04/07/2025 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB47 | |
| Presentation(s): Megaproject Risk Mitigation | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 47 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 7, 2025
1:01 p.m.
MEMBERS PRESENT
Representative Robyn Niayuq Burke, Co-Chair
Representative Maxine Dibert, Co-Chair
Representative Carolyn Hall
Representative Donna Mears
Representative Zack Fields
Representative Dan Saddler
Representative George Rauscher
Representative Julie Coulombe
Representative Bill Elam
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 47(RES)
"An Act relating to Chugach State Park; and providing for an
effective date."
- MOVED CSSB 47(RES) OUT OF COMMITTEE
PRESENTATION(S): MEGAPROJECT RISK MITIGATION
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 47
SHORT TITLE: CHUGACH STATE PARK EASEMENTS
SPONSOR(s): SENATOR(s) GIESSEL
01/22/25 (S) PREFILE RELEASED 1/17/25
01/22/25 (S) READ THE FIRST TIME - REFERRALS
01/22/25 (S) TRA, RES
02/04/25 (S) TRA AT 1:30 PM BUTROVICH 205
02/04/25 (S) Heard & Held
02/04/25 (S) MINUTE(TRA)
02/11/25 (S) TRA AT 1:30 PM BUTROVICH 205
02/11/25 (S) Moved SB 47 Out of Committee
02/11/25 (S) MINUTE(TRA)
02/14/25 (S) TRA RPT 2DP 1DNP 1NR
02/14/25 (S) DP: BJORKMAN, KIEHL
02/14/25 (S) DNP: SHOWER
02/14/25 (S) NR: TOBIN
02/17/25 (S) RES AT 3:30 PM BUTROVICH 205
02/17/25 (S) Heard & Held
02/17/25 (S) MINUTE(RES)
02/26/25 (S) RES AT 3:30 PM BUTROVICH 205
02/26/25 (S) Moved CSSB 47(RES) Out of Committee
02/26/25 (S) MINUTE(RES)
02/28/25 (S) RES RPT CS 6DP 1NR SAME TITLE
02/28/25 (S) DP: GIESSEL, HUGHES, DUNBAR, CLAMAN,
MYERS, WIELECHOWSKI
02/28/25 (S) NR: KAWASAKI
03/10/25 (S) TRANSMITTED TO (H)
03/10/25 (S) VERSION: CSSB 47(RES)
03/11/25 (H) READ THE FIRST TIME - REFERRALS
03/11/25 (H) TRA, RES
03/20/25 (H) TRA AT 1:00 PM BARNES 124
03/20/25 (H) Heard & Held
03/20/25 (H) MINUTE(TRA)
03/25/25 (H) TRA AT 1:30 PM BARNES 124
03/25/25 (H) Heard & Held
03/25/25 (H) MINUTE(TRA)
03/27/25 (H) TRA AT 1:00 PM BARNES 124
03/27/25 (H) Moved CSSB 47(RES) Out of Committee
03/27/25 (H) MINUTE(TRA)
03/28/25 (H) TRA RPT 2DP 3NR
03/28/25 (H) DP: CARRICK, EISCHEID
03/28/25 (H) NR: MOORE, MINA, STUTES
04/07/25 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
SENATOR CATHY GIESSEL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented CSSB 47(RES).
ROGER MARKS, Board of Supervisors
Glen Alps Road Service Area
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on CSSB 47(RES).
RICKY GEASE, Director
Division of Parks and Outdoor Recreation
Alaska Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on
CSSB 47(RES).
JEREMY CLARK, Senior Vice President
Pegasus-Global Holdings Inc.
Seattle, Washington
POSITION STATEMENT: Co-presented the Megaproject Risk
Mitigation presentation.
JOE MILLER, President/CEO
Pegasus-Global Holdings, Inc.
Charlotte, North Carolina
POSITION STATEMENT: Co-presented the Megaproject Risk
Mitigation presentation.
ACTION NARRATIVE
1:01:54 PM
CO-CHAIR BURKE called the House Resources Standing Committee
meeting to order at 1:01 p.m. Representatives Coulombe, Fields,
Rauscher, Saddler, Hall, Mears, Elam, Dibert, and Burke were
present at the call to order.
SB 47-CHUGACH STATE PARK EASEMENTS
1:02:30 PM
CO-CHAIR BURKE announced that the first order of business would
be CS FOR SENATE BILL NO. 47(RES) "An Act relating to Chugach
State Park; and providing for an effective date."
1:02:53 PM
SENATOR CATHY GIESSEL, Alaska State Legislature, as prime
sponsor, presented CSSB 47(RES). She paraphrased from the
sponsor statement [included in the committee packet], which read
as follows [original punctuation provided]:
Chugach State Park hosts 1.5 million visitors annually
more than Denali National Park and most of the
road traffic leading to the park originates from
outside of the Anchorage Hillside neighborhood. The
roads that provide access to the park, including the
Glen Alps and Upper DeArmoun/Canyon Road corridors are
in need of significant upgrades. In 2023, Anchorage
residents voted to establish the Chugach State Park
Access Service Area (CASA), which includes the
Anchorage Bowl, creating the first mechanism for
financing capital upgrades to roads leading to Chugach
State Park. In 2024, Anchorage voters approved a $4
million bond to fund much needed improvements to
Canyon Road, which is in poor condition. This project
involves pacing and drainage for about 0.6 miles of
the road, extending to the park boundary. About half
of this section lies within Chugach State Park, and
because the municipality cannot bond for improvements
on state-owned land, those portions fall outside the
scope of the bond.
To address this, SB 47 reinforces existing statutes
designating the Department of Transportation and
Public Facilities (DOT&PF) as the agency responsible
for maintaining public roads within Chugach State
Park. This ensures DOT&PF will continue managing the
maintenance of roads that provide access to this
important state resource. Additionally, the bill
grants the Department of Natural Resources (DNR) the
authority to grant easements or rights-of-ways within
Chugach State Park to municipalities. This provision
allows municipalities to improve access to the park,
provided they meet certain requirements. Before
granting any easements, the DNR commissioner must
provide public notice and hold hearings. If an
easement is granted, responsibility for maintaining
and repairing the road will shift from the state to
the municipality.
By allowing municipalities to assume responsibility
for certain infrastructure improvements, SB 47
provides the flexibility needed to support upgrades
that will increase safety, access, and overall public
enjoyment of Chugach State Park. It creates a pathway
for municipalities to invest in and maintain key
resources within their community, improving access to
trailheads and other park features.
1:07:42 PM
ROGER MARKS, Board of Supervisors, Glen Alps Road Service Area,
explained that road service areas (RSA) can be thought of as
small, independent districts on the hillside that manage area
road maintenance (e.g. road repair, grading, drainage, and snow
removal for a particular area). There are roughly 20 of these,
and they are paid for by area property taxes. He explained that
RCAs were set up to decentralize snow removal. He pointed out
that elevation changes result in a variety of microclimates in
the area and decentralized snow removal has been effective. He
said that the roads in this RSA lead to the Glen Alps and Rabbit
Lake trail heads - which are among the most utilized in the
park. He explained that most of the traffic in this RSA
originates outside of the RSA, passing through it to reach the
trailheads. This traffic is the leading cause of road
depreciation. He said that the Anchorage municipality is not
able to bond on roads within the park. Few residents and a low
tax base have resulted in an inability to cover the costs of the
capital upgrades, which he estimates at millions of dollars. He
said that in 2023, a service area was created to finance
infrastructure for access through the park. In 2024, Anchorage
voters voted for a bond to finance upgrades to Canyon Road. He
stated that the road is in terrible shape. However, the bond
cannot be applied to park assets; therefore, the municipality is
seeking an easement from the state. He emphasized the
importance of maintaining the roads to ensure safety.
1:12:28 PM
REPRESENTATIVE COULOMBE sought to confirm that the road would be
maintained by the Limited Road Service Area (LRSA).
MR. MARKS affirmed.
REPRESENATIVE COULOMBE asked whether the maintenance would be
perpetual.
MR. MARKS answered yes, in perpetuity.
1:13:23 PM
CO-CHAIR BURKE open public testimony. After ascertaining that
no one wished to testify, she closed public testimony.
1:13:48 PM
REPRESENTATIVE COULOMBE asked what would happen if the
municipality doesn't want to [maintain] it anymore.
SENATOR GIESSEL said that is not an issue of concern for the
municipality. She reiterated that [maintenance] would be in
perpetuity.
REPRESENTATIVE COULOMBE asked whether the municipality could use
this to request the takeover of any [municipal] road.
SENATOR GIESSEL referenced page 1, line 6, and clarified that
the language is specific to Chugach State Park, adding that this
location is unique.
1:15:33 PM
CO-CHAIR DIBERT asked whether the bill would help with similar
situations, in Fairbanks, for example.
SENATOR GIESSEL reiterated that the bill is specific to Chugach
State Park.
1:16:16 PM
RICKY GEASE, Director, Division of Parks and Outdoor Recreation,
Alaska Department of Natural Resources, in response to Co-Chair
Dibert, confirmed that the bill is specific to Chugach State
Park; however, if it proved to be successful, legislation could
be enacted in the future for other locations in the state park
system.
1:17:04 PM
REPRESENTATIVE FIELDS asked whether there are other geographic
situations like this for other parks in the state.
MR. GEASE reiterated that [the intersection of municipal road
with state park] in this specific instance is unique. Other
instances of Department of Transportation & Public Facilities
(DT&PF) road responsibilities in state parks are specific to
Chugach State Park and the Chilkat Bald Eagle Preserve.
1:18:07 PM
The committee took a brief at-ease at 1:18 p.m.
1:19:17 PM
REPRESENTATIVE FIELDS moved to report CSSB 47(RES) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSB 47(RES) was
reported out of the House Resources Standing Committee.
1:24:39 PM
The committee took an at-ease from 1:24 p.m. to 1:30 p.m.
^PRESENTATION(S): Megaproject Risk Mitigation
PRESENTATION(S): Megaproject Risk Mitigation
1:30:40 PM
CO-CHAIR BURKE announced that the next order of business would
be the Megaproject Risk Mitigation project.
1:31:06 PM
JEREMY CLARK, Senior Vice President, Pegasus-Global Holdings
Inc., explained that Pegasus-Global Holdings, Inc. provides
expert assessments, advice, and solutions for governments,
private and public companies, concerning every phase of mega
projects throughout the world. He directed attention to a
PowerPoint presentation, titled "Megaproject Risks;
Considerations for the Alaska LNG Project" [hard copy included
in the committee file]. He began on slide 2, "Pegasus's 2019
Report Overview," which read as follows [original punctuation
provided]:
•Engaged by the State to provide advice concerning the
risks associated with megaprojects, including
specifically the proposed Alaska LNG project.
•Reviewed the Trans-Alaska Pipeline System (TAPS) and
Strategic Reconfiguration project execution and issues
encountered.
•Identified issues commonly realized on megaprojects.
•Discussed impact of cost overruns.
•Provided examples of contract tools to mitigate
risks.
MR. CLARK continued to slide 3, "Megaprojects Defined," which
read as follows [original punctuation provided]:
•Typically have costs in excess of $1 billion USD.
•Comparably high benefits and correspondingly high
risk.
•Multi-year construction, often longer than a decade
from feasibility planning through execution.
•Many stakeholders that can have substantial impacts
on the project (environmentally, economically).
•Unique aspects/scopes (i.e. not a bigger version of a
smaller project).
•Conventional project management processes and
priorities often not sufficient.
MR. CLARK turned to slide 4, "Megaproject Challenges," which
read as follows [original punctuation provided]:
•Inherent risks due to long planning/execution
horizons and complex interfaces.
•Technology/components that are often not standard
(including FOAK).
•Decision-making and planning involves multiple
parties with conflicting interests.
•Unplanned events (black swans) are often not
accounted for, but megaprojects have high exposure and
high resulting impacts.
•Over optimism on costs, benefits, and risk treatment.
MR. CLARK defined the "Iron Law" of megaprojects as, "Over
budget, over time, under benefits, over and over again," a quote
by Bent Flyvbjerg. Despite these challenges, 92 percent of
megaprojects come in over budget, over schedule, or both.
1:36:46 PM
REPRESENTATIVE COULOMBE so we should not have built the
pipeline?
MR. CLARK, in response to Representative Coloumbe, clarified
that slide 5 speaks to the reality that challenges and changes
are inevitable, and their complexity must be accounted for. He
confirmed that today, he would be speaking to risks that are
common of many megaprojects, whereas the benefits can vary by
project. In response to a question from Representative Saddler
regarding the relevancy of Trans-Alaska Pipeline System (TAPS)
to the LNG project, he said some challenges are relevant, such
as the regulatory environment in Alaska. He shared the
following challenges, faced by TAPS, that are largely common of
most megaprojects: labor shortages and low initial estimates.
1:40:51 PM
MR. CLARK resumed the presentation on slide 6, "LNG Project
Risks," which read as follows [original punctuation provided]:
Project Economics
Long-term sales contracts that allow for a sufficient
return typically underpin the financing of LNG
projects. Developers generally need to secure long-
term buyers for a large portion of the project's
capacity before sanctioning a project; high project
costs/changing markets can have a large impact on
if/when a project is sanctioned; cost overruns post-
FID impact project returns.
Regulatory Approvals
Regulatory process typically time consuming and
costly, particularly for high-profile projects that
attract opposition groups. May require additional
requirements (including scope changes).
Partner Priorities
Alignment amongst project partners on strategies and
objectives can be challenging; partners may face
different constraints, have differing risk exposure.
Ability to Execute
Partners must have the technical, operational,
financial, and logistical capabilities to execute the
project. Technical hurdles may impact project
feasibility. Craft labor must be available to support
project needs. Limited number of contractors able to
execute megaprojects.
Weather/Environment
Adverse/extreme weather impacts productivity and can
lead to missed construction windows and schedule
extensions.
Supply Chain/Logistics
Timely receipt of key material and equipment.
Challenge of delivering to remote locations.
MR. CLARK described graphics depicting the impact of risk
mitigation and decision making as well as LNG project
development phases on slides 7 and 8.
1:43:18 PM
REPRESENTATIVE MEARS if you look at various stages. there
something increase the risk.
MR. CLARK, in response to Representative Mears, confirmed that
shortening some of the earlier stages would typically increase a
project's risk; however, its dependent on specific
characteristics. He agreed that much can be learned from
similar projects in different locations. In response to
Representative Saddler, he said some consider "project start" to
be the final investment decision (FID), whereas others consider
it to begin at the earlier conceptual or preliminary phases. In
reference to slide 8, he aligned project sanction to be after
front-end engineering design (FEED), right as detailed design is
initiated.
1:45:51 PM
MR. CLARK resumed the presentation and continued to slide 9,
"Contracting Approaches," which read as follows [original
punctuation provided]:
•Size and complexity of megaprojects typically
requires multiple delivery methods and contracting
approaches.
•Risk should generally be assigned to the party best
able to manage/mitigate it.
•For a contractor to assume a risk, additional costs
and/or contingencies are expected.
•Cost-plus and time and materials contracting
approaches run the risk of the contractor low-balling
the bid to win the award, leading to extensive change
orders.
•Firm price/lump sum contracting approaches run the
risk of the contractor adding excess contingency and
still has the risk of disputes if major issues are
encountered.
MR. CLARK continued to slide 10, "Risk Allocation," which read
as follows [original punctuation provided]:
•Control: risk should be allocated to the party best
in position to control and manage variable relevant to
that risk.
•Clarity: allocation decisions should be clearly
articulated and defined in relevant documents and the
project contracts.
•Consistency: allocation decisions need to be
expressed consistently across the project.
•Fairness: allocation should be conducted in a
balanced, clear, and consistent manner.
Balance risk allocation to ensure alignment between
the parties on project objectives.
MR. CLARK proceeded to slide 11, "Trans-Alaska Pipeline System;
GAO Report Findings Challenges and Cost Overruns," which read
as follows [original punctuation provided]:
Site-specific Challenges:
•More groundwater than anticipated.
•Underground construction required deeper/wider
trenches than planned.
•Wide variations in soil conditions.
•Permafrost more difficult to move and drill than
planned.
•Less backfill material sites available, requiring
additional hauling.
•Tolerances for valve support structures far more
critical than planned; temperature changes and
settlement required realignment.
•Productivity impacts in cold weather.
MR. CLARK advanced to slide 12, "Trans-Alaska Pipeline
System; GAO Report Findings 0 Lessons Learned," which read
as follows [original punctuation provided]:
•Initial and subsequent cost estimates should be
viewed with skepticism.
•As much site-specific data as is feasible should be
obtained.
•Technical and geological uncertainties should be
thoroughly investigated.
•Government approval should be contingent on detailed
planning for management control, including cost
controls.
•Future project expenditures should have an ongoing
government audit to protect the public's interest.
1:51:00 PM
REPRESENTATIVE SADDLER shared his appreciation for the
presenter's skepticism and asked if the state was looking for
financiers to finance the proposed project.
1:51:49 PM
JOE MILLER, President/CEO, Pegasus-Global Holdings, Inc., in
response to Representative saddler, agreed that the state should
consider looking for the financiers who are not stretching their
capacity to finance the project.
MR. CLARK explained that typically, risk allocation is defined
in the contract; he added that there's usually a cost associated
with a contractor taking on more risk even if its just adding a
contingency. He resumed the presentation on slide 13,
"Strategic Reconfiguration Project; Prudence Review Findings,"
which read as follows [original punctuation provided]:
•Project engineer lacked Alaska experience, failed to
effectively manage the project.
•Poorly defined scope at sanction, leading to poor
cost/schedule estimates.
•Reduction of project contingency to an unrealistic
level to improve project economics.
•No meaningful oversight by project owner.
•Failure to rely on internal project risk assessments.
•Assumed control of project at Supplement 1 decision
point, despite insufficient resources to do so.
1:54:32 PM
MR. CLARK, in response to Representative Coulombe, stated that
the TAPS findings are from a Government Accountability Office
(GAO) report, and the data on the 2004 Strategic Reconfiguration
Project is from a Prudence Review. He explained that often on
regulated projects, there's a prudence review at the end of the
execution that assesses whether the management practices and
costs incurred were reasonable and necessary. This is typically
a requirement of the regulated utility body and conducted by an
independent party.
1:56:56 PM
MR. CLARK, in response to a question from Representative Mears
about how to learn from recent underestimations, stated that
publicly available records associated with a project can be
accessed. He state that prudence reviews, when required, are
often conducted at the final rate hearing within one to two
years from project completion. In response to Representative
Saddler, he confirms that * is involved conducting prudence
reviews.
2:00:25 PM
MR. CLARK resumed the presentation on slide 14, "Questions on
the Alaska LNG Project," which read as follows [original
punctuation provided]:
•Status of program management plans.
•Status of the project's risk management program.
•Status of conceptual or preliminary engineering (pre-
FEED).
•Scope of the FEED Study efforts.
•Oversight of Glenfarne.
MR. CLARK, in response to Representative Fields, stated that *
was not familiar with Glenfarne to any meaningful degree. He
said the state should have awareness of the scope that Glenfarne
is engaged to perform and how that might align with the project
owner's strategic objectives. In response to Representative
Saddler, he acknowledged that some specific applications may
have changed since their 2019 report; however, by and large the
overall themes would remain consistent in the large risk
associated with megaprojects with the project owner on the hook
for those risks
2:05:23 PM
MR. CLARK concluded on slide 15, "Recommendations," which read
as follows [original punctuation provided]:
•Detailed review of the FEED Study (including updated
cost estimate).
•Readiness reviews prior to FID and prior to
execution.
•Perform a contract risk review for the EPC/EPCM
contract.
•Independent project monitor/advisory committee during
execution.
2:06:09 PM
MR. CLARK, in response to a series of questions, stated that
Canada's trans mountain pipeline is an applicable project to
Alaska LNG due to its geographic challenges and complexities.
He said this project is both cautionary and laudatory, as it
reflects the challenges of megaproject execution. He added that
the key to success is mitigation risk in a way that limits the
exposure to cost and schedule.
2:08:54 PM
MR. MILLER named the Darlington Nuclear Refurbishment project as
an example of a successful megaproject.
MR. CLARK agreed and described the project, which is being
completed in phases, and has remained on budget and on schedule.
In terms of projects that went awry, he reiterated about 92
percent of projects end up over budget, over schedule, or both,
adding that the biggest issues is typically a lack of planning.
He explained that * is often involved in these projects from a
review and evaluation standpoint at the end of the project.
Occasionally, they are engaged on the front side to conduct a
readiness look. He listed initial optimism with early estimates
and schedules as an adverse impact to cost overruns, as well as
the complexity of a project where a seemingly minor impact to
one small aspect of the project could have a ripple effect. He
reiterated that underestimating scope and resources are the
primary reason that projects go over budget, as these projects
often take more labor and more time than initially assumed.
2:20:29 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:20 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Pegasus-Report-2019-04-15.pdf |
HRES 4/7/2025 1:00:00 PM |
Megaproject Risk Mitigation |
| SB 47 supporting docs packet H RES 4.7.25.pdf |
HRES 4/7/2025 1:00:00 PM |
SB 47 |
| Pegasus Alaska LNG-Megaproject.pdf |
HRES 4/7/2025 1:00:00 PM |
Megaproject Risk Mitigation |
| Susan A SB 47 written testimony H RES 4.7.25_Redacted.pdf |
HRES 4/7/2025 1:00:00 PM |
SB 47 |