Legislature(2003 - 2004)

03/23/2004 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 23, 2004                                                                                         
                           1:35 p.m.                                                                                            
                                                                                                                                
TAPE(S) 04-25                                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Bettye Davis                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
CS FOR HOUSE BILL NO. 340(JUD) am                                                                                               
"An Act  relating to  damages in  an action for  a defect  in the                                                               
design, construction,  and remodeling  of certain  dwellings; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     MOVED CSHB 340(JUD) am OUT OF COMMITTEE                                                                                    
                                                                                                                                
SENATE BILL NO. 357                                                                                                             
"An  Act  relating  to the  regulation  of  insurance,  insurance                                                               
licenses, qualifications  of insurance producers,  surplus lines,                                                               
fraud  investigations,  electronic transactions,  and  compliance                                                               
with federal  law and  national standards;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     MOVED CSSB 357(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
CS FOR HOUSE JOINT RESOLUTION NO. 34(FSH)                                                                                       
Requesting the  United States Department  of Agriculture  and the                                                               
United  States Department  of Labor  to  extend Trade  Adjustment                                                               
Assistance benefits  to Alaska  salmon fishermen;  requesting the                                                               
United  States  Congress  and the  United  States  Department  of                                                               
Agriculture  to  extend  additional disaster  and  price  support                                                               
benefits to  Alaska salmon fishermen;  and requesting  the United                                                               
States  Department of  Commerce to  establish a  Trade Adjustment                                                               
Assistance program specific to commercial fishermen.                                                                            
                                                                                                                                
     MOVED CSHJR 34(FSH) OUT OF COMMITTEE                                                                                       
                                                                                                                                
CS FOR HOUSE BILL NO. 409(FSH)                                                                                                  
"An Act relating to the maximum length of salmon seine vessels;                                                                 
and providing for an effective date."                                                                                           
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 358                                                                                                             
"An Act relating to the performance of railroad track                                                                           
construction work for the Department of Transportation and                                                                      
Public Facilities by the Alaska Railroad Corporation."                                                                          
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 340                                                                                                                  
SHORT TITLE: DAMAGES IN CONSTRUCTION CLAIMS                                                                                     
SPONSOR(s): REPRESENTATIVE(s) MEYER                                                                                             
                                                                                                                                
01/12/04       (H)       PREFILE RELEASED 1/2/04                                                                                
01/12/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/12/04       (H)       L&C, JUD                                                                                               
01/23/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
01/23/04       (H)       Moved CSHB 340(L&C) Out of Committee                                                                   
01/23/04       (H)       MINUTE(L&C)                                                                                            
01/26/04       (H)       L&C RPT CS(L&C) 1DP 4NR                                                                                
01/26/04       (H)       DP: ANDERSON; NR: CRAWFORD, LYNN,                                                                      
01/26/04       (H)       GATTO, GUTTENBERG                                                                                      
02/04/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/04/04       (H)       -- Meeting Canceled --                                                                                 
02/09/04       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
02/09/04       (H)       Moved CSHB 340(JUD) Out of Committee                                                                   
02/09/04       (H)       MINUTE(JUD)                                                                                            
02/12/04       (H)       JUD RPT CS(JUD) 5DP 1NR                                                                                
02/12/04       (H)       DP: OGG, SAMUELS, HOLM, ANDERSON,                                                                      
02/12/04       (H)       MCGUIRE; NR: GARA                                                                                      
02/23/04       (H)       TRANSMITTED TO (S)                                                                                     
02/23/04       (H)       VERSION: CSHB 340(JUD) AM                                                                              
02/25/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/25/04       (S)       L&C, JUD                                                                                               
03/04/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/04/04       (S)       Heard & Held                                                                                           
03/04/04       (S)       MINUTE(L&C)                                                                                            
03/09/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/09/04       (S)       Scheduled But Not Heard                                                                                
03/23/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 357                                                                                                                  
SHORT TITLE: INSURANCE                                                                                                          
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/01/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/01/04       (S)       L&C, FIN                                                                                               
03/09/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/09/04       (S)       Heard & Held                                                                                           
03/09/04       (S)       MINUTE(L&C)                                                                                            
03/23/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: HJR 34                                                                                                                  
SHORT TITLE: FED TRAINING AND ASSISTANCE FOR FISHERMEN                                                                          
SPONSOR(s): REPRESENTATIVE(s) OGG BY REQUEST OF SALMON INDUSTRY                                                                 
TASK FORCE                                                                                                                      
                                                                                                                                
01/28/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/04       (H)       FSH, L&C                                                                                               
02/09/04       (H)       FSH AT 9:00 AM CAPITOL 124                                                                             
02/09/04       (H)       Moved CSHJR 34(FSH) Out of Committee                                                                   
02/09/04       (H)       MINUTE(FSH)                                                                                            
02/12/04       (H)       FSH RPT CS(FSH) NT 5DP                                                                                 
02/12/04       (H)       DP: OGG, WILSON, SAMUELS, GUTTENBERG,                                                                  
02/12/04       (H)       SEATON                                                                                                 
02/16/04       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/16/04       (H)       Moved CSHJR 34(FSH) Out of Committee                                                                   
02/16/04       (H)       MINUTE(L&C)                                                                                            
02/18/04       (H)       L&C RPT CS(FSH) NT 4DP 1NR                                                                             
02/18/04       (H)       DP: LYNN, GATTO, GUTTENBERG, ANDERSON;                                                                 
02/18/04       (H)       NR: DAHLSTROM                                                                                          
02/26/04       (H)       TRANSMITTED TO (S)                                                                                     
02/26/04       (H)       VERSION: CSHJR 34(FSH)                                                                                 
02/27/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/27/04       (S)       L&C, RES                                                                                               
03/23/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: HB 409                                                                                                                  
SHORT TITLE: SEINE VESSEL LENGTH                                                                                                
SPONSOR(s): REPRESENTATIVE(s) WILLIAMS BY REQUEST OF SALMON                                                                     
INDUSTRY TASK FORCE                                                                                                             
                                                                                                                                
01/28/04       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/04       (H)       FSH, RES                                                                                               
02/09/04       (H)       FSH AT 9:00 AM CAPITOL 124                                                                             
02/09/04       (H)       Heard & Held                                                                                           
02/09/04       (H)       MINUTE(FSH)                                                                                            
02/16/04       (H)       FSH AT 9:00 AM CAPITOL 124                                                                             
02/16/04       (H)       Moved CSHB 409(FSH) Out of Committee                                                                   
02/16/04       (H)       MINUTE(FSH)                                                                                            
02/18/04       (H)       FSH RPT CS(FSH) 3DP 4NR                                                                                
02/18/04       (H)       DP: WILSON, HEINZE, GUTTENBERG;                                                                        
02/18/04       (H)       NR: GARA, OGG, SAMUELS, SEATON                                                                         
02/18/04       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
02/18/04       (H)       Moved CSHB 409(FSH) Out of Committee                                                                   
02/18/04       (H)       MINUTE(RES)                                                                                            
02/19/04       (H)       RES RPT CS(FSH) 5DP 1DNP 2NR                                                                           
02/19/04       (H)       DP: STEPOVICH, HEINZE, KERTTULA,                                                                       
02/19/04       (H)       GUTTENBERG, MASEK; DNP: WOLF;                                                                          
02/19/04       (H)       NR: LYNN, GATTO                                                                                        
02/26/04       (H)       TRANSMITTED TO (S)                                                                                     
02/26/04       (H)       VERSION: CSHB 409(FSH)                                                                                 
02/27/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/27/04       (S)       L&C, RES                                                                                               
03/11/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/11/04       (S)       <Above Bill Hearing Postponed>                                                                         
03/23/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 358                                                                                                                  
SHORT TITLE: ALASKA RAILROAD TRACK WORK                                                                                         
SPONSOR(s): TRANSPORTATION                                                                                                      
                                                                                                                                
03/03/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/03/04       (S)       TRA, L&C                                                                                               
03/04/04       (H)       TRA AT 1:30 PM CAPITOL 17                                                                              
03/04/04       (H)       -- Meeting Canceled --                                                                                 
03/05/04       (S)       TRA RPT 3DP 2NR                                                                                        
03/05/04       (S)       DP: WAGONER, COWDERY,THERRIAULT                                                                        
03/05/04       (S)       NR: LINCOLN, OLSON                                                                                     
03/23/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
Representative Kevin Meyer                                                                                                      
Alaska State Capitol                                                                                                            
Juneau AK  99801-1182                                                                                                           
POSITION STATEMENT: Sponsor of HB 340.                                                                                        
                                                                                                                                
Ms. Linda Hall, Director                                                                                                        
Division of Insurance                                                                                                           
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau AK 99811-0800                                                                                                            
POSITION STATEMENT: Supports SB 357.                                                                                          
                                                                                                                                
Ms. Melissa Dover                                                                                                               
Staff to Representative Dan Ogg                                                                                                 
Alaska State Capitol                                                                                                            
Juneau AK  99801-1182                                                                                                           
POSITION STATEMENT: Sponsor of HJR 34.                                                                                        
                                                                                                                                
Mr. Mark Vinsel, Executive Director                                                                                             
United Fishermen of Alaska                                                                                                      
211 4th Street, Suite 110                                                                                                       
Juneau AK  99801-1172                                                                                                           
POSITION STATEMENT: Supports HJR 34.                                                                                          
                                                                                                                                
Mr. Tim Barry                                                                                                                   
Staff to Representative Bill Williams                                                                                           
Alaska State Capitol                                                                                                            
Juneau AK  99801-1182                                                                                                           
POSITION STATEMENT: Commented on HB 409 for the sponsor.                                                                      
                                                                                                                                
Mr. Jerry McCune, Executive Director                                                                                            
United Fishermen of Alaska (UFA)                                                                                                
211 4th Street, Suite 110                                                                                                       
Juneau AK  99801-1172                                                                                                           
POSITION STATEMENT: Supports HB 409.                                                                                          
                                                                                                                                
Mr. Mac Meiners                                                                                                                 
Purse Seiner                                                                                                                    
No address provided                                                                                                             
POSITION STATEMENT: Supports HB 409.                                                                                          
                                                                                                                                
Mr. Melvin Larson                                                                                                               
Sand Point AK                                                                                                                   
POSITION STATEMENT: Opposes HB 409.                                                                                           
                                                                                                                                
Mr. Richard Schmitz                                                                                                             
Staff to Senator John Cowdery                                                                                                   
Alaska State Capitol                                                                                                            
Juneau AK  99801-1182                                                                                                           
POSITION STATEMENT: Commented on SB 358 for sponsor.                                                                          
                                                                                                                                
Ms. Wendy Lindskoog, Director                                                                                                   
External Affairs                                                                                                                
Alaska Railroad Corporation (ARRC)                                                                                              
PO Box 107500                                                                                                                   
Anchorage AK 99510                                                                                                              
POSITION STATEMENT:  Supports SB 358.                                                                                         
                                                                                                                                
Ms. Nona Wilson, Legislative Liaison                                                                                            
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau AK  99801-7898                                                                                                           
POSITION STATEMENT: Supports SB 358.                                                                                          
                                                                                                                                
Mr. J.R. Wood, Owner                                                                                                            
Railway Support Services                                                                                                        
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposes SB 358.                                                                                           
                                                                                                                                
Mr. Mark Condon, President                                                                                                      
Condon Railroad Construction                                                                                                    
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposes SB 358.                                                                                           
                                                                                                                                
Mr. John Landerfelt                                                                                                             
Laborers Local 341                                                                                                              
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposes SB 358.                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-25, SIDE A                                                                                                            
                                                                                                                                
             HB 340-DAMAGES IN CONSTRUCTION CLAIMS                                                                          
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee  meeting  to  order  at  1:35  p.m.  All  members  were                                                               
present.  The  first  order  of   business  to  come  before  the                                                               
committee was CSHB 340(JUD)am.                                                                                                  
                                                                                                                                
REPRESENTATIVE  KEVIN  MEYERS,  sponsor,   said  that  there  had                                                               
already  been a  lot of  testimony on  this bill  and offered  to                                                               
answer any questions.                                                                                                           
                                                                                                                                
CHAIR BUNDE  said the  committee had already  had one  hearing on                                                               
this bill and there was no additional testimony.                                                                                
                                                                                                                                
SENATOR  RALPH  SEEKINS  moved   to  pass  CSHB  340(JUD)am  from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
CHAIR BUNDE asked for a roll call vote. Senators Gary Stevens,                                                                  
Bettye Davis, Hollis French, Ralph Seekins and Chair Con Bunde                                                                  
voted yea; and CSHB 340(JUD)am moved from committee.                                                                            
                                                                                                                                
                        SB 357-INSURANCE                                                                                    
                                                                                                                                
CHAIR CON BUNDE announced SB 357 to be up for consideration.                                                                    
                                                                                                                                
SENATOR GARY STEVENS moved to adopt CSSB 357(L&C), version H.                                                                   
There were no objections and it was so ordered.                                                                                 
                                                                                                                                
MS. LINDA HALL, Director, Division of Insurance, Department of                                                                  
Community & Economic Development (DCED), said the CS has two                                                                    
changes.                                                                                                                        
                                                                                                                                
     We have  had two areas  of concern expressed  to us....                                                                    
     One  of those  is represented  in sections  47 and  48,                                                                    
     which are  the changes in  the bill. The  original bill                                                                    
     requires  reinsurance   agreements  to  be   filed  and                                                                    
     approved by the director  of the Division of Insurance.                                                                    
     The feedback  we got from,  not only industry,  but the                                                                    
     Reinsurance  Association,  was  that  this  was  overly                                                                    
     burdensome  and could  sometimes be  impossible due  to                                                                    
     negotiations  between   insurers  for   their  treating                                                                    
     reinsurance  agreements. The  new  language  in the  CS                                                                    
     requires  only  that  the signed  agreements  be  filed                                                                    
     within  30 days  and it's  my understanding  that these                                                                    
     changes  meet the  concerns of  industry and  they also                                                                    
     meet our needs. Our needs were  that we need to be sure                                                                    
     that  we  are   able  to  get  copies   of  the  signed                                                                    
     reinsurance agreements  and that had been  a problem in                                                                    
     the  past. So,  the  only  changes in  the  CS are  to,                                                                    
     instead  of   the  division   having  to   approve  the                                                                    
     reinsurance agreements, they would  merely have to file                                                                    
     a signed copy of the reinsurance agreements.                                                                               
                                                                                                                                
     The  other  area  of  concern  that  I  would  like  to                                                                    
     address...is in  section 12 of  the bill and  I believe                                                                    
     this was  also part  of a letter  that was  received by                                                                    
     members of the committee.                                                                                                  
                                                                                                                                
CHAIR BUNDE asked her if she was referencing the Timber                                                                         
Insurance Exchange letter.                                                                                                      
                                                                                                                                
MS. HALL replied yes. She explained:                                                                                            
                                                                                                                                
     The second half  of that letter is addressed  in 47 and                                                                    
     48 addressed  in the CS.  Section 12 has  received some                                                                    
     concern. The  language in section 12  is taken directly                                                                    
     from  the  NAIC   [National  Association  of  Insurance                                                                    
     Commissioners] model  regulations on  reinsurance. What                                                                    
     we've tried  to do here  is to provide  assurances that                                                                    
     the  state  of  domicile  is  aware  that  the  insurer                                                                    
     writing  the reinsurance  is a  life insurance  company                                                                    
     who is  writing what  is typically a  property casualty                                                                    
     line   of   workers'    compensation.   The   financial                                                                    
     statements  that   are  filed  by  the   two  types  of                                                                    
     companies  are   very  different   and  the   NAIC  has                                                                    
     recognized   a  need   for  more   extensive  financial                                                                    
     information  and  has  provided  a  supplement  to  the                                                                    
     annual financial  statements that a life  insurer would                                                                    
     file if they choose  to write workers' compensation. We                                                                    
     want  to  be  sure  that the  state  of  domicile,  the                                                                    
     primary  regulator,  has   that  information,  has  the                                                                    
     ability  to look  at and  approve that  company writing                                                                    
     those  lines of  business. We're  not asking  that they                                                                    
     have a  certificate of authority, but  merely that they                                                                    
     be given  approval, which  can be done  as simply  as a                                                                    
     letter acknowledging  that they have approval  to write                                                                    
     that  line  of  business.  That's  really  a  financial                                                                    
     oversight area.                                                                                                            
                                                                                                                                
CHAIR BUNDE added that the  letter expressed concern that section                                                               
12  would prevent  Alaskan property  and  casualty insurers  from                                                               
using life insurance as a reinsurance.                                                                                          
                                                                                                                                
MS. HALL clarified that it  wouldn't prevent them from using life                                                               
insurers  for  reinsurance  as  long   as  the  state  where  the                                                               
reinsurer is primarily regulated,  their state of domicile, knows                                                               
they're doing it and has approved  them doing it. They don't have                                                               
to be licensed,  so section 12 would not prevent  them from being                                                               
able to do it.                                                                                                                  
                                                                                                                                
CHAIR BUNDE  asked her  why it could  be perceived  as preventing                                                               
them from doing it.                                                                                                             
                                                                                                                                
MS. HALL replied that she didn't know.                                                                                          
                                                                                                                                
CHAIR BUNDE asked if she had any further comments on the bill.                                                                  
                                                                                                                                
MS. HALL  replied that she  had spent quite  a bit of  time going                                                               
through  the  bill   at  its  first  hearing   and  would  answer                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR BUNDE indicated there were no further questions.                                                                          
                                                                                                                                
SENATOR RALPH SEEKINS moved to  pass CSSB 357(L&C) from committee                                                               
with individual recommendations and attached zero fiscal note.                                                                  
                                                                                                                                
CHAIR BUNDE asked  for a roll call vote.  Senators Ralph Seekins,                                                               
Hollis French,  Bettye Davis,  Gary Stevens  and Chair  Con Bunde                                                               
voted yea; and CSSB 357(L&C) moved from committee.                                                                              
                                                                                                                                
        HJR 34-FED TRAINING AND ASSISTANCE FOR FISHERMEN                                                                    
                                                                                                                                
CHAIR  CON   BUNDE  announced   CSHJR  34(FSH)   to  be   up  for                                                               
consideration.                                                                                                                  
                                                                                                                                
MS.  MELISSA DOVER,  staff to  Representative  Dan Ogg,  sponsor,                                                               
said  the  HJR   34  asks  Congress  to   make  trade  adjustment                                                               
assistance  a  better fit  for  commercial  fishermen. Last  year                                                               
commercial fishermen became eligible  to receive trade adjustment                                                               
assistance through two  programs. One of them is  a Department of                                                               
Labor program that  expends retraining benefits and  the other is                                                               
a U.S. Department  of Agriculture (USDA) program  that gives cash                                                               
benefits up to $10,000.                                                                                                         
                                                                                                                                
For a variety of reasons the  programs have not fit very well for                                                               
commercial  fishermen -  mostly  because they  were designed  for                                                               
agricultural   workers.   Things  like   receiving   Exxon-Valdez                                                               
payments made fishermen ineligible for  the programs. HJR 34 asks                                                               
for four  specific things  - the  first is  that USDA  give price                                                               
adjustment benefits  to Alaska salmon  fishermen who  fished five                                                               
out  of six  years from  1997 to  2002 and  subsequent qualifying                                                               
years if  they can prove lost  income or market share  in any one                                                               
of those  five years due to  imports. It also asks  that the U.S.                                                               
Department of Labor extend retraining  benefits to Alaskan salmon                                                               
fishermen who fished in the same  years even if they did not fish                                                               
in the preceding  year due to impacts from  price fluctuations or                                                               
loss of  market. Some  people were not  able to  fish, especially                                                               
last year, simply because they lost their market.                                                                               
                                                                                                                                
Third, HJR 34 asks Congress and  the USDA to make Alaska salmon a                                                               
covered  commodity,  which  would make  Alaska  salmon  fishermen                                                               
eligible for other  disaster and price support  benefits. This is                                                               
something that Senator Murkowski hopes to get passed this year.                                                                 
                                                                                                                                
Lastly, it  asks Congress  to pursue a  program that  is designed                                                               
specifically  for commercial  fishermen so  that they  don't have                                                               
the same problems in the future.                                                                                                
                                                                                                                                
CHAIR BUNDE  asked how fishermen  prove they have lost  price due                                                               
to imported fish.                                                                                                               
                                                                                                                                
MS. DOVER  replied that currently  the USDA is not  disputing the                                                               
fact that prices have plummeted due to imports.                                                                                 
                                                                                                                                
MR. MARK  VINSEL, Executive Director, United  Fishermen of Alaska                                                               
(UFA),  added  that  UFA filed  the  petition  that  successfully                                                               
qualified all  five species of  Alaska salmon for the  USDA trade                                                               
adjustment  assistance.  The  Foreign  Agricultural  Service  has                                                               
determined that  increased imports  were a significant  factor in                                                               
the price decline according to  guidelines in the program for all                                                               
five salmon species.                                                                                                            
                                                                                                                                
CHAIR BUNDE asked  if the retraining program is  designed to make                                                               
fishermen better  fishermen or  to get  them to  move out  of the                                                               
fishing industry.                                                                                                               
                                                                                                                                
MR. VINSEL  replied that part  of the program  includes technical                                                               
assistance training to  show fishermen ways to  be more efficient                                                               
and other ways  to get more income by  diversifying their fishing                                                               
business.  The cash  price adjustment  helps fishermen  to adjust                                                               
financially  to the  impact  imports have  already  had on  their                                                               
business.                                                                                                                       
                                                                                                                                
CHAIR BUNDE noted  that he's often thought  of commercial fishing                                                               
as a way of life rather than a career choice.                                                                                   
                                                                                                                                
     As  I've told  Senator  Stevens from  time  to time,  I                                                                    
     believe in separation of church  and state, so we ought                                                                    
     not  to   be  putting  money  into   fishing  that's  a                                                                    
     religion.                                                                                                                  
                                                                                                                                
SENATOR  RALPH SEEKINS  asked  Mr. Vinsel  to  define an  Alaskan                                                               
salmon fisherman.                                                                                                               
                                                                                                                                
MR. VINSEL replied that the  petition included all permit-holding                                                               
Alaska salmon  fishermen throughout  the state, all  crew members                                                               
if  they could  should show  a  crew license,  which doesn't  say                                                               
which kind  of fishery or  species, and  a letter from  a captain                                                               
stating  that  they did  have  a  share  in  a catch  of  salmon.                                                               
Fishermen  of   both  crew  and   fishermen  categories   of  the                                                               
Metlakatla Indian Association are included.                                                                                     
                                                                                                                                
SENATOR SEEKINS asked,  of the qualified fishermen,  how many are                                                               
Alaska residents.                                                                                                               
                                                                                                                                
MR.  VINSEL  replied that  he  didn't  have statistics  for  crew                                                               
members, but  of the permit holders,  about 70 to 75  percent are                                                               
residents.                                                                                                                      
                                                                                                                                
CHAIR BUNDE asked if it was  possible for the State of California                                                               
to have  a program  like this and  that fishermen  could possibly                                                               
double dip and apply in both states?                                                                                            
                                                                                                                                
MR. VINSEL replied:                                                                                                             
                                                                                                                                
     This is a  federal USDA program and  the commodity that                                                                    
     UFA  qualified  through  our  petition  is  all  Alaska                                                                    
     salmon.  The  Farm  Service  Agency  of  the  different                                                                    
     states  is cast  with  following  through with  helping                                                                    
     with   the  application   process   so  basically   the                                                                    
     qualification of Alaska salmon  is by the permit holder                                                                    
     fishing fishermen  from other states as  well. They are                                                                    
     included in the program.  In addition, Washington State                                                                    
     salmon,  other   than  their   pinks  and   chums  were                                                                    
     qualified.... California  salmon -  I don't  think that                                                                    
     they  applied.  Oregon  salmon  applied  and  were  not                                                                    
     approved.  Alaska  salmon  -   all  five  species  were                                                                    
     approved and  it's a  commodity-based program,  so it's                                                                    
     really based  on the  fish and  that's where  there's a                                                                    
     little bit  of misconception  and the  price adjustment                                                                    
     is based on the poundage  of fish during the year under                                                                    
     the petition.                                                                                                              
                                                                                                                                
SENATOR SEEKINS said  the reason he asked is  because language on                                                               
pages 2  and 15  talks about  Alaska salmon and  that led  him to                                                               
think about Alaska  residents who fish for the  Alaska salmon. He                                                               
thought   language  on   line   15,   "whereas  alternative   job                                                               
opportunities  are uncommon  in  many of  the  rural areas  where                                                               
Alaska salmon  fishermen live",  is a  little misleading  and was                                                               
concerned  about temporary  people who  come to  Alaska from  the                                                               
Lower  48 to  fish for  a season  and then  want to  get benefits                                                               
because they are "Alaska salmon fishermen."                                                                                     
                                                                                                                                
SENATOR SEEKINS  wanted to  know how many  members of  the United                                                               
Fishermen of Alaska  actually live in Alaska and  don't just fish                                                               
here. He  is not sympathetic  to transients  who come up  here to                                                               
take advantage of Alaska's disaster.                                                                                            
                                                                                                                                
CHAIR BUNDE  said he  would get  an update  of those  numbers for                                                               
him.                                                                                                                            
                                                                                                                                
SENATOR GARY STEVENS commented that  Senator Seekins' concern has                                                               
troubled all  people in the  fishing industry. Often  permits are                                                               
held by people who are not  Alaska residents, but he hesitated to                                                               
call them  transients, because  many had  been fishing  in Alaska                                                               
for 20,  30 or  40 years. Charging  non-residents more  for their                                                               
permits was  found to be  unconstitutional. Much of  the industry                                                               
has been created by people from  outside Alaska and it's an issue                                                               
that he didn't  want to tackle. He asked Mr.  Vinsel if there was                                                               
any element  of the retraining  that would take fishermen  out of                                                               
the fishing industry.                                                                                                           
                                                                                                                                
MR. VINSEL  answered that  the technical training  part of  it is                                                               
specific to fishing  and helping people be  better fishermen, but                                                               
the Department of Labor program,  which a fisherman automatically                                                               
qualifies for  if he qualifies  for the USDA  program, previously                                                               
required that  a fisherman had to  be part of an  employee worker                                                               
group.  Employees  of  processors  qualified for  that,  but  not                                                               
fishermen.  That  program  is  a   retraining  program  to  offer                                                               
alternative work  and new  career paths.  It includes  other jobs                                                               
that could go hand in hand with seasonal fishing.                                                                               
                                                                                                                                
SENATOR  GARY STEVENS  stated that  the salmon  industry is  in a                                                               
crisis because  of farming and  hopefully it will come  back, but                                                               
it  would  take a  while.  Fishermen  can  train for  fishing  in                                                               
undersubscribed   fisheries  -   specifically  the   pollock  jig                                                               
fishery.                                                                                                                        
                                                                                                                                
CHAIR BUNDE asked if a person  who lives in Seattle and fished in                                                               
Kodiak  for  the last  20  years  could  take advantage  of  this                                                               
program. That person could retrain  and go from an oversubscribed                                                               
to an undersubscribed fishery and  thereby compete with an Alaska                                                               
resident. "There  could be a  downside to  this as well.  Is that                                                               
not possible?"                                                                                                                  
                                                                                                                                
SENATOR  GARY STEVENS  responded, "I  would think  that in  a jig                                                               
fishery,  which  is  a  year-round  fishery...that  person  would                                                               
probably become an Alaska resident, I would think...."                                                                          
                                                                                                                                
SENATOR SEEKINS asked why those particular dates were selected.                                                                 
                                                                                                                                
MR. VINSEL answered that 2001/2002  is the specific year of price                                                               
decline for which UFA applied and  a full year of data was needed                                                               
for the application; 2003 was still  in progress at the time. The                                                               
concept  should be  carried forward  into the  2003/2004 petition                                                               
cycle,  for  which the  salmon  species  will still  probably  be                                                               
qualified.                                                                                                                      
                                                                                                                                
SENATOR  HOLLIS FRENCH  said language  on page  2 was  confusing,                                                               
because  it  first  states   that  fishermen  experience  reduced                                                               
earnings  due to  a decline  in price,  but went  on to  say they                                                               
couldn't show that.                                                                                                             
                                                                                                                                
MR.  VINSEL replied  that is  the crux  of the  problem with  the                                                               
specific net fishing income decline requirement for benefits.                                                                   
                                                                                                                                
     Salmon  prices  went  down  over  the  whole  five-year                                                                    
     period.  It  was  a slam-dunk  in  getting  the  salmon                                                                    
     qualified based on the numbers.  And if somebody had $1                                                                    
     less fishing  income in  2001, then  they made  $1 more                                                                    
     than  that  in  2002,  even  though  it's  pretty  much                                                                    
     understood  that  both  years were  pretty  poor,  they                                                                    
     wouldn't qualify for this program.  So, the net fishing                                                                    
     income decline  is really the  crux of  the resolution,                                                                    
     in my  opinion. It's  the main  reason why  many salmon                                                                    
     fishermen weren't  able to qualify for  the benefits in                                                                    
     the  program.   It's  what  we  expect   to  have  some                                                                    
     possibility  to work  on with  the USDA  in fine-tuning                                                                    
     the program.                                                                                                               
                                                                                                                                
SENATOR FRENCH  asked if the  net decline was different  than the                                                               
annual decline.                                                                                                                 
                                                                                                                                
MR. VINSEL answered:                                                                                                            
                                                                                                                                
     The requirement  for benefits in  the program is  a net                                                                    
     decline in all  fishing income. In my  opinion, more or                                                                    
     less rightly so, taking into  effect that if you were a                                                                    
     farmer or a fisherman  and were already diversified and                                                                    
     you made up  on other species from the  poor fishing in                                                                    
     salmon  - or  say you  grew another  crop, because  you                                                                    
     knew the  price would be  low on  your corn and  so you                                                                    
     grew potatoes  or something  like that....  Things like                                                                    
     Melissa mentioned,  like the Exxon Valdez  payments and                                                                    
     any  other  things  that are  ultimately  in  your  tax                                                                    
     returns  in the  fishing  income category  - that  kept                                                                    
     other people from qualifying. We  believe these are not                                                                    
     necessarily in  the statutes; they were  interpreted by                                                                    
     the USDA  as this was  the first year of  this program.                                                                    
     Partly in  their haste in  the challenge  of processing                                                                    
     the  potential  large  number  of  fishermen  that  may                                                                    
     apply, which  is a little  beyond what the  program was                                                                    
     designed  to do  when it  was started  with farmers  in                                                                    
     mind.  When   they  added   fishermen,  it   made  some                                                                    
     procedural challenges  - especially in Alaska  where we                                                                    
     didn't  have a  large  infrastructure  of Farm  Service                                                                    
     Agency offices....                                                                                                         
                                                                                                                                
SENATOR  FRENCH said  he heard  him  saying that  net decline  in                                                               
fishing earnings is just a  different measure than simply fishing                                                               
earnings by themselves.                                                                                                         
                                                                                                                                
MR. VINSEL sought to clarify  further that the net fishing income                                                               
on tax  returns includes Exxon  Valdez payments and other  work a                                                               
fisherman does  with his boat.  The original program  started out                                                               
with net  farming income,  which might not  be as  complicated as                                                               
fishing income.                                                                                                                 
                                                                                                                                
SENATOR SEEKINS moved  to pass CSHJR 34(FSH)  from committee with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
CHAIR BUNDE asked  for a roll call vote.  Senators Hollis French,                                                               
Bettye Davis, Gary  Stevens, Ralph Seekins and  Chair Bunde voted                                                               
yea: and CSHJR 34(FSH) moved from committee.                                                                                    
                                                                                                                                
                   HB 409-SEINE VESSEL LENGTH                                                                               
                                                                                                                                
CHAIR CON BUNDE announced HB 409 to be up for consideration.                                                                    
                                                                                                                                
MR. TIM  BARRY, staff to  Representative Bill  Williams, sponsor,                                                               
said that  HB 409 was  requested by the Joint  Legislative Salmon                                                               
Industry Task Force.                                                                                                            
                                                                                                                                
     It  could  give  the  Alaska  Board  of  Fisheries  and                                                                    
     Alaska's fishermen an additional  tool to allow them to                                                                    
     diversify and  increase the value of  their fish. First                                                                    
     of  all, Mr.  Chairman, I  want to  make it  clear that                                                                    
     this  does not  eliminate the  58 ft.  length limit  on                                                                    
     salmon seiners.  It only puts  these boats in  the same                                                                    
     regulatory  regime  as  all  other  fishing  boat  size                                                                    
     limits. The 58 ft. limit  is one of only two commercial                                                                    
     fishing  boat  length  limits  that  are  enshrined  in                                                                    
     statute.                                                                                                                   
                                                                                                                                
     The  58 ft.  limit  predates statehood.  In the  1950s,                                                                    
     Alaska's commercial  fisheries were not nearly  as well                                                                    
     developed as they are now.  Territorial and early state                                                                    
     lawmakers  wanted  to  protect Alaska's  fishing  fleet                                                                    
     from the dominant fleet of  large boats that fished out                                                                    
     of, primarily,  Puget Sound. This perceived  threat was                                                                    
     serious enough  that legislators enshrined  this length                                                                    
     limit  in statute  rather than  allowing  the Board  of                                                                    
     Fisheries to have the same  discretion it has regarding                                                                    
     lengths  in  other  gear restrictions.  Those  concerns                                                                    
     that drove  the law 50  or so  years ago are  no longer                                                                    
     present.  There really  is no  longer  the same  threat                                                                    
     from  outside   vessels  or  fleets  today.   In  fact,                                                                    
     Alaska's fishing  fleet is  far stronger  and healthier                                                                    
     now than certainly the Puget Sound fishing fleet.                                                                          
                                                                                                                                
     In addition, if  HB 409 becomes law,  the length limit,                                                                    
     as I  said earlier, remains  in place. If the  Board of                                                                    
     Fisheries decides  to consider  changing it,  the board                                                                    
     will  have  to  consider the  concerns  about  Alaska's                                                                    
     seiners and  their economic future,  as well  as dozens                                                                    
     of  other concerns  before  rendering  a decision.  The                                                                    
     Board  of  Fisheries has  the  authority  to change  or                                                                    
     impose  length limits,  gear limits,  and all  sorts of                                                                    
     other regulations  on commercial  fishing boats  in the                                                                    
     State of Alaska.                                                                                                           
                                                                                                                                
     If this  bill is made  law, the  board will have  to go                                                                    
     through  its  normal  public  process,  which  involves                                                                    
     hearings, public comment,  generally speaking, at least                                                                    
     a  three-year cycle  between the  proposal of  a change                                                                    
     and  an actual  change  being made  before this  length                                                                    
     limit  would  be  changed.  The   bill  before  you  is                                                                    
     supported  by the  UFA and  by a  number of  individual                                                                    
     fishermen around the state.  Unfortunately, a number of                                                                    
     seiners who  wanted to  testify in  favor of  this bill                                                                    
     are out fishing. In  conversations in other committees,                                                                    
     seiners   have   said   they  could   diversify   their                                                                    
     operations if  they had longer  boats. They could  do a                                                                    
     little more  processing; they could add  value to their                                                                    
     product,  which is  something we're  all hoping  we can                                                                    
     help  Alaska's fishermen  do. There  is  a zero  fiscal                                                                    
     note from the Department of Fish and Game....                                                                              
                                                                                                                                
CHAIR BUNDE asked if the other length that is set in statute is                                                                 
for Bristol Bay boats.                                                                                                          
                                                                                                                                
MR. BARRY replied  that Bristol Bay boat length  is not enshrined                                                               
in  statute, but  is  determined  by the  board.  The other  boat                                                               
length was set  in statute six years  ago and has to  do with the                                                               
hair crab fishery out west.                                                                                                     
                                                                                                                                
CHAIR BUNDE asked  if he thought seiners would  begin to pressure                                                               
the board to change their length limitation if this bill passes.                                                                
                                                                                                                                
MR. BARRY replied that he wouldn't bet against that happening.                                                                  
                                                                                                                                
SENATOR GARY STEVENS asked if  the 58 ft. length were eliminated,                                                               
would that devalue the vessels that are in the fleet now.                                                                       
                                                                                                                                
MR. BARRY  answered that fishermen  have commented a lot  on this                                                               
issue. One of  their comments is that not all  seiners are 58 ft.                                                               
long - some are 48 ft. or 52  ft. and a good living could be made                                                               
from  them if  other boats  were larger.  Testimony is  that some                                                               
fishermen want to diversify their  business with the change being                                                               
very gradual.                                                                                                                   
                                                                                                                                
SENATOR STEVENS  pointed out that the  58 ft. boat length  is not                                                               
being removed, but the option is  simply being given to the board                                                               
to do that.                                                                                                                     
                                                                                                                                
SENATOR SEEKINS asked if he had a  62 ft. seiner that has been in                                                               
the state's waters  since before 1962, could he  still be fishing                                                               
it.                                                                                                                             
                                                                                                                                
MR. BARRY replied that he  understands that using an Alaska seine                                                               
permit limits a boat size to 58 ft.                                                                                             
                                                                                                                                
2:17 p.m.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS remarked that it  says, "except vessels that have                                                               
fished  for salmon  with seines  in  waters of  the state  before                                                               
January 1, 1962...." and asked what that means.                                                                                 
                                                                                                                                
MR. BARRY replied  that some boats were fishing when  the law was                                                               
put in place in  1962, but the boat would still  have to be under                                                               
the same ownership and permit to be fished.                                                                                     
                                                                                                                                
SENATOR  FRENCH  asked  how  much  longer  he  anticipated  boats                                                               
getting to be.                                                                                                                  
                                                                                                                                
MR.  BARRY  replied  that  testimony  has  indicated  that  other                                                               
considerations would  come into  play in  the board's  process of                                                               
determining length.  For instance, federal regulations  for boats                                                               
longer than 60 ft. and  practical considerations in terms of what                                                               
people can do on a boat once it  gets to be that much longer like                                                               
where it can fish. People are  not looking for an optimum number.                                                               
He added that  trollers currently do not have a  length limit and                                                               
a few are 70 ft., but most are shorter than 60 ft.                                                                              
                                                                                                                                
MR.  JERRY MCCUNE,  United Fishermen  of Alaska  (UFA), supported                                                               
the sponsor's  statement for  HB 409.  People could  petition the                                                               
board according to area and it  would have to decide based on its                                                               
deliberations.                                                                                                                  
                                                                                                                                
TAPE 04-25, SIDE B                                                                                                            
                                                                                                                              
MR. MCCUNE  continued saying that  probably some  fishermen would                                                               
want to  extend their  boats 5 -  10 ft. and  be able  to harvest                                                               
more fish  - perhaps by  putting in a  Sunday hold so  they could                                                               
put RSW  (refrigerated salt water)  sockeye in it and  high grade                                                               
fish in another.                                                                                                                
                                                                                                                                
     So, even  if you  change the  limit in  Southeast, it's                                                                    
     not going to  happen overnight. Guys are  going to have                                                                    
     to  make  the decision  based  on  their economics  and                                                                    
     based on whether they want  to market some of their own                                                                    
     fish and  things like that.  Way back when,  there were                                                                    
     100 ft. tuna  seiners coming up here to  do the herring                                                                    
     and stuff,  so they put  that 58  ft. to keep  all that                                                                    
     big boat fleet  out of here.... Well, that  fleet is no                                                                    
     longer in existence. So, a  lot of this is changing now                                                                    
     to be  able to  do your  own fish  and market  and have                                                                    
     enough room to handle it.                                                                                                  
                                                                                                                                
He described how  one fisherman needs more room to  put his seine                                                               
[net] and  another fish  hold while  still being  able to  have a                                                               
covered area  to clean fish,  a DEC requirement. In  other areas,                                                               
some guys have  two boats, a 58  ft. and a 70 ft.  They could get                                                               
rid of one  boat and consolidate their operations  and save money                                                               
by just  using the  one boat  if the board  decided that  was the                                                               
limit.                                                                                                                          
                                                                                                                                
SENATOR SEEKINS asked again what the  process is for the Board of                                                               
Fisheries to consider changing the length regulation.                                                                           
                                                                                                                                
MR. MCCUNE explained that he would  write a proposal to the board                                                               
if he fished  in Southeast, asking to change the  58 ft. limit to                                                               
65 ft.                                                                                                                          
                                                                                                                                
     I'd  have to  write  that proposal,  submit  it in  the                                                                    
     three-year  cycle  that  the board  has  Southeast  in.                                                                    
     Let's  use, for  example,  2006 is  the next  Southeast                                                                    
     cycle  -   submit  that   proposal,  they   accept  the                                                                    
     proposal, put it  in the book and then  they publish it                                                                    
     to the public  - all the proposals -  so everybody gets                                                                    
     to see what's going to be coming up in 2006.                                                                               
                                                                                                                                
SENATOR  SEEKINS said  the application  is not  by petition,  but                                                               
rather by a proposal that anyone could write.                                                                                   
                                                                                                                                
MR. MCCUNE replied that is correct.                                                                                             
                                                                                                                                
SENATOR SEEKINS asked if he was  right in assuming that the board                                                               
didn't  have to  consider  just  any proposal  at  any time,  but                                                               
within the board cycle.                                                                                                         
                                                                                                                                
MR. MCCUNE replied that is right.                                                                                               
                                                                                                                                
SENATOR  GARY STEVENS  asked if  he  thought there  would be  any                                                               
devaluation  of the  existing fleet  and  would existing  vessels                                                               
still be competitive.                                                                                                           
                                                                                                                                
MR. MCCUNE  replied that  he really  didn't think  existing boats                                                               
would be devalued. There is a  good 58 ft. limit market in Kodiak                                                               
right now. He  said that a lot of people  would just extend their                                                               
existing boats that might already be paid for.                                                                                  
                                                                                                                                
SENATOR GARY STEVENS said he  knew of several fishermen in Kodiak                                                               
who  were  attempting  to  do  value-added  processing  on  their                                                               
vessels and  they often have to  do that in very  cramped spaces.                                                               
"This would  allow them to  be a  little more competitive  on the                                                               
market, I would guess."                                                                                                         
                                                                                                                                
MR. MCCUNE agreed. "You have to  have another fish hold if you're                                                               
going  to clean  fish and  ice  them. You  can't have  it in  the                                                               
refrigerated  salt water.  That's against  DEC rules,  because of                                                               
bacteria and stuff...."                                                                                                         
                                                                                                                                
MR. MAC MEINERS, Alaska purse seiner,  supported HB 409. He has a                                                               
little purse seiner.                                                                                                            
                                                                                                                                
     If  they would  open up  and get  bigger seiners,  that                                                                    
     would  give  me an  opportunity  to  buy a  little  bit                                                                    
     bigger boat.... What we've got  to remember is that the                                                                    
     gear catches the fish and  the gear is also restricted.                                                                    
     So, no matter  how big the boat is,  you'll always have                                                                    
     the same piece of gear.                                                                                                    
                                                                                                                                
MR. MELVIN  LARSON said he  is a limit  seiner out of  Sand Point                                                               
and carries  160,000 lbs.  under the deck;  he didn't  agree with                                                               
most of the previous testimony.  He said there are many different                                                               
ways to process and make a boat capable of doing more work.                                                                     
                                                                                                                                
     Under  the  federal  LLP  regulation,  with  the  limit                                                                    
     seiner that I have now, I'd  only be able to add on two                                                                    
     feet. Under federal  regulations you can only  go to 60                                                                    
     ft.  and  then it  goes  from  60  to  125 ft.  I'd  be                                                                    
     penalized and  I'd be  able to go  only two  feet under                                                                    
     federal regulations.                                                                                                       
                                                                                                                                
MR.  LARSON said  the same  goes  for fishing  halibut IFQs.  You                                                               
could only go  to 60 ft. otherwise you would  have to get another                                                               
boat  or you  wouldn't be  able  to fish  your IFQs  on the  same                                                               
vessel.                                                                                                                         
                                                                                                                                
Under  federal  regulations,  also,  if  you  are  not  currently                                                               
qualified for  processing, you are  only capable of  processing a                                                               
small amount of  rockfish on a vessel. Getting rid  of the 58 ft.                                                               
limit wouldn't help in terms of adding processing capacity.                                                                     
                                                                                                                                
Regarding the value  of a 58 ft. seiner, Mr.  Larson said he paid                                                               
over $1 million for his "wide-bodied  Delta," and right now it is                                                               
valued at about half  of that. If the 58 ft.  limit went away, he                                                               
didn't know what he would be able to sell it for. Not much.                                                                     
                                                                                                                                
     I   also  believe   the  salmon   fishery  is   already                                                                    
     overcapitalized.  It doesn't  need  anything to  change                                                                    
     it.  Passing   this  bill  would  stop   in  the  wrong                                                                    
     direction,  putting  the  burden  on  small  struggling                                                                    
     communities  that are  already  having a  hard time.  I                                                                    
     don't believe many people  in these smaller communities                                                                    
     could afford to spend  $400,000 to $500,000 to lengthen                                                                    
     their boats....                                                                                                            
                                                                                                                                
MR. LARSON said he  has been a member of the UFA  for a long time                                                               
and  wasn't contacted  about this.  "I  don't agree  with UFA.  I                                                               
think it's  just personal opinions  there that's  being presented                                                               
to you."                                                                                                                        
                                                                                                                                
CHAIR BUNDE said he would pass  that information on to Mr. McCune                                                               
and that he would hold the bill for further thought.                                                                            
                                                                                                                                
               SB 358-ALASKA RAILROAD TRACK WORK                                                                            
                                                                                                                                
CHAIR CON BUNDE  announced SB 358 to be up  for consideration and                                                               
that it  is a  work in  progress and  he didn't  plan to  move it                                                               
today.                                                                                                                          
                                                                                                                                
MR.  RICHARD SCHMITZ,  staff to  Senator John  Cowdery, explained                                                               
that  until recently  the  Department  of Transportation  (DOTPF)                                                               
would treat  the railroad the same  way it would treat  a utility                                                               
or power company when crossing a  highway by putting the work out                                                               
to bid.                                                                                                                         
                                                                                                                                
     Over the last  few years, there have not  been bids put                                                                    
     on some of  this work and the railroad  itself has come                                                                    
     in and  done it because  they have the equipment  to do                                                                    
     it.  So, the  purpose of  the bill  is to  basically go                                                                    
     back  and  allow  DOT  to have  the  choice  of  either                                                                    
     putting  the  work  out  to  competitive  bid  or  just                                                                    
     allowing the  railroad to do  the work under  a utility                                                                    
     type agreement....                                                                                                         
                                                                                                                                
MS.  WENDY  LINDSKOOG,  Director,  External  Affairs,  said  that                                                               
Eileen  Riley, Vice  President of  Projects, Engineering  Signals                                                               
and  Technology,  ARRC,  would  help her  answer  questions.  She                                                               
supported  Mr.  Schmitz'  statements   elaborating  that  SB  358                                                               
retains  the DOTPF's  ability  to work  with  the private  sector                                                               
under  the competitive  bid  process for  the  DOT projects  that                                                               
include track construction, like a crossing over a road.                                                                        
                                                                                                                                
     In addition,  SB 358 amends the  state procurement code                                                                    
     so that  DOT can  also work directly  with the  ARRC on                                                                    
     track  work through  a  reimbursable service  agreement                                                                    
     similar to  other utilities. Prior to  1996, the Alaska                                                                    
     Railroad  could conduct  work with  DOT projects  under                                                                    
     the  utility agreement  arrangement. The  railroad work                                                                    
     was  treated just  as a  utility  relocation with  cost                                                                    
     reimbursed in the same manner  as the relocation of any                                                                    
     other  utilities similar  to a  power line  or a  water                                                                    
     line.  The utility  agreements  include cost  estimates                                                                    
     that are  reviewed and  approved by  DOT in  advance of                                                                    
     the work.  After 1996, due  to private  sector interest                                                                    
     in the  track work  part of  these projects,  the state                                                                    
     procurement code was amended  requiring DOT to contract                                                                    
     track work under the competitive bid process.                                                                              
                                                                                                                                
     Over the years, contractors have  bid and won the track                                                                    
     construction  work from  DOT. Today,  however, some  of                                                                    
     the   specific  railroad   work  does   require  highly                                                                    
     specialized equipment  that is  not cost  effective for                                                                    
     the private  sector to support  or maintain  in Alaska.                                                                    
     This has affected the level  of interest on certain DOT                                                                    
     projects  and it  also has  contributed to  some recent                                                                    
     work  that  was  not  completed  to  railroad  industry                                                                    
     standards.  For  an  example, in  the  past  year,  the                                                                    
     railroad  has had  to redo  some  projects including  a                                                                    
     mainline  crossing  at C  Street  in  Anchorage and  in                                                                    
     Talkeetna  along the  spur road.  These factors  led to                                                                    
     support for  SB 358 from  the Alaska Railroad,  DOT and                                                                    
     the Associated General Contractors.                                                                                        
                                                                                                                                
     The goal  of the  bill is to  ensure that  DOT projects                                                                    
     involving rail construction can  move forward by giving                                                                    
     DOT the  flexibility to use either  the competitive bid                                                                    
     process  or to  work  directly with  the railroad.  And                                                                    
     more  specifically,  SB  358 would  allow  basic  track                                                                    
     construction  work to  be done  by  the private  sector                                                                    
     and, I say basic track  construction work, but it would                                                                    
     also allow the highly  specialized work like a mainline                                                                    
     crossing  to  be constructed  by  the  railroad at  the                                                                    
     discretion  of DOT.  Either  way,  Alaska laborers  are                                                                    
     constructing the project.                                                                                                  
                                                                                                                                
     Finally,  we  believe  that  there  are  advantages  to                                                                    
     working with the railroad  directly on certain projects                                                                    
     and  the advantages  for DOT  would include  some lower                                                                    
     costs  and  savings of  time.  There  are a  couple  of                                                                    
     reasons  for  some  cost  savings.  For  starters,  the                                                                    
     railroad does  buy railroad  materials in  quantity and                                                                    
     we're  able to  pass those  savings along.  We own  the                                                                    
     specialized equipment; it's very  expensive and we also                                                                    
     have the skilled  labor force who know how  to work the                                                                    
     equipment and work around  track issues. So, therefore,                                                                    
     cost  savings are  realized because  the railroad  does                                                                    
     not have  to mobilize the specialized  equipment out of                                                                    
     state.  We already  have it  here in  Alaska. Excessive                                                                    
     contractor  premiums  will  be avoided  for  the  small                                                                    
     specialty  market and  the railroad  provides federally                                                                    
     required   inspection   and   coordination   for   road                                                                    
     projects. DOT must pay the  railroad for these services                                                                    
     even  under the  competitive  bid  process. An  example                                                                    
     would  be flagging,  so that  everybody who  is working                                                                    
     around the track is protected from moving trains.                                                                          
                                                                                                                                
     The advantage of this bill  for the Alaska Railroad, in                                                                    
     our opinion,  would be  enhanced quality  and assurance                                                                    
     that  our   industry  standards  are  being   met.  The                                                                    
     Railroad, the DOTPF  and Associated General Contractors                                                                    
     do support SB 358.                                                                                                         
                                                                                                                                
CHAIR  BUNDE noted  that  there were  concerns  from the  private                                                               
sector and asked if those had been addressed.                                                                                   
                                                                                                                                
MS.  LINDSKOOG replied  that they  had not  heard any  opposition                                                               
after  a couple  of hearings,  but last  week received  word from                                                               
some  companies  that were  concerned.  Local  341 Laborers  were                                                               
being  used for  this work.  Other facts  have come  forward, but                                                               
their  concern  over quality  issues  hasn't  changed on  certain                                                               
parts of  the rail projects  that are highly specialized.  One of                                                               
the companies  may even be  new to the  scene. The bill  has been                                                               
drafted  in a  manner  as to  allow DOT  the  flexibility to  use                                                               
either method to get the work done.                                                                                             
                                                                                                                                
CHAIR BUNDE  asked her to  work with  DOT and the  contractors to                                                               
see if there is some middle ground.                                                                                             
                                                                                                                                
SENATOR  HOLLIS  FRENCH  asked  if  this  bill  just  applies  to                                                               
railroads where they cross roads.                                                                                               
                                                                                                                                
MS.   LINDSKOOG  answered   that  the   bill  amends   the  state                                                               
procurement  code. When  DOT  has a  road  project, sometimes  it                                                               
might  be over  a rail  crossing or  maybe straightening  out the                                                               
highway like along Turnagain Arm  where the railroad track has to                                                               
be moved.  DOT is funding and  managing the work, so  it can mean                                                               
more than a crossing.                                                                                                           
                                                                                                                                
MS.   NONA    WILSON,   Legislative   Liaison,    Department   of                                                               
Transportation and Public Facilities  (DOTPF), said Mark O'Brien,                                                               
Chief Contracting  Officer, is out  of town and had  been working                                                               
closely  with Ms.  Lindskoog who  has already  hit all  the major                                                               
points. She offered to answer questions.                                                                                        
                                                                                                                                
CHAIR BUNDE  said he  would delay  action on  the bill  until Mr.                                                               
O'Brien could testify.                                                                                                          
                                                                                                                                
MR.  J.R.  WOOD, owner,  Railway  Support  Services, said  he  is                                                               
concerned  that  the bill  would  limit  the procurement  of  the                                                               
Alaska Railroad  from the DOT  to just railroad crossing  per se.                                                               
For instance, the job he just  bid on in Wasilla is approximately                                                               
4,000 ft. adjacent to the highway.                                                                                              
                                                                                                                                
     Our  major  concern here  is  that  we feel  there  are                                                                    
     quality  contractors here  available  that  can do  the                                                                    
     work. In  fact, I have worked  with one of them  that I                                                                    
     bid  against  this year.  We  do  work in  the  transit                                                                    
     industry where the standards are  much higher than they                                                                    
     are in the  freight industry and we  manage to maintain                                                                    
     those standards, which are nationwide....                                                                                  
                                                                                                                                
MR.  WOOD  said that  he  has  hired  and  trained more  than  80                                                               
personnel including  personnel with the local  laborers union who                                                               
are  exceptional  workers and  could  compete  with any  railroad                                                               
laborer in the country.                                                                                                         
                                                                                                                                
     Some of  the specifications we  follow up here  are not                                                                    
     nearly as tight as they are  in the states. I feel that                                                                    
     probably  our abilities  to perform  the  work and  our                                                                    
     efficiency because we do  work as 'hungry contractors,'                                                                    
     would be much greater.                                                                                                     
                                                                                                                                
MR. MARK  CONDON, President,  Condon Railroad  Construction, said                                                               
he  had been  working on  projects in  Alaska for  the last  four                                                               
years and  planned on continuing  bidding on projects,  but said,                                                               
"If they  go through with this,  it would pretty much  put us out                                                               
of business."                                                                                                                   
                                                                                                                                
MR. JOHN  LANDERFELT, Laborers  Local 341, opposed  SB 358  as it                                                               
has  potential  to work  harm  against  contractors who  are  now                                                               
engaged  in   this  kind  of   rail  work  and,   therefore,  his                                                               
membership. He  felt that the  problems could easily  be resolved                                                               
through the bidding process. He  suggested holding the bill until                                                               
all  the parties  concerned  could  come to  the  table and  work                                                               
things out.                                                                                                                     
                                                                                                                                
CHAIR BUNDE said that was his  recommendation as well - to see if                                                               
they could  come to some  compromise and  bring that back  to the                                                               
committee. There  being no  further business  to come  before the                                                               
committee, he adjourned the meeting at 2:52 p.m.                                                                                

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