04/19/2001 01:18 PM House TRA
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
April 19, 2001
1:18 p.m.
MEMBERS PRESENT
Representative Vic Kohring, Chair
Representative Beverly Masek, Vice Chair
Representative Drew Scalzi
Representative Mary Kapsner
Representative Albert Kookesh
MEMBERS ABSENT
Representative Scott Ogan
Representative Peggy Wilson
COMMITTEE CALENDAR
HOUSE BILL NO. 244
"An Act relating to a grant of state land to the Denali Borough
for a railroad and utility corridor and a railroad development
project; repealing provisions relating to a grant of a right-of-
way of land for a railroad and utility corridor to the Alaska
Industrial Development and Export Authority; and providing for
an effective date."
- MOVED HB 244 OUT OF COMMITTEE
SENATE BILL NO. 88
"An Act relating to metropolitan planning organizations and to
establishment of a metropolitan planning organization for the
Anchorage metropolitan area; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 235
"An Act relating to the handling of and interest on contract
controversies involving the Department of Transportation and
Public Facilities or state agencies to whom the Department of
Transportation and Public Facilities delegates the
responsibility for handling the controversies."
- MOVED HB 235 OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 22
"An Act relating to certain passenger vessels operating in the
marine waters of the state; and providing for an effective
date."
- MOVED CSSSHB 22(TRA) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 244
SHORT TITLE:RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL.
SPONSOR(S): REPRESENTATIVE(S)JAMES
Jrn-Date Jrn-Page Action
04/11/01 0959 (H) READ THE FIRST TIME -
REFERRALS
04/11/01 0959 (H) TRA, RES
04/17/01 (H) TRA AT 1:00 PM CAPITOL 17
04/17/01 (H) Heard & Held
MINUTE(TRA)
04/19/01 (H) TRA AT 1:00 PM CAPITOL 124
BILL: SB 88
SHORT TITLE:METROPOLITAN PLANNING ORGANIZATIONS
SPONSOR(S): SENATOR(S) PHILLIPS
Jrn-Date Jrn-Page Action
02/13/01 0356 (S) READ THE FIRST TIME -
REFERRALS
02/13/01 0356 (S) TRA, CRA, FIN
02/20/01 (S) TRA AT 1:30 PM BUTROVICH 205
02/20/01 (S) Moved Out of Committee
02/20/01 (S) MINUTE(TRA)
02/21/01 0451 (S) TRA RPT 3DP 1DNP 1AM
02/21/01 0451 (S) DP: COWDERY, WARD, WILKEN;
DNP: ELTON;
02/21/01 0451 (S) AM: TAYLOR
02/21/01 0451 (S) FN1: ZERO([DOT&PF])
03/07/01 (S) CRA AT 1:30 PM FAHRENKAMP 203
03/07/01 (S) Moved Out of Committee
03/07/01 (S) MINUTE(CRA)
03/09/01 0596 (S) CRA RPT 2DP 1NR
03/09/01 0596 (S) DP: TORGERSON, PHILLIPS; NR:
AUSTERMAN
03/09/01 0596 (S) FN1: ZERO([DOT&PF])
03/22/01 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/26/01 (S) FIN AT 6:00 PM SENATE FINANCE
532
03/26/01 (S) Moved Out of Committee
MINUTE(FIN)
03/27/01 0819 (S) FIN RPT 3DP 2DNP 2NR
03/27/01 0819 (S) DP: DONLEY, GREEN, LEMAN;
03/27/01 0819 (S) NR: KELLY, WILKEN; DNP:
HOFFMAN, OLSON
03/27/01 0819 (S) FN1: ZERO([DOT&PF])
04/04/01 0933 (S) RULES TO CALENDAR 1OR 4/4/01
04/04/01 0943 (S) READ THE SECOND TIME
04/04/01 0944 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/04/01 0944 (S) READ THE THIRD TIME SB 88
04/04/01 0944 (S) PASSED Y15 N4 E1
04/04/01 0944 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/04/01 0944 (S) OLSON NOTICE OF
RECONSIDERATION
04/04/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/05/01 0960 (S) RECON TAKEN UP - IN THIRD
READING
04/05/01 0961 (S) PASSED ON RECONSIDERATION Y12
N7 E1
04/05/01 0961 (S) EFFECTIVE DATE(S) Y19 N- E1
04/05/01 0962 (S) TRANSMITTED TO (H)
04/05/01 0962 (S) VERSION: SB 88
04/06/01 0875 (H) READ THE FIRST TIME -
REFERRALS
04/06/01 0875 (H) TRA, CRA
04/17/01 (H) TRA AT 1:00 PM CAPITOL 17
04/17/01 (H) Heard & Held
04/17/01 (H) MINUTE(TRA)
04/19/01 (H) TRA AT 1:00 PM CAPITOL 124
BILL: HB 235
SHORT TITLE: DOT&PF-RELATED CONTRACT CLAIMS
SPONSOR(S): JUDICIARY BY REQUEST
Jrn-Date Jrn-Page Action
04/06/01 0882 (H) READ THE FIRST TIME -
REFERRALS
04/06/01 0882 (H) TRA, FIN
04/17/01 (H) TRA AT 1:00 PM CAPITOL 17
04/17/01 (H) Scheduled But Not Heard
04/19/01 (H) TRA AT 1:00 PM CAPITOL 124
BILL: HB 22
SHORT TITLE:MARINE PASSENGER VESSELS
SPONSOR(S): REPRESENTATIVE(S)KERTTULA
Jrn-Date Jrn-Page Action
01/08/01 0029 (H) PREFILE RELEASED 12/29/00
01/08/01 0029 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0030 (H) TRA, RES, FIN
02/23/01 0410 (H) SPONSOR SUBSTITUTE INTRODUCED
02/23/01 0410 (H) READ THE FIRST TIME -
REFERRALS
02/23/01 0410 (H) TRA, RES, FIN
04/19/01 (H) TRA AT 1:00 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE JEANNETTE JAMES
Alaska State Legislature
Capitol Building, Room 214
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of HB 244.
JANET OATES, Staff
to Senator Randy Phillips
Alaska State Legislature
Capitol Building, Room 103
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the sponsor of SB
88.
DAVID MILLER, Division Administrator
Federal Highway Administration
PO Box 21648
Juneau, Alaska 99802
POSITION STATEMENT: Testified on SB 88.
DOUGLAS GARDNER, Assistant Attorney General
Transportation Section
Civil Division (Juneau)
Department of Law
PO Box 110300
Juneau, Alaska 99811
POSITION STATEMENT: Testified on SB 88 and HB 235.
HEATHER MARTEL NOBREGA, Staff
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 118
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the House Judiciary
Standing Committee, sponsor of HB 235.
DICK CATTANACH
Associated General Contractors of Alaska
4041 B Street
Anchorage, Alaska 99504
POSITION STATEMENT: Testified in support of HB 235.
JOHN WHEATLEY, Senior Vice President
Associated General Contractors of Alaska
1031 West 4th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in support of HB 235.
MIKE MILLER
MB Contracting Company
7101 DeBarr Road
Anchorage, Alaska 99504
POSITION STATEMENT: Testified in support of HB 235.
KEVIN BRADY, Attorney
Oles Morrison Rinker & Baker
745 West 4th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 235.
BILL RENNO, Attorney
Oles Morrison Rinker & Baker
745 West 4th Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 235.
DENNIS POSHARD, Legislative Liaison/Special Assistant
Office of the Commissioner
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions on HB 235.
REPRESENTATIVE BETH KERTTULA
Alaska State Legislature
Capitol Building, Room 430
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of SSHB 22.
SPENCER WOOD, Lieutenant Commander
Seventeenth District Coast Guard Office - Juneau
U.S. Coast Guard
PO Box 25517
Juneau, Alaska 99802
POSITION STATEMENT: Provided information on SSHB 22.
RANDY RAY
U.S. Cruise Ship Association
PO Box 979
Mercer Island, Washington 98040
POSITION STATEMENT: Expressed his interest in seeing CSSSHB 22
move forward.
PAULA TERREL, Southeast Program Director
Alaska Marine Conservation Council
5025 Thane Road
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of SSHB 22.
JOHN HANSEN, President
North West CruiseShip Association
100.1111 West Hastings Street
Vancouver, British Colombia
POSITION STATEMENT: Testified in support of CSSSHB 22.
JOLENE RIELLY
National Ocean and Sciences Bowl
Juneau-Douglas High School
10014 Crazy Horse Drive
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of SSHB 22.
ADRIANA RODRIGUEZ
National Ocean and Sciences Bowl
Juneau-Douglas High School
10014 Crazy Horse Drive
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of SSHB 22.
ROBERT REGES, Member
Cruise Control, Inc.
226 Saint Ann's Avenue
Douglas, Alaska 99824
POSITION STATEMENT: Urged the committee to move CSSSHB 22 from
committee.
JOE LeBEAU
Alaska Center for the Environment
PO Box 872922
Wasilla, Alaska 99687
POSITION STATEMENT: Urged the committee to move CSSSHB 22 from
committee.
MICHELE BROWN, Commissioner
Department of Environmental Conservation (DEC)
410 Willoughby, Suite 303
Juneau, Alaska 99801
POSITION STATEMENT: Announced DEC's support of CSSSHB 22.
MICHAEL KRIEBER, Staff
to Representative Vic Kohring
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
POSITION STATEMENT: As committee aide for the House
Transportation Standing Committee, reviewed changes in the
proposed CS for SSHB 22, Version O.
ACTION NARRATIVE
TAPE 01-30, SIDE A
Number 0001
CHAIR VIC KOHRING called the House Transportation Standing
Committee meeting to order at 1:18 p.m. Members present at the
call to order were Representatives Kohring, Scalzi, Kapsner, and
Kookesh. Representative Masek joined the meeting as it was in
progress.
HB 244-RIGHT-OF-WAY TO DENALI BOR. FOR RR/UTIL.
CHAIR KOHRING announced that the first order of business would
be HOUSE BILL NO. 244, "An Act relating to a grant of state land
to the Denali Borough for a railroad and utility corridor and a
railroad development project; repealing provisions relating to a
grant of a right-of-way of land for a railroad and utility
corridor to the Alaska Industrial Development and Export
Authority; and providing for an effective date."
Number 0086
REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, came
forth as sponsor of HB 244. [She referred to a question-and-
answer handout provided in the committee packets, addressing
questions asked at the previous hearing.] She stated that one
of the questions was about the 40,000-acre parcel through the
middle [of the area]. She explained the reason for that:
It is necessary to select the larger area in order to
ensure the best possible right-of-ways surveyed.
There needs to be a wide swath to select from, so that
all the varied interests and concerns - from being a
good neighbor to avoiding wildlife, habitat, or
wetlands - can be addressed. In addition, it's ideal
to have a larger parcel to select a smaller one from
so it can meet specific needs for rail such as curves
and grades.
REPRESENTATIVE JAMES noted that the next question was whether
there needs to be a "drop-dead" date. She referred to past
history on this project and said there is opposition from those
who don't want anything to happen there at all. Her assessment
is that there is a growing problem in that area because the road
itself is not sufficient at this time. She said her biggest
fear is that other people will demand a road. However, she is
opposed to a road and thinks the railroad is more
environmentally friendly. As for the drop-dead date, she said
she couldn't figure out what it should be. If one were set, it
would help those people who don't want it to happen, by
confusing the issue and causing delays; therefore, she wasn't
willing to put in a drop-dead date.
REPRESENTATIVE JAMES remarked that there was also a concern that
this Kantishna Holdings project is a full-force contract; she
said it isn't. The state is not saying, "Who wants to come and
put a railroad in here?" The state government, Denali Borough,
and Alaska Railroad [Corporation] will always retain all the
ownership of the land. Another question, she said, was whether
this right-of-way should be part of the borough's land
selection. In response, she said:
I talked to the borough to see what was the status of
their land selection as it is, because this says ...
the maximum that they can get is 3,500 acres. More
than likely, it will be about 1,400 acres, but we put
the 3,500 acres in there because we didn't know what
the largest amount should be. They were entitled to
49,000 acres.
Currently, they have gotten 20,000 acres of their
selection; the other 29,000 is still out there for
selection. ... They went through a two-year process to
figure out what lands to select by going to all the
various communities in the Denali Borough and [asked]
them which particular parcels they'd like to select so
that they could have something in their community.
And so that's how they designed and found this 49,000
acres of selection to be made.
Now, it turns out they weren't able to really walk all
over every square foot of those parcels. And some of
those parcels that they've already gotten in the
20,000 ... are just not going to be utilized at all,
because there are wetlands and other things [that]
they can't do anything with. ... They did not know
that when they selected them. And in talking to DNR
[Department of Natural Resources], DNR said they could
give them back, but they can't get any replacements.
... I'm not willing to put it in the bill to say that
it is part of their entitlement. However, if it turns
out to be part of their entitlement when it goes
through the other committees and gets to the end and
people would demand that, then I would just wait and
see if that's what people think.
Number 0578
REPRESENTATIVE JAMES stated that some people asked whether the
"Stampede Trail" would be best because this goes through the
middle of that area. In response to that, she said it is not a
railroad route. In fact, it was built by Yutan Construction
with an old D3 Caterpillar tractor, and would not even be
considered a road if it were built today. She noted that no
part of the proposed route crosses any designated wilderness
areas.
REPRESENTATIVE JAMES, in response to the question of why a
second access should be constructed just a few miles north of
the existing park roads, said it is true this proposed right-of-
way is just 17 miles north of the park entrance, but the two
access routes are separated by a massive mountain range.
Eventually, park visitors could complete a loop using the
existing roads for inbound or outbound portions while enjoying a
unique viewing experience throughout the entire route. She
added that it is not part of this plan, but it could happen.
She noted that there is another $1.32 million that has been
appropriated for the construction of this access, and she thinks
the Senator from that district has $330,000 of matching funds.
CHAIR KOHRING surmised that there would be no committee
substitute or modifications.
REPRESENTATIVE JAMES replied that she has no plans to make any
amendments or provide a committee substitute.
Number 0767
REPRESENTATIVE KOOKESH remarked that most of the questions
[Representative James addressed] were his; he was completely
satisfied and had no objection to moving the bill out.
CHAIR KOHRING asked whether there has been any examination of
the feasibility of running a rail line down [the existing road
through the park].
REPRESENTATIVE JAMES responded that that has been discussed, but
even though the road itself is not part of the park, there's an
awful lot of past history about that road that still hasn't been
determined in court. She remarked that it would be possible to
put another rail line down through the park, perhaps south of
the [existing road]. She added that she is a big supporter of
accessing the parks by rail, as opposed to car. She noted that
there are some really dangerous parts in that area; for example,
the Polychrome Pass has a single-lane road with no guardrail.
CHAIR KOHRING commended Representative James for taking the lead
on this issue. He said he thinks it is a very environmentally
sound way of getting a large number of people in [the park] with
minimal damage to the environment. He added that the economic
development aspect helps to enhance tourism in the area by
opening up this alternative access.
Number 0986
REPRESENTATIVE MASEK asked whether Kantishna Holdings, Inc., has
been around for a while.
REPRESENTATIVE JAMES responded that she thinks it has been in
existence for 10 or 12 years, having been formed for this
specific project.
REPRESENTATIVE SCALZI moved to report HB 244 out of committee
with individual recommendations and the accompanying fiscal
note. There being no objection, HB 244 was reported from the
House Transportation Standing Committee.
SB 88-METROPOLITAN PLANNING ORGANIZATIONS
CHAIR KOHRING announced that the next order of business would be
SENATE BILL NO. 88, "An Act relating to metropolitan planning
organizations and to establishment of a metropolitan planning
organization for the Anchorage metropolitan area; and providing
for an effective date."
JANET OATES, Staff to Senator Randy Phillips, Alaska State
Legislature, came forth on behalf of Senator Phillips, sponsor
of SB 88. She stated:
Basically, the purpose of this bill is to assist in
the Anchorage Metropolitan Area Transportation Study
[AMATS], which does the planning for the Anchorage
area road system. Senator Phillips and other
legislators have been approached by many of our
constituents who are frustrated with the process now,
finding that many times priorities that community
councils and community groups have established somehow
are lost along the way when it comes to the actual
carrying out of the priorities for the communities.
And so Senator Phillips has introduced this bill that
would put two legislators on the [AMATS Policy
Committee].
Number 1286
REPRESENTATIVE MASEK indicated legislators already have
connections with [DOT&PF] (Department of Transportation & Public
Facilities) [because of the budget]. She mentioned the regional
director of [DOT&PF], the commissioner of DEC (Department of
Environmental Conservation), the mayor of Anchorage, and two
municipal assembly members. She said she thinks the idea was
that the Senate President and the Speaker of the House would
designate a representative from each to be on the board. She
added that it doesn't seem to fit in properly.
MS. OATES responded that she believes the feeling is that
because state dollars are involved, there should be a tie-in
with members of the legislature.
REPRESENTATIVE KOOKESH noted that the Municipality of Anchorage,
by resolution, voted not to support this legislation. Second,
one question from testifiers at the previous meeting was that if
two legislators were put on the panel, how would they get away
to go to the monthly meetings in Anchorage? Third, no matter
how this is done, if legislators picked by the Senate or the
House leadership are on the panel, there is going to be a bias.
REPRESENTATIVE KOOKESH noted that finally, there was a lot of
discussion about the State of Hawaii allowing legislators to sit
on its same board, and there is a constitutional question that
still has to be answered. He said he doesn't think the
legislature wants to get into a position [of having to] defend a
constitutionally flawed position.
Number 1549
REPRESENTATIVE SCALZI remarked that he likes the concept of
this, and thinks getting a couple of legislators on the board
may be helpful. For example, he said the legislator that
represented his district before had some frustrations as to why
projects weren't being completed on time. On the other hand, he
said, he knows there are two things that get in the way of this.
REPRESENTATIVE SCALZI stated that he doesn't think the
constitutionality of providing the dual office on one board is
such a big hurdle, but the way the board mandates the
appointments is a problem for him. He said it is his
understanding that the proper procedure is to be voted onto the
board; the latitude for this group to do that now is available.
He asked whether the Senator or other [legislators] interested
in being on that board have submitted a proposal or a request
that they be appointed.
MS. OATES responded that she would have to check with Senator
Phillips.
REPRESENTATIVE KAPSNER stated that during the previous meeting
there was reference to the possibility of disbanding AMATS if
the legislature wasn't accommodated. She said it is her
understanding that Anchorage wouldn't receive that federal
funding anymore if there wasn't a municipal organization to deal
with.
Number 1702
DAVID MILLER, Division Administrator, Federal Highway
Administration (FHWA), came forth and stated that his program
provides the vast majority of highway funding in the state.
REPRESENTATIVE KAPSNER asked, if there wasn't a municipal
planning organization, what that would do to the transportation
needs in Anchorage.
MR. MILLER responded that Title 23 requires that there be a
metropolitan planning organization (MPO) for all areas over
50,000 in population. Without an MPO in place and without
funding to it, there could be no federal highway funds going
into Anchorage or the Matanuska-Susitna area.
REPRESENTATIVE KAPSNER asked what the dollar figure is on that.
MR. MILLER answered that he couldn't say off hand.
REPRESENTATIVE KOOKESH asked whether the federal statute also
explains how people get put on the board.
MR. MILLER responded that it does. He said it is very specific.
He stated:
A metropolitan planning organization may be
redesignated by agreement between the governor and
units of general-purpose local government that
together represent at least 75 percent of the
effective population, including the central city or
cities as defined by the bureau of census as
appropriate to carry out this section.
MR. MILLER stated that there was an original designation at some
point in the past, and there are bylaws in place as to how new
membership is added. In general, when the local affected
officials, the AMATS board, and the local government change
membership in accordance with their bylaws, that really doesn't
constitute a designation that has happened in the past. An
instance such as this, when the state legislature interjects
itself into the existing process, would be considered a
redesignation and would require undergoing that process.
Number 1882
REPRESENTATIVE KOOKESH asked whether that process requires input
and involvement of the governor.
MR. MILLER responded that it does. If this legislation passes
and the governor vetoes it or approves it, there would be
implications down the road.
REPRESENTATIVE KOOKESH remarked that if there was a
redesignation, it wouldn't guarantee that two legislators would
be put on it, because a redesignation could mean just including
two more members from the public.
MR. MILLER replied that that could very well be. He added that
FHWA would like to see those decisions made at the local level
under existing procedures and policies.
REPRESENTATIVE KAPSNER asked Mr. Miller whether he was opposed
to this legislation.
MR. MILLER responded that he doesn't believe it is consistent
with "134" in the intent of the federal legislation.
Number 1983
DOUGLAS GARDNER, Assistant Attorney General, Transportation
Section, Civil Division (Juneau), Department of Law, came forth
and stated that it is [the department's] position that the bill
is unconstitutional as it's drafted. Having legislators place
themselves upon a board that exercises executive powers - such
as when a project will be built, which project will be built,
how it will be funded, and where it will be placed on the
priority list - is the type of activity that Article II, Section
2, of the Alaska constitution addresses with respect to "dual
office" holding.
MR. GARDNER stated that he thinks it was Representative Masek
who said the legislators have a key role in funding [DOT&PF]
budgets and projects, but the implementation of those projects
is an executive type of function. From the legal standpoint, he
said, the department feels that this bill falls more into the
category of the exercise of some of those executive powers.
REPRESENTATIVE KAPSNER noted that the Legislative Affairs Agency
had supplied the committee with a legal opinion that says Hawaii
has the same kind of prohibitions on dual office holdings. She
asked Mr. Gardner whether there had been court contests.
MR. GARDNER responded that he has recently seen a memo [from
legislative legal counsel] that identifies the fact that there
is this similar constitutional provision on dual office holding
in Hawaii, but he didn't see any case citations in the memo. He
added that he can't say what the law is in Hawaii; however, he
thinks he can say with confidence that [the department's]
position is based on what it has been for the last 30 years.
Number 2205
REPRESENTATIVE KAPSNER disagreed with the premise that because
Hawaii does this, even though it has the same prohibition
against dual office holding in its constitution, it's something
[Alaska] should do. She remarked that Hawaii does a lot of
things that Alaska's not willing to do, such as allowing for
aboriginal hunting rights, having two official state languages,
having all streets named in the official language, and having
"immersion" schools. Representative Kapsner said she doesn't
think Alaska has taken the pattern of emulating Hawaii, and
doesn't think [Alaska] should start now with AMATS. She added
that she doesn't think it has been contested in Hawaii that the
list changes with every different office holder.
REPRESENTATIVE SCALZI asked whether any part of the bill
specifically speaks through the constitution about the dual
office holding. He referred to a letter [dated March 14] from
the Office of the Attorney General that states that the
disqualifications speak to holding an office for pay. He asked
whether the position on the board is a paid position.
MR. GARDNER answered that he does not know the parameters of the
positions on AMATS in terms of payment.
REPRESENTATIVE SCALZI said that's the only thing in Section 5 on
disqualifications that would preclude someone from having the
inability to serve in two positions, unless they were both paid
[positions]. Referring to wording on the second page [of the
letter], he said it is an interpretation; if the interpretation
is just from the statutory language, he thinks it's inadequate.
MR. GARDNER responded that the interpretation that was given of
SB 88 in that letter was based on a number of prior attorney
general opinions in Alaskan cases that were attached to [the
letter]; unfortunately, he said, Representative Scalzi may not
have had those attachments. With respect to payment, he said he
doesn't think that whether the position is paid or unpaid
changes the analysis. In an attorney general opinion from
December 27, 1996, it quotes language from an Alaskan case that
may address Representative Scalzi's opinion. Mr. Gardner read
to the committee:
The purpose of the prohibition is to guard against
conflicts of interest, self-aggrandizement,
concentration of power, and dilution of separation of
powers in regard to the exercise of the executive,
judicial, and legislative functions of our government.
MR. GARDNER added that he hadn't considered payment prior to
this testimony, but can reconsider it if the committee would
like. However, he thinks that was a strong statement by the
Alaska Supreme Court. Mr. Gardner said he thinks the best
answer is that separation of powers is designed to prevent the
concentration of power in that AMATS board, which is really what
the legislature would be doing if it placed two members on that
board.
Number 2424
REPRESENTATIVE SCALZI commented that if that's the only language
that case law was derived from, it seems inadequate; he thinks
the argument expanded from this simple interpretation of having
a dual office that pays is this: [a legislator] may not hold
another office position for profit.
MR. GARDNER replied that the constitution is a document that
ultimately is the Alaska Supreme Court's job to interpret. He
said he just tried to convey to the committee the interpretation
that his office has given, as part of its function in the
constitutional system.
CHAIR KOHRING shared that he likes the concept of the
legislation; however, he doesn't thinks there are the votes to
move it out of the committee. Therefore, [the committee] will
hold the bill over indefinitely.
[SB 88 was held over.]
HB 235- DOT&PF-RELATED CONTRACT CLAIMS
CHAIR KOHRING announced that the next order of business would be
HOUSE BILL NO. 235, "An Act relating to the handling of and
interest on contract controversies involving the Department of
Transportation and Public Facilities or state agencies to whom
the Department of Transportation and Public Facilities delegates
the responsibility for handling the controversies."
Number 2603
HEATHER MARTEL NOBREGA, Staff to Representative Norman Rokeberg,
Alaska State Legislature, came forth on behalf of the House
Judiciary Standing Committee, sponsor of HB 235. She stated:
We have introduced this bill at the request of the
Associated General Contractors [AGC] of Alaska. ... On
public works projects in the state of Alaska, a
contractor encountering a condition that requires a
change in the contract is required to perform the work
even if there is a dispute as [to] the appropriate
adjustment.
Resolution of such a claim frequently takes a long
time, as much as four yeas, and the state currently
disallows interest on the amount of the ultimate
settlement. This bill ... will require the interest
to be given at the end of the adjudication of the
matter, and when there's a settlement amount given ...
prejudgment interest will be given.
CHAIR KOHRING asked Ms. Nobrega to explain what prejudgment
interest means.
MS. NOBREGA explained that interest would start running from the
day of the dispute until the matter is settled. She stated that
there are a couple of different ways it could be settled.
CHAIR KOHRING asked who makes the settlement.
MS. NOBREGA responded that she believes a procurement officer
can make a decision. She noted that the person could appeal at
each level: a commissioner's [decision], a Department of
Transportation and Public Facilities (DOT&PF) [decision], all
the way up to a judicial decision. In response to a question by
Chair Kohring, she said this applies universally, to all
parties. It says the interest should be given to the
contractor, the department, or a contracting agency.
CHAIR KOHRING asked Ms. Nobrega whether she could cite some
examples that have occurred.
MS. NOBREGA responded that AGC would have the best examples.
However, the Department of Law's opposition paper cites quite a
bit of money it would have to give in prejudgment interest if
required to do so. It indicates to her that this is a problem:
these contractors aren't getting interest on their money.
Number 2780
DICK CATTANACH, Associated General Contractors (AGC) of Alaska,
testified via teleconference, saying [AGC] understands the
position of the Department of Law - it likes the idea of not
having to pay interest. However, a contractor has to pay all
his/her bills on time, out-of-pocket; frequently [the
contractor] has to borrow money just to pay those bills.
Controversies come up, which is why there is a claims process;
it is resolved in terms of who is at fault and who has to pay.
MR. CATTANACH stated that [AGC] thinks interest on that money
ought to be part of the costs of that claim, and the state ought
to be responsible for its fair share if the claim goes in favor
of the contractor. One thing [AGC] is concerned about is the
sheer size of the state [government] and its ability to postpone
claims. It places small contractors at a significant
disadvantage when they are forced at times to settle claims at
less than their realistic values; sometimes they go out of
business because they can't afford to take on the state. He
added that [AGC] doesn't think this type of interaction between
the state and the contractor is just; it is bad public policy.
CHAIR KOHRING asked Mr. Cattanach whether he could justify this
legislation as far as how many people have actually been
impacted by this.
MR. CATTANACH responded that this impacts a good number of
people each year. For example, a contractor right now who is
working on a project on the Kenai Peninsula is basically out of
business because of having to use the cost of the entire claim
just to continue. In some cases, arbitrators award upwards of
half a million dollars as prejudgment interest, only to have the
Department of Law contest it, take it to court, and end up
settling the claim for "pennies on the dollar."
Number 2928
CHAIR KOHRING asked whether the court process has worked for
AGC.
MR. CATTANACH answered that it is a very expensive process. One
thing [AGC] is working on with [DOT&PF] is a review of the
entire claims process. His members say if their claim is less
than $150,000, it is not economical to pursue it because of the
time involved and attorney fees.
Number 2975
JOHN WHEATLEY, Senior Vice President, Associated General
Contractors of Alaska, testified via teleconference.
TAPE 01-30, SIDE B
MR. WHEATLEY stated:
Contractors are required to perform the work even if
there is a dispute between the parties regarding
adequate and appropriate compensation. Also,
construction claims frequently represent differing of
opinions between the owner and the contractor
regarding whether or not particular work was included
in the documents at the time of bid. Resolution of
these differences takes time, and the state currently
disallows any interest on the amounts of ultimate
settlement.
A contractor incurs costs to complete the work. These
costs, if recovered in a timely fashion, could be used
to finance additional work and to support additional
security bond credit. The inability to use these
funds in their business could result in tremendous
costs to the contractor in terms of lost projects,
credit, and wages, [and] as we've heard in previous
testimony, even their very existence.
Alaska courts generally recognize awarding prejudgment
interest is necessary to make a plaintiff [whole] by
compensating him for the use of money .... The State
of Alaska should recognize the same principle in its
claim-resolution process by paying interest on
contract controversy. I urge you to support House
Bill 235, allowing contract claims to be [calculated]
the same as all other claims in the state of Alaska.
Number 2909
MIKE MILLER, MB Contracting Company, testified via
teleconference. He stated that he has worked in the
construction industry for 28 years in Alaska, and for 17 years
for MB Contracting Company. He views this legislation as
correcting an oversight in the [Alaska] Procurement Code. Prior
to the procurement code, in the mid-to-late '80s, the state paid
prejudgment interest. [The construction industry] is asking to
be treated fairly.
CHAIR KOHRING asked Mr. Miller whether there is a system like
this set up at the municipal level in Anchorage or Fairbanks.
MR. MILLER responded that he knows that they pay [prejudgment
interest], but does not know how it is set up. When he took
Legal Aspects of Engineering and Architecture at the University
of Alaska Fairbanks in the late '70s, a footnote in his textbook
mentioned that prejudgment interest was paid in Alaska as a
matter of course. He suggested this seems to be oversight from
when the model procurement code went to the procurement [code].
CHAIR KOHRING remarked that he asked the question to see if
there is any system in place, either municipally or perhaps in
other states, to use as an example of how it works elsewhere.
MR. MILLER said he is sure the federal C.F.R. (Code of Federal
Regulations) covers it.
Number 2778
KEVIN BRADY, Attorney, Oles Morrison Rinker & Baker, testified
via teleconference. He stated:
I have been involved with approximately four of these
cases that have gone through the administrative claims
process. ... I should point out that there are
multiple layers of review: the beginning in the
field, going up through the project management, going
up through the ... appropriate [DOT&PF] division,
going up through the commissioner, going through the
hearing officer, and going through the judicial
appeals. The fastest I've ever seen one of these
actually go through the process is 24 months - 24
months on a $750,000 award, which resulted in
approximately $90,000 in prejudgment interest, which
the contractor never received.
From a legal standpoint, up through July of 1998, the
commissioner's office routinely paid prejudgment
interest for contractor claims. Some time after that,
they arbitrarily decided that they no longer had to do
it.
Suffice it to say that we view that as being wrong,
and our efforts are to codify the preexisting
requirement that they must in fact pay prejudgment
interest. There [are] a number of reasons for doing
[this], not the least of which is every city, every
municipality, every federal agency [is] all required
to pay prejudgment interest for contractor claims.
For that matter, every state agency in the State of
Alaska is required to pay prejudgment interest on
other contract and court [claims]. There's simply no
basis for [DOT&PF] not to pay general contractors
prejudgment interest; it's fundamentally unfair and
it's unfriendly to business.
... The last thing I'd like to mention is there's
approximately a three-year period during which the
department has declined to pay prejudgment interest.
... I know of four or five contractors who have filed
claims and certified their claims within this three-
year period, and their interest is basically hanging
out there and accruing. I would like to encourage
this committee, if it sees fit to pass this bill out,
to make it retroactive to cover every contractor who
has a pending claim as of the effective date of the
legislation.
CHAIR KOHRING asked Mr. Brady when the [prejudgment] interest on
claims failed to continue.
Number 2616
MR. BRADY responded that he is aware of one case. The last
piece of correspondence he saw was signed by Commissioner
Perkins, indicating he had approved the hearing officer's
recommended decision in a case known as Quality Asphalt Paving,
which included a component of interest at 10.5 percent from the
date the claim was initially filed. Quality Asphalt Paving
subsequently believed its award was too little and appealed it.
In response to that, the Department of Law appealed the
prejudgment interest issue; that has been the subject of a lot
of pleadings and is currently en route to the supreme court.
BILL RENNO, Attorney, Oles Morrison Rinker & Baker, testified
via teleconference. He stated that over the past few years [his
firm] has had the opportunity to represent a number of
contractors in claims against DOT&PF. He emphasized how long it
takes a contractor to get through this process. He stated:
Right now in our office alone - and we're not the only
law firm by any means that represents the contractor -
... we are involved in at least five or six cases that
are in stages of the resolution process with [DOT&PF].
And as close as we are to a decision on this interest,
... my best guess is a year and a half to two years.
The next step is to go from superior court to the
supreme court. One of our clients has to file a
notice of appeal by tomorrow. ... That decision in the
supreme court - and that happens to be on Quality
Asphalt - will affect all other pending claims. ...
We would strongly recommend that the effective date,
if you choose to pass this bill, would be effective to
ending claim. That's the only way ... the legislature
can put an end to this long, arduous, costly process
that a number of contractors have found themselves
wrapped up in at this time.
Number 2519
MR. RENNO continued:
I guess the other point is, again, to go back and make
sure that the committee members understand that
[DOT&PF] essentially changed positions .... Everybody
else pays interest. ... The reason you're not going to
see other regimes is because, as a matter of course,
this is paid.
What happened that derailed the process at [DOT&PF] is
that the supreme court issued a decision called Danco
[Danco Exploration v. DNR]. That decision actually
involved a deposit on an oil lease with DNR
[Department of Natural Resources]. The supreme court
in that case said that the person who put down the
deposit was not entitled to interest on his deposit.
There's been reams of briefing on that case; I'm not
going to get into it in detail. Just let me simplify
it and say that case does not apply to this situation.
It was not a contractor court case; it was a lease
deposit, and ... the Department of Law has latched on
to that case and used that as an excuse to direct
[DOT&PF] not to pay interest to contractors.
And to run that point home, I would like to quote from
a letter that Mr. Cattanach received from Commissioner
Perkins on March 17, 2000. At that time, Commissioner
Perkins told Mr. Cattanach, "On the issue of paying
prejudgment interest on a claim appeal, we are not
avoiding making such payment by choice. Rather, we
are following the advice of the attorney general's
office that such payments are contrary to law."
So what has happened since [DOT&PF] has been
instructed by the Department of Law that they don't
have to pay interest [has] actually been ... a club
against contractors. And let me give you [an] example
of how that club has been used. ... After the hearing
officer's decision, Quality thought they were entitled
to more on the principal of their claim.
They appealed that to superior court. [DOT&PF] turned
around after ... the commissioner had recognized that
Quality was entitled to interest by adopting the
hearing officer's decision. After that, [DOT&PF]
reversed fields in response to Quality's appeal and
cross-appealed and said, "We changed ... our minds:
you are not entitled to interest." That is the case
that's been tied up in superior court ... and is now
heading toward the supreme court.
Well, let me take this one step further. Now it's
going to the supreme court, and Quality's attorneys
called the AGs [attorney generals] in Fairbanks
handling this case and asked those AGs, "Would you
agree to allow this to go to the supreme court on the
interest issue only, and agree to pay us the principal
amount of our claim that has been affirmed at the
hearing officer level [and] that has been affirmed at
the supreme court level?" The response from the AGs
[was], "No, if you dare to appeal this interest issue,
we are going to appeal all other issues in the case
and you're not going to see a dime."
So that's the kind of abuse that has been going on
from [DOT&PF] with regard to this interest issue.
Interest is needed in order to give these people an
incentive to sit down with the contractors, early on
in the process, and resolve these disputes, or
otherwise pay the penalty of having to pay the
contractor at the end of the day for two, three, four
years of interest.
CHAIR KOHRING remarked that he was amenable to moving the bill
if it was the will of the committee.
Number 2228
DOUG GARDNER, Assistant Attorney General, Transportation
Section, Civil Division (Juneau), Department of Law, came forth
and stated:
I guess I'd like to tell some of the things that Oles
Morrison Rinker, the law firm that is here to further
their clients' business interests, hasn't told you
about this particular bill. First of all, we have
heard the comments that [DOT&PF], in the past, has
paid this interest, and we have queried a senior
[DOT&PF] staff and asked them for situations where
they have paid interest. They have been unable to
provide us with any of those instances. I wouldn't be
surprised if at some point [DOT&PF] may have -- and
our clients often make mistakes. ... It may be that
somehow or another, somewhere along the way, some
interest was paid. ...
As Mr. Renno and Mr. Brady have indicated to you, ...
we have been in litigation with their law firm for
many years over contract claims and for ... quite a
few months now on this issue. The Alaska Superior
Court has twice ruled in the Quality Asphalt case ...
that we have correctly interpreted Alaska law and that
prejudgment interest is not paid on these claims.
The reason that prejudgment interest is not paid on
administrative claims is because under Alaska law ...
the state has sovereign immunity; it agrees to be sued
for the things it agrees to be sued for. In AS
09.52.50 the state has specifically not agreed to be
sued directly in superior court on administrative
claims. There's a process that has been put together,
which could be described as an alternate dispute
resolution process where the contractor and the
[DOT&PF] represented by our office try and litigate
these issues. But for claims like that, where there
is no direct route into court, the payment of
prejudgment interest just doesn't happen; it's not
something that the state has waived its sovereign
immunity to allow to have happen. ... A very closely
analogous situation was raised in the Danco case.
Number 2078
MR. GARDNER continued:
... The other thing that I don't think was clear from
any of the testimony so far is that the concept that's
being advance here is a concept, from what we've been
able to determine, [that] is not a majority position
in the country. The Associated General Contractors
and Oles Morrison are representing to you that this is
a great idea and a good thing to do. ... Other states
have decided that they will pay liquidated claims, but
they will not pay interest on unliquidated claims.
And it gets a little complicated, but the bottom line
is, the State of Alaska pays interest on a claim
that's not disputed. If you've done work for us, and
you're just owed the money and there's no dispute, we
pay interest. If there is a disputed amount, then we
don't pay interest on those types of claims for the
reasons that I have just said.
Something that the legislators need to consider really
carefully is, ... as a consequence, this bill affects
all of the agencies and would make the cost of those
projects, to the extent that any interest is owed on a
claim, rise.
That brings the second issue up, which is how does the
state pay for that kind of interest, if in fact it is
owed? [DOT&PF] gets most of its funding through the
Federal Highway Administration, ... gets some from FAA
[Federal Aviation Administration] and some from
Federal Transit Authority. But other agencies may get
their funding through other federal agencies that
don't participate in the payment of interest. ... The
state will ultimately have to pay that interest one
way or the other, whether the federal government
participates or whether the state has to reach into
general funds to pay those kinds of interest payments.
That's certainly a consequence that this committee
should seriously consider. The other consequences in
this legislation are some equal protection issues.
Number 1901
REPRESENTATIVE KOOKESH asked Mr. Gardner to describe what
prejudgment interest is. He pointed out that in the sponsor
statement it says, "This legislation would simply require that
when a contract settlement with [DOT&PF] is in dispute and
settled in favor of the contractor, interest must be paid to the
contractor on the settlement amount from the date of the claim
to the date of the decision." He said that doesn't sound like
prejudgment to him.
MR. GARDNER responded that he thinks a lot of terms have been
used to describe this. He said it could most accurately be
described as interest on administrative claims.
REPRESENTATIVE KOOKESH asked when it is paid and whether it is
paid prior to a settlement.
MR. GARDNER answered that it probably is not a good term to use
in this situation.
CHAIR KOHRING asked Ms. Nobrega whether the legislation is
retroactive.
Number 1746
MS. NOBREGA responded that it is her understanding that it would
not be retroactive unless it was specifically stated as such.
CHAIR KOHRING commented that if it wasn't retroactive, other
current claims might come to the forefront after the effective
date of the legislation.
MS. NOBREGA said she is not sure.
CHAIR KOHRING remarked that assuming that were the case, he is
curious as to how much money [DOT&PF] would potentially be
liable to pay out in claims.
Number 1709
DENNIS POSHARD, Legislative Liaison/Special Assistant, Office of
the Commissioner, Department of Transportation & Public
Facilities, came forth and stated his understanding that this
bill would not affect claims retroactively.
MR. GARDNER said a bill is not retroactive unless it's
specifically made retroactive. He believes there would be
serious issues with respect to federal participation in a
retroactive payment; he isn't sure FHWA would participate in
that kind of payment, but the sense is that it probably would
not, in which case the bill would have a seven-figure fiscal
note. He added that to do something retroactively, under
[Alaska's] constitution, similarly situated people must be
treated similarly. A retroactive provision in this bill could
really just be addressing the tip of the iceberg; there may be a
massive amount of people who could be entitled to raise this
issue.
REPRESENTATIVE KOOKESH referred to AS 09.52.50 and indicated the
desire to have a legal opinion regarding sovereign immunity, as
well as the state's ability to be sued, and to have to pay
interest. He noted that people who testified described the
prejudgment interest, but that it is not particularly mentioned
in the bill. He suggested perhaps someone from AGC or Ms.
Nobrega could answer that later.
Number 1492
REPRESENTATIVE SCALZI said he would like to move the bill out of
committee; the remarks that the state would have to pay don't
bother him, because he thinks it would bring the state into
compliance with the private sector and push the DOT&PF to
operate more efficiently. He remarked that he thinks when a
contractor goes through different change orders on a good-faith
basis and then all of a sudden is faced with having to appeal
his or her case, the interest accrued is a big factor in the
judgment and whether or not the contractor may remain solvent.
REPRESENTATIVE SCALZI moved to report HB 235 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE KOOKESH objected. He stated:
I know that there's no retroactive clause in the bill,
and even if there was, I know that we would have to
think twice about supporting something like this
because of the fiscal note it would generate. And if
people continue to want to have a retroactive clause,
then we have a big problem.
... I have no problem with the sponsor statement
saying that, if there's a problem and they go to a
decision and there's interest owed somebody, after the
decision is made, ... because I think that's fair.
But at the same time, we need to know how much money
that is ... because I think the state itself would
have to come up with that money to pay that interest
payment. ... The way I interpret prejudgment interest
is that you pay it upfront. ...
And I really believe that if the state is relying on
certain statutes that say we can only be sued by
people who waive sovereign immunity, ... there's many
people, ... especially in this legislature, who have
stood up and said the state is a sovereign entity.
And when you give away that sovereign entity to a
contract or through a bill like this, then we have a
problem.
Number 1270
REPRESENTATIVE MASEK said it seems many issues brought up deal
with the financial portion, which the House Finance Standing
Committee can deal with. Therefore, she will support moving the
bill.
CHAIR KOHRING addressed Representative Kookesh and offered to
put together a letter voicing any additional concerns.
REPRESENTATIVE KOOKESH said he didn't have any more problems
with moving the bill out, and would work with [Michael Krieber,
committee aide for the House Transportation Standing Committee]
to put together a letter for the House Finance Standing
Committee. He noted that he would still have the option of
voting "no" on the floor. He said he wanted to be supportive,
but wanted to state his objections and the reasons.
CHAIR KOHRING told Mr. Gardner he would look forward to the
legal opinion as far as the sovereign immunity issue. He asked
that copies be provided to himself, for circulation to committee
members. He asked whether there was any further objection to
the motion.
REPRESENTATIVE KOOKESH said he would object "just so I could
vote no."
Number 1220
A roll call vote was taken. Representatives Masek, Scalzi, and
Kohring voted in favor of moving the bill. Representative
Kookesh voted against it. [Representatives Ogan, Wilson, and
Kapsner were absent.]
CHAIR KOHRING announced that HB 235 was moved from the House
Transportation Standing Committee by a vote of 3-1. He assured
Representative Kookesh that his concerns would be forwarded to
the House Finance Standing Committee. [Representative Kookesh
was one of four signers of the bill report and thus HB 235 was
forwarded to the Chief Clerk.]
REPRESENTATIVE KOHRING called for an at-ease at 2:40 p.m. The
meeting was called back to order at 2:48 p.m.
HB 22-MARINE PASSENGER VESSELS
[Contains discussion of HB 183 and SB 134, the governor's
proposed legislation on the same topic]
Number 1055
CHAIR KOHRING announced that the next order of business would be
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 22, "An Act relating to
certain passenger vessels operating in the marine waters of the
state; and providing for an effective date."
CHAIR KOHRING noted that there was a proposed committee
substitute (CS) [Version O] that was worked on with the cruise
ship industry and Representative Kerttula.
REPRESENTATIVE KOOKESH expressed his desire to pass the proposed
CS out that day. He noted that he had worked hard with the
committee staff to get Version O before the committee.
CHAIR KOHRING reported that [Version O] was acceptable to all
parties involved.
Number 0892
REPRESENTATIVE BETH KERTTULA, Alaska State Legislature,
testifying as the sponsor of SSHB 22, related her belief that
this is the vehicle to move forward. The fundamentals behind
the bill and the proposed CS are to protect the state's right to
know what is being emitted in the state's waters, in order that
reasonable action with the industry to step forward can occur.
At the House Transportation Standing Committee's April 12, 2001,
work session, the committee had heard a presentation that
identified the problems with cruise ship discharges based on
last summer's sampling. For those living in downtown Juneau,
the past summer was surprising due to the identification of high
discharges of fecal coliform bacteria in graywater. She pointed
out that the committee as well as the public have heard this
information; thus the public expects the legislature to do
something about this.
Number 0741
REPRESENTATIVE KERTTULA reiterated that SSHB 22 is a vehicle for
addressing the cruise ship issues. Furthermore, this
legislation complements U.S. Senator Murkowski's legislation,
which took a great step forward in dealing with some of these
problems. She said U.S. Senator Murkowski didn't preempt the
state [with his federal legislation], but specifically allowed
the state to work with the federal government in order to
accomplish good changes for Alaska.
REPRESENTATIVE KERTTULA noted that [Version O] places modest
state requirements on the cruise ship industry. For example,
cruise ships would have to register with the state, not only
allowing a better relationship between the state and the
industry, but also providing the state with the ability to get
service [of process] on the industry, should the need arise.
REPRESENTATIVE KERTTULA explained that cruise ships would
conduct sampling and testing, which would go directly to the
state. She said this is somewhat of a state's rights issue in
that the state can receive this information directly. There
would also be a requirement for the industry to collect
graywater samples and conduct routine tests for fecal coliform
bacteria and other conventional pollutants at least twice during
the cruise season.
REPRESENTATIVE KERTTULA explained that if a cruise ship doesn't
discharge wastewater while in state waters, the ship doesn't
have to report to the state. However, those that do discharge
wastewater must report what, when, where, and how much they
discharge; this information will be used to make decisions.
REPRESENTATIVE KERTTULA related her belief that the industry has
made great steps forward to try to control this itself. Without
a comprehensive picture, however, the appropriate path is not
clear. She believes SSHB 22 moves the state where it needs to
be, and that the proposed CS accomplishes what should happen in
most of the important areas. Therefore, she encouraged Chair
Kohring to move SSHB 22 forward today.
Number 0579
REPRESENTATIVE SCALZI moved to adopt the proposed CS, version
22-LS0238\O, Lauterbach, 4/19/01, as the working document.
There being no objection, Version O was before the committee.
REPRESENTATIVE SCALZI offered as an amendment to page 3, lines 7
and 15, that "20" be replaced with "200 parts per [100
milliliters]".
Number 0460
SPENCER WOOD, Lieutenant Commander, Seventeenth District Coast
Guard Office - Juneau, U.S. Coast Guard, clarified that it
wouldn't be "parts per milliliters"; rather, it would be "200
colonies [of] fecal coliform per 100 milliliters," which is the
current federal standard for marine sanitation devices.
Number 0387
REPRESENTATIVE SCALZI moved that the committee adopt the
following amendment:
Page 3, lines 7 and 15:
Delete "20"
Insert "200 colonies"
There being no objection, Amendment 1 was adopted.
REPRESENTATIVE KERTTULA thanked Representative Kohring and his
staff, the House Transportation Standing Committee members, as
well as the cruise ship industry. She also thanked those on
teleconference.
Number 0304
RANDY RAY, U.S. Cruise Ship Association, testified via
teleconference. He noted that he and the association's
lobbyist, Ray Gillespie, have been working on this issue for two
years. He expressed interest in seeing this bill move forward.
Not having the proposed CS in front of him, he said he would not
comment. However, he looked forward to working with everyone on
this legislation as it moved forward.
Number 0134
PAULA TERREL, Southeast Program Director, Alaska Marine
Conservation Council (AMCC), testified via teleconference in
support of SSHB 22 and requested that the committee forward this
bill from committee. She informed the committee that AMCC is a
statewide, community-based organization with a diverse
membership. The AMCC considers SSHB 22 to be a right-to-know
piece of legislation, which it strongly supports. One of AMCC's
guiding principles is the promotion of sustainable and healthy
fisheries, which is part of having sustainable communities [with
healthy economies].
TAPE 01-31, SIDE A
MS. TERREL mentioned the [AMCC principles] of sound science,
local and community input, and traditional knowledge. Such
principles depend on the continued health of Alaska's marine
waters. This legislation would ensure that the public has the
information as well as the state.
Number 0155
JOHN HANSEN, President, North West CruiseShip Association,
explained that the North West CruiseShip Association is an
association of the nine cruise lines that operate in the Pacific
Northwest. This year the association has 22 ships operating in
the region. Since the committee has already heard much of the
background, he said he would skip that portion of his testimony.
Furthermore, the proposed CS changes some of the association's
response to some things.
MR. HANSEN reported that the association recommends the
following. First, the [legislation] should be carefully crafted
in order to avoid ambiguity and overlapping with federal
legislation or existing state law. Second, the standards
expected of the industry should be clearly established. Third,
there should be clear penalties for breach. Fourth, [the
legislation] should contain provisions for state record keeping
of ship discharges, and the records should be available. Fifth,
there should be a program of monitoring and testing. Sixth, the
industry should pay for reasonable monitoring, testing, and
research, which is consistent with industry practice. The
association believes the proposed CS incorporates the
aforementioned six principles, he said, and thus supports it.
Number 0461
JOLENE RIELLY, National Ocean and Sciences Bowl, Juneau-Douglas
High School, came forth and informed the committee that the
group has been researching the cruise ship waste, its history,
and how it ties in with Alaska and the cruise ship industry.
Ms. Rielly spoke in favor of SSHB 22 because she feels that it
covers many of the areas in which cruise ships should comply.
Number 0560
ADRIANA RODRIGUEZ, National Ocean and Sciences Bowl, Juneau-
Douglas High School, came forth and informed the committee that
the group consisted of a team of four people who researched the
topics included in SSHB 22. This bill is a major step forward
in propelling the cruise industry and the state into a
partnership. Ms. Rodriquez noted her support of SSHB 22 and
expressed her hope that this will help the industry and Alaska.
CHAIR KOHRING asked if the students recognize the other side of
this issue: the economic benefits that tourism brings to
Alaska. He acknowledged that the students were present to
achieve a balance between the economic and environmental sides.
MS. RIELLY and MS. RODRIGUEZ agreed that both sides of the issue
should be reviewed.
MS. RODRIGUEZ, in response to Representative Kookesh, noted that
she and Ms. Rielly are seniors at Juneau-Douglas High School.
Number 0751
ROBERT REGES, Member, Cruise Control, Inc., came forth and
informed the committee that Cruise Control is working towards
ensuring that the cruise industry mitigates its impacts. While
Cruise Control recognizes the economic benefits of the cruise
industry, it also recognizes the economic and social burdens
this industry brings. Cruise Control's task is to ensure that
those burdens are internalized and paid for by the operators.
Although Cruise Control doesn't wish to diminish cruising in
Alaska, it does want the industry to tell [the public] what it
leaves behind; he believes providing such information is the
purpose of SSHB 22. Furthermore, [Cruise Control] believes the
cruise industry should mitigate any impacts where feasible, and
should pay for impacts that can't be mitigated.
MR. REGES acknowledged that the title change in the proposed CS
will eliminate permits, which are included in the governor's
bill [HB 183 and SB 134]. The title also "effectively
eliminates discussions of head taxes," Mr. Reges noted, but
indicated [Cruise Control] is working with others on an
initiative. The title change sets up contention on certain
issues for another time.
MR. REGES noted that [AS 46.03].463 speaks to "a person", while
the remainder of the bill addresses an "owner or operator". For
consistency, he suggested that "person" be changed to "owner or
operator" on page 2, line 30, and on page 3, lines 1, 12, and
17. Mr. Reges informed the committee that he is an
environmental attorney and has worked with the state and federal
environmental statutes for years. He explained that ["owner or
operator"] is the term of art that is used to describe all the
persons who may be responsible for the operation of a vessel.
MR. REGES recalled discussion regarding whether existing laws
are already satisfactory; to that, he replied no. From a
business perspective, he told members, the cruise industry is
one of the few industries in Alaska that isn't required to
register or have an agent for service of process. For example,
a carpenter from out of state can't come up and put a cabinet
together without registering and getting an agent for service of
process. Although this is not problematic when companies or
their offices are based in the United States, that isn't the
case with all cruise companies. Mr. Reges related his
experience during his time with the Office of the Attorney
General when he attempted to serve [process on] a cruise company
with no office in the United States. Those provisions requiring
registration and an agent for service of process don't exist
elsewhere in statute for cruise owners and operators.
Number 1156
MR. REGES turned to the environmental section of the bill, the
right to know provision. He acknowledged the possibility that
an individual could, through the Freedom of Information Act
and/or litigation discovery, secure the type of information
being sought [in the right-to-know provision]. He informed the
committee that he has been working with the Department of
Environmental Conservation (DEC) steering committee since its
inception. On numerous occasions, Mr. Reges said, he has
requested that he be able to review the opacity readings from
the mid-1990s to last year. He has yet to see those readings.
Mr. Reges characterized this as fundamental information that
isn't readily available.
MR. REGES referred to the April 18, 2001, Anchorage Daily News
article entitled, "Bush Backs Rule on Lead Emission." He quoted
the following from that article:
The Bush Administration announced Tuesday that it
would go forward with a regulation proposed by former
president Bill Clinton to require thousands of
businesses to make public the details of their
emissions of lead into the environment. EPA
Administrator Christine Whitman, in announcing the
lead emission rules - ["again, a public right to know
rule," Mr. Reges observed] - said that public scrutiny
has helped reduce emissions of other toxic substances.
MR. REGES pointed out that this right to know is a tried and
true rule. Therefore, Mr. Reges urged the committee to move
this bill from committee.
Number 1346
JOE LeBEAU, Alaska Center for the Environment (ACE), testified
via teleconference. Mr. LeBeau acknowledged that the committee
supports clean air and water. However, everyone was surprised
with last summer's [sampling] results. This bill will go
further to increase the knowledge of the pollutants emitted into
the environment. Mr. LeBeau urged the committee to move this
bill forward.
Number 1401
MICHELE BROWN, Commissioner, Department of Environmental
Conservation (DEC), testified via teleconference, reporting that
DEC supports this legislation as a "right-to-know" bill. Thus
far, the cruise ship industry is the only industry DEC knows of
that operates in Alaska with such potential to pollute, although
there is virtually no oversight by the state.
COMMISSIONER BROWN characterized the reporting and gathering of
information included in this bill as an important first step.
However, she expressed hope that the committee would hear the
governor's bill next week. The governor's bill includes a more
comprehensive monitoring and oversight program that goes beyond
information gathering.
COMMISSIONER BROWN pointed out that all other industries
operating in Alaska have to report, make information available,
and follow clean air and water rules. She echoed Mr. Hansen's
earlier testimony regarding the need to have a program in place
that would perform future verification, record keeping,
systematic monitoring and testing, establish a way to pay for
that activity and state oversight, as well as establish clear
penalties for breach of the standards. Commissioner Brown
reiterated DEC's support of [CSSSHB 22] and noted her hope that
the committee would forward the bill today.
Number 1567
MICHAEL KRIEBER, Staff to Representative Vic Kohring, Alaska
State Legislature, speaking as the committee aide for the House
Transportation Standing Committee, pointed out that the key
change included [Version O] is the requirement for the treatment
of graywater. If this legislation passes, Alaska would be the
only place that would require the treatment of graywater.
MR. KRIEBER continued with the other changes. The title has
changed in order to reflect the particular sections of the bill.
Furthermore, language concerning the graywater treatment
requirements and the monitoring have been added. Any reference
to air-monitoring requirements has been deleted because existing
state statutes and regulations cover that matter.
CHAIR KOHRING recognized concern that passage of legislation
could result in an agency's interpreting the legislation
differently from the intent of the legislation. He asked how
that possibility can be addressed.
MR. KRIEBER pointed out that statute cites particular treatment
levels. Therefore, the legislation states what the requirements
would be; thus there would be no need for regulations. Mr.
Krieber referred to page 8, [AS] 46.03.485, entitled
"Regulations." In the prior bill, language directed DEC to
propose, review, and implement regulations. A good portion of
that language was taken out because the treatment requirements
were directly addressed.
MR. KRIEBER said the elimination of the regulations drafting
process, coupled with an implementation date of 2003, will allow
the treatment requirements to be in effect sooner than if the
regulatory process were in place. However, the bill does
include the ability for the department to adopt regulations for
the implementation of exemptions. He noted that there is the
potential that various operators may not be "up to snuff" yet,
although they are working with the department; the department
should have flexibility to work with the industry in those
circumstances.
Number 1804
REPRESENTATIVE KOOKESH thanked Mr. Krieber for his help on this
issue. He mentioned that his district includes communities
throughout Southeast Alaska, which is where the impact of the
cruise ship industry could be the greatest if there were a major
problem.
CHAIR KOHRING noted that initially he didn't want to move this
legislation; however, now that there is a proposed CS that is
acceptable to the industry and seems to [alleviate] some of the
environmental and economic concerns, he was open to advancing
it. He said he was trying to listen to all sides and come to a
consensus, to put forth something that is acceptable to the
cruise ship industry, but not onerous with regard to prospective
regulations and taxes. He mentioned that this legislation could
return from the Senate in the form of a tax bill to which he is
adamantly opposed; however, the title has been tightened so that
a tax couldn't be added.
Number 1975
REPRESENTATIVE SCALZI noted his concern with any legislation
that takes the monitoring agency out of the loop. He related
his belief that the U.S. Coast Guard should perform the
monitoring, whether it is oil-related or graywater discharge.
He said that he is very satisfied with the modifications that
resulted in the CS. However, he maintained that the U.S. Coast
Guard and the Environmental Protection Agency (EPA) will still
be involved with this because of the federal legislation.
REPRESENTATIVE SCALZI, in regard to Mr. Reges's suggestion for
language changes, reminded members that this legislation has two
more committee referrals where amendments could be addressed.
Furthermore, three of the House Transportation Standing
Committee members also sit on the House Resources Standing
Committee, the next committee of referral.
REPRESENTATIVE SCALZI turned to the issue of a fee, which he
felt would have been cumbersome and open to more debate. Now
that this legislation strictly addresses monitoring, there is a
modest fiscal note. Furthermore, the deletion of the air
control language [was appropriate] because the issue of air
quality would take an inordinate amount of time and testimony.
Therefore, Representative Scalzi expressed his satisfaction with
[Version O] and noted his desire to move it forward.
Number 2122
REPRESENTATIVE MASEK said having two other committee referrals
and the need to deal with this issue before the end of session
make it incumbent upon the committee to forward this bill out of
committee today. She, too, believes that the proposed CS is a
step in the appropriate direction and can be further worked on
in the other two committees of referral.
REPRESENTATIVE MASEK moved to report CSSSHB 22, Version O [22-
LS0238\O, Lauterbach, 4/19/01], as amended, out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, CSSSHB 22(TRA) was reported
from the House Transportation Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 3:34
p.m.
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