Capital budget proposals from both the governor and state legislature propose redirecting cruise ship inspection money toward electrical hookups at cruise ship docks in Juneau and Ketchikan.

It’s been two decades since Alaska voters approved the Ocean Ranger program, placing state environmental observers on large cruise ships and creating a tax to fund the program. The tax charges a $4 per-passenger berth fee on all large-commercial passenger vessels in state waters.

The program, however, has been dead for the past five years

The ingredients are still there: the program remains written into state law, and the fee continues to bring in revenue each year — between $7 million and $9 million. But since 2019, the money hasn’t paid for any Ocean Ranger staff.

Under Alaska statute, funding sources like the per-berth fee can’t be restricted to a specific use, outside of a few exceptions. So while voters approved an intention to use funds for cruise-ship environmental regulatory compliance, the state’s budget process requires legislators to make the spending decision each time they write their annual plan.

That gives the governor, who holds the power to veto any item in the legislature’s budget, a significant lever of control. In 2019, governor Mike Dunleavy used his veto to block the legislature’s Ocean Ranger appropriation, eliminating the program’s roughly $3 million operating budget, if not its statutory authority.

That shifted oversight duties away from the 22 marine engineers contracted by the program to a smaller number of Department of Environmental Conservation employees.

In materials submitted to the legislature in 2020, the governor’s office called the program “costly for its outcomes” and said it subjected the cruise industry to a uniquely burdensome level of oversight.

At the time, the Haines Borough Assembly passed a resolution opposing the governor’s veto and expressing support for the Ocean Ranger program.

But still the berth-tax revenue continues to flow in, and redirecting it elsewhere poses a challenge. Federal regulations on taxing interstate transportation mean the funds can only be used to “offset costs of compliance programs and to provide facilities associated with handling vessels and passengers,” the legislature’s finance division says.

With the per-berth fee still charged on each cruise ship, money in the account has accumulated, up to a projected $26 million at the end of the fiscal year in June.

Now, the governor and the legislature appear to have agreed on a new destination for the funds.

Last year’s state capital budget directed just over $6 million in Ocean Ranger funds to port electrification in Whittier, allowing large ships there to draw from shore power while docked rather than running their engines for electricity, thereby reducing air emissions.

Both a Senate Finance Committee budget draft last week and the governor’s draft from December would continue down that path, spending down the fund’s balance on additional port electrification projects.

Senate Finance’s capital budget draft, released last week, would put a total of $18.3 million toward port electrification at the Juneau and Ketchikan cruise ship terminals. An earlier Governor’s draft for the capital budget proposed $15.3 million to port electrification, without specifying which ports would receive the funding.

It’s unlikely Haines will see any benefit from state spending on port electrification — at least for the foreseeable future. Adding a cruise ship to Haines’ existing power demand would exceed the area’s maximum electricity output, said borough harbormaster Henry Pollan.

The proposed spending on Juneau and Ketchikan’s terminals would empty most, but not all, of the account balance. Some of the Ocean Ranger revenue will likely go to the state’s current compliance program, the replacement for the Ocean Ranger observers.

Both the governor and the House proposed operating budgets that pull a little over $2 million in Ocean Ranger revenue for that purpose, mirroring spending from last year.
The roughly $2.2 million budget for the compliance program is a drop-off from the Ocean Ranger-era compliance funding, even as the number of cruise ship passengers in the state has risen significantly, over 30% since 2018, according to industry data.

Decreased funding has translated to fewer total compliance checks, state records show. Last season, DEC staff conducted 76 total inspections on large cruise ships, the majority of which came while cruise ships were in port.

Meanwhile, in 2018, the last year of the Ocean Ranger program, the program’s marine engineers filed 1,580 daily reports.

The changes have resulted in a greater reliance on cruise-ship industry self-reporting, and at times, cruise ship companies have denied state inspectors access to wastewater data, claiming they don’t have the same statutory authority as Ocean Ranger observers, KHNS’ Avery Ellfeldt reported earlier this month.

Last year, the department recorded 21 instances of cruise ships failing to meet wastewater regulations. In 2018, Ocean Ranger observers reported 56 wastewater violations, as well as a range of other violations, including 40 reports of oil pollution.

Former commissioner Jason Brune, however, in the 2020 hearing, said that 264 reported wastewater violations in 12 years of the Ocean Ranger program only resulted in six official notices of violation. Many of the observers’ reports of violation “had insufficient info to make the determination or were under other jurisdictions, like federal jurisdiction,” Brune told legislators at the time, adding that many of the reports “were quickly resolved” before an official notice of violation was issued.

Though the shape of the compliance program has changed in practice, Dunleavy’s attempts in recent years to officially take the Ocean Ranger program and per-berth tax out of state statute have failed to advance through the legislature, suggesting some amount of legislative support for keeping the program on life support.

Because of that, particularly given the end of Dunleavy’s term this fall, the program will remain an open possibility for future governors and legislators — or just a source for more port infrastructure improvements.