Legislature(2021 - 2022)BARNES 124

03/02/2021 01:30 PM House TRANSPORTATION

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Audio Topic
01:32:34 PM Start
01:36:08 PM Overview(s): Alaska Marine Highway System
03:03:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
-- Teleconference <Listen Only> --
+ Overview: Alaska Marine Highway System by TELECONFERENCED
- Deputy Commissioner Rob Carpenter, DOT & PF
- Matt McLaren, AMHS Business Enterprise &
Development Manager
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         March 2, 2021                                                                                          
                           1:32 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Grier Hopkins, Chair                                                                                             
Representative Ivy Spohnholz                                                                                                    
Representative Harriet Drummond                                                                                                 
Representative Sara Hannan                                                                                                      
Representative Tom McKay                                                                                                        
Representative Kevin McCabe                                                                                                     
Representative Mike Cronk                                                                                                       
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
OVERVIEW(S): ALASKA MARINE HIGHWAY SYSTEM                                                                                       
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
ROB CARPENTER                                                                                                                   
Deputy Commissioner                                                                                                             
Department of Transportation & Public Facilities                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Shared a PowerPoint and answered questions                                                               
during the meeting.                                                                                                             
MATT MCLAREN                                                                                                                    
Business Manager                                                                                                                
Alaska Marine Highway System                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Shared a PowerPoint and answered questions                                                                
during the meeting.                                                                                                             
CAPTAIN JOHN FALVEY                                                                                                             
General Manager                                                                                                                 
Alaska Marine Highway System                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Shared a PowerPoint  and answered questions                                                             
during the meeting.                                                                                                             
ACTION NARRATIVE                                                                                                              
1:32:34 PM                                                                                                                    
CHAIR  GRIER HOPKINS  called  the  House Transportation  Standing                                                             
Committee meeting to  order at 1:32 p.m.   Representatives McKay,                                                               
Cronk,  and   Hopkins  were  present   at  the  call   to  order.                                                               
Representatives Spohnholz,  Hannan, McCabe, and  Drummond arrived                                                               
as the meeting was in progress.                                                                                                 
^OVERVIEW(S): ALASKA MARINE HIGHWAY SYSTEM                                                                                      
           OVERVIEW(S): ALASKA MARINE HIGHWAY SYSTEM                                                                        
1:36:08 PM                                                                                                                    
ROB CARPENTER, Deputy  Commissioner, Department of Transportation                                                               
&  Public  Facilities  (DOT&PF),  shared a  presentation  on  the                                                               
Alaska Marine  Highway System (AMHS),  which covered  AMHS routes                                                               
in  Southeast Alaska,  from  Bellingham,  Washington to  Yakutat,                                                               
Alaska, as well as the  vessels serving this area: the Matanuska,                                                               
the  mainliner   that  goes  from  Bellingham   to  Skagway;  the                                                               
Kennicott,  going from  Bellingham to  Yakutat and  cross-Gulf to                                                               
Southwest  Alaska;   the  LeConte,   doing  the   "village  runs"                                                               
Gustavus,  Pelican,  Angoon,  and  the  Lituya,  the  "day  boat"                                                               
running from Ketchikan to Metlakatla daily.                                                                                     
MR. CARPENTER  showed a depiction  of Southwest routing  on slide                                                               
2, pointing  out that  the Kennicott,  after leaving  Yakutat and                                                               
crossing the  Gulf, generally stopped  in Whittier, but  when the                                                               
Tustumena went out the Aleutian  Chain ("chain") to Dutch Harbor,                                                               
the Kennicott  filled in  and provided  service from  Whittier to                                                               
Homer to Kodiak.  The  Aurora generally served the Prince William                                                               
Sound (PWS) Area of Whittier, Valdez, and Cordova, he added.                                                                    
1:40:25 PM                                                                                                                    
CHAIR HOPKINS  asked what  the longest  duration was  between any                                                               
two stops.                                                                                                                      
MR. CARPENTER replied it would depend on the time of year.                                                                      
1:41:11 PM                                                                                                                    
MATT  MCLAREN,  Business  Manager, AMHS,  replied  during  summer                                                               
boats  went out  the chain  once per  month on  a one-week  round                                                               
trip.   In the wintertime, October  - April, AMHS did  not go out                                                               
the  chain  due to  rough  seas  and  weather.   The  Aurora  ran                                                               
continuously so long as funding was available, he stated.                                                                       
CHAIR  HOPKINS   asked  whether  cancellations  due   to  funding                                                               
decreases were a recent thing or an ongoing pattern.                                                                            
MR. MCLAREN replied  there has been continuous  service, but that                                                               
it  has   not  been   as  frequent.     The  Kennicott   has  run                                                               
consistently,  but   with  additional  funding  the   Aurora  and                                                               
Tustumena would run more often as well, he added.                                                                               
CHAIR  HOPKINS asked  whether the  current  budget proposal  from                                                               
Governor Mike Dunleavy would allow the winter run to happen.                                                                    
MR. MCLAREN replied  there was more room in the  budget than last                                                               
year.  The Aurora  would need to be laid up  in October, he said,                                                               
the Kennicott would  be running, and the Tustumena  would be laid                                                               
up beginning  in November.   The  governor's budget  did decrease                                                               
the amount  of time  the Kennicott  would have  to run  alone, he                                                               
1:44:15 PM                                                                                                                    
REPRESENTATIVE HANNAN  asked if  Kake and Pelican  were reflected                                                               
in the finalized summer schedule for 2021.                                                                                      
MR.  MCLAREN replied  yes, the  ports  of Kake  and Pelican  were                                                               
included.   Pelican will be  one roundtrip per month;  Kake would                                                               
be serviced by the Matanuska.                                                                                                   
REPRESENTATIVE  HANNAN asked  whether  the  Bellingham runs  have                                                               
been increased, as  it could be a profitable season  for that run                                                               
due to the Canada closures.                                                                                                     
MR. MCLAREN replied there was  regular service to Bellingham with                                                               
six stops  per month  between the Matanuska  (once per  week) and                                                               
Kennicott (once every  other week), but folks  headed to Interior                                                               
Alaska through  Whittier would be  serviced by the  Matanuska out                                                               
of Bellingham's feeding the Kennicott in Juneau.                                                                                
1:47:10 PM                                                                                                                    
REPRESENTATIVE   MCCABE  asked   after  the   Kennicott's  summer                                                               
ridership  on the  "cross-Gulf"  route (Bellingham  - Whittier  -                                                               
Homer - Kodiak), and the "break-even" point.                                                                                    
MR.  MCLAREN replied  on all  routes, revenue  came from  the car                                                               
deck, as passenger seats didn't sell  out.  When the Columbia ran                                                               
out of  Bellingham, only about 70%  capacity on the car  deck was                                                               
needed to break even.   With military moves, the cross-Gulf route                                                               
looked to be  in high demand, he stated.   In the summertime, the                                                               
route paid for itself, he added, and helped pay for some others.                                                                
REPRESENTATIVE  MCCABE  asked  whether  frequency  in  wintertime                                                               
could be  decreased enough, and  ridership brought up  enough, to                                                               
break even on the Kennicott's cross-Gulf trips.                                                                                 
MR. MCLAREN replied frequency had  already been limited regarding                                                               
the  Kennicott, which,  due to  COVID-19 mitigation  measures had                                                               
been on a two-week round  trip basically covering the entire AMHS                                                               
system and  seeing a  lot of  demand.  The  best way  to increase                                                               
revenue  while   keeping  frequency  of  trips   down  was  being                                                               
determined, he added.                                                                                                           
1:51:51 PM                                                                                                                    
CAPT JOHN FALVEY,  General Manager, AMHS, showed  the AMHS "Aging                                                               
Fleet" commercial ship status, hastening  to point out ships were                                                               
normally retired after 30-35 years  of service. Starting with the                                                               
oldest and moving  to the newest: the  Malaspina (mainliner built                                                               
in 1963,  the same year as  the Matanuska) was currently  laid up                                                               
in Ketchikan  due to  approximately $16  million needed  in steel                                                               
repair work.   The Malaspina is  the only ship with  its original                                                               
engines  (58 years  old), so  their inevitable  replacement along                                                               
with  any  "discovery"  steel  work  could  cost  more  than  $50                                                               
million.   The sister  ship of the  Malaspina, the  Matanuska was                                                               
one of  two ships  (the other  being the  Kennicott), built  as a                                                               
Safety  of   Life  at  Sea   (SOLAS)  ships,  built   to  service                                                               
International  Port Prince  Rupert.   Captain  Falvey imparted  a                                                               
tremendous  amount  of work  had  been  done in  the  Matanuska's                                                               
engine room, and  between the re-power and  SOLAS conversion, $40                                                               
million  was spent.    Tustumena, at  57 years  old,  was in  the                                                               
shipyard  almost  one  year receiving  overhauls  each  year  and                                                               
having  work  done  on  small projects  such  as  the  restrooms,                                                               
kitchen,  tiling, and  lighting,  to keep  the Tustumena  running                                                               
efficiently and safely.                                                                                                         
1:58:06 PM                                                                                                                    
CAPT. FALVEY imparted  the Le Conte, a 235  ft., 47-year-old ship                                                               
historically operating  out of Juneau,  was receiving  its annual                                                               
overhaul  and had  no major  issues.   The  Aurora was  currently                                                               
having hull  steel and interior  steel replaced in  Ketchikan, he                                                               
stated,  as  well as  receiving  its  upgrades on  "habitability"                                                               
aspects.   On time  and on budget,  the Aurora was  set to  go in                                                               
water Thursday (March  4, 2021).  He added PWS  citizens would be                                                               
happy to have  the Aurora back.  The Columbia,  also 47 years old                                                               
and the largest ship in the  fleet, was currently in cost savings                                                               
layup and  set go  in for  overhaul in three  weeks' time.   Non-                                                               
extensive  steelwork needed  to be  done.   Propellor systems  on                                                               
Colombia were unable to be replaced  due to none big enough built                                                               
in US, Captain Falvey stated.  The same company that made engines                                                               
on the  Kennicott could install  the new propellor system  on the                                                               
Colombia, and  the latter should  be good  to go by  winter 2022.                                                               
The  Kennicott, at 27 years  old, is AMHS's newest mainliner, due                                                               
in  the water  March 18th  with no  issues.   The Lituya  was the                                                               
smallest  ship, running  from Ketchikan  to Metlakatla  five days                                                               
per week.   The smallest ship and the closest  to break-even; the                                                               
Lituya  just  finished  its  overhaul  and  would  be  completely                                                               
repainted next year including decks  sandblasted and recoated, as                                                               
a federal project, by next summer.                                                                                              
2:03:50 PM                                                                                                                    
CAPT. FALVEY  introduced the two  newest ships in the  fleet, the                                                               
Tazlina and  the Hubbard, both  built in  2019.  Both  ships were                                                               
going through overhaul  and have had new doors  installed so they                                                               
will be  more flexible  when they  were able to  run again.   The                                                               
Hubbard has not been in  operation due to budget; maintenance and                                                               
extensive  checks would  have to  be done.   The  Fairweather and                                                               
Chenega, the two fast ferries,  17 and 16 years old respectively,                                                               
were both for  sale.  Operations were ceased on  the fast ferries                                                               
because  of cost,  he put  forth.   Due to  personnel needed  and                                                               
licensing,  the fast  ferries also  struggled in  Lynn Canal  and                                                               
Prince William  Sound and  didn't handle weather  as well.   Both                                                               
carried as  many people as the  Le Conte and the  Aurora but were                                                               
much more  expensive to  run than  the latter  ships.   There has                                                               
been  an  international  bid,  a  buyer  from  the  Mediterranean                                                               
working with a  lawyer in Anchorage, on the fast  ferries and two                                                               
unused spare engines.                                                                                                           
2:08:18 PM                                                                                                                    
REPRESENTATIVE  SPOHNHOLZ said  the Kennicott  was 23  years old,                                                               
not 27.  She asked Captain Falvey to talk about SOLAS.                                                                          
CAPT. FALVEY  explained SOLAS  was a  set of  international rules                                                               
mainly in  place for ships in  the ocean to get  to foreign ports                                                               
required to  have many more  safety features, such  as evacuation                                                               
routes, in place.  The catch with Prince Rupert, though  it is an                                                               
inland port, is a foreign  country, so ships traveling through it                                                               
must abide  by SOLAS.   The  SOLAS ships  were more  expensive to                                                               
build and to maintain, he added.                                                                                                
REPRESENTATIVE SPOHNHOLZ  asked about  ferry funding  and sources                                                               
for ferry repair.                                                                                                               
CAPT. FALVEY  said AMHS received  $23 million in  federal funding                                                               
per year for repair, plus the state match.                                                                                      
REPRESENTATIVE SPOHNHOLZ asked what the funding source was.                                                                     
CAPT. FALVEY  replied federal highways and,  on occasion, federal                                                               
2:11:51 PM                                                                                                                    
REPRESENTATIVE MCCABE  asked about the  doors on the  Tazlina and                                                               
Hubbard that had been done, and  if the crew bunk installation on                                                               
day ships was still being done.                                                                                                 
CAPT. FALVEY  replied yes,  forward starboard  doors on  both the                                                               
Tazlina  and the  Hubbard had  been installed  to make  them more                                                               
flexible in any  port, with or without crew cabins.   The Tazlina                                                               
was  operated  with two  back  doors  from  Juneau to  Haines  to                                                               
Skagway  but it  became awkward  to maneuver  vehicles with  only                                                               
back doors. Boats  had both been built without  crew quarters, he                                                               
answered,  but  with quarters  ships  could  run 24/7.    Without                                                               
cabins, they would fall into 12-hour  days and would be much more                                                               
restrictive in  PWS and  Juneau.  Cabins  have been  designed, he                                                               
REPRESENTATIVE  MCCABE asked  if  the designed  cabins would  cut                                                               
into revenue  (car space  on main  deck, passenger  seating), and                                                               
whether that would  affect revenue.  He asked also  about the 12-                                                               
hour rule.                                                                                                                      
CAPT.  FALVEY  replied  cabins  would  not  affect  revenue  from                                                               
passengers or cars, and that the  12-hour rule was a US rule that                                                               
worked its way down to the Coast Guard.                                                                                         
REPRESENTATIVE  MCCABE   asked  for   more  information   on  the                                                               
CAPT. FALVEY  replied the regulations  were a US  requirement and                                                               
that he would provide more information.                                                                                         
2:16:39 PM                                                                                                                    
REPRESENTATIVE HANNAN, referencing  the Colombia's no-cost layup,                                                               
asked, if  the Malaspina would  be sold,  what was it  costing to                                                               
MR. MCLAREN  replied it cost $8K  per week or $400K  per year for                                                               
mooring costs, security, and utilities.                                                                                         
REPRESENTATIVE HANNAN asked how long  the Malaspina had been laid                                                               
up with AMHS paying for its storage.                                                                                            
MR.  MCLAREN  replied  since mid-December  2019,  so  $450K  this                                                               
fiscal year plus $233K spent in past.                                                                                           
2:20:05 PM                                                                                                                    
REPRESENTATIVE SPOHNHOLZ  asked what  it would  cost to  build up                                                               
crew quarters on the Tazlina and Hubbard.                                                                                       
CAPT. FALVEY replied around $15 million per ship.                                                                               
REPRESENTATIVE SPOHNHOLZ  asked with regard to  ensuring folks in                                                               
upper  Lynn Canal  had consistent  AMHS service,  if there  was a                                                               
preferred alternative  between retrofitting ships with  cabins or                                                               
creating another terminal at Cascade Point.                                                                                     
MR.  CARPENTER replied  the development  of  Cascade Point  would                                                               
work but it may be seasonal, and  with a crew ships could run out                                                               
of  Auke Bay  and  Prince William  Sound.   That  being said,  he                                                               
added, the two were not mutually exclusive.                                                                                     
2:22:55 PM                                                                                                                    
REPRESENTATIVE  MCCABE  asked  how  much  adding  crew  increased                                                               
operating cost per hour, and if  the crew always had to equal the                                                               
crew quarters if it was a day trip.                                                                                             
CAPT. FALVEY  replied night crew would  be on shore side  so with                                                               
or without the  cabins the crew would not increase.   He added it                                                               
would  be a  matter  of  working with  unions  to get  agreements                                                               
needed to efficiently and cost effectively run the ships.                                                                       
MR. MCLAREN replied there were  challenges without crew quarters.                                                               
With  the distance  from Juneau  to  Haines to  Skagway with  the                                                               
Tazlina, crews were overnighted in  Haines which added about $25K                                                               
per week.  Crew quarters  would decrease that expense, runs could                                                               
be  made longer,  and revenue  increased as  more ports  could be                                                               
2:26:46 PM                                                                                                                    
CHAIR  HOPKINS  asked  what  would happen  to  revenue  from  the                                                               
international sale.                                                                                                             
CAPT. FALVEY  replied the  revenue would  go back  into federally                                                               
eligible  "pot."  Permission was  granted  to  AMHS from  federal                                                               
highways  to sell  the  boats,  and funds  would  report back  to                                                               
federal highways after the sales were complete.                                                                                 
CHAIR HOPKINS asked about the  maintenance agreement between AMHS                                                               
and Vigor Shipyard.                                                                                                             
CAPT. FALVEY  replied the maintenance agreement  was renegotiated                                                               
every three  years, and  when any  ships were  brought in  for an                                                               
overhaul there was a full crew  doing work that would not be done                                                               
by shipyards.                                                                                                                   
CHAIR HOPKINS asked  if the crew was able to  repair en route, in                                                               
light of a complete overhaul.                                                                                                   
CAPT. FALVEY  replied yes, and  the ship  also needed to  come in                                                               
for licensing and certificate renewal, so it was a group effort.                                                                
CHAIR HOPKINS asked how the tasks were delineated.                                                                              
CAPT.  FALVEY  replied it  was  based  on  need and  they  worked                                                               
downward based on importance.                                                                                                   
CHAIR HOPKINS  asked if  this was  done with  an eye  toward cost                                                               
savings, or how it was evaluated.                                                                                               
CAPT. FALVEY replied  in terms of state overhauls they  had to be                                                               
done within the state.                                                                                                          
2:36:17 PM                                                                                                                    
REPRESENTATIVE  HANNAN asked  after  the long-term  plan for  the                                                               
CAPT. FALVEY replied the new  Tustumena was at 60% completion and                                                               
there was another year or so.                                                                                                   
MR. CARPENTER replied once it  was fully designed, coming up with                                                               
the money  was the tricky part.   The new Tustumena  penciled out                                                               
about $238 million non-SOLAS, he  stated; SOLAS would add another                                                               
$46 million or so. Funding  through highway system was about $600                                                               
million  a year  and  that  serviced demands  from  all over  the                                                               
state, so there was a need to be creative about financing.                                                                      
REPRESENTATIVE  HANNAN asked  how much  money was  in the  vessel                                                               
replacement fund currently and what  was expected to be generated                                                               
off the Chenega and Fairweather.                                                                                                
MR. CARPENTER  replied $19  million in now,  $2.5 million  in the                                                               
match set  aside.  He said  the amount of the  fast ferries' sale                                                               
was not public yet.                                                                                                             
REPRESENTATIVE  HANNAN  commented  the fatal  plane  accident  in                                                               
Dutch Harbor  18 months ago  made folks take  a hard look  at the                                                               
number  of  people  stuck  with charter  flights  when  there  is                                                               
private sector AMHS in existence, still no options.                                                                             
2:42:39 PM                                                                                                                    
REPRESENTATIVE DRUMMOND  asked if any  thought had been  given to                                                               
an  infrastructure  plan  vis  a vis  Washington  and  the  Biden                                                               
MR.  CARPENTER  replied  yes, the  infra-grant  upwards  of  $100                                                               
million and there  was some "political sway" as to  how they were                                                               
handed out.                                                                                                                     
REPRESENTATIVE DRUMMOND  suggested if  AMHS was mentioned  as one                                                               
of  the largest  state-run highway  systems in  the nation,  they                                                               
might pay more attention.                                                                                                       
2:44:50 PM                                                                                                                    
CHAIR HOPKINS asked  if DOT&PF had looked at  the possibility for                                                               
electric ferries for  shorter runs such as the  Le Conte, Lituya,                                                               
and Aurora.                                                                                                                     
CAPT. FALVEY replied AMHS had  looked into battery technology for                                                               
shorter runs,  especially for  the Lituya,  but it  would require                                                               
"major  work  and  redesign."   He  mentioned  LNG  engines  were                                                               
2:48:29 PM                                                                                                                    
MR.  MCLAREN   referenced  slide   8,  "Historical   Traffic  and                                                               
Operating Weeks," in  which vehicle traffic history  went back 30                                                               
years.   The  red  line  "bumping up  and  down" represented  the                                                               
number  of operating  weeks for  the  year, he  stated.   Vehicle                                                               
traffic  was  consistent,  passenger  traffic  has  declined  but                                                               
remained constant  vis a  vis the number  of operating  weeks, he                                                               
pointed out.   Between 2004 and 2008 operating  weeks jumped from                                                               
300 to 425 service weeks, he  said, but passenger traffic did not                                                               
go up the same during those years, he said.                                                                                     
CHAIR HOPKINS asked for a definition of operating weeks.                                                                        
MR. MCLAREN  replied it was  a week a  ship was operating,  so if                                                               
seven  vessels  were  operating it  counted  as  seven  operating                                                               
weeks, even if it was only one calendar week.                                                                                   
CHAIR HOPKINS asked for a schedule  without the Lituya, so it was                                                               
not skewed in that consistently traveling ship's direction.                                                                     
2:52:32 PM                                                                                                                    
MR.  MCLAREN referenced  slide 9,  with  more detailed  passenger                                                               
detail from 2011-2020.  Without  the Lituya's 50 operating weeks,                                                               
33,000  passengers per  year could  be removed,  but a  new chart                                                               
would be provided.                                                                                                              
MR.  MCLAREN moved  on to  slide 12,  "Tariff Increase  History."                                                               
Increases since May 2015, part  of recommendation was to levelize                                                               
2:56:25 PM                                                                                                                    
REPRESENTATIVE  HANNAN asked  if  "tariffs" were  interchangeable                                                               
with "fares."                                                                                                                   
MR. MCLAREN replied yes.                                                                                                        
MR.  MCLAREN  introduced  slide 13,  "Dynamic  Pricing."    Table                                                               
showed the amount  of increase in fare above the  base fare.  The                                                               
AMHS hasn't  had a "traditional  normal year" to look  at numbers                                                               
but has seen increase in revenue.                                                                                               
REPRESENTATIVE  HANNAN asked  if analysis  has been  done on  the                                                               
inverse of dynamic  pricing, such as offering  discounts if spots                                                               
hadn't been filled, instead of charging more.                                                                                   
MR. MCLAREN  replied it had come  up, and other options  would be                                                               
looked at.                                                                                                                      
REPRESENTATIVE HANNAN  related since  dynamic pricing  there have                                                               
been  a lot  of complaints.   When  a trip  was cancelled  it was                                                               
extra frustrating and  didn't make sense. The  fallout of default                                                               
dynamic pricing was not the fault of the consumer, she stated.                                                                  
3:01:05 PM                                                                                                                    
CHAIR HOPKINS  asked what  came out of  the AMHS  reshaping ferry                                                               
MR. CARPENTER  replied AMHS  was working  on leveraging  the road                                                               
system toward Cascade Point, dynamic pricing, and other things.                                                                 
3:03:28 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Transportation Standing  Committee meeting was adjourned  at 3:03                                                               

Document Name Date/Time Subjects
House Transportation - AMHS Overview 03.02.2021 FINAL.pdf HTRA 3/2/2021 1:30:00 PM
DOTPF - Alaska Marine Highway Overview