Legislature(1993 - 1994)

03/30/1993 03:36 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                 SENATE TRANSPORTATION COMMITTEE                               
                         March 30, 1993                                        
                            3:36 p.m.                                          
  MEMBERS PRESENT                                                              
  Senator Bert Sharp, Chairman                                                 
  Senator Randy Phillips, Vice Chairman                                        
  Senator Tim Kelly                                                            
  Senator Georgianna Lincoln                                                   
  Senator Jay Kerttula                                                         
  MEMBERS ABSENT                                                               
  All members present                                                          
  COMMITTEE CALENDAR                                                           
  SENATE BILL NO. 148                                                          
  "An Act  relating to  the Alaska  Railroad Corporation;  and                 
  providing for an effective date."                                            
  NOT HEARD THIS DATE.                                                         
  PREVIOUS SENATE COMMITTEE ACTION                                             
  SB 148 - See Transportation minutes dated 3/11/93, 3/23/93.                  
  SB 157 - See Transportation minutes dated 3/23/93.                           
  WITNESS REGISTER                                                             
  John Kelsey                                                                  
  Valdez, AK                                                                   
  POSITION STATEMENT:  Has concerns with SB 148                                
  Phyliss Johnson, General Counsel                                             
  Alaska Railroad Corporation                                                  
  P.O. Box 107500                                                              
  Anchorage, AK 99510-7500                                                     
  POSITION STATEMENT:  Outlined concerns with SB 148                           
  George Utermohle, Legal Counsel                                              
  Division of Legal Services                                                   
  Legislative Affairs Agency                                                   
  130 Seward St.                                                               
  Juneau, AK 99801                                                             
  POSITION STATEMENT:  Offered information on SB 148                           
  Senator Steve Frank, Co-chair                                                
  Senate Finance Committee                                                     
  State Capitol                                                                
  Juneau, AK 99801                                                             
  POSITION STATEMENT:  Offered information on SB 148                           
  Dave Skidmore, Staff to Senator Frank                                        
  State Capitol                                                                
  Juneau, AK                                                                   
  POSITION STATEMENT:  Offered information on SB 148                           
  Leon Van Wyhe                                                                
  Alaska Resource Conservation Center                                          
  Box 10087                                                                    
  Fairbanks, AK 99710                                                          
  POSITION STATEMENT:  Opposed to SB 148                                       
  Jack Burton, President                                                       
  Alaska Federation of Government Employees                                    
  Moose Pass, AK                                                               
  POSITION STATEMENT:  Opposed to SB 148                                       
  Wayne Carpenter, Executive Director                                          
  Seward Chamber of Commerce                                                   
  P.O. Box 749                                                                 
  Seward, AK 99664                                                             
  POSITION STATEMENT:  Opposed to SB 148                                       
  Frank Chapados, Member of the Board of Directors                             
  Alaska Railroad Corporation                                                  
  Box 74825                                                                    
  Fairbanks, AK 99707                                                          
  POSITION STATEMENT:  Opposed to SB 148                                       
  Cathy Shultz                                                                 
  Fairbanks Hotel & Motel Association                                          
  Box 2107                                                                     
  Fairbanks, AK 99707                                                          
  POSITION STATEMENT:  Supports SB 148                                         
  Pat Pourchot, Executive Director                                             
  Alaska Commonwealth North                                                    
  935 W. 3rd                                                                   
  Anchorage, AK 99501                                                          
  POSITION STATEMENT:  Opposed to SB 148                                       
  Hank Warren                                                                  
  P.O. Box 770848                                                              
  Eagle River, AK 99577                                                        
  POSITION STATEMENT:  Opposed to SB 148                                       
  Bonnie Bailey                                                                
  Chugiak-Eagle River Chamber of Commerce                                      
  P.O. Box 770353                                                              
  Eagle River, AK 99577                                                        
  POSITION STATEMENT:  Read resolution opposing SB 148                         
  Joe Fields                                                                   
  Box 71047                                                                    
  Fairbanks, AK 99707                                                          
  POSITION STATEMENT:  Opposed to SB 148                                       
  ACTION NARRATIVE                                                             
  TAPE 93-17, SIDE A                                                           
  Number 001                                                                   
  CHAIRMAN SHARP called the Senate Transportation Committee to                 
  order at 3:55 p.m.  He  opened the public hearing on SB  148                 
  (ALASKA  RAILROAD  CORPORATION)   stating  that  there  were                 
  several witnesses waiting to testify over the teleconference                 
  JOHN KELSEY,  a Valdez  businessman testifying  from Valdez,                 
  said  that  in 1982  he  was  appointed to  Alaska  Railroad                 
  Transfer Advisory Commission.  Many of the  provisions of SB
  148 were  discussed in great detail by  that commission, and                 
  it  was generally  the consensus  of the membership  that by                 
  placing  too  many  restrictions upon  the  Alaska  Railroad                 
  Corporation  would affect  the  economic well-being  of that                 
  Mr.  Kelsey  said the  advisory  commission was  directed by                 
  legislation to  attempt to find another railroad corporation                 
  to  purchase the Alaska  Railroad, but  they were  unable to                 
  find  a  buyer.   In  informal conversations  with potential                 
  bidders, concerns  were evidenced about  the possibility  of                 
  the   state  placing   restrictions,  by   virtue  of   sale                 
  provisions, that would adversely affect the operation.                       
  Mr. Kelsey believes  that many of  the provisions of SB  148                 
  might very well have the effect  of inhibiting profit to the                 
  Alaska  Railroad Corporation.    He  recommended caution  in                 
  placing  restrictions  upon  the Alaska  Railroad  as  it is                 
  presently structured.                                                        
  Number 075                                                                   
  CHAIRMAN SHARP asked  if committee members had  any comments                 
  on  a proposed committee substitute that had been drafted as                 
  the result of a Saturday work session on the legislation.                    
  SENATOR  KELLY stated that  he did  not think  the committee                 
  substitute, as drafted, came out like  was agreed to at that                 
  work session.  He noted there  had been a consensus that the                 
  current board  should be held  harmless, and he  wasn't sure                 
  that the committee substitute addressed that adequately.                     
  Number 121                                                                   
  PHYLLIS   JOHNSON,   General   Counsel,    Alaska   Railroad                 
  Corporation, expressed  the railroad's appreciation  for the                 
  opportunity to participate in the work session on SB 148 and                 
  to  identify several  areas  of  concern.    Some  of  their                 
  concerns  have been  addressed in the  committee substitute,                 
  however, there are several  areas where it doesn't  track or                 
  completely reflect  their understanding of the concerns that                 
  were  discussed  and  the  consensus  reached in  that  work                 
  Ms. Johnson outlined the following significant concerns that                 
  the  railroad corporation has with the committee substitute:                 
  use  of  language regarding  railroad  and  railroad related                 
  transportation  services;  debt  limit  language;  municipal                 
  taxation  issue;   Open  Meetings   Act  consideration   and                 
  teleconferencing; and composition of the board.                              
  Ms. Johnson pointed  out that other  state entities such  as                 
  the  Alaska Housing  Finance Corporation, the  University of                 
  Alaska and the Alaska Power  Authority do not require  their                 
  executive directors to file conflict of interest statements,                 
  and they question why the railroad is being treated a little                 
  Number 252                                                                   
  There was extensive discussion between the committee members                 
  and George Utermohle,  Legislative Legal Counsel on  the $10                 
  million debt limitation language and just what the consensus                 
  of the committee was on that language.                                       
  The  discussion  centered  around  inserting  the  following                 
  exception  language  to paragraph  (3)  on page  8,  line 2:                 
  "debt  incurred  for  the  acquisition  and  maintenance  of                 
  railroad  rolling  stock,   locomotives,  construction   and                 
  maintenance equipment, track  structure, and other  railroad                 
  related physical plant."                                                     
  CHAIRMAN SHARP asked if the language was added to  paragraph                 
  (3), would  it exclude  from the  limitation all  activities                 
  involved  in  the  railroad  operation.    GEORGE  UTERMOHLE                 
  answered  that  if  it  were  added,  it  would  essentially                 
  withdraw   avocation   for   that   provision   to   capital                 
  acquisitions  of the railroad.  It would not seemingly apply                 
  to operation  expenses of  the railroad  and nonrailroad  or                 
  nontransportation activities or expenditures.                                
  Number 412                                                                   
  SENATOR FRANK,  Co-chair  of the  Senate Finance  Committee,                 
  said it was his  understanding that during the  work session                 
  it  was agreed to have  a $10 million  cap with an exception                 
  for  rolling stock, engines, etc.,  but not an exception for                 
  any  other  emergencies.   However,  he added  that  the $10                 
  million  figure  might   be  too  high,  but   he  would  be                 
  comfortable with that amount.                                                
  Number 425                                                                   
  CHAIRMAN  SHARP  requested that  Mr.  Utermohle  include the                 
  exception  language  in  the  next  draft of  the  committee                 
  Number 432                                                                   
  Discussion  then  turned to  the  teleconferencing of  board                 
  meetings.   SENATOR KELLY said at the work session committee                 
  members were concerned  that the  railroad wouldn't allow  a                 
  commissioner in  Juneau,  during a  legislative session,  to                 
  teleconference.    The  railroad  said  they were  going  to                 
  address that at their meeting, but committee members felt it                 
  important that  the issue  be particularly  addressed during                 
  session.   SENATOR  KERTTULA  agreed  with  Senator  Kelly's                 
  comments,  saying  he  thought  that  at  least  during  the                 
  legislative session it makes sense to teleconference.                        
  It was agreed that on page 4, line 31, to delete "and by the                 
  public" and to  insert after  the word "teleconference"  the                 
  phrase "during legislative sessions."                                        
  Number 515                                                                   
  The  committee next discussed  the makeup of  the board, and                 
  the fact that the committee  substitute does not grandfather                 
  in the current  seven members.   The consensus  at the  work                 
  session was to  let current members  remain on the board  as                 
  long as they like,  but also to have  management represented                 
  on the board   because  labor is represented  on the  board.                 
  Overall consensus was that in the future to not have the  10                 
  years  of railroad experience member  be the CEO, that those                 
  two be separate.                                                             
  Number 540                                                                   
  GEORGE  UTERMOHLE  said  in  addressing  the  concern  about                 
  whether the CEO of  the corporation is either  the executive                 
  of another railroad or has 10 years of  railroad experience,                 
  the committee substitute gets at that  by saying the CEO may                 
  not be either of those persons, and neither of those persons                 
  may  be the CEO.   However, it  does not grandfather  in the                 
  existing members of  the board.   Should the current CEO  be                 
  one  of  those  two   members  of  the  board,  he   is  not                 
  grandfathered in under this bill.   He said the only persons                 
  that need to be grandfathered in at this point are the three                 
  people involved:  the CEO and the one or two  appointees who                 
  satisfy  the  conditions  of  having  10 years  of  railroad                 
  experience  and/or currently  an  executive  of a  railroad.                 
  PHYLISS JOHNSON added that his portion of the legislation is                 
  very confusing.  She said the  concern was to grandfather in                 
  the existing board members, but  there are other seats  that                 
  are involved as well.                                                        
  SENATOR KELLY suggested saying that all members of the board                 
  have to file conflict  of interest forms, and the  CEO can't                 
  be the chair or vice chair of the board.                                     
  CHAIRMAN  SHARP requested  that  Mr.  Utermohle rework  that                 
  section of the bill.                                                         
  TAPE 93-17, SIDE B                                                           
  Number 001                                                                   
  There  was brief discussion on the  taxation section on page                 
  2, lines 3  through 7, and concerns expressed  about putting                 
  any undo  restrictions on  the railroad's  ability to  lease                 
  their  land.   The railroad  has requested  that section  be                 
  deleted from the bill, however, the committee members agreed                 
  to leave that section in and request that the Senate Finance                 
  Committee look at the issue and make that decision.                          
  Number 075                                                                   
  SENATORS  PHILLIPS  and   LINCOLN  expressed  their  concern                 
  regarding the railroad getting into other types of business,                 
  but both  agreed that  they were  more comfortable  with the                 
  provision in the purpose section of the  bill which provides                 
  that  the   corporation  shall  obtain  approval   from  the                 
  legislature   before  obtaining   an   equity  position   in                 
  nontransportation activities.                                                
  Discussion then turned to the language which appears several                 
  times in the  committee substitute relating to  railroad and                 
  railroad  related  transportation   services,  which   would                 
  include leasing.                                                             
  PHYLISS JOHNSON  spoke to the language on  page 8, beginning                 
  on  line  9, "use  assets of  the  corporation to  obtain an                 
  equity  position  in  a nontransportation  activity",  etc.,                 
  which she  said is  a whole  new area  of  definition of  an                 
  activity  the railroad cannot  engage in without legislative                 
  approval.    She  said  by   inserting  that  language,  the                 
  intention was to  take out  the other language  in the  bill                 
  where  the  purpose  was limited  to  railroad  and railroad                 
  related, etc.                                                                
  DAVID SKIDMORE, staff  to Senator Frank, clarified  that the                 
  new language on page 8 referred to by  Ms. Johnson, plus the                 
  accompanying  definition  on page  10  of "nontransportation                 
  activities"  would  remove  the  necessity  of  keeping   in                 
  language in other  portions of  the bill that  refer to  the                 
  purpose   of   providing  railroad   and   railroad  related                 
  transportation services.                                                     
  The committee  agreed to instruct the drafter  to delete the                 
  new  language  relating  to railroad  and  railroad  related                 
  transportation services which  is contained in Section  5 on                 
  page 4, in Section 10 on page 5, and in Section 13 beginning                 
  on page 8.                                                                   
  Number 275                                                                   
  LEON VAN WYHE, representing the Alaska Resource Conservation                 
  Center, testifying from Fairbanks, spoke  to a joint venture                 
  the center is  involved in,  which is the  development of  a                 
  regional  landfill  at  Mile  388  on  the  Alaska  Railroad                 
  mainline near Clear, Alaska.   The facility will be  able to                 
  service a vast majority of Alaskan citizens via the railroad                 
  system, the state highway system  and the Tanana-Yukon river                 
  system.   He  said  the  way  SB 148  is  written,  it  will                 
  effectively stop all progress on the project.                                
  Number 342                                                                   
  SENATOR KELLY commented he thinks that with the way the bill                 
  is  drafted  the  project  can  go  forward.    However,  he                 
  suggested that  the drafter to take a close look at it, and,                 
  if it is necessary, the bill be changed to make certain that                 
  this type of  joint venture is  encouraged.  CHAIRMAN  SHARP                 
  said the committee would get more information on the project                 
  and make sure that it is adequately addressed.                               
  Number 380                                                                   
  JACK   BURTON,  President   of  the  Alaska   Federation  of                 
  Government Employees, testifying  from Moose  Pass, said  he                 
  represents  approximately   250  employees  of   the  Alaska                 
  Railroad.  He  said the employees  of the railroad are  very                 
  upset with SB 148 and have a vested interest in its outcome.                 
  These employees have no  desire to be dug back  into another                 
  government\political mess.  They have just spent years under                 
  direct government management and it was choking the life out                 
  of the Alaska Railroad.                                                      
  Number 475                                                                   
  WAYNE CARPENTER, Executive Director of the Seward Chamber of                 
  Commerce, testifying from Anchorage, spoke to the importance                 
  of the  Alaska Railroad to Seward.  He said for the railroad                 
  to operate effectively in the marketplace, it needs a degree                 
  of autonomy.   The impact  of SB 148  will very  effectively                 
  hamstring that opportunity and could have  very far-reaching                 
  Mr. Carpenter said the Seward Chamber of Commerce feels that                 
  the Alaska Railroad Corporation  already imposes substantial                 
  legislative control  on the  railroad's actions.   He  urged                 
  defeat of SB 148.                                                            
  Number 535                                                                   
  SENATOR PHILLIPS pointed  out that  many of Mr.  Carpenter's                 
  concerns   have  been   addressed  in   the   new  committee                 
  substitute.  SENATOR  KERTTULA added for the record  that he                 
  thinks the bill is still onerous.                                            
  Number 555                                                                   
  FRANK CHAPADOS, a  member of the  Board of Directors of  the                 
  Alaska  Railroad,   testifying  from  Fairbanks,   said  the                 
  purchase of the  Alaska Railroad  by the state  in 1985  and                 
  operation  of   the  line  through  an   independent  public                 
  corporation  has proven  to be  one  of the  most successful                 
  public policy actions in recent time.                                        
  Mr. Chapados urged  great caution and careful  consideration                 
  before  passing  sweeping  adjustments  as  those  currently                 
  proposed in  SB 148.   He  said  the provisions  restricting                 
  railroad debt over $1 million, coupled with the railroad and                 
  railroad related transportation  services limitations  could                 
  make  it quite  difficult  for the  railroad  to respond  to                 
  transportation market opportunities.  In addition, the added                 
  taxation exposure  for real  property of  the railroad  will                 
  lead to increased costs.                                                     
  Number 638                                                                   
  CATHY  SHULTZ, representing  the Fairbanks  Hotel and  Motel                 
  Association, voiced support  for SB 148, saying  citizens of                 
  Alaska  should expect that a corporation  owned by the state                 
  should reasonably  have to  report to  the legislative  body                 
  when  its activities go beyond  its usual scope of business.                 
  She encouraged the  committee to retain the  language in the                 
  bill  which  requires  that  the  railroad  corporation come                 
  before  the  legislature  before  entering  into  an  equity                 
  position in future ventures.                                                 
  TAPE 93-18, SIDE A                                                           
  Number 010                                                                   
  PAT POURCHOT,  Executive  Director  of  Commonwealth  North,                 
  testifying  from  Anchorage,  stated  their  board's  strong                 
  concern with many of the provisions  contained in SB 148 and                 
  the proposed committee substitute.                                           
  Mr.  Pourchot  outlined some  areas of  concern such  as the                 
  limitation on debt,  which has been opposed  by Commonwealth                 
  North,  and  the  railroad related  transportation  services                 
  language,  which they agree should  be deleted from the work                 
  Concluding  his  comments,  Mr.  Pourchot said  Commonwealth                 
  North feels that  the best way  to ensure that the  railroad                 
  operates with the independent conditions  of the 1984 Act is                 
  to allow the board and  managers to run the railroad with  a                 
  positive  bottom line.  The Alaskan  people are fortunate to                 
  have  the  railroad  operating  as  a viable,  profit-making                 
  entity.    The  public  must  ensure that  Alaska's  elected                 
  officials   insulate   the  Corporation's   operations  from                 
  political meddling, he said.                                                 
  Number 087                                                                   
  HANK  WARREN,  a  resident of  Eagle  River  testifying from                 
  Anchorage, said in the early eighties he was  co-chairman of                 
  the  Anchorage-Eagle  River  Chamber of  Commerce  committee                 
  which met to make recommendations to the state regarding the                 
  purchase of the railroad.   The main recommendations made by                 
  that committee were that (1)  the state should purchase  the                 
  railroad;  (2)  the  railroad  should  be  organized  as  an                 
  independent corporation under  the control  of the board  of                 
  directors; (3) the railroad should operate as a business and                 
  be competitive in  the marketplace; (4) the  railroad should                 
  be  entirely  free  of  any  political or  special  interest                 
  pressure;  and (5) the  railroad should operate  so that its                 
  bottom line would make it attractive for purchase by private                 
  Mr. Warren said  it is his  opinion that in operating  under                 
  the provision of  the 1984 Act  and its board of  directors,                 
  the Alaska Railroad has done extremely well and has provided                 
  jobs for hundreds of  Alaskans.  He said it is  strange that                 
  we have an entity that is  doing what we intended for it  to                 
  do, and now the  legislature wants to tinker with  its rules                 
  and make  significant  changes.   He  urged  defeat  of  the                 
  Number 177                                                                   
  BONNIE BAILEY, representing  Bruce Marion, President of  the                 
  Chugiak-Eagle River  Chamber of Commerce and testifying from                 
  Anchorage,  read into the record a  resolution passed by the                 
  Chamber of Commerce in opposition to HB 202 and SB 148.                      
  Number 206                                                                   
  JOE FIELDS, testifying  from Fairbanks, voiced concern  that                 
  the  legislation  might  limit  the  ability of  the  Alaska                 
  Railroad to interrelate with private  industry, and he urged                 
  that great care and caution be exercised so as not  to cause                 
  unnecessary  harm  to  a  successful  element  of   Alaska's                 
  Number 234                                                                   
  CHAIRMAN  SHARP  closed the  public  hearing on  SB  148 and                 
  stated that a  new committee substitute making  the proposed                 
  changes would be before the committee at its next meeting on                 
  Thursday, April 2.                                                           
  There  being  no   further  business  to  come   before  the                 
  committee, the meeting was adjourned at 5:25 p.m.                            

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