Legislature(1995 - 1996)
03/28/1996 01:36 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE TRANSPORTATION March 28, 1996 1:36 p.m. MEMBERS PRESENT Senator Steve Rieger, Chairman Senator Robin Taylor, Vice Chair Senator Lyda Green Senator Georgianna Lincoln MEMBERS ABSENT Senator Al Adams COMMITTEE CALENDAR SENATE BILL NO. 315 "An Act relating to procurement by the Alaska Railroad Corporation." CS FOR HOUSE BILL NO. 210(STA) am "An Act relating to issuance of motor vehicle registrations and titles, and to licenses and permits to operate a motor vehicle." HOUSE BILL NO. 411 "An Act naming Mountain View Road in Gustavus." PREVIOUS SENATE ACTION SB 315 - No previous action to record. HB 210 - See Senate Transportation minutes dated 3/19/96. HB 411 - No previous action to record. WITNESS REGISTER Henry Springer, Executive Director Associated General Contractors of Alaska 4041 B Street Anchorage, Alaska 99503 POSITION STATEMENT: Emphasized the competitive bidding process. John Eng Cornerstone Construction 4141 B Street #201 Anchorage, Alaska 99503 POSITION STATEMENT: Emphasized the competitive bidding process. Bob Hatfield, President & CEO Alaska Railroad Corporation 327 Ship Creek Avenue Anchorage, Alaska 99501 POSITION STATEMENT: Discussed how right of way construction currently happens. Sam Kito III, Legislative Liaison/Special Assistant Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 POSITION STATEMENT: Answered questions. Rick Leggett, General Road Manager 327 Ship Creek Avenue Anchorage, Alaska POSITION STATEMENT: Discussed layoff possibilities. Representative Mackie State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Prime Sponsor of HB 411. Juanita Hensley, Chief Driver Services Division of Motor Vehicles Department of Public Safety PO Box 20020 Juneau, Alaska 99811-0020 POSITION STATEMENT: Suggested changes to HB 210. Anne Carpeneti, Assistant Attorney General Criminal Division Department of Law PO Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Discussed concerns with HB 210. ACTION NARRATIVE TAPE 96-9, SIDE A SB 315 ALASKA RAILROAD PROCUREMENT Number 001 CHAIRMAN RIEGER called the Senate Transportation meeting to order at 1:36 p.m. and noted that testimony would be taken until a quorum arrived. He introduced SB 315 as the first order of business. HENRY SPRINGER, Executive Director of the Associated General Contractors of Alaska, emphasized the association's platform of open competitive bidding processes. He said that there have been attempts to erode that process in the past few years. Mr. Springer mentioned that he worked with the Department of Transportation (DOT) in 1962 and is somewhat familiar with the construction or changes within the right of way of the Alaska Railroad. He did not understand why that work could not be done under a competitive bidding process. The Alaska Railroad would continue to outline the specifications and the operational demands. Mr. Springer said that it could be done as a specialty contract where the railroad does the construction and integrates the construction with their maintenance and other operations or it can be done through DOT. Regardless of how the work is done, Mr. Springer believed that the work could be done as the rest of the state work is done, which is in compliance with the State Procurement Code. He offered to answer any questions. A quorum was established. Number 082 JOHN ENG, Cornerstone Construction, explained that Cornerstone Construction is a general contractor that does commercial and industrial work as well as railroad maintenance and construction. Mr. Eng believed that tax dollars should be awarded through a competitive bidding process. He agreed with Mr. Springer that the owner of the adjacent property whether it be the railroad or someone else, could establish some technical requirements that would have to be followed for everyone's benefit. Mr. Eng said that he was promoting this legislation primarily for the economic benefit to the state as well as a competitive bid operation and business opportunity for Cornerstone Construction. BOB HATFIELD, President and CEO of the Alaska Railroad, said that the railroad owns the right of way on which the work would be done and the railroad should do the work it is capable of doing on its own right of way. As a standard condition to consent to a DOT grade crossing project, the railroad asks that its employees do that work which involves changing or moving track. Mr. Hatfield emphasized that the railroad asks that its employees do such work due to the liability issues which the railroad accepts through its normal operations. Therefore, the railroad wants to know exactly how work has been done. Mr. Hatfield recognized that the work could be accomplished by contractors, but the railroad's liability creates the need to know exactly what is done. Also the train and construction operations have to be coordinated; the railroad can do this more efficiently. Mr. Hatfield pointed out that the railroad is reimbursed for doing a project in accordance with the Federal Highway Administration guidelines. He explained that cost estimates are submitted to DOT who analyzes the estimates for reasonableness. Once the project is complete, DOT routinely audits the payments in order to ensure that the railroad does not receive payment for work that was not done or not done in the manner specified. He offered to answer any questions. Number 145 SENATOR LINCOLN inquired as to why the railroad could not specify within the contract that the contractor would bear the responsibility. With regards to the reimbursement by the federal government, could the contractors or subcontractors submit cost estimates and DOT could audit them just as the department audits the railroad? BOB HATFIELD agreed that the audits could be done for the subcontractor. Mr. Hatfield reiterated that the railroad can not only do work comparable to that of a contractor, but also can coordinate the work better. This discussion only refers to track and signal work. Mr. Hatfield pointed out that the railroad routinely contracts out other work in the right of way that does not directly involve the track or the signal. SENATOR LINCOLN noted that Mr. Eng's letter said that he was looking at railroad crossings and overpasses when asking how track and signal work would be involved in overpasses. BOB HATFIELD explained that often a track must be relocated when there is work done on an overpass. SENATOR LINCOLN asked if Mr. Hatfield believed there to be a cost savings to Alaska by keeping the contract solely with the railroad. BOB HATFIELD believed there to be a cost savings. The railroad has the equipment, people, and the expertise to do this work on demand. Mr. Hatfield noted that the railroad seems to have the same situation with highway construction as the utility companies do. SENATOR LINCOLN asked how much the savings would be in one fiscal year. BOB HATFIELD did not know. There are many factors involved in such an estimate. Number 203 SENATOR GREEN asked if this same dilemma applied to any other governmental entity besides the railroad. Senator Green believed that a conflict had been created in this public-private entity which separates the railroad from a normal utility. SAM KITO III, Department of Transportation & Public Facilities, did not believe there was another private entity to which this would apply. Typically, the department does force account work with villages through Public Health Services or the Department of Environmental Conservation. SENATOR TAYLOR said that the substance of SB 315 is to allow the railroad to defer to DOT. He asked if the railroad would have to defer to DOT. CHAIRMAN RIEGER explained that SB 315 would require that the railroad use the same processes that DOT would have used had DOT done the work themselves. In response to Senator Taylor, Chairman Rieger said that the railroad is not doing that. BOB HATFIELD interjected that the railroad is behaving in the same manner in which DOT would. DOT can choose to do the work itself of the work can be contracted out. SENATOR TAYLOR asked if the railroad was using competitive sealed bidding. BOB HATFIELD said that the railroad was being asked to do the work and the railroad is. SENATOR TAYLOR said that if the work is being done in-house, competitively sealed proposals would not be required; this law would not effect that, would it? BOB HATFIELD said that it seems that any work DOT may undertake on the railroad's property which involved track work would have to be put out to bid, even routine work. SENATOR TAYLOR asked if the routine work was being done by DOT, not the railroad and its employees. Number 256 BOB HATFIELD explained that DOT may be relocating a road or building a highway overpass which would require taking apart tracks or moving tracks. That work is done by the railroad at the request of DOT. SB 315 would require that work done by the railroad for the railroad to be competitively bid upon. HENRY SPRINGER pointed out that under the State Procurement Code, any money appropriated to DOT under the Capital Program (CIP) or any projects must have a competitive bidding process. The department can choose how to proceed with operating and maintenance funds that are general fund appropriations. Mr. Springer clarified that he was asking that the railroad, in cases of capital money coming through DOT to the railroad, have a competitive bid process. SENATOR LINCOLN understood from previous testimony that this legislation would cost the state more money. She noted that there is no fiscal note. Senator Lincoln inquired as to the position of DOT regarding SB 315 and if SB 315 will cost more money. CHAIRMAN RIEGER pointed out that there are fiscal notes from the Alaska Railroad and DOT. SENATOR LINCOLN said those fiscal notes are zero. SAM KITO III said that DOT does not believe there to be a fiscal impact with SB 315. The department cannot project what the fiscal impact may be for the Alaska Railroad Corporation if the method of operation is changed. Mr. Kito said that DOT supports the Alaska Railroad Corporation's position on SB 315. Number 300 CHAIRMAN RIEGER asked if the Alaska Railroad were a private corporation and there were no special statutes governing the railroad, would DOT be able to transfer the ability to do the work on the railroad's right of way to that private railroad. If the department could transfer that ability to a private railroad, would it be subject to State Procurement Code laws? SAM KITO III believed that if the Alaska Railroad Corporation were an independent or private entity, DOT would have no say in how the project was constructed. With regards to the private entity receiving funds from the department, Mr. Kito did not know if that would be possible. CHAIRMAN RIEGER asked if that was done in any other instance or does the department always own the right of way included in a project. Perhaps, utilities would be an example. SAM KITO III informed the chairman that DOT does have lease agreements for utilities within the road right of way where a utility will have an easement within the road right of way to place its utility. With a DOT project or highway project, the department will own the right of way or have a significant interest. With some airports, the department leases the land from a corporation or is proposing to lease the land from a corporation. CHAIRMAN RIEGER asked if the department did the work in such situations. SAM KITO III replied yes, the department does the work directly; it is a public project. The department would have a lease for the property and the department would have significant interest in the property in order to operate a public project. Number 330 CHAIRMAN RIEGER asked if money would be transferred to Alyeska where the road crosses the pipeline right of way or would the department do the work. SAM KITO III said that he was unfamiliar with the statutes and the regulations. Statute specifically addresses utility relocation in state right of way. CHAIRMAN RIEGER said that he was still unclear as to what would transpire if the railroad was private. SENATOR TAYLOR acknowledged that there may be some specialty or advantage to doing the work in-house. He asked if this work should be open to competitive bidding when the railroad is ultimately liable for the trains running over that work. SENATOR LINCOLN wanted to know if there would be a significant difference in the cost of going through a competitive bidding process. She pointed out that more employment would be created, if there was not a significant difference in the cost. With regards to the liability, Senator Lincoln suggested that the construction of buildings, highways and bridges is no different than building railroad ties. The liability could be written into the contract. Is there going to be an additional cost to Alaska and if so, how much? Would this carry forward if the railroad was sold? BOB HATFIELD indicated that he would be speculating at this point with regards to the savings or expense of SB 315. However, Mr. Hatfield assumed that there would be no savings from the labor cost component. Furthermore, the railroad has parts and materials that are bought in bulk which presumes a better price than a contractor would be able to obtain. Even if a contractor did the work, the railroad would require that a flagman and track inspector be in place monitoring the work. Therefore, three more employees would be present than would if the railroad were doing the project. SENATOR LINCOLN asked if anyone would have to be laid off if the bidding process were utilized. BOB HATFIELD said that it could be possible. With the Bird Creek to Girdwood Project, employees would have been laid off. Number 399 RICK LEGGETT, General Road Manager, that the Bird to Gird Project had about 30 track people on that project and two separate crews. If that project had been allowed to go through the bidding process, those railroad employees would have been laid off. SENATOR GREEN asked if the railroad determines the size of its staffing based on the assumption that those employees will do those projects in-house. JOHN ENG posed the following question: would the work be better on a competitive bid basis or a cost plus force account basis? BOB HATFIELD pointed out that the railroad's estimates are reviewed for reasonableness before the work is done and are further audited after the work is completed in order to ensure that the railroad did not do anything out of line. JOHN ENG said that SB 315 does not prevent the railroad from also bidding on the work. With a competitive bid process, the railroad would be able to demonstrate if there would or would not be savings if the railroad did the work. SENATOR TAYLOR does not like the current procurement code. It is burdensome. If the railroad has used private contractors in the past and this is a policy shift, Senator Taylor did not object to the legislation. CHAIRMAN RIEGER pointed out that the additional language in SB 315 refers to "when procuring" and that there would be a competitive process "when procuring". Chairman Rieger clarified that the complaint was in regards to the force account. Does the railroad interpret SB 315 as preventing any in-house work? BOB HATFIELD replied yes. The railroad believes that SB 315 would require the railroad to competitively bid a project no matter how small or large. Mr. Hatfield mentioned the administrative burden which would be created for the railroad. CHAIRMAN RIEGER asked if Mr. Eng interpreted the bill in that manner. JOHN ENG said no. Mr. Eng understood the bill to mean that public bidding would only be required when the project is funded by tax payers' dollars. BOB HATFIELD agreed with Mr. Eng, but some of DOT's projects paid for by tax payers are relatively insignificant with regards to cost. HENRY SPRINGER pointed out that is done under AS 36.30.100 - 36.30.270 which does not preclude the work being done in-house or by force account; the statute lays out a mechanism. It basically says that, under the procurement code, anything over $100,000 would be required to go through a competitive bidding process. If there are extenuating circumstances, then the competitive bidding process does not have to be used; it is not a blanket requirement. CHAIRMAN RIEGER asked if there were other questions from the committee. Hearing none, Chairman Rieger asked for the pleasure of the committee. Number 465 SENATOR TAYLOR moved that SB 315 be moved out of committee with individual recommendations. CHAIRMAN RIEGER noted that SB 315 has a referral to Senate Finance. SENATOR LINCOLN objected for discussion purposes. She had no objection to moving the bill to Senate Finance, but the bill could be waived from that committee because of the zero fiscal notes. Senator Lincoln said that she would not object to moving the bill out of committee if she was assured that it would be heard in Senate Finance. SENATOR TAYLOR shared Senator Lincoln's concerns regarding the fiscal impacts of SB 315. He hoped the bill would not be waived from Senate Finance. SAM KITO III explained that AS 36.30.100 - 36.30.270 does not have any guidelines for what would constitute a project that should be eligible for competitive sealed bid or competitive sealed proposal. Those portions of the procurement code only address the procedures by which a competitive sealed bid or a competitive sealed proposal would be implemented. CHAIRMAN RIEGER said that he would like to move this bill, but he would also like to review those statutes. SENATOR TAYLOR withdrew his motion. CHAIRMAN RIEGER believed that often public projects are appropriated in part, with the expectation that work would get out to the private sector. Chairman Rieger said that he was sympathetic to that. He wanted to have a workable procedure in place to ensure that happens. If there is a question regarding the restrictions with the procurement reference, then it would be appropriate to hold the bill. Chairman Rieger asked if anyone else would like to testify on SB 315. He informed everyone that staff would research those statutes, obtain a legal opinion, and share it with committee members. HB 411 MOUNTAIN VIEW ROAD - GUSTAVUS CHAIRMAN RIEGER introduced HB 411 as the next order of business. REPRESENTATIVE MACKIE, Prime Sponsor, explained that Alaska statute requires that highway names be done by legislation. This is a community project which has been consistently called Mountain View Road since the 1950s. Representative Mackie received a petition from Gustavus to officially name the road Mountain View Road. Thi summer the road is being upgraded and the cost of the signs will be included, there will not be a fiscal impact to the state. Representative Mackie did not know of any opposition in the community. SENATOR TAYLOR moved that HB 411 be moved out of committee with individual recommendations. Hearing no objections, it was so ordered. HB 210 PRIVATE MOTOR VEHICLE LICENSING/TESTING Number 522 CHAIRMAN RIEGER introduced HB 210 as the next order of business before the committee. He pointed out that the committee packets contained a marked up version of a proposed CS which addresses many of the concerns previously raised. However, the CS does not delete the contract nor does it address the concern surrounding the administrative hearing. The prime sponsor had serious objections to those changes, so Chairman Rieger wanted to bring them before the committee. SENATOR GREEN moved that the CS be adopted in lieu of the original bill. Without objection, it was so adopted. JUANITA HENSLEY, Driver Services in the Division of Motor Vehicles, informed the committee that the issues she would be discussing were brought before the House last year as the bill moved through the process. She directed the committee to page 5, line 23 when explaining that she wanted an immediate report of a criminal complaint of child molestation or sexual abuse; Ms. Hensley did not want to wait 10 days in these cases. There should also be an immediate report of embezzlement. Ms. Hensley was also concerned that the department does not have an arbitration process. A process would have to be developed. In statute, there is a provision allowing the department to conduct administrative hearings with oversight from the Superior Court. Ms. Hensley proposed that page 6, lines 19-24 be deleted and replaced with "administrative hearings conducted under AS 28.05.141." That would be easier for the department. Ms. Hensley felt that the contracts on pages 7-17 are very cumbersome. It is not necessary to place the contracts in statute because the bill establishes what would be agreed upon. Ms. Hensley referred to page 17, line 8 when suggesting that "preapproval" should be deleted. She expressed concern with the amount of insurance required on page 18, but did not know what amount would be appropriate. TAPE 96-9, SIDE B Number 587 Ms. Hensley said that the department has some concerns with subsection (a) on page 19, lines 10-14 regarding civil liabilities. She noted that the Department of Law also had some concerns with that section and Anne Carpeneti would speak to those concerns. Ms. Hensley thanked the committee and the staff for working with the department on the bill. SENATOR LINCOLN asked Ms. Hensley to repeat her comments regarding performing audits on page 17 of the bill. JUANITA HENSLEY suggested that the word "preapproval" on line 8 be deleted. SENATOR LINCOLN clarified that she was referring to line 15. JUANITA HENSLEY recommended deleting the words "with or". SENATOR LINCOLN inquired as to why Ms. Hensley would suggest that deletion. JUANITA HENSLEY reiterated that she would recommend deleting "preapproval" on line 8 which would provide an option of whether or not to give the person notice of an audit. ANNE CARPENETI, Assistant Attorney General for the Department of Law, reiterated her apologies for not being very familiar with civil law, but she noted that she had talked with the civil division regarding the civil liabilities section on page 19. Ms. Carpeneti recalled that the sponsor said that the purpose of subsection (a) was to create a level playing field, but the state continues to be liable for negligence acts of its agents. HB 210 would give these private agents, third parties, protection against liability for negligence which the state does not have. Ms. Carpeneti recommended that subsection (a) be deleted. CHAIRMAN RIEGER asked if a state employee performing this function would be indemnified from negligence. If someone were damaged from the actions of a state employee would the state be held liable. ANNE CARPENETI believed that was correct. CHAIRMAN RIEGER asked if this clause placed the agent in the same position as an employee would have been in. SENATOR TAYLOR stated that the employee is individually responsible as well as the employee's superior. There is an agreement in which the state indemnifies. He noted that there has always been discussion regarding whether or not those indemnification agreements should be extended to third party contractors. CHAIRMAN RIEGER was under the impression that state employees were not personally liable. Number 542 SENATOR TAYLOR said that under HB 210 no one would be held liable, the bill provides a blanket civil immunity. There has to be proof of gross negligence before there can be any recourse. CHAIRMAN RIEGER asked if subsection (b), lines 15-17 were the lines that do not allow the action against the state. ANNE CARPENETI clarified that he was referring to subsection (a), lines 10-14. SENATOR TAYLOR explained that lines 10-14 provide immunity for the contracted agent. Subsection (b) provides a complete blanket of liability immunity for the state and all of the agents of the state. ANNE CARPENETI pointed out that the immunity is provided for the third party agents not the employees of the state. SENATOR TAYLOR pointed out that if subsection (a) were deleted, then the state would receive the blanket of immunity from the person which the state licensed and placed in the field. ANNE CARPENETI said that the state is responsible for the employees that work for them. However, the purpose of subsection (b) is to protect the state against actions of third parties. HB 210 does require that the third party be insured against negligence, gross negligence, and other acts. CHAIRMAN RIEGER believed that the state must use agents to perform state functions in other cases. In such a case, is the person performing the function indemnified? ANNE CARPENETI said that she would have to research such a scenario. SENATOR TAYLOR believed that there is an indemnification agreement that does exist between the State Troopers and Alaska. The troopers are indemnified by the state. ANNE CARPENETI referred to page 5, lines 16-18 when saying that the Department of Public Safety would recommend zero tolerance. This bill would allow people with .03 BAC to be able to give driving tests. CHAIRMAN RIEGER did not have a problem with zero tolerance, but understood that testimony indicated that federal CDL language included this language. ANNE CARPENETI said that was correct for the CDLs, but some states say that .02 is zero tolerance. SENATOR TAYLOR inquired as to why the states would use .02 to mean zero tolerance. Number 493 ANNE CARPENETI believed the reason for that was to not make criminal an act of driving after drinking a glass of wine with dinner. The bill currently going through the legislature discusses zero tolerance for juveniles driving and drinking. Ms. Carpeneti noted that the Department of Law was taking that position as well. CHAIRMAN RIEGER understood the concern. SENATOR TAYLOR discussed how blood alcohol level is determined by lots of factors such as size, weight, tolerance, age, etc. which all vary individually. SENATOR GREEN interjected that what should be addressed was someone going out for lunch and having two or three drinks and returning to administer a driving test. SENATOR TAYLOR discussed the studies on blood alcohol levels. CHAIRMAN RIEGER asked if anyone else was present to testify on HB 210. Chairman Rieger said that he wanted to determine if the committee was interested in changing any of the points that have been raised. Is there interest in lowering the standard on page 5, lines 16-18? SENATOR LINCOLN replied yes. SENATOR GREEN inquired as to how that would be phrased. CHAIRMAN RIEGER believed it would be legal to say that a person could not be visibly under the influence. There must be some way in which to address that issue. SENATOR TAYLOR pointed out that negotiated contracts would address that issue. CHAIRMAN RIEGER asked if there was interest in tightening that language. There seemed to be interest in tightening that language. Chairman Rieger asked if there was interest in adding the language "within the next business day" or "immediately" upon a criminal complaint. That language is on page 5, line 22-23. He informed the committee that the drafter had to choose because the earlier draft had both. SENATOR GREEN asked how the immediate language would be used. CHAIRMAN RIEGER believed that it would be best to specify a time limit. Number 431 SENATOR TAYLOR pointed out that paragraph (3) on page 6 which says, "before the end of the next business day after the agent or examiner is charged." CHAIRMAN RIEGER clarified that language was removed by the drafter because it conflicted with the "10 days of" language. Chairman Rieger explained that line 23 would have to be deleted and criminal complaints would have to be dealt with in a separate section. SENATOR TAYLOR mentioned that currently civil and criminal law was being mixed. CHAIRMAN RIEGER asked if there was interest in placing the criminal language in its own section. There was interest. He asked if the committee was interested in removing the arbitration requirement on page 6, lines 20-24. SENATOR TAYLOR agreed. He said that he liked arbitration as a resolution, but it is not necessary to create a big fiscal note on the bill. CHAIRMAN RIEGER referred to page 7, line 19-page 17, line 5 regarding whether the committee wanted to leave the contract in the bill. SENATOR TAYLOR indicated that he would like for the contract to be deleted. If the department or the contractors wanted to change the contract, they would have to come before the legislature in order to do so. CHAIRMAN RIEGER asked if the committee wanted to delete "preapproval" on page 17, line 8. SENATOR TAYLOR suggested deleting the language "with or" as well on line 15 of page 17. CHAIRMAN RIEGER informed the committee that he took silence to mean consent or interest in changing these issues. He referred to page 18 regarding liability. SENATOR TAYLOR recalled previous testimony that the liability established in the bill was reasonable and could possibly be a little higher. CHAIRMAN RIEGER believed that the department had requested the increase in liability insurance. What should the exact amount be for the liability insurance requirement? A discussion ensued regarding the amount of insurance that should be required. ANNE CARPENETI offered to find out what the norm is from the industry and provide that information to the committee. CHAIRMAN RIEGER was interested in the premiums of an air taxi operator. Number 387 SENATOR TAYLOR recommended deleting lines 10-17 on page 19. SENATOR LINCOLN summarized that the bill would then contain no references to civil liability. SENATOR TAYLOR commented that it would be the same as today; no one's rights are being taken away. CHAIRMAN RIEGER asked if it was correct that an individual would be liable unless there is a statute stating otherwise? SENATOR TAYLOR said that negligence has to be proved. ANNE CARPENETI explained that most of the contracts that allow the state to contract with third party agents include hold harmless provisions for the state. If lines 15-17 on page 19 are deleted, the hold harmless provision would be deleted. The Department of Law would oppose that deletion, but the department would support the deletion of subsection (a). SENATOR TAYLOR said that no one would be granted a contract without a policy of insurance that shows the state as the primary insurer on the policy. Requiring the contractor to have insurance means that the contractor would serve as the first line of defense on liability for the state. Then the state would say that the state should be held harmless for any possible liability the state had. Number 363 ANNE CARPENETI clarified that this only holds the state harmless for damages resulting from the act or omission of the agent or registrar. SENATOR TAYLOR believed it to say that the state would not be liable if the state does a poor job of inspecting an agent and continues to allow the agent to operate. What is the state's motivation to ensure that a bad agent is not allowed to operate? CHAIRMAN RIEGER read this to mean that the state was being held harmless from the act of the third party, but not from an omission of the state in how the state has contracted or qualified that agent. SENATOR TAYLOR said that was dependent upon the definition of "performing duties." Senator Taylor surmised that the state could not be sued by any injured third party because of an action of an agent. This individual would be an agent of the state. SENATOR LINCOLN agreed with Senator Taylor. In the interest of the state, it would be good to leave the language in the bill because the state would not be sued. However, the state should also be held accountable if the state utilizes an agent on its behalf. ANNE CARPENETI pointed out that these agents are not like state employees, they are independent agents. Ms. Carpeneti agreed with Senator Lincoln that the agent is described as an agent of the state as this is drafted, but Ms. Carpeneti did not envision these individuals as agents of the state. SENATOR TAYLOR emphasized that these individuals would be agents of the state for carrying out certain functions of state government that is being authorized to contract with them. CHAIRMAN RIEGER posed the following situation: an employee stationed in a remote location drives their truck into a store. In that case, the state would be liable. Taking this out would not be inconsistent with the level of liability that the state has with an unsupervised employee. ANNE CARPENETI said that the problem is the level of control the state has over these independent agents. Number 312 SENATOR TAYLOR said that in order to cover this provision that is not in law, the state requires that the agent contractor hold the state harmless and a specific amount of insurance is also required. He pointed out that the same is done with day care centers. This insurance basically insures the state. Senator Taylor believed this to be backwards. ANNE CARPENETI suggested that Ms. Hensley could give the committee an example of the type of agent relationships. Ms. Carpeneti understood that garages that repair cars would be able to issue renewed registration for automobiles. CHAIRMAN RIEGER said that already occurs. SENATOR TAYLOR noted that I/Ms are also done in this way. JUANITA HENSLEY explained that emissions testing stations in Fairbanks and Anchorage were already allowed to renew registrations. HB 210 would allow the department to contract with groups such as Budget Rent a Car. The department does not have control over those employees, the department only has control over the type of work they do. Ms. Hensley pointed out that anyone who performs this work and has access to the computer systems must pass the same background investigations that the department's employees have to pass. She informed the committee that the department is in the process of forming an agreement with third party testing for commercial vehicles. That third party may be an individual or a business such as Princess Tours/Greyline who would not necessarily have to pass the background investigations, but would have to pass the standards established in the contract. The department has no control over those employees other than what is specified in the contracts. SENATOR TAYLOR said that there is a middle ground. These employees could have a hold harmless agreement with the person authorized to perform the work. That individual could be individually responsible and hold the state harmless from liability. HB 210 creates a blanket immunity for the state. SENATOR LINCOLN recalled a question relating to the meaning of "professional manner" on page 5, line 5. JUANITA HENSLEY explained that HB 210 has a section requiring that employees meet all the certifications, training, workshops, seminars, and other instructive meetings. SENATOR GREEN asked if that was on page 4, line 7. JUANITA HENSLEY pointed out that there is a professional code of ethics of the American Association of Motor Vehicle Administrators Certified Driver Examiner Program. This code of ethics would be adopted in regulation. CHAIRMAN RIEGER said that HB 210 would be before the committee again either as a CS or with prepared amendments. There being no further business before the committee, the meeting was adjourned at 2:58 p.m.