SJR 12-CRUISE SHIP PORT TIMES: JONES ACT    9:02:44 AM CHAIR MCGUIRE announced the consideration of SJR 12. SENATOR BUNDE moved to adopt the committee substitute (CS) to SJR 12, labeled 25-LS1292\E, Kane. Hearing no objection, Version E was before the committee. SENATOR GENE THERRIAULT, Alaska State Legislature, said SJR 12 opposes proposed changes to the interpretation of the Passenger Vessel Services Act of 1886 by the U.S. Department of Homeland Security (DHS), which would affect the cruise itineraries of foreign-flagged vessels transporting passengers to Alaska. In November, DHS published a new interpretation requiring all foreign-flagged cruise ships to spend at least 48 hours in a foreign port, spend at least 50 percent of the time that is spent at U.S. ports at foreign ports, and require passengers to depart at a foreign port. The industry brings a million passengers to Alaska each year, and this new interpretation will mean 158 fewer voyages and 349,000 fewer passengers. It will result in a loss of $222 million that supports Alaska businesses in coastal communities and beyond. The public comment period is closed so the statement will not be officially submitted into the public record, but a decision has not been rendered. The CS makes it clear that Alaska opposes the interpretation, but if it is adopted, SJR 12 asks that Alaska be exempted. 9:06:05 AM SENATOR BUNDE asked if this interpretation was developed because of some problems with foreign-flagged cruise ships going to Hawaii and spending a few hours in Mexican ports. SENATOR THERRIAULT said the new interpretation does spring from a problem in Hawaii. American-flagged ships provide intra-island service, and "over time the large cruise ships that seasonally come to the state of Alaska, some of them were going from the West Coast over to Hawaii, around the islands, and to avoid the problem with the old ruling, they would then go to Mexico, touch base at a port there overnight, and then go back to the West Coast." That is what triggered this. The determination continually refers to the Hawaiian market, and at the end it refers to any cruise itinerary, thereby sweeping in Alaska. 9:08:02 AM WAYNE STEVENS, President, State Chamber of Commerce, said his board supports SJR 12. It is on record opposing the proposed criteria to determine if foreign-flagged passenger vessels are in violation of the Passenger Services Vessels Act. While intended to solve a problem in Hawaii, the interpretation isn't limited to Hawaii and could be interpreted to include cruise runs to Alaska from Seattle or San Francisco. This is one third of the cruises coming to Alaska. It will not affect ships from Vancouver, B.C. The loss of ships will be devastating to Alaska's communities and delicate economy. The interpretation could be in effect for the 2008 summer season. The loss of jobs, revenue, and taxes will be crippling. If cruise ships spend 48 in foreign ports and 50 percent of port time in foreign ports on round-trip voyages from Seattle to Alaska, it will make the existing seven-day itineraries impossible. The only alternative will be for ships to spend less time in Alaska and more time in Canada. The proposed changes are a significant departure from industry practice and not an interpretation of existing regulations. These proposed changes will affect all tourism communities. Cruise passengers typically fly from Alaska to connect to the ships. The solution to a problem in Hawaii will be of significant detriment to Alaska and its cruise industry. 9:11:14 AM CHAIR MCGUIRE asked what the chamber is doing nationally to influence the regulation writers in Washington D.C. MR. STEVENS said the chamber has been commenting. CHAIR MCGUIRE asked about the chances of success. MR. STEVENS said there is potential to get it overturned. SENATOR BUNDE asked about Seattle losing business, and if Washington State is doing anything. MR. STEVENS said he believes they are commenting. 9:12:35 AM JEREMY GEISER, President, Juneau Chapter, Alaska Travel Industry Association, said he is also the manager for Gastineau Guiding. If a third of the port calls are lost in Juneau, his company will lose one third of its business including some year-round jobs. All of those jobs will go to British Columbia. The proposed interpretation will impact the communities, visitor services, and indirect businesses. Each organization stands to suffer economic hardships, and the resolution will send an important message. CHIP THOMA, Juneau, said all the cruises that emanate from Vancouver are legal, but the Seattle ones are illegal under the Passenger Services Act. The complication can be solved by Vancouver building more dock spaces and taking over the entire trade. The problem with the Seattle-based cruises is that once they leave Seattle, they don't spend any time in Canadian waters until they come back and provide an eight-hour tour of Victoria. The ships then go back to Seattle. That is the token stop. The San Diego trade stops in Ensenada, Mexico, in the middle of the night for a few hours. He said he supports the resolution, but it should be more focused. On line 6, of page 1, instead of saying the cruise ship industry, it should say the Port of Seattle. On line 8, after "cruise ships", it should say "cruise ships from Seattle". 9:16:41 AM DON HABEGER, Regional Vice President, Royal Caribbean, Juneau, said the industry is on the record in opposition to the proposed regulations. The best trade organization for getting cruise ship messages out is "our membership" and the Association of American Port Authorities. They say the rule would drastically restrict vacation options for cruise passengers, and they specifically mention Alaska. It would limit cruise markets to itineraries with a single U.S. port of call, driving all Alaska business to Canada and Hawaii business to Mexican Ports. It will eliminate Key West Florida, and numerous East Coast and Gulf ports of call. He said there is a controversy in the Hawaiian market. He comes from the foreign-flagged side of the industry, and they have a different niche in that market. The foreign-flagged cruises to Hawaii are 14-15 days long and have a different clientele. The U.S.-flagged ships in Hawaii are typically seven nights. He thinks there is room for both in Hawaii. The proposed regulation will drastically change the business in North America. He supports the resolution. 9:19:47 AM SENATOR FRENCH asked if the governor received an answer to her letter sent in December, 2007. HEATHER BRAKES, Staff to Senator Therriault, Alaska State Legislature, said she believes she has not. SENATOR BUNDE moved to report the CS to SJR 12, labeled 25- LS1292\E, from committee with individual recommendations and attached fiscal note(s). There being no objection, CSSJR 12(STA) passed out of committee.