Legislature(2001 - 2002)

04/26/2001 01:43 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SB 130-ALASKA MARINE HIGHWAY AUTHORITY                                                                        
SENATOR  ROBIN  TAYLOR,  sponsor  of  SB  130,  gave  the  following                                                            
explanation of the measure.                                                                                                     
SB 130 is essentially  the same measure that he introduced  about 10                                                            
years ago when  he was a member of  the House.  Senator Lloyd  Jones                                                            
introduced a companion  bill in the Senate.  The concept  originated                                                            
from studies done  on Southeast Alaska transportation  over the last                                                            
25 years.  Those  studies have concluded that transportation  issues                                                            
should be removed from  the influence of politics by establishing an                                                            
autonomous board  that would hire staff.  An autonomous  board would                                                            
also provide  for  continuity and  hopefully  develop an  intermodal                                                            
system of transportation  to interconnect the expanding  road system                                                            
of Southeast  Alaska.   None  of that has  occurred  in the last  37                                                            
years. Unfortunately,  that  operation, in  the words of Jim  Ayers,                                                            
"is in a death spiral."                                                                                                         
SENATOR TAYLOR  said that without  continuity in transportation,  he                                                            
doesn't believe  the ferry system will continue to  exist, even as a                                                            
shadow of what it was in  the past.  The entire economy of Southeast                                                            
Alaska depends  upon a certain level of service that  may or may not                                                            
be available.  If those  communities are going to survive and have a                                                            
viable  transportation  link, this  bill is  crucial.   This  matter                                                            
always  come down  to a confrontation  between  the legislative  and                                                            
executive branches.  Every  governor wants to be able to appoint the                                                            
people who will  run the Alaska Marine Highway System  (AMHS).  This                                                            
administration  has been no more successful in that  effort than has                                                            
any previous administration.   Senator Taylor expressed concern that                                                            
the head of the entire  transportation system and the people who run                                                            
it change every  four years and the replacements have  no background                                                            
in that  system.  That has  led to a lack  of continuity, a  lack of                                                            
expertise, and wildly vacillating concepts.                                                                                     
SENATOR TAYLOR  noted he is not aware  of any marine highway  system                                                            
in the world  that is building high  speed ferries for normal  runs.                                                            
High  speed ferries  are being  built for  critical  runs where  the                                                            
existing system has no  capacity left.  Passengers are paying two to                                                            
three times the cost to get to their destination quicker.                                                                       
Number 467                                                                                                                      
CHAIRMAN  COWDERY asked  if the high  speed ferries  are capable  of                                                            
running in big seas.                                                                                                            
SENATOR  TAYLOR said  that every system  he has  contacted does  not                                                            
operate  fast ferries in  adverse weather  conditions. In  addition,                                                            
staff from  the Department of Transportation  and Public  Facilities                                                            
(DOTPF) have  said they would  not be able  to operate a fast  ferry                                                            
several days  each year; high  seas are a  major factor, as  well as                                                            
cost  and  maintenance.     High  speed  ferries  are   probably  an                                                            
innovative  idea that will develop  over time to where they  will be                                                            
less expensive  to operate.   He  pointed out  that issue should  be                                                            
resolved  by  a  board   of  directors  with  expertise   in  public                                                            
transportation, and specifically marine transportation.                                                                         
CHAIRMAN  COWDERY  noted that  Senators  Ward, Taylor,  Wilken  were                                                            
present  and  that Senator  Elton  was ill.    He then  took  public                                                            
Number 664                                                                                                                      
MR. GEORGE  CAPACCI, General  Manager of  the Alaska Marine  Highway                                                            
System, read the following prepared statement to the committee.                                                                 
     It  is  important  that I  be  here today  to  express  my                                                                 
     concerns  about  the  proposed  marine highway  authority                                                                  
     contained  in SB 130.  These concerns are essentially  the                                                                 
     same as Commissioner Perkins  presented in 1997, with some                                                                 
     important  updates about the  management and direction  of                                                                 
     the Alaska Marine Highway.                                                                                                 
     Let  me begin  with  a review  of  why the  Alaska Marine                                                                  
     Highway  Authority  is not  in the  best interest  of  our                                                                 
     customers,  the citizens of Alaska, and the Alaska  Marine                                                                 
     Highway employees.                                                                                                         
     First  off, the authority  creates more  problems than  it                                                                 
     solves.  SB  130 diminishes public accountability.   Under                                                                 
     the present  system, the marine highway system  management                                                                 
     is accountable  to the public.  Concerns and requests  are                                                                 
     responded  to quickly  and completely.   They have to  be.                                                                 
     Elected  officials are responsible  for the management  of                                                                 
     the  marine  highway  and elected  officials  have  to  be                                                                 
     responsive to the public  they serve.  Sometimes that is a                                                                 
     time consuming  and cumbersome process but it  is the most                                                                 
     responsive  way  to handle  the  people's business.    The                                                                 
     establishment of an authority  would diminish the publics'                                                                 
     accountability  of marine highway management by  inserting                                                                 
     an  appointed board  between  management and  the people.                                                                  
     Marine highway  management will no longer answer  directly                                                                 
     for  the  elected  governor   or for  any  other  elected                                                                  
     representatives.  The board,  and not the governor nor the                                                                 
     legislature,   will  make  management  decisions.     Once                                                                 
     appointed,  board members will  not be accountable to  the                                                                 
     public.   A board member  may be removed  only for cause.                                                                  
     The  accountability of  the marine  highway management  to                                                                 
     the communities they serve  will be substantially reduced.                                                                 
     We believe this is not desirable.                                                                                          
     SB  130 diminishes  public influence  on decision making.                                                                  
     Alaskans  know  who is  in charge  of the  marine highway                                                                  
     system.   When things are running  well, they know who  to                                                                 
     compliment.   When things aren't going so well,  they know                                                                 
     who  to contact.  Believe  me, they  know who to contact.                                                                  
     This  bill changes all  of that.   When accountability  of                                                                 
     elected officials  changes, public access to the  decision                                                                 
     making  process  also changes.   Although  a  person or  a                                                                 
     community  may ask the  board of directors  of the system                                                                  
     for  a schedule  change  or a special  run,  there may  be                                                                 
     little  or no pressure to respond.   The CEO is insulated                                                                  
     from the effect of public pressure.                                                                                        
     Current  community  input to  the fleet's  schedule is  an                                                                 
     ongoing  effort.    Annually  we solicit  this  input  and                                                                 
     adjust  our schedule  as much  as possible  to meet  those                                                                 
     demands.  We believe Alaskans  appreciate direct access to                                                                 
     the public systems that  most affect their lives, and this                                                                 
     bill  will have  a  substantial  negative impact  on  that                                                                 
     The  Alaska Marine  Highway  System is  not  broken.   The                                                                 
     marketing  and  pricing  study  was  recently  completed.                                                                  
     There  is a  lot that  is right  about the  Alaska Marine                                                                  
     Highway  System.    The  ships  have  an enviable  safety                                                                  
     record,  they generally  run on time,  they provide  safe,                                                                 
     economical,   comfortable  and   reliable  transportation                                                                  
     service   to  our   traveling  public.     The  currently                                                                  
     completed,  back in September of last year, marketing  and                                                                 
     pricing  study, found  that 93  percent  of our customers                                                                  
     rate  their AMHS  experience as  good or very  good.   The                                                                 
     study also  concluded of the top ten locations  visited by                                                                 
     summer of 1999 visitors,  five locations - Anchorage, Mat-                                                                 
     Su/Denali,  Fairbanks, Valdez and the Kenai Peninsula  are                                                                 
     not  even in Southeast  Alaska.   So five  of the top  ten                                                                 
     locations  are not even in Southeast Alaska.   This points                                                                 
     out  that   we  are  carrying   visitors  and  passengers                                                                  
     throughout  the  state  of Alaska.    The  entire state's                                                                  
     economy  therefore  benefits  from  the  marine highway's                                                                  
     Of  course,  I'll be  the  first to  admit  some problems                                                                  
     occur.   They are inevitable  in an  operation that is  as                                                                 
     vulnerable  to as  many variables  as the  marine highway                                                                  
     system  is.  It is a  system that has  a large and varied                                                                  
     constituency,  and  everyone  has an  opinion  as to  what                                                                 
     should  be  done and  how it  should  be operated.    But,                                                                 
     overall,  the system is doing  what it was designed  to do                                                                 
     in  the  mid-60s   -  transporting  people  and  vehicles                                                                  
     throughout coastal Alaska  in the context of an intermodal                                                                 
     transportation  network.    It is  a  credit to  the  hard                                                                 
     working  crewmembers and dedicated  staff that we operate                                                                  
     as well as we do.                                                                                                          
     SB  130 adds  another  administrative  layer.   This  bill                                                                 
     would  set  up another  administrative  layer  over  which                                                                 
     neither  the  governor  nor  the  legislature   will  have                                                                 
     control.   We believe  that is  bad public  policy.   But,                                                                 
     even worse, it doesn't fix  anything.  There is nothing in                                                                 
     the bill  that encourages stability  or financial support                                                                  
     by the  legislature.   There is nothing  in the bill  that                                                                 
     addresses the increasing  capital needs of an aging fleet.                                                                 
     There are major challenges  at marine highways that we are                                                                 
     addressing with strong leadership  and action.  One of the                                                                 
     biggest  problems that  you can help  relieve is the  time                                                                 
     and energy that now is being  spent controlling the damage                                                                 
     caused  by anxiety  over our  future.  That  is a problem                                                                  
     that you can materially  affect by telling the whole story                                                                 
     in this very  successful state adventure by demonstrating                                                                  
     your  support  for  its  future and  helping  us  fix  the                                                                 
     problems  that we  have.  The  system is  nearly 40  years                                                                 
     old.  The ships are aging,  the system is running the same                                                                 
     type  of operation it  did 38 years  ago with more public                                                                  
     service.   In 1976, for example,  Sitka was provided  with                                                                 
     268 trips  and in 1999 that number  was 325 trips.   Today                                                                 
     we are responding  to the challenges of shrinking  funding                                                                 
     and increasing regulatory demands.                                                                                         
     I'd  like  to  talk  a  little  bit about  AMHS  maritime                                                                  
     experience.  Although it  isn't specifically stated in the                                                                 
     proposed   legislation,   an  implicit   purpose  for   an                                                                 
     authority  is apparently  to insulate  the marine highway                                                                  
     system from  inexperienced managers appointed  through the                                                                 
     political  patronage  process.   The 1989  "Acres Report"                                                                  
     recommended  that additional  experienced mariners should                                                                  
     be hired  as managers to better  understand the operation                                                                  
     of the  maritime vessels.   AMHS has  done that and  more.                                                                 
     From  myself,  the  director  of  the  Southeast  region,                                                                  
     through  the   vessel  operations  managers,  the  marine                                                                  
     engineering  manager,  the port  captain,  assistant  port                                                                 
     captain,   the  ISM/STCW  coordinator,   the  three   port                                                                 
     engineers,  the eight  vessel construction  managers,  and                                                                 
     the state's  only naval architect and our safety  officer,                                                                 
     the Alaska  Marine Highway System  is staffed with marine                                                                  
     professionals with over  500 years of vessel operation and                                                                 
     maintenance  experience.    Most of  my staff,  my senior                                                                  
     level  staff, have the title  "captain" in front of  their                                                                 
     names  and we can refer  to them because  of their master                                                                  
     mariners  documents.   This staff  exists  to support  the                                                                 
     Alaska  Marine  Highway  vessels and  conducts  its  daily                                                                 
     business to that end.                                                                                                      
     The Southeast  Transportation Plan and the Prince  William                                                                 
     Sound  Transportation Plan point  toward the future.   The                                                                 
     Southeast  Alaska Transportation Plan was a comprehensive                                                                  
     plan   that  was   developed  through   extensive  public                                                                  
     participation.   The basic tenant of the SATP  is a series                                                                 
     of  shuttle  vessels   connecting  Southeast  communities                                                                  
     coupled with a version of  the exiting mainline vessels to                                                                 
     improve   the  overall  transportation   system  for   our                                                                 
     customers.   The same  holds true for  the Prince William                                                                  
     Sound  Transportation Plan.   A vessel capable of 30  plus                                                                 
     knots is needed  to solve the elemental time and  distance                                                                 
     equation to provide daily  service in Southeast Alaska and                                                                 
     Prince  William  Sound. The  residents of  Prince William                                                                  
     Sound  communities  strongly  support  our transportation                                                                  
     planning efforts.  The residents  of Southeast Alaska have                                                                 
     uniformly supported a Southeast  transportation plan.  The                                                                 
     Southeast  Transportation  Plan  and  the  Prince William                                                                  
     Sound  Transportation Plan  are not perfect  but they  are                                                                 
     good  plans and the  best our public  process can produce                                                                  
     for essential  transportation  improvements.  These  plans                                                                 
     have wide  public support and  endorsement.  We need  your                                                                 
     support to implement these transportation plans.                                                                           
     I  believe a  firm foundation  is  being laid  for future                                                                  
     statewide transportation  services including the essential                                                                 
     Alaska Marine  Highway System. Vessels are being  upgraded                                                                 
     to comply  with ever increasing international  and federal                                                                 
     safety   regulations.      Our   crews   are   undergoing                                                                  
     standardized   training  mandated  by  the  international                                                                  
     regulations   to  be   the  most   professional  mariners                                                                  
     An  authority would  further  isolate the  marine highway                                                                  
     system from  capital funds.  The marine highway  system is                                                                 
     presently managed by DOT/PF  personnel as an integral part                                                                 
     of  Alaska's   intermodal  transportation  system.     The                                                                 
     majority  of the routes have  been designated by Congress                                                                  
     as part of  the national highway system.  As an  operating                                                                 
     arm  of  the  department,  the  system  receives  federal                                                                  
     highway  funds from  the department.   By  separating  the                                                                 
     system from DOT, as an authority,  operating independently                                                                 
     from  the rest of  the Department  of Transportation,  the                                                                 
     debate  for  funding the  marine  highway  system capital                                                                  
     improvement  projects could conceivably shift  more toward                                                                 
     the  legislature  for resolution.    This will  force  the                                                                 
     marine  highway system to compete  more aggressively  with                                                                 
     individual  communities  throughout the  state, other  DOT                                                                 
     regions, and  other agencies for its share of  the federal                                                                 
     highway funds,  rather than sharing them as one  component                                                                 
     of Alaska's intermodal transportation system.                                                                              
     While the commissioner of  DOT would serve on the board of                                                                 
     directors  of this  new authority,  it is  unrealistic  to                                                                 
     think that an organizational  component, which is separate                                                                 
     form   the  rest  of  the  agency,   and  for  which   the                                                                 
     commissioner  no longer has primary  responsibility,  will                                                                 
     receive  the  same  level  of consideration   for federal                                                                  
     highway funds  as it receives as a line agency  within the                                                                 
     The  authority  itself  provides no  mechanism  to reduce                                                                  
     subsidies.   The marine highway  system presently derives                                                                  
     about  55 percent of  its operating  funds from revenues,                                                                  
     with  the remaining  45 percent  of its  operating budget                                                                  
     appropriated  from the  general fund  by the legislature.                                                                  
     The  marine highway  provides  an essential  public  good,                                                                 
     transportation,  that cannot be provided by the  [private]                                                                 
     sector.  As  such, providing a state operating  subsidy is                                                                 
     an  appropriate  role for  government.   This  subsidy  is                                                                 
     essential   for  continuing   service  year  round   at  a                                                                 
     reasonable  price.  Nothing in  this proposed legislation                                                                  
     is  directed toward  changing that  funding relationship.                                                                  
     The  proposed  authority is  not  designated to  be  self-                                                                 
     sufficient.     It   will  continue   to  require  annual                                                                  
     legislative  appropriations  for  operations  and capital                                                                  
     improvements.     What  then  is  the  justification   for                                                                 
     establishing  it as  a state  corporation?   An authority                                                                  
     will  require additional  subsidy  to fund  its increased                                                                  
     overhead costs.                                                                                                            
     Additionally,   administrative   costs   are   likely   to                                                                 
     increase.   The marine highway system is already  unfairly                                                                 
     criticized  for its  large size of  central office staff.                                                                  
     In  truth,  the Juneau  office  staff  has  diminished  in                                                                 
     recent  years despite extensive  additional international                                                                  
     and national  safety and training regulations,  which need                                                                 
     implementation, monitoring,  and oversight.  If the marine                                                                 
     highway  system  is split  from  the rest  of DOT  into  a                                                                 
     quasi-independent    authority,    it   will   lose    the                                                                 
     administrative   support   presently   provided   by   the                                                                 
     department,  and the administrative  costs for the marine                                                                  
     highway  system will  certainly increase.   Personnel  and                                                                 
     accounting  services, which  are now  provided in part  by                                                                 
     headquarters,   would  fall  entirely  on  the  authority                                                                  
     itself,  so would engineering  services now being provided                                                                 
     by  the Southeast  region.   The system  would further  be                                                                 
     removed  from the  Federal  Highway Administration.    The                                                                 
     relations with DOT and the  Federal Highway Administration                                                                 
     would  be  complicated  since our  CFR  Title 23  for  the                                                                 
     administration of the Federal  Highway funding programs is                                                                 
     the responsibility  of the state highway agency,  which is                                                                 
     the Department of Transportation.                                                                                          
     Separate  accounting  and data  processing  systems  would                                                                 
     almost certainly  be necessary.  That authority  would not                                                                 
     be   exempt  from   the  Executive   Budget   Act,   state                                                                 
     procurement  code,  and  other state  mandated  rules  and                                                                 
     Finally, and  thankfully, in summary, the proposed  marine                                                                 
     highway authority  would be a move in the wrong  direction                                                                 
     as far as  transportation in Alaska is concerned.   We all                                                                 
     recognize  that the marine highway system cannot  continue                                                                 
     to operate as if it were  still in the 1960s.   Times have                                                                 
     changed  and the  needs of  Alaska's communities  and  the                                                                 
     traveling   public  have  changed.    The  transportation                                                                  
     network  along  Alaska's   coastline  has  changed.    The                                                                 
     changes   needed  in   the  marine   highway  system   are                                                                 
     evolutionary  as the system adapts to meet the  demands of                                                                 
     our  varied customers.   However, SB 130  takes us in  the                                                                 
     wrong  direction.  With  the help of  the legislature,  we                                                                 
     will continue to work to  ensure the marine highway system                                                                 
     truly  functions as an  integral system  and element in  a                                                                 
     well designed  state transportation system.  I  am working                                                                 
     to  bring about this  evolutionary change  to improve  the                                                                 
     marine  highway system  but this transition  must be  well                                                                 
     thought out and have the  support of the people of Alaska.                                                                 
     This takes  time and the worst  action we can take now  is                                                                 
     to create  another level of unneeded  bureaucracy as  this                                                                 
     bill  proposes to do.   Thank you for  allowing that  many                                                                 
     pages  and I would be  happy to answer  any questions  you                                                                 
     might have.                                                                                                                
Number 1400                                                                                                                     
CHAIRMAN  COWDERY asked  if the ferry  systems in  other states  are                                                            
privately owned  and, if so, how they  deal with federal  subsidies.                                                            
MR. CAPACCI said there  are a number of ferry systems throughout the                                                            
country, both  publicly and privately  owned.  Most of the  publicly                                                            
owned ferry  systems get  federal dollars  to improve and  construct                                                            
their vessels.   Their operating funds come from their  own revenues                                                            
and  from  their  state  legislatures.     Those  systems  are  very                                                            
different  from Alaska's.    Alaska has  passenger  ships that  also                                                            
carry cars  and are not used as commuter  systems. Most other  state                                                            
ferry systems do not have to deal with long distances.                                                                          
SENATOR WARD asked for  a copy of Mr. Capacci's written comments. He                                                            
also asked if any other ferry systems are run by an authority.                                                                  
MR. CAPACCI  said  he is not  aware of  all the  authorities,  but a                                                            
number of bodies  advise the Washington  Legislature and  do studies                                                            
for it, such  as tariff pricing studies.   He does not believe  that                                                            
Washington State  has a true authority that directs  the CEO of that                                                            
ferry system.                                                                                                                   
SENATOR   WARD  asked   if  the   existing  authorities   are   port                                                            
MR.  CAPACCI  said  he  would  have to  do  more  research  on  that                                                            
SENATOR WARD  commented that  he asked because  Mr. Capacci  said he                                                            
was not  in favor of authorities.   He then  noted the Governor  has                                                            
proposed  new regulations  on  cruiseships  to deal  with waste.  He                                                            
asked if the ferry  system is already complying with  the Governor's                                                            
proposed regulations.                                                                                                           
MR. CAPACCI  replied, "Through the  Chair, yes - Senator  Ward there                                                            
are a number of different ...."                                                                                                 
SENATOR WARD responded, "Okay, that's fine, thank you."                                                                         
MR. CAPACCI said, "...but yes."                                                                                                 
SENATOR  WARD asked if  the AMHS  has the ability  to acquire  state                                                            
lands so that it can develop,  sell or lease those lands in order to                                                            
supplement   its  operations,   similar  to   the  Alaska   Railroad                                                            
Corporation (ARRC).                                                                                                             
MR. CAPACCI  said he  did not  know what possibilities  exist  along                                                            
that line.                                                                                                                      
SENATOR WARD asked if Mr.  Capacci has read Sec.19.55.210, regarding                                                            
acquisition  of land and easements,  on page  6 of SB 130.  He noted                                                            
that  one of  the  cornerstones  of this  bill  is to  transfer  1.4                                                            
million acres of state  land to this new authority to offset some of                                                            
the  operational  costs.    He  again  asked if  the  AMHS  has  the                                                            
authority to accept land now.                                                                                                   
MR.  CAPACCI  said he  did  not see  that  section in  the  previous                                                            
edition of  the bill.  He repeated  that he is not sure whether  the                                                            
AMHS can accept  land at this time.  He noted that  is an intriguing                                                            
SENATOR  WARD  said,  regarding  Mr.  Capacci's   comment,  that  an                                                            
authority  would separate  the people from  the operations,  that he                                                            
believes an authority  would bring the two into closer  contact.  He                                                            
asked if that  would be eliminated  if the members of the  authority                                                            
are elected rather than appointed.                                                                                              
MR. CAPACCI said  he would have to give that question  more thought.                                                            
SENATOR WARD  said to serve  on other authorities,  candidates  must                                                            
fit certain  criteria, such  as geographic  location.  He felt  that                                                            
should solve the public  input problem and asked Mr. Capacci if that                                                            
is what he is proposing.                                                                                                        
Number 1693                                                                                                                     
MR. CAPACCI  said he  does not know  that the  Port of Bellingham's                                                             
authority runs  a maritime transportation system.   DOTPF deals with                                                            
the facilities  in Bellingham but  he is only aware of the  terminal                                                            
facilities that they operate.                                                                                                   
SENATOR  WARD  asked  Mr.  Capacci  if  he  is  familiar  with  that                                                            
MR. CAPACCI  said he is  aware they have  an authority with  elected                                                            
SENATOR  WARD again  asked  if that  would alleviate  Mr.  Capacci's                                                            
concern about public participation.                                                                                             
MR. CAPACCI  said he is not sure how  that authority relates  to the                                                            
public  and how  responsive  it is  to the  public.   He noted  that                                                            
authority  is not  developing  a transportation  system.   It  makes                                                            
decisions about the shore side facilities.                                                                                      
CHAIRMAN  COWDERY  said he  is glad  the  marine highway  system  is                                                            
already conforming  to the proposed cruiseship regulations  on waste                                                            
MR. CAPACCI said there will be expenses.                                                                                        
CHAIRMAN  COWDERY  said  the  marine  highway  system  must  not  be                                                            
conforming then.                                                                                                                
MR. CAPACCI said,  "We do conform with the outflows  but the testing                                                            
requirements  and  the reporting  requirements  and  the  monitoring                                                            
requirements   are  going  to  be   additional  administrative   and                                                            
additional costs  if the periodicity is changed.   The sampling that                                                            
we  do -  we  weren't initially  sampling  effluent,  we  had  other                                                            
measures of  whether the systems are  effective or not, but  we took                                                            
it upon ourselves to sample  those outflows and found that they were                                                            
within  specifications  so, if  a lot of  those  bills get  enacted,                                                            
there's going to be some expenses involved in that, yes sir."                                                                   
There being no further  testimony or questions, SENATOR TAYLOR moved                                                            
SB 130 from committee with  individual recommendations.  There being                                                            
no objection, the motion carried.                                                                                               

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