Legislature(1997 - 1998)
04/06/1998 01:15 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 480 - MAINTENANCE OF STATE MARINE VESSELS Number 0004 CHAIRMAN WILLIAMS announced the committee will be addressing HB 480, "An Act relating to maintenance of state marine vessels; and providing for an effective date." CHAIRMAN WILLIAMS mentioned they talked about this issue last year when they debated the Marine Highway Authority legislation and the interport differential is part of that legislation. Chair Williams mentioned last fall the provisions of HB 480 sunsetted from state law and he introduced HB 480 to make sure that we have interport provisions this year. Number 0012 PETE ECKLUND, Legislative Assistant to Representative Williams, Alaska State Legislature read the following sponsor statement: "AS 36.90.050 expired by sunset in August of 1997 and that expired provision provided similar considerations to those contained in HB 480. House Bill 480, as the chairman mentioned, the provisions in it were discussed also last year when we had the Alaska Marine Highway Authority legislation in front of the committee. ... Passage of HB 480 will preserve the following benefits to the state: "State Multi-vessel Maintenance Agreements: Prior to expiration of AS 36.90.050, the Alaska Marine Highway System (AMHS) negotiated with Alaska shipyards a precedent setting multi-vessel maintenance agreement for seven of its eight state ferries. This multi-vessel agreement resulted in significant savings and economic benefits to the state and Alaska's growing ship repair industry. After the expiration of AS 36.90.050, the state will no longer be able to negotiate future advantageous multi-vessel agreements with Alaska shipyards. Number 0024 "House Bill 480 Creates a Level Competitive Playing Field for Alaska's Shipyards: House Bill 480 provides for a true and accurate statement of interport differential costs giving Alaska shipyards a fair competitive basis for publicly bid vessel repair projects. House Bill 480 provides guidance for full, understandable and repeatable calculation and disclosure of costs which make-up the interport differential. "Interport Differentials Explained: Interport differential refers to costs associated with moving a vessel from point (a), the vessels base port, to point (b), any other place a bidder is located, and back. The interport differential is calculated by the state and added to the non-base port shipyard's bid. House Bill 480 directs the AMHS to adopt interport regulations. "House Bill 480 creates a level playing field between bidders for state marine vessel maintenance and repair work. A level playing field helps Alaska's shipyards draw new marine support contractors, vendors and support industries to Alaska and ultimately diversify the state's economy and bolster winter employment." Number 0037 MR. ECKLUND indicated he was available to answer question and that there were two amendments to be considered. Number 0038 REPRESENTATIVE JOHN COWDERY asked if there is a current preference for instate contractors to do the work. MR. ECKLUND replied for jobs that don't involve federal money, there is a five percent bidder's preference for Alaska companies on all types of jobs. REPRESENTATIVE COWDERY asked do we have the capacities to do maintenance on all the ferries instate. MR. ECKLUND pointed out there is two yards, one in Seward and one in Ketchikan. The one in Ketchikan is still trying to expand its capabilities. He did not know that they can do every project that might come up on the AMHS but we have the capability to do many of the projects that the system generates. REPRESENTATIVE COWDERY asked if the "Kennicott" is too large for the dry-docks or for instate repair. MR. ECKLUND referred that question to Mr. Doll. Number 0051 BOB DOLL, Captain, General Manager, Marine Highway System, Department of Transportation and Public Facilities, came before the committee in support of HB 480. MR. DOLL said HB 480 incorporates many of the practices already in place and refers or makes a possible continuation of a contract for the maintenance of the ships of the AMHS which we negotiated last year and which we would like to continue to keep in place. He mentioned they did have some suggestions in regard to the legislation and those suggestions are embodied in amendments which are before the committee. He stressed their support for the legislation. Number 0060 REPRESENTATIVE BEVERLY MASEK made a motion to adopt proposed Amendment 1 for discussion. Page 1, starting on line 12, after the word unreasonable, delete: [In making the determination, the commissioner shall consider, and document in writing, the direct and indirect benefits to the economy and labor force in the state that would be derived by performing the vessel maintenance or repair work in the state.] REPRESENTATIVE WILLIAMS noted there is a motion to adopt Amendment 1. He asked Mr. Doll to speak on it. Number 0062 MR. DOLL stated it was the department's view that the objectives of the legislation, and the words contained in the original document, are always a part of our considerations. He thought the committee would appreciate that the issue is always, what is the best way to get the work done, to some degree the competition between the costs (usually involved in getting work done in Alaska versus getting it done outside) are always before us. Mr. Doll said, "Where the advantages are clear we would like to be able to get the work done in the area that includes the lowest costs that we can possibly generate." MR. DOLL stated the language of the original bill would create a requirement to do a rather extensive economic survey that's certainly beyond the capacity of anybody at DOT/PF to complete. To know a purpose as far as they could determine, what we do with it once it had been completed. We always consider the same factors which are where's the best location and what's the best way to get the work done on ships on the marine highway. Based on their experience last year he believes that they're going to find more often then not that the best way to do it is with a unified contract in which all the ships are being maintained in Alaska. Number 0077 MR. DOLL addressed the question raised earlier regarding whether the Alaska shipyards are capable of doing all of the ships. He said the only shortcoming that he knows of is with the Kennicott, she has a set of stabilizers that project from the bottom of the hull out at an angle of 20 or 30 degrees, they extend the clearance that's required between the bottom of the ship and the bottom of the dry dock. He believes, just about every time they dry-dock that ship, they're going to want to extend those stabilizers. He indicated he's not sure at this point that the dry docks in Alaska are going to be able to do that. That's the only qualification, other than that, the Ketchikan Shipyard can certainly handle all of them. REPRESENTATIVE COWDERY asked how would you handle out-of-state damage, a vessel damaged in the Seattle area. Number 0093 MR. DOLL replied the U.S. Coast Guard is probably going to dictate that outcome for us. Depending on what it is, it may have to be completed or corrected immediately and if that's the case, we're going to be told that it has to be done before the ship can proceed any further. If we have discretion, either to postpone it or to do it after the ship has arrived in another location, they would certainly exercise that. But most often the circumstances are going to dictate to us where we're going to get it done. Number 0100 CHAIRMAN WILLIAMS asked Mr. Doll how does Amendment 1 affect the fiscal note. MR. DOLL replied the legislation as originally drafted, would require a rather extensive - a determination in a case of every ship, every contract that was let, to determine it's economic effect on the entire state. If this language is eliminated so is that economic determination eliminated and thus they can come up with a zero fiscal note. By the way that would apply to all the departments that had to get this type of work done which would include the university, he assumes at the minimum, and so those costs would grow with every contract that was written for this purpose. With the amendment in place, those costs do not exist, thus we come up with a zero fiscal note. Number 0012 REPRESENTATIVE KIM ELTON referred to page 1, line 8, "determines in writing," whether or not that language is redundant if they're taking out the language below, or whether or not that language needs to remain on line 8. He indicated they're doing a second, that this refers to another action by the agency, that the first in writing (in line 8) would mandate that the commissioner would have to determine in writing that there is no shipyard facility. He said that's different from the economic analysis that's required in the language that they're deleting. Representative Elton wants to make sure that that's the case before they vote on the amendment. MR. ECKLUND responded you're correct, those are two different things. The amendment would delete the economic determination, there would still need to be "in writing" (wouldn't have to be an in depth economic determination), that there's a shipyard in the state that can do the service at a reasonable cost. REPRESENTATIVE ELTON said so that would be, the determination would be to be made, for example in the stabilizer problem. MR. ECKLUND agreed. Number 0131. REPRESENTATIVE MASEK made a motion to adopt proposed Amendment 1. CHAIRMAN WILLIAMS asked whether there was any objection. There being none, Amendment 1 was adopted. Number 0137 MR. ECKLUND referred to proposed Amendment 2. He explained SB 192 (companion to HB 480) was amended in this same fashion. Amendment 2 would conform the two pieces of legislation. There's a shipyard in Seward and there's one in Ketchikan - interport differential would apply within those two shipyards, that's the effect of the amendment. Page 2, line 25-26: Delete [located outside of the state] Page 2, line 27: Delete [outside of the state] Page 2, line 29 Delete [Alaska] Insert the designated base port Number 0143 REPRESENTATIVE MASEK made a motion to adopt proposed Amendment 2. CHAIRMAN WILLIAMS asked whether there was any objection. There being none, Amendment 2 was adopted. REPRESENTATIVE COWDERY asked if they had eliminated the fiscal note. UNIDENTIFIED SPEAKER replied that is correct. REPRESENTATIVE COWDERY asked who does most of the private sector's work, is that done in Ketchikan or Seward. Number 0149 MR. DOLL stated the Alaska Ship and Dry Dock in Ketchikan most often does the bulk of the AMHS annual maintenance. The shipyard in Seward has traditionally done those ships that are located in the Prince William Sound area, in part because of the effects of the interport differential as amended in this bill. It requires us to include the (indisc. - noise) so that moving a ship from there to Ketchikan. And in part because not all of these ships are capable of making that transit. Of the eight ships of the AMHS, let's say typically two of them will be done in Ketchikan and the other two may most likely be done in Seward. REPRESENTATIVE COWDERY said his question was on the privately owned vessels. MR. ECKLUND indicated there is a person on line (teleconference) in Ketchikan who might be able to answer that question. Number 0163 DOUG WARD, Project Manager, Alaska Ship and Dry Dock, testified via teleconference in support of HB 480. He stated, "I think Mr.Ecklund did a very good job of summarizing the basis of our support for the bill - the multi-vessel agreement I think is mutually advantageous. We appreciate the efforts of the AMHS, Mr. Doll put forth to execute - and last year's multi vessel agreement. And with this bill we'll be able to negotiate a similar mutually advantageous bill for next year's repair season." MR. WARD replied to the question on private commercial work. He said, "Here in Ketchikan we're expanding our customer base, as you know, we've had a long-term operating agreement since last July, and since that period the commercial fleet owners I think are becoming comfortable in the knowledge that the Ketchikan shipyard has the full support of the community of Ketchikan, as well as the state of Alaska, and are comfortable in bringing their vessels to our shipyard in Ketchikan now with this added ability of long-term agreement. So our share of commercial work is growing steadily, particularly since last July, with the execution of our long-term operating agreement. I know that the Seward shipyard does a very good job of marketing the commercial fleet operators in Kodiak and the Gulf regions. So, both yards do have active commercial repair ongoing agreement." REPRESENTATIVE COWDERY asked for a brief explanation of his abilities and capabilities in Ketchikan [Alaska Ship and Dry Dock]. Number 0184 MR. WARD replied, "We're officially a full-service shipyard. We're able to execute a large scale of steel fabrication projects. That was evident with the barge repair where we replaced the bottom of a barge in less than 30 days - a very large steel job. We have an excellent coating program here and we're able to apply coating, even with the weather that we have. We've provided military specifications coatings for Coast Guard work, and so on. We have a full-service machine shop where we're able to execute most of the work required for maintenance of the propulsion units on the state ferries. We've got lathe capabilities, an excess of 50 feet, which would handle the largest state shaft requirements on the 'M/V Columbia.' So there is, with the exception of perhaps some speciality items on the engine work, maybe some refrigeration issues when we'd have to bring in a specialist from outside and perhaps send out some of the parts on some of the propulsion systems. We're essentially a full-service shipyard in Ketchikan." Number 0199 CHAIRMAN WILLIAMS asked Mr. Ward to address the problem of the stabilizers on the "Kennicott." MR. WARD explained that they haven't seen the exact dimensions yet, they're looking forward to doing that. They are, however, looking at various modifications to the existing dry dock that will accommodate the stabilizers so they're fully extended. They can certainly handle the vessel's displacement and draft, he thinks some pockets in the wing walls could be built in place to accept the stabilizers when they're extended. Number 0206 TOM MOORE, First Mate, Motor Vessel "LaConte," Marine Highway System, Department of Transportation and Public Facilities, testified via teleconference in support of HB 480. He said he just took the "LaConte" in March to Portland and one of the problems that they had, it wasn't a server problem but, of course, when you have to be there at a certain time you have to go weather permitting. He indicated the trip between Cape Flattery and over the Columbia River Bar was very interesting. If they could have stayed in Ketchikan it would have been a lot cheaper, he believes they have adequate facilities for handling most of the work for the AMHS. Number 0215 MR. MOORE said the one question he has is the weather for doing outside painting and hull work, and stuff, it seems to have been a problem in the past. If they say that they're taking care of that, he's in full support of this bill. He indicated it's very good for the state, communities and the local workforce. The AMHS could use more support from the state legislature, he sees there's support from Alaska's U.S. Congressmen, this will help in the long run. Mr. Moore reiterated his support for HB 480. CHAIRMAN WILLIAMS jokingly said Ketchikan is the banana belt of Alaska and asked Mr. Ward to speak to that. Number 0223 MR. WARD pointed out they are currently preparing to wind up a $60,000 grant, studying the cost-effective enclosure technology for floating dry dock. He'll be going to Palm Beach, Florida, to deliver a report to them and extend his request for a quarter of a million-dollar grant to hold the design competition for enclosure of floating dry dock, this particular dry dock is in Ketchikan. Being in that they're in the sunbelt, they could use that for shade as well. Number 0233 MR. ECKLUND noted he talked to DOT/PF and the drafter this morning regarding proposed Amendment 3, this would clarify that the AMHS is going to write interport differential regulations. If there are other departments that have vessels, they're going to refer to those regulations when they calculated their interport differential for those vessels. He indicated DOT/PF supports this and can testify on it if they wish. Page 1, line 11, after by Insert: criteria established by the Alaska marine highway system under this section, Number 0246 REPRESENTATIVE ELTON indicated this raises a whole new issue for him, "criteria established by the Alaska marine highway system." He said, "I would hope that what they would do is they would work with the university and the Department of Fish and Game because clearly some of the dry-dock needs of a research vessel may be different than the dry-dock needs of a ferry. From what I understand then those needs and the criteria developed would be developed by the marine highway system and I would hope that that would occur in consultation with other agencies that are out there." MR. ECKLUND said that is correct, Mr. Doll is going to testify on that. Number 0254 MR. DOLL stated the intent of this amendment is to simplify the writing and the paperwork associated with adopting these regulations. The apprehension is, that if we left the wording as it appeared originally, that it would require a similar set of regulations to be adopted by each of the departments. What we're attempting to do is to minimize the amount of effort that has to go into this - complying with this legislation by having the marine highway system write the regulations which would probably be the most extensive - all inclusive. And then those departments that operate other vessels, usually smaller, cold employ those ports of the marine highway system regulations that would apply to their ship and avoid the necessity for them to go through the same drill each in their turn. He indicated this was suggested to him by the Office of the Attorney General. And, in the interest of saving paperwork and effort, that's the motivation behind it. REPRESENTATIVE ELTON said he will support the amendment. He suggested they touch base with the university and the Department of Fish and Game to find out the comfort level that they may have. CHAIR WILLIAMS mentioned someone from the Department of Fish and Game is here to testify. Number 0271 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game, came before the committee. He said, "With me is Paul Larson, who is the Deputy Director for the Commercial Fisheries Management [and Development] Division - they operate vessels that the department operates in. Just to respond briefly, in general to your question, and then if you have more specifics Mr. Larson would be the one to address them to. But I think in general, the concept of this amendment is a good one and it would, as it was described by the marine highway system, be a broad basis which then we would be able to work in specialized to our needs and we are comfortable with that." MR. BRUCE said in some respects the bill will simplify procedures that they have to go through now to maintain their vessels and that they won't have to go through competitive bids in certain cases. Number 0282 REPRESENTATIVE MASEK made a motion to adopt Amendment 3. There being no objection, Amendment 3 was adopted. Number 0287 JAMES PRUITT, President, Seward Ship Dry Dock, testified in support of HB 480 via teleconference. He noted they have a similar repair maintenance agreement with the state, and that they have just completed the M/V "Tustumena," which is now in port in Seward getting ready to go back into service. Mr. Pruitt indicated they have also worked on the M/V "Bartlett" in the past. Number 0291 JAMES PRUITT said, "We are also a full-service shipyard, capable of hauling five thousand tons, and a capacity of about 350 feet long. We also have the capability of doing propulsion work on American Bureau of Shipping, and Coast Guard inspected [vessels] to do so. So I think we're fortunate that we do have two qualified shipyards instate, with workforces in place, in communities that need the work. And this seems like a win, win situation for all." Number 0297 REPRESENTATIVE COWDERY made a motion to move HB 480 as amended, with individual recommendations and attached zero fiscal note. REPRESENTATIVE ELTON objected for the purpose of asking two questions. He asked Mr. Ecklund what the definition of a marine vessel, he's assuming we're not talking about 18 foot Boston Whalers that are used for enforcement purposes. MR. ECKLUND referred that question to Mr. Doll. MR. DOLL stated, "That's an easily defined term, the first cut at it that I would make would be a ship that operates in saltwater or in the open ocean of some sort, rather than a river craft or lake craft." Number 0305 REPRESENTATIVE ELTON stated that definition would be made through the process of establishing, of the criteria that the department would establish, at some point you would try to determine whether or not an 18-foot Boston Whaler is... MR. DOLL remarked, "I think we would define it as widely as we could in order to make sure we had covered all of the contracts that any state agency had regarding a vessel. I think if a particular agency wanted to exclude a vessel, they'd have to make a case to do that. Of course, then it would be their own determination in any case. I think the vessels which were contemplated, by the suggestions made to us for this amendment - Amendment 3 that we added, were typically the fish and game vessels, the law enforcement vessels. To my knowledge that we didn't contemplate, I haven't heard anybody discuss anything other than those salt water vessels." REPRESENTATIVE ELTON indicated the reason he is asking the question is because when you take the definition of whatever it may be of a marine vessel, and then you add to the definition shipyard facility, he wants to make sure that a local company who may not be a shipyard facility, but does have the capability of working on an inboard engine or does have the capability of patching a hole on a fishery's enforcement vessel in a skiff size that that's allowed. Number 0318 MR. ECKLUND replied the portion of HB 480 that you're talking about is actually verbatim of the law that sunsetted, so different departments must have addressed it in some manner, he's not sure what that manner was, but it's the same language that was in law. REPRESENTATIVE ELTON asked, "When you make a determination on the interport - when you determine there is no shipyard facility located in the state that is equipped or qualified to perform a particular function, what happens in the case when you have a conflict for the shipyard. For example, maybe there is a commercial user that has tied-up the dry dock space for a certain period of time and you have a certain period of time, for example in which you can lay-up the 'LaConte' for scheduling purposes. How do you figure that into this kind of an equation, or do you just have to take the bid and then take the time that may be available?" Number 0326 MR. DOLL explained normally they would specify to the shipyard in the invitation to bid - the window of time during which the work could be completed. There certainly can arise cases where the shipyard may ask for a few days, one side or another, because of some particular conflict. He said, "Even after the contract is let, there are always emergency cases where a shipyard is asked to help keep the ship on top of the water, or perhaps been hold or anything of the sort. And, certainly the cruise ships operating here in Southeast would be prime candidates for that kind of priority. I think that those kinds of things are worked out, sort of ad hoc, and sometimes we might even have to defer to somebody whose got an emergency job that needs to be done in order to avoid pollution, those kinds of things would drive the decision-making in that case. Maybe I should ask our contracting officer to comment further on this, he may have encountered such situations, if that's all right." Number 0336 MARK O'BRIEN, Chief Contracts Officer, Office of the Commissioner, Department of Transportation and Public Facilities, came before the committee. He said it has occurred in the past where a yard is tied-up. One option that the department always has is to send that project out for competitive bid. And if the shipyard then elects not to participate in that ship, then it will be likely going out- of-state. REPRESENTATIVE ELTON stated nothing in this bill would force the department to take it or leave it as far as time in the shipyard. MR. O'BRIEN responded in the past that has not been a problem, the shipyard will simply decline the work on that project. Number 0342 REPRESENTATIVE ELTON asked because they're tied up and... MR. O'BRIEN replied right. If that window does not exist in the shipyard, perhaps Mr. Ward would like to address that issue. When the time frame has not existed in the shipyard, they have passed on that work, and then we can put it out to competitive bid. Number 0345 CHAIRMAN WILLIAMS asked Representative Elton if he still upheld his objection. REPRESENTATIVE ELTON indicated he will vote to move the bill out and removed his objection. CHAIRMAN WILLIAMS announced, hearing no objections, CSHB 480, as amended, moved from the House Transportation Standing Committee with individual recommendations and attached zero fiscal note.
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