HJR 40-COOK INLET/KACHEMAK BELUGA POPULATION  2:24:47 PM CO-CHAIR NEUMAN announced that the next order of business is HOUSE JOINT RESOLUTION NO. 40, Opposing the proposed designation by the National Marine Fisheries Service of 3,000 square miles of upper Cook Inlet, the mid-inlet, all of the inlet's western shores, and Kachemak Bay as critical habitat for beluga whales. 2:25:23 PM REPRESENTATIVE CHARISSE MILLETT, Alaska State Legislature, sponsor of HJR 40, stated that the resolution is of utmost importance to the entire state of Alaska because a critical habitat listing in Cook Inlet would impact the port through which 85 percent of the state's goods and products travel. The resolution would tell Washington, D.C., that Alaska thinks a critical habitat listing is ahead of its time. The listing was preceded by the over-harvest of belugas from subsistence hunting. A revised harvest management plan was instituted in 2000 and since then the belugas have increased about 4 percent a year. The National Marine Fisheries Service (NMFS) has proposed a critical habitat of 3,000 square [miles], which would affect every business that comes through the Port of Anchorage, as well as Representative Seaton's district. REPRESENTATIVE MILLETT pointed out that it is possible to stop a critical habitat designation by putting together a good economic base for why critical habitat should not be administered. In this situation, the National Marine Fisheries Service has grossly understated the economic impacts. For example, the service has stated that the impact would be $600,000 over the next decade; however, other folks have said $600,000 is the cost of just one permitting application and the impact statements on that permit. This resolution asks the National Marine Fisheries Service to slow the process down and take into consideration the economic impacts of a 3,000-square-mile critical habitat area. 2:28:01 PM CO-CHAIR NEUMAN moved the adoption of the proposed committee substitute (CS) for HJR 40, labeled 26-LS1376\E, Kane, 2/4/10, ("Version E"), as the working document. REPRESENTATIVE EDGMON objected for discussion purposes. 2:28:43 PM JEFF TURNER, Staff, Representative Charisse Millett, Alaska State Legislature, explained that the three changes in Version E are based on recommendations received from the Municipality of Anchorage. On page 2 of the original resolution, lines 13, 14, 16, 19, and 27, the word "will" was replaced by the word "may". He related that the municipality is in the process of trying to persuade the National Marine Fisheries Service that the needs of the beluga whales around the city and in Cook Inlet have already been completely addressed; therefore, the municipality wanted to soften the language a little bit. On page 2 of the original resolution, lines 22 and 23 were struck and a different whereas was inserted which expands on the whereas that was replaced by stating that the Port of Anchorage has already fully addressed the conservation needs of Cook Inlet beluga whales. On page 3, lines 7-10, of the original resolution, the whereas was removed that talked about the potential increased cost of treating wastewater that is discharged into Cook Inlet. The city asked this be deleted because it feared this might insinuate that the current wastewater discharge into the inlet could be harming the belugas or needs to be changed. The city steadfastly believes that the current wastewater discharge is not harming the beluga whales or the environment of Cook Inlet. 2:30:23 PM MR. TURNER, in response to Co-Chair Neuman, said three people are available via teleconference to answer questions regarding the wastewater discharge. REPRESENTATIVE EDGMON removed his objection to adopting Version E as the working document. There being no further objection, Version E of HJR 40 was before the committee. REPRESENTATIVE MILLETT stated she does not think the Endangered Species Act (ESA) is a management plan that works for Alaska and managing by the ESA is detrimental to the state. The more vocal Alaska is to the federal government, the better the state controls its destiny. In response to Co-Chair Neuman, she requested that Mr. Arne Fuglvog be able to testify. 2:32:49 PM ARNE FUGLVOG, Legislative Assistant to U.S. Senator Lisa Murkowski, pointed out that the public comment period ends March 3, 2010, should the legislature's goal be to submit the resolution by the deadline. He added, however, that the agency typically allows a little bit of leeway for other government bodies. He said this issue goes back to the first petition in 1999 and there have been multiple petitions since then. The listing was made in 2008. Under the Endangered Species Act an agency is required by law to designate and in this case the National Marine Fisheries Service is the agency of jurisdiction. The State of Alaska is working on extensive comments and he thinks it would be helpful to have the resolution go back as a comment from the legislature. MR. FUGLVOG noted that the Secretary of Commerce has a lot of discretion, unlike a listing decision which is based only on science and in which economics do not matter. For example, a $100 million economic loss was projected from listing the Steller's sea lion and that did not play a factor in the listing decision. After lawsuits shut down the fisheries, the cost was somewhere between $50 million and $100 million. 2:35:50 PM MR. FUGLVOG said the National Marine Fisheries Service had three alternatives: 1) list everything in Cook Inlet, 2) list nothing in Cook Inlet, and 3) the alternative that was chosen. He maintained that the data describing some of the areas is weak, especially along the western Cook Inlet shore, and he urged that this go into the comments. MR. FUGLVOG pointed out that the National Marine Fisheries Service and the U.S. Fish and Wildlife Service treat critical habitat very differently. For example, in a U.S. Fish and Wildlife Service document, out of 1,231 species listed as either threatened or endangered, critical habitat has been designated for only 150. Thus, a little over 10 percent of species have critical habitat designated for them. The U.S. Fish and Wildlife Service basically stopped the declaration of critical habitat in the mid-1990s because it was expending so much staff and dollars on critical habitat that it could not get to all the litigation and petitions to list species. The exception is the polar bear for which the agency has proposed to list critical habitat. 2:37:19 PM MR. FUGLVOG related that the U.S. Fish and Wildlife Service has stated that critical habitat designations usually afford little extra protection to most species, and in some cases it can result in harm to the species. This harm may be due to a negative public sentiment to the designation or inaccuracies in the initial area designated. However, the National Marine Fisheries Service disagrees with that and will be designating by law. He said he thinks that if the National Marine Fisheries Service does not do this, it would get litigated. MR. FUGLVOG added that with this resolution the legislature has an opportunity to provide meaningful comments for the public comment record. Given all the issues in Alaska related to the Endangered Species Act, he thinks the legislature would be wise to pay attention to this one and provide input. For example, as part of his work for Senator Murkowski he is currently dealing with 10 listings in Alaska. 2:38:52 PM REPRESENTATIVE TUCK requested Mr. Fuglvog to provide examples of how critical habitat designation has been harmful to a species. MR. FUGLVOG related that the U.S. Fish and Wildlife Service believes that in some cases the designation of critical habitat highlights where the species is found and people then know where the animals are located to the animals' detriment. Regarding this critical habitat listing for beluga whales, the National Marine Fisheries Service is saying that the benefits to the species are clear; the U.S. Fish and Wildlife Service takes a different approach. 2:40:02 PM REPRESENTATIVE SEATON clarified that the endangered species listing has already taken place, so critical habitat designation would mean that human impacts on the habitat must be looked at. However, even if critical habitat is not designated, all the government agencies and industries will still have to look at the impacts on the beluga whales themselves. The resolution is not challenging that, it is challenging the designation of the entire [3,000 square mile] unit. MR. FUGLVOG replied correct. The benefits of the listing to the species, and interactions between activities, will still occur regardless of whether there is critical habitat designation. The agency says the added benefit is the Section 7 consultation which provides that any activity in the critical habitat must consult with the National Marine Fisheries Service. In this consultation the agency evaluates a project and how it might adversely affect both the species and the critical habitat, and a determination is made as to whether there needs to be mitigation of the impacts on both the species and the critical habitat. Therefore, it is an extra layer. 2:41:32 PM REPRESENTATIVE SEATON surmised that in regard to an activity taking place where there are whales, the consultation and mitigation will have to take place no matter what. However, if critical habitat is designated for areas like the west side of Cook Inlet where whales have not been seen for 10 years, the consultation would be required because it might influence what has been designated as critical habitat even though there might not be any whales there. MR. FUGLVOG answered correct. 2:42:16 PM RICHARD BERKOWITZ, Pacific Coast Director, Transportation Institute, offered his organization's support of HJR 40. He said the members of his organization are all U.S. Registry with U.S. crews, U.S. built, and U.S. flagged vessels. Members most directly impacted by this critical habitat designation include Horizon Lines and TOTE. With respect to safety, these companies have made up to five transits per week into Cook Inlet in all sorts of weather in every season and have an unblemished record of safety and risk avoidance, as well as no spills and no whale strikes in all that time. They do not pollute the waters with ballast because TOTE has no ballast and Horizon Lines does not discharge ballast in Cook Inlet. MR. BERKOWITZ said one of the key issues is that because of the numerous trips each week that these companies are able to provide into Anchorage, which in turn supplies much of the state, the whole system is just-in-time. Because of this frequent service, the cargo can be moved straight out so there is no warehousing. This saves Alaska's consumers over $70 million in annual warehousing distribution costs and provides Alaskans with fresh vegetables and milk. The potential changes that could occur as a result of this critical habitat designation could seriously impact that just-in-time cargo distribution. He urged the resolution be moved in time to meet the March 3, 2010, public comment deadline. 2:45:15 PM REPRESENTATIVE TUCK asked how a whale strike is determined, given the large size of the vessels. MR. BERKOWITZ responded that "to their knowledge, there has not been a whale strike." He allowed that there have been strikes in other ports in other areas and when this happened the whale ended up on the bulbous bow of the vessel and could be seen. REPRESENTATIVE TUCK requested Mr. Berkowitz to elaborate on how critical habitat designation would affect TOTE and Horizon Lines. MR. BERKOWITZ replied the key issue is that Cook Inlet has lots of ice and up to 22-foot tides. Missing the tide can mean a 12- hour delay getting into port and the just-in-time system does not afford this kind of variability. If a vessel was asked to go slow or to wait it would impact the just-in-time cargo and also the safety of the vessel, particularly in ice. 2:47:05 PM REPRESENTATIVE TUCK asked whether critical habitat designation would require the vessels to slow down. MR. BERKOWITZ answered that that is unknown, but in the right whale situation on the East Coast ships have been required to slow significantly during certain times of the year and to avoid certain areas. He added that there are also significant problems with silt in Cook Inlet and the last thing the Transportation Institute wants to see is a ban on dredging which could affect vessel safety. It is known what has happened elsewhere and his organization does not want to see it replicated in Cook Inlet. 2:47:57 PM JOHN MCCLELLAN, P.E., Tyonek Native Association, testified that his association supports HJR 40 because it believes that designating all of this area would raise a barrier to the $18 billion-worth of new development that is seen for west Cook Inlet on or near Tyonek's land. Tyonek does not believe that all habitat is critical habitat and this is regulatory over- reach. MR. MCCLELLAN said Tyonek believes that the cause for the beluga whale not restoring its population is the lack of king salmon. The villagers who have lived with the beluga whale and the salmon for years know that the beluga whale is dependent upon king salmon during the critical nursing period and the belugas will not come back until the king salmon come back. He cited recent examples of similar events. In San Francisco, CA, the sea lions disappeared from Pier 39 and scientists there said the sea lions left because their food source left. In Puget Sound a researcher has tied the killer whale population to the salmon population. He related that when Tyonek asked the National Marine Fisheries Service if it had correlated the drop of Cook Inlet's belugas with the drop of king salmon, the service said no, it did not have the data available. 2:51:51 PM JASON BRUNE, Executive Director, Resource Development Council (RDC), supported HJR 40. He spoke from the following written statement [original punctuation provided]: RDC members include all of the major, and many of the minor, parties who will be adversely impacted by the proposed designation of over 3,000 square miles of critical habitat in Cook Inlet. From local communities, to oil and gas, mining, tourism, and fisheries members, all stand to be negatively affected by this proposal. Meanwhile, this designation will result in no added benefit to the belugas. RDC members who live, recreate, and work in and around Cook Inlet are committed to the recovery of the beluga whale. It is important to remember that NMFS' biologists have acknowledged the sole cause for the population decline of Cook Inlet beluga whales was the subsistence harvest that transpired in the 1990s. The multitude of activities in Cook Inlet that will absolutely be impacted by this critical habitat proposal were not the cause of the decline, nor are they an ongoing threat to the whale's recovery. Since statehood, economic and community development activities have occurred in Cook Inlet. Indeed, these activities have long co-existed with the belugas. Responsible community and economic development have in no way adversely impacted these whales or impeded their recovery. Unfortunately, this designation, if finalized will lead to additional requirements, costly delays, and lengthy 3rd party litigation. There is no other way to put it. The ESA requires economic effects to be taken into account when designating critical habitat. In fact, areas may be excluded from critical habitat if it is determined that the benefit of such exclusion outweighs the benefit of specifying such areas as critical habitat. The economic analysis that has been completed as part of this proposal is grossly inadequate. In fact, only direct consultation costs are acknowledged as "costs" in this analysis. Nothing further is considered. The agency's estimates are less than $600,000 over the next decade. Frankly, this is naïve and way understated. Because of this, RDC has hired a contractor, Resource Dimensions, to undertake an independent economic analysis to attempt to more accurately identify the costs of this proposal. These economists have been conducting in person and telephone interviews with many of the potentially affected entities. We are working very closely with the State of Alaska Department of Fish and Game as well as the Office of Economic Development on the development of this analysis and we will be providing the results of this analysis to the agency. We hope NMFS will use these results as a boilerplate to conduct a more robust economic analysis and to that end, I wholeheartedly endorse the second action item of this resolution which calls for a more robust economic analysis. In conclusion, the benefits of designating critical habitat in most, if not all of the areas that have been proposed is outweighed by the economic impacts it will have. In addition, critical habitat will provide no added benefit to the Cook Inlet belugas and therefore, I enthusiastically endorse HJR40. 2:55:41 PM BRUCE WEBB said he is the manager of land and regulatory affairs for Aurora Gas, a small independent gas exploration and production company in Cook Inlet. Aurora Gas supplies about six percent of the gas to the Cook Inlet market. He recently attended the North American Petroleum Expo in Houston, Texas, where he was shocked to learn of the stigma that has happened from this proposed critical habitat designation; for example, some people at the expo thought drilling could no longer occur in the Cook Inlet because of the beluga whale. He predicted that if the habitat designation goes through it will open the floodgates to frivolous litigation that will delay and possibly cancel oil and gas exploration in the Cook Inlet. He therefore supports HJR 40 because critical habitat designation would negatively impact oil and gas exploration and development. 2:58:12 PM STACY SCHUBERT, Intergovernmental Affairs Director, Mayor's Office, Municipality of Anchorage, supported the proposed committee substitute for HJR 40 on behalf of Mayor Dan Sullivan. She said this is a significant issue to the Anchorage community and its partners across the state. She testified from the following written statement [original punctuation provided]: The Municipality of Anchorage (MOA) is committed to ensuring the long-term health and productivity of the Cook Inlet and to the conservation of its beluga population. Cook Inlet supports significant oil and gas production, fishing, mining and a year-round tourism industry to the benefit of all Alaskans. The Port of Anchorage is the essential conduit through which passes an astounding 85% of all goods entering the state, and 26% of the tonnage of U.S. international air freight moves through the city via Ted Stevens Anchorage International Airport. Anchorage's strategic location continues to be vitally important to our nation's overall defense strategy. We are an excellent staging point for an array of military operations and equipment that is deployed - and redeployed - through our Port in support of our national strategic interests. The proposed critical habitat designation adds nominal value to the protection of the Cook Inlet beluga. It is fundamentally vague, and because the Endangered Species Act already applies, the MOA is addressing the needs of the beluga responsibly, directly, and with best available science. The projections of economic costs associated with the proposed designation do not pass the red face test; the potential for new regulations, delayed development and increased costs will most certainly total more than the $575,000 that NMFS included along with its proposal. MS. SCHUBERT stated that for the aforementioned reasons the Municipality of Anchorage opposes the proposed critical habitat designation. She urged expeditious passage of the resolution so it can be included in the NMFS's public record. 3:00:32 PM GRAHAM SMITH, Communications and Membership Director, Alaska Support Industry Alliance, supported HJR 40 and urged it be passed in time to meet the public record comment deadline. He testified from the following written statement [original punctuation provided]: The Alliance is a trade organization representing nearly 500 businesses, organizations and individuals that provide goods and services to Alaska's oil, gas and mining industries and more than 40,000 jobs for Alaskan workers. Our livelihoods depend on a healthy Alaska oil & gas industry and investment climate. As a result of depressed business activity in Alaska's oil patch, hundreds of Alaskan oil field workers and professionals have been laid off in recent months. New exploration and development efforts are necessary to sustain Alaska's economy and the livelihoods of our members. A critical habitat designation would have a crippling impact on the already-struggling oil and gas operations in Cook Inlet. It would risk billions of dollars in future projects and could ultimately cost Southcentral Alaska residents and companies hundreds of millions of dollars to comply with new regulations and standards. As you have already heard, National Marine Fisheries Service biologists have acknowledged the sole cause for the population decline of Cook Inlet beluga whales was the subsistence harvest that transpired in the 1990s. Oil and gas operations in Cook Inlet have gone on for decades without contributing to the population decline or impeding the recovery of the Beluga whales, and we believe that further exploration and development of Cook Inlet resources can occur without adversely affecting the Beluga population. 3:02:52 PM CO-CHAIR NEUMAN closed public testimony after ascertaining no one else was available to testify. REPRESENTATIVE SEATON stated that he will be writing and submitting personal testimony on this issue as he believes designation of the full Cook Inlet is way too broad. He is not opposed to designating critical habitat, but the current proposal of the entire range of the animal is too much. He offered his support for HJR 40. REPRESENTATIVE TUCK related that for years he has heard the beluga decline is directly tied to the king salmon runs, as was stated by the Tyonek Native Association. Therefore it is hard to say that industry, shipping, or drilling has had anything to do with the decline. 3:04:03 PM CO-CHAIR JOHNSON moved to report the proposed committee substitute for HJR 40, labeled 26-LS1376\E, Kane, 2/4/10, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHJR 40(RES) was reported from the House Resources Standing Committee.