA (via teleconference), spoke in support of the bill with the amendment being passed. The legislation was necessary for the continuation of his company's small fleet to operate out of Sitka. 5:16:38 PM Co-Chair Foster CLOSED Public Testimony. Representative Wilson asked if the bill was going to be moved. Co-Chair Foster was open to moving the bill if the committee members did not have amendments. Vice-Chair Gara agreed with Representative Wilson. Representative Wilson relayed that there were two zero impact fiscal notes [OMB Component Number 2062 from the Department of Environmental Conservation and OMB Component Number 2604 from the Department of Transportation and Public Facilities]. 5:18:10 PM AT EASE 5:18:36 PM RECONVENED Co-Chair Foster invited Mr. Neussl to review the new fiscal note for OMB Component Number 2604. Mr. Neussel explained that the new fiscal note was an update of the previous fiscal note. The previous fiscal note covered the bill when it had both the 1 percent for art and the wastewater discharge provisions in it. The department striped out the 1 percent for art language from the fiscal note. The note remained a zero fiscal impact note and contained the same language regarding the wastewater discharge bill. Representative Pruitt asked if there was enough artwork for the vessels. Mr. Neussel responded that the artwork salvaged from the MV Taku and the FVF Chenega would be sufficient for the new Alaska class ferry. Representative Pruitt relayed that the original fiscal note stated that there was approximately $2.37 million for the future MV Tustumena replacement vessel. He asked if the money was still necessary. Mr. Neussl responded that regarding the 1 percent for art portion, the MV Tustumena replacement vehicle was not currently under contract, therefore, did not apply. He detailed that $2.37 million was the estimated cost of 1 percent for art. He did not think the department could spend that much on art for the vessel. It was a large amount for artwork on a vessel. The department planned to salvage the art off of the existing MV Tustumena to reuse on its replacement and supplemented as necessary with a small increase. Representative Pruitt thought that using the art from the MV Tustumena was the right thing to do. He wondered if there was a statutory requirement concerning the amount spent on art. Mr. Neussel relayed that there were some concerns about the 1 percent for art account being a dedicated fund and unconstitutional. Therefore, it was removed from the bill. Representative Pruitt asked if there was an expectation that the state spent an additional amount on art. He wondered if additional language was necessary. Mr. Neussel did not believe additional language to deal with the issue of the 1 percent for art. The new vessel would have reused art. Any additional monies for art would come from funding from within the construction project. He did not believe it would be 1 percent. Representative Wilson MOVED to report HCSSB 3 (TRA) out of Committee with individual recommendations and the accompanying fiscal notes. HCSSB 3 (TRA) was REPORTED out of committee with a "do pass" recommendation and with a new zero fiscal note by the Department of Transportation and Public Facilities and with a previously published zero fiscal note: FN1 (DEC). 5:23:05 PM AT EASE 5:27:01 PM RECONVENED