Emission Control Area Update from Bob Dindinger

January 1, 1970

Last week, the EPA began enforcing the new fuel requirements under the Emission Control Area (ECA). Since many of our members have been asking questions regarding implementation, the impact of the EPA’s agreement with Totem Ocean Trailer Express (TOTE), and the focus of AlaskaACT going forward, we are sending this update. On August 1, 2012, vessels traveling within 200 miles of the U.S. coastline were required to shift to low sulfur fuel. The costs were estimated to be around $200 more per ton, or approximately $72 per passenger, for a one week cruise. Unfortunately, the bunker market is reporting costs at roughly $250 more per ton than the previously used fuel. This calculates to approximately $90 per passenger on a one week cruise, burning 900 tons with 2,500 passengers. This is also about 180% more than the $50 voter initiative head tax, which led to a 14% reduction in Alaska’s cruise capacity. Over the course of the short Alaska season, increased fuel could cost a single ship between $4 million to $4.5 million more. As you may have heard, the EPA has reached an agreement with TOTE to suspend the requirement to burn higher priced fuel. In exchange, TOTE has agreed to convert two vessels (eight engines) to Liquefied Natural Gas (LNG). It is legitimate for Alaskans to ask what this means to our economy and shipping goods to Alaska. When hearing about the announcements, Senator Lisa Murkowski had the following response: “While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars,” she said. “My fear is that the total costs of compliance will simply be passed on to Alaskans.” We will not speculate on these issues but would like to acknowledge Senator Murkowski’s continued fight for all Alaskans. The ECA still poses a significant economic threat to Alaska without demonstrated scientific justification. In our industry, passing the costs along to consumers is not always an option. Vacations for many travelers have become extremely price sensitive and Alaska could become less attractive for potential guests and less economic for the cruise lines. This could lead to fewer ships and would be devastating to many businesses, communities, and individual Alaskans who depend upon the visitor industry. We also appreciate the efforts by Governor Parnell to file a legal challenge against the EPA. When the Federal Government overreaches, it’s nice to know you have a State administration that will stand up for the rights of Alaskans. Many people are not aware that the cruise industry has been trying to negotiate with the EPA on a proposal that would establish a four year pilot project. The project would achieve the same health benefits sought by the EPA through the use of even better fuels and the use of shore power in populated areas, while using less expensive fuel when traveling the hundreds of miles of remote areas and out to sea. The proposal, called populated weighted averaging, includes ambient air testing to determine its effectiveness. How can the EPA agree to a five year suspension of the ECA but refuse to consider an entire industry’s proposed four year pilot project with actual testing? Just like the exemption for the Great Lakes region, which is an area of high population and ship traffic, the ECA is not based upon science; it is based upon politics. That is why we need to continue to fight the EPA. We must continue our efforts to educate Alaskans that the ECA will cost all of us, hurt our economy, and threaten businesses and thousands of jobs across our state. We must also continue to contact our elected officials. Please write Governor Parnell, thank him for challenging the EPA on behalf of Alaskans and encourage him to keep up the fight. Please write our Congressional Delegation and let them know we need a solution for all Alaskans. Request they do everything they can to push the EPA to support reasonable solutions, such as the industry’s populated weighted averaging. Thank you, Bob Dindinger Alaska Travel Adventures