Legislature(2001 - 2002)
04/26/2001 01:43 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION COMMITTEE
April 26, 2001
1:43 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Jerry Ward, Vice Chair
Senator Robin Taylor
Senator Gary Wilken
MEMBERS ABSENT
Senator Kim Elton
COMMITTEE CALENDAR
SENATE BILL NO. 130
"An Act establishing the Alaska Marine Highway Authority; and
providing for an effective date."
MOVED SB 130 OUT OF COMMITTEE
SENATE BILL NO. 195
"An Act relating to the operation of the Anton Anderson Memorial
Tunnel and related toll facilities by the City of Whittier; and
providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 196
"An Act relating to the toll for the use of the Anton Anderson
Memorial Tunnel and the Portage Glacier Highway; and providing for
an effective date."
HEARD AND HELD
SENATE BILL NO. 197
"An Act prohibiting the imposition of a toll or other fee for use
of the Anton Anderson Memorial Tunnel and the Portage Glacier
Highway; annulling certain regulations of the Department of
Transportation and Public Facilities relating to tolls for use of
the Anton Anderson Memorial Tunnel and the Portage Glacier Highway;
and providing for an effective date."
HEARD AND HELD
CS FOR HOUSE BILL NO. 127(RLS)
"An Act relating to aviation and to emergency equipment to be
carried on aircraft."
MOVED SCS CSHB 127(RLS) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 130 - No previous Senate committee action.
HB 127 - No previous action to record.
SB 195 - No previous action to record.
SB 196 - No previous action to record.
SB 197 - No previous action to record.
WITNESS REGISTER
Captain George Capacci
Director, Alaska Marine Highway System
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Opposed to SB 130.
Mr. John Manley
Aide to Representative Harris
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified for the sponsor of HB 127.
Ms. Juli Lucky
Aide to Senator Halford
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Explained the changes made in SCS CSHB
127(TRA).
Senator Donny Olson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified in favor of SCS CSHB 127(TRA).
Mr. Paul Bowers
Director, Statewide Aviation
Department of Transportation &
Public Facilities
PO Box 196900
Anchorage, AK 99519
POSITION STATEMENT: Discussed problems with implementing SCS
CSHB 127(TRA).
Mr. Carl Siebe
Department of Transportation &
Public Facilities
411 Aviation Drive
Anchorage, AK 99502
POSITION STATEMENT: Discussed enforcement problems with Alaska's
aviation statutes.
Mr. Butch Halford
Address not provided
POSITION STATEMENT: Commented on SCS CSHB 127(TRA).
Mr. Tom Crafford
Alaska Miners' Association
POSITION STATEMENT: Discussed problems with SCS CSHB 127(TRA)
regarding the use of public runways used in mining operations.
Brad Thompson, Director
Division of Risk Management
Department of Administration
PO Box 110218
Juneau, AK 99811-0200
POSITION STATEMENT: Discussed the current and proposed insurance
requirements of air carriers under SCS CSHB 127(TRA).
Mr. Kip Knudson
ERA Aviation
6160 Carl Brady Drive
Anchorage, AK 99502
POSITION STATEMENT: Commented on the insurance provisions
related to SCS CSHB 127(TRA).
Mr. Matt Rowley
City of Whittier
PO Box 608
Whittier, AK 99693
POSITION STATEMENT: Commented on SB 195, SB 196, and SB 197.
Mr. Ben Butler, Mayor
City of Whittier
PO Box 608
Whittier, AK 99693
POSITION STATEMENT: Commented on SB 195, SB 196, and SB 197.
Mr. Dennis Poshard
Special Assistant
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Commented on DOTPF's concerns with SB 195,
SB 196, and SB 197.
ACTION NARRATIVE
TAPE 01-14, SIDE A
Number 001
CHAIRMAN JOHN COWDERY called the Senate Transportation Committee
meeting to order at 1:43 p.m. Present were Senators Taylor, Wilken
and Cowdery. He announced the committee would hear the resolution
at another time; the first bill to come before the committee would
be SB 130. Chairman Cowdery asked the sponsor to address the
committee.
SB 130-ALASKA MARINE HIGHWAY AUTHORITY
SENATOR ROBIN TAYLOR, sponsor of SB 130, gave the following
explanation of the measure.
SB 130 is essentially the same measure that he introduced about 10
years ago when he was a member of the House. Senator Lloyd Jones
introduced a companion bill in the Senate. The concept originated
from studies done on Southeast Alaska transportation over the last
25 years. Those studies have concluded that transportation issues
should be removed from the influence of politics by establishing an
autonomous board that would hire staff. An autonomous board would
also provide for continuity and hopefully develop an intermodal
system of transportation to interconnect the expanding road system
of Southeast Alaska. None of that has occurred in the last 37
years. Unfortunately, that operation, in the words of Jim Ayers,
"is in a death spiral."
SENATOR TAYLOR said that without continuity in transportation, he
doesn't believe the ferry system will continue to exist, even as a
shadow of what it was in the past. The entire economy of Southeast
Alaska depends upon a certain level of service that may or may not
be available. If those communities are going to survive and have a
viable transportation link, this bill is crucial. This matter
always come down to a confrontation between the legislative and
executive branches. Every governor wants to be able to appoint the
people who will run the Alaska Marine Highway System (AMHS). This
administration has been no more successful in that effort than has
any previous administration. Senator Taylor expressed concern that
the head of the entire transportation system and the people who run
it change every four years and the replacements have no background
in that system. That has led to a lack of continuity, a lack of
expertise, and wildly vacillating concepts.
SENATOR TAYLOR noted he is not aware of any marine highway system
in the world that is building high speed ferries for normal runs.
High speed ferries are being built for critical runs where the
existing system has no capacity left. Passengers are paying two to
three times the cost to get to their destination quicker.
Number 467
CHAIRMAN COWDERY asked if the high speed ferries are capable of
running in big seas.
SENATOR TAYLOR said that every system he has contacted does not
operate fast ferries in adverse weather conditions. In addition,
staff from the Department of Transportation and Public Facilities
(DOTPF) have said they would not be able to operate a fast ferry
several days each year; high seas are a major factor, as well as
cost and maintenance. High speed ferries are probably an
innovative idea that will develop over time to where they will be
less expensive to operate. He pointed out that issue should be
resolved by a board of directors with expertise in public
transportation, and specifically marine transportation.
CHAIRMAN COWDERY noted that Senators Ward, Taylor, Wilken were
present and that Senator Elton was ill. He then took public
testimony.
Number 664
MR. GEORGE CAPACCI, General Manager of the Alaska Marine Highway
System, read the following prepared statement to the committee.
It is important that I be here today to express my
concerns about the proposed marine highway authority
contained in SB 130. These concerns are essentially the
same as Commissioner Perkins presented in 1997, with some
important updates about the management and direction of
the Alaska Marine Highway.
Let me begin with a review of why the Alaska Marine
Highway Authority is not in the best interest of our
customers, the citizens of Alaska, and the Alaska Marine
Highway employees.
First off, the authority creates more problems than it
solves. SB 130 diminishes public accountability. Under
the present system, the marine highway system management
is accountable to the public. Concerns and requests are
responded to quickly and completely. They have to be.
Elected officials are responsible for the management of
the marine highway and elected officials have to be
responsive to the public they serve. Sometimes that is a
time consuming and cumbersome process but it is the most
responsive way to handle the people's business. The
establishment of an authority would diminish the publics'
accountability of marine highway management by inserting
an appointed board between management and the people.
Marine highway management will no longer answer directly
for the elected governor or for any other elected
representatives. The board, and not the governor nor the
legislature, will make management decisions. Once
appointed, board members will not be accountable to the
public. A board member may be removed only for cause.
The accountability of the marine highway management to
the communities they serve will be substantially reduced.
We believe this is not desirable.
SB 130 diminishes public influence on decision making.
Alaskans know who is in charge of the marine highway
system. When things are running well, they know who to
compliment. When things aren't going so well, they know
who to contact. Believe me, they know who to contact.
This bill changes all of that. When accountability of
elected officials changes, public access to the decision
making process also changes. Although a person or a
community may ask the board of directors of the system
for a schedule change or a special run, there may be
little or no pressure to respond. The CEO is insulated
from the effect of public pressure.
Current community input to the fleet's schedule is an
ongoing effort. Annually we solicit this input and
adjust our schedule as much as possible to meet those
demands. We believe Alaskans appreciate direct access to
the public systems that most affect their lives, and this
bill will have a substantial negative impact on that
access.
The Alaska Marine Highway System is not broken. The
marketing and pricing study was recently completed.
There is a lot that is right about the Alaska Marine
Highway System. The ships have an enviable safety
record, they generally run on time, they provide safe,
economical, comfortable and reliable transportation
service to our traveling public. The currently
completed, back in September of last year, marketing and
pricing study, found that 93 percent of our customers
rate their AMHS experience as good or very good. The
study also concluded of the top ten locations visited by
summer of 1999 visitors, five locations - Anchorage, Mat-
Su/Denali, Fairbanks, Valdez and the Kenai Peninsula are
not even in Southeast Alaska. So five of the top ten
locations are not even in Southeast Alaska. This points
out that we are carrying visitors and passengers
throughout the state of Alaska. The entire state's
economy therefore benefits from the marine highway's
passengers.
Of course, I'll be the first to admit some problems
occur. They are inevitable in an operation that is as
vulnerable to as many variables as the marine highway
system is. It is a system that has a large and varied
constituency, and everyone has an opinion as to what
should be done and how it should be operated. But,
overall, the system is doing what it was designed to do
in the mid-60s - transporting people and vehicles
throughout coastal Alaska in the context of an intermodal
transportation network. It is a credit to the hard
working crewmembers and dedicated staff that we operate
as well as we do.
SB 130 adds another administrative layer. This bill
would set up another administrative layer over which
neither the governor nor the legislature will have
control. We believe that is bad public policy. But,
even worse, it doesn't fix anything. There is nothing in
the bill that encourages stability or financial support
by the legislature. There is nothing in the bill that
addresses the increasing capital needs of an aging fleet.
There are major challenges at marine highways that we are
addressing with strong leadership and action. One of the
biggest problems that you can help relieve is the time
and energy that now is being spent controlling the damage
caused by anxiety over our future. That is a problem
that you can materially affect by telling the whole story
in this very successful state adventure by demonstrating
your support for its future and helping us fix the
problems that we have. The system is nearly 40 years
old. The ships are aging, the system is running the same
type of operation it did 38 years ago with more public
service. In 1976, for example, Sitka was provided with
268 trips and in 1999 that number was 325 trips. Today
we are responding to the challenges of shrinking funding
and increasing regulatory demands.
I'd like to talk a little bit about AMHS maritime
experience. Although it isn't specifically stated in the
proposed legislation, an implicit purpose for an
authority is apparently to insulate the marine highway
system from inexperienced managers appointed through the
political patronage process. The 1989 "Acres Report"
recommended that additional experienced mariners should
be hired as managers to better understand the operation
of the maritime vessels. AMHS has done that and more.
From myself, the director of the Southeast region,
through the vessel operations managers, the marine
engineering manager, the port captain, assistant port
captain, the ISM/STCW coordinator, the three port
engineers, the eight vessel construction managers, and
the state's only naval architect and our safety officer,
the Alaska Marine Highway System is staffed with marine
professionals with over 500 years of vessel operation and
maintenance experience. Most of my staff, my senior
level staff, have the title "captain" in front of their
names and we can refer to them because of their master
mariners documents. This staff exists to support the
Alaska Marine Highway vessels and conducts its daily
business to that end.
The Southeast Transportation Plan and the Prince William
Sound Transportation Plan point toward the future. The
Southeast Alaska Transportation Plan was a comprehensive
plan that was developed through extensive public
participation. The basic tenant of the SATP is a series
of shuttle vessels connecting Southeast communities
coupled with a version of the exiting mainline vessels to
improve the overall transportation system for our
customers. The same holds true for the Prince William
Sound Transportation Plan. A vessel capable of 30 plus
knots is needed to solve the elemental time and distance
equation to provide daily service in Southeast Alaska and
Prince William Sound. The residents of Prince William
Sound communities strongly support our transportation
planning efforts. The residents of Southeast Alaska have
uniformly supported a Southeast transportation plan. The
Southeast Transportation Plan and the Prince William
Sound Transportation Plan are not perfect but they are
good plans and the best our public process can produce
for essential transportation improvements. These plans
have wide public support and endorsement. We need your
support to implement these transportation plans.
I believe a firm foundation is being laid for future
statewide transportation services including the essential
Alaska Marine Highway System. Vessels are being upgraded
to comply with ever increasing international and federal
safety regulations. Our crews are undergoing
standardized training mandated by the international
regulations to be the most professional mariners
possible.
An authority would further isolate the marine highway
system from capital funds. The marine highway system is
presently managed by DOT/PF personnel as an integral part
of Alaska's intermodal transportation system. The
majority of the routes have been designated by Congress
as part of the national highway system. As an operating
arm of the department, the system receives federal
highway funds from the department. By separating the
system from DOT, as an authority, operating independently
from the rest of the Department of Transportation, the
debate for funding the marine highway system capital
improvement projects could conceivably shift more toward
the legislature for resolution. This will force the
marine highway system to compete more aggressively with
individual communities throughout the state, other DOT
regions, and other agencies for its share of the federal
highway funds, rather than sharing them as one component
of Alaska's intermodal transportation system.
While the commissioner of DOT would serve on the board of
directors of this new authority, it is unrealistic to
think that an organizational component, which is separate
form the rest of the agency, and for which the
commissioner no longer has primary responsibility, will
receive the same level of consideration for federal
highway funds as it receives as a line agency within the
department.
The authority itself provides no mechanism to reduce
subsidies. The marine highway system presently derives
about 55 percent of its operating funds from revenues,
with the remaining 45 percent of its operating budget
appropriated from the general fund by the legislature.
The marine highway provides an essential public good,
transportation, that cannot be provided by the [private]
sector. As such, providing a state operating subsidy is
an appropriate role for government. This subsidy is
essential for continuing service year round at a
reasonable price. Nothing in this proposed legislation
is directed toward changing that funding relationship.
The proposed authority is not designated to be self-
sufficient. It will continue to require annual
legislative appropriations for operations and capital
improvements. What then is the justification for
establishing it as a state corporation? An authority
will require additional subsidy to fund its increased
overhead costs.
Additionally, administrative costs are likely to
increase. The marine highway system is already unfairly
criticized for its large size of central office staff.
In truth, the Juneau office staff has diminished in
recent years despite extensive additional international
and national safety and training regulations, which need
implementation, monitoring, and oversight. If the marine
highway system is split from the rest of DOT into a
quasi-independent authority, it will lose the
administrative support presently provided by the
department, and the administrative costs for the marine
highway system will certainly increase. Personnel and
accounting services, which are now provided in part by
headquarters, would fall entirely on the authority
itself, so would engineering services now being provided
by the Southeast region. The system would further be
removed from the Federal Highway Administration. The
relations with DOT and the Federal Highway Administration
would be complicated since our CFR Title 23 for the
administration of the Federal Highway funding programs is
the responsibility of the state highway agency, which is
the Department of Transportation.
Separate accounting and data processing systems would
almost certainly be necessary. That authority would not
be exempt from the Executive Budget Act, state
procurement code, and other state mandated rules and
regulations.
Finally, and thankfully, in summary, the proposed marine
highway authority would be a move in the wrong direction
as far as transportation in Alaska is concerned. We all
recognize that the marine highway system cannot continue
to operate as if it were still in the 1960s. Times have
changed and the needs of Alaska's communities and the
traveling public have changed. The transportation
network along Alaska's coastline has changed. The
changes needed in the marine highway system are
evolutionary as the system adapts to meet the demands of
our varied customers. However, SB 130 takes us in the
wrong direction. With the help of the legislature, we
will continue to work to ensure the marine highway system
truly functions as an integral system and element in a
well designed state transportation system. I am working
to bring about this evolutionary change to improve the
marine highway system but this transition must be well
thought out and have the support of the people of Alaska.
This takes time and the worst action we can take now is
to create another level of unneeded bureaucracy as this
bill proposes to do. Thank you for allowing that many
pages and I would be happy to answer any questions you
might have.
Number 1400
CHAIRMAN COWDERY asked if the ferry systems in other states are
privately owned and, if so, how they deal with federal subsidies.
MR. CAPACCI said there are a number of ferry systems throughout the
country, both publicly and privately owned. Most of the publicly
owned ferry systems get federal dollars to improve and construct
their vessels. Their operating funds come from their own revenues
and from their state legislatures. Those systems are very
different from Alaska's. Alaska has passenger ships that also
carry cars and are not used as commuter systems. Most other state
ferry systems do not have to deal with long distances.
SENATOR WARD asked for a copy of Mr. Capacci's written comments. He
also asked if any other ferry systems are run by an authority.
MR. CAPACCI said he is not aware of all the authorities, but a
number of bodies advise the Washington Legislature and do studies
for it, such as tariff pricing studies. He does not believe that
Washington State has a true authority that directs the CEO of that
ferry system.
SENATOR WARD asked if the existing authorities are port
authorities.
MR. CAPACCI said he would have to do more research on that
question.
SENATOR WARD commented that he asked because Mr. Capacci said he
was not in favor of authorities. He then noted the Governor has
proposed new regulations on cruiseships to deal with waste. He
asked if the ferry system is already complying with the Governor's
proposed regulations.
MR. CAPACCI replied, "Through the Chair, yes - Senator Ward there
are a number of different ...."
SENATOR WARD responded, "Okay, that's fine, thank you."
MR. CAPACCI said, "...but yes."
SENATOR WARD asked if the AMHS has the ability to acquire state
lands so that it can develop, sell or lease those lands in order to
supplement its operations, similar to the Alaska Railroad
Corporation (ARRC).
MR. CAPACCI said he did not know what possibilities exist along
that line.
SENATOR WARD asked if Mr. Capacci has read Sec.19.55.210, regarding
acquisition of land and easements, on page 6 of SB 130. He noted
that one of the cornerstones of this bill is to transfer 1.4
million acres of state land to this new authority to offset some of
the operational costs. He again asked if the AMHS has the
authority to accept land now.
MR. CAPACCI said he did not see that section in the previous
edition of the bill. He repeated that he is not sure whether the
AMHS can accept land at this time. He noted that is an intriguing
idea.
SENATOR WARD said, regarding Mr. Capacci's comment, that an
authority would separate the people from the operations, that he
believes an authority would bring the two into closer contact. He
asked if that would be eliminated if the members of the authority
are elected rather than appointed.
MR. CAPACCI said he would have to give that question more thought.
SENATOR WARD said to serve on other authorities, candidates must
fit certain criteria, such as geographic location. He felt that
should solve the public input problem and asked Mr. Capacci if that
is what he is proposing.
Number 1693
MR. CAPACCI said he does not know that the Port of Bellingham's
authority runs a maritime transportation system. DOTPF deals with
the facilities in Bellingham but he is only aware of the terminal
facilities that they operate.
SENATOR WARD asked Mr. Capacci if he is familiar with that
authority.
MR. CAPACCI said he is aware they have an authority with elected
officials.
SENATOR WARD again asked if that would alleviate Mr. Capacci's
concern about public participation.
MR. CAPACCI said he is not sure how that authority relates to the
public and how responsive it is to the public. He noted that
authority is not developing a transportation system. It makes
decisions about the shore side facilities.
CHAIRMAN COWDERY said he is glad the marine highway system is
already conforming to the proposed cruiseship regulations on waste
disposal.
MR. CAPACCI said there will be expenses.
CHAIRMAN COWDERY said the marine highway system must not be
conforming then.
MR. CAPACCI said, "We do conform with the outflows but the testing
requirements and the reporting requirements and the monitoring
requirements are going to be additional administrative and
additional costs if the periodicity is changed. The sampling that
we do - we weren't initially sampling effluent, we had other
measures of whether the systems are effective or not, but we took
it upon ourselves to sample those outflows and found that they were
within specifications so, if a lot of those bills get enacted,
there's going to be some expenses involved in that, yes sir."
There being no further testimony or questions, SENATOR TAYLOR moved
SB 130 from committee with individual recommendations. There being
no objection, the motion carried.
HB 127-AVIATION & AIRCRAFT EMERGENCY EQUIPMENT
CHAIRMAN COWDERY announced that the committee discussed the Senate
version [SB 100] of HB 127 at a previous hearing.
SENATOR WARD moved to adopt SCS CSHB 127(TRA), Version F, as the
working document of the committee. There being no objection, the
motion carried.
The committee took a brief at-ease.
CHAIRMAN COWDERY called the meeting back to order and took public
testimony.
MR. JOHN MANLEY, staff to Representative Harris, prime sponsor of
HB 127, told committee members that Representative Harris's
original intention was to make it easier for private pilots who
take off from Alaska and land in Canada to do so legally.
According to recent federal legislation in Canada, a person must
get a permit to bring in a firearm, meaning a rifle or shotgun.
Handguns are not allowed. Alaska statutes require private pilots
to carry a firearm to take off from Alaska. The new Canadian
legislation creates a situation where Alaskan pilots would be
acting illegally if they took off without a firearm and illegally
if they landed in Canada with one.
HB 127 exempts private pilots flying under an FAA flight plan into
Canada from carrying a gun. A few other changes regarding
emergency equipment to be carried were made in the House.
MS. JULI LUCKY, staff to Senator Rick Halford, sponsor of SB 100,
explained that most of the provisions of SB 100 were added to SCS
CS HB 127(TRA) but it differs from SB 100 in the following ways. A
section regarding survival rations was removed; provisions related
to communications were removed as no reference to communications
was made in the title of HB 127; and new language was added to the
civil liabilities section (Section 11), which Senator Taylor worked
on.
Number 2005
SENATOR TAYLOR expressed concern about lessening the life, health,
and safety aspects of the law. He pointed out that a flight from
Fairbanks to Dawson covers a significant distance and pilots will
be less well-equipped to deal with difficulties with this bill. He
said he understands the reasons for the compromise but he is
frustrated that it has to be done.
SENATOR DONALD OLSON told the committee that this bill will affect
two air taxi businesses he owns. He has been a pilot since 1969
and has had to make about 14 or 15 forced landings during his
flying career; he has needed the emergency gear he carries various
times. He noted that during the past 30 years, the air taxi
business has changed. Airlines used rudimentary Cessna 180s
whereas now multi-engine turbine aircraft are used. Regarding
searches, emergency locator transmitters were not required in the
early 1970s so searches could take months. Now that they are
required for air taxi businesses and private aircraft, search time
has been dramatically reduced. For those reasons, he supports this
bill. Senator Olson pointed out that some pilots are reluctant to
carry all required emergency gear, such as handguns, because of
vandalism.
MR. PAUL BOWERS, Director of State Aviation for DOTPF, agreed that
vandalism is a problem. He said that requiring pilots in Nome to
carry firearms onboard a flight might cause problems if Russian
airspace is opened up to private flights. He suggested making the
firearm requirement an optional part of emergency equipment or
rewording the bill so that it applies to any international flight
instead of Canada only. Mr. Bowers also suggested exempting large
airlines from Section 1 as they are already exempted by the FAA.
Regarding signaling devices, he suggested listing a small mirror as
an alternative device.
CHAIRMAN COWDERY announced that an error was made when adopting the
previous committee substitute and asked that a member move to adopt
the correct version.
SENATOR TAYLOR moved to adopt SCS CSHB 127(TRA), Version L, as the
working document of the committee. There being no objection, the
motion carried.
CHAIRMAN COWDERY continued to take public testimony.
MR. CARL SIEBE, airports engineer for the Statewide Aviation
Division of DOTPF, made the following comments. The current
statutes create enforcement problems for DOTPF by requiring it to
do selective enforcement. Foreign pilots fly into Alaska every
year and try to get their book rating, yet under federal law
foreign visitors to the United States are prohibited from carrying
weapons. In addition, licensed pilots with a felony conviction are
prohibited by other statutes from carrying weapons. Last, business
aircraft often stop in Alaska for a "pit stop" on their way to
other countries.
TAPE 01-14, SIDE B
MR. SIEBE said an aircraft cannot land in those countries with a
weapon so they typically do not carry weapons. He noted that
clarification of the original legislative intent of that provision
would help DOTPF to administer the statute. Regarding the survival
gear statutes in general, he pointed out the U.S. Air Force
survival school has excellent guidelines for survival gear, many of
which differ from Alaska's statutes. The Air Force requires that
survival gear be simple enough to be carried on the person. He
informed the committee the revised [1999] Canadian aviation
regulations require pilots to carry shelter, signaling equipment
and equipment to make potable water. He asked that whatever is put
forth in statute be reasonable and enforceable.
CHAIRMAN COWDERY said when he was flying in Alaska he carried a
sealed metal container filled with survival gear that could only be
used, under penalty, for an emergency. He asked if that same
concept could be applied to this bill.
MR. SIEBE said his first concern with that approach would be
enforceability. DOTPF aviation staff are extremely limited and the
State Troopers are also limited as far as what they can do.
CHAIRMAN COWDERY said most pilots want to conform so a random check
should suffice.
MR. SIEBE said the FAA doesn't want to get into the requirement for
carrying survival gear on small aircraft. If an annual inspection
was required, someone in DOTPF would have to enforce that statute.
CHAIRMAN COWDERY asked the next testifier his opinion of the
concept of a sealed packet of survival gear.
MR. BUTCH HALFORD said he is not well-versed on that element of the
proposed legislation.
SENATOR TAYLOR asked Mr. Halford to comment on the need for a
proposed amendment regarding occupancy related contracts and leases
at airports.
MR. HALFORD said the issue is one of liability. The Division of
Risk Management has recently required that anyone who enters into
an agreement with the state, whether it be through a contract or a
lease, must indemnify the state against any liability less than 100
percent of sole responsibility of the state. He pointed out if the
state was 99 1/2 percent responsible for a problem, the person who
entered into the lease would have to assume 100 percent of the
liability. He felt that is not reasonable and it is not common.
It would be far more reasonable to adopt a position of comparative
fault so that each party shares in the liability to the degree of
fault.
Number 1984
SENATOR TAYLOR informed committee members he has submitted a
proposed amendment (Amendment 1) to take care of part of that
problem. The amendment does not cover as broad a scope as Mr.
Halford would like on all liability issues, but it does adopt a
comparative fault policy on DOTPF-owned airports with lessees,
permittees and concession owners. He moved to adopt Amendment 1.
There being no objection, the motion carried.
CHAIRMAN COWDERY proposed to delete on page 5, line 17, of SCS CSHB
127(TRA) the reference to AS 02.35.110(b).
SENATOR TAYLOR so moved Chairman Cowdery's proposed amendment as
Amendment 2. There being no objection, the motion carried.
MR. TOM CRAFFORD, representing the Alaska Miners Association (AMA),
made the following comments about the civil liability provisions in
SCS CSHB 127(TRA). He noted he is a geologist by training. The
concerns of the AMA relate to the civil liability exposure of a
miner who, out of necessity, maintains an airstrip to support his
operations in rural Alaska. Under existing law, the miner may not
close the airstrip for public use, even though it is intended
solely for the support of the mining operations. As a consequence,
this opens the miner up to certain liability issues. The
provisions of Section 11 seek to provide some limitations of that
liability exposure to the operator of the airstrip but it still
leaves a paid employee, perhaps a grader operator, open to
liability. He pointed out that section does extend liability
protection to damage to an aircraft, which was suggested by the
AMA. He felt it would be appropriate to further extend that
protection to the contents of the aircraft.
MR. CRAFFORD explained that Section 11(b) extends the right to the
owner or operator of an airstrip located on private land to close
that airstrip by placing a large X on it that is readily visible
from the air. The AMA supports the concept but would like that
provision to apply to airstrips on public land also. Most miners
operate on mining claims and leases from either the federal
government or the state so the airstrips associated with those
operations are not located on private land. In addition, the
limitation on liability in subsection (b) should also be extended
to the contents of the aircraft.
Number 1730
SENATOR TAYLOR commented that, in his opinion, there is no risk of
liability whatsoever because no one has ever been sued in the
history of the state for negligence on the maintenance of one of
these remote airstrips. He explained that one lawsuit was brought
against a person who parked a large vehicle in the middle of a
runway and did not move when told to do so. A pilot had to make a
landing and damaged the aircraft. The pilot sued the vehicle owner
and won.
SENATOR TAYLOR said that since there is no risk of liability, he
structured this section so that it would only apply to a person who
had grossly acted. That section applies to the boss and any
employees, even though an employee was paid. The boss was not
being compensated for operating the airfield. Regarding the
ability to close the runway, that subsection was structured to be
limited to private landowners with the understanding that there are
operators who work off of public land that do not have the
authority to close a runway on public land. That is why two
separate subsections were created.
CHAIRMAN COWDERY asked Mr. Crafford if Senator Taylor's explanation
satisfied his concerns.
MR. CRAFFORD said it does in large part but the AMA is also
concerned about whether painting an X on a runway is sufficient to
close a runway. He noted the placer miners want to be able to
restrict access to a runway when they are absent during the winter
season to prevent vandalism. He agrees that it is arguable that
closing a runway with an X will be an effective deterrent.
SENATOR TAYLOR responded that litigation against private landowners
on access roads and trails did not occur until private landowners
tried to close them off. Instead of closing them off in a
reasonable fashion, 99 percent of those landowners strung a 1/2
inch diameter steel cable across the road and someone hit the
cable. He suggested that putting an X on the runway should keep 99
percent of pilots from landing. He added that this section will
not provide protection if a runway operator set up a "booby" trap.
MR. CRAFFORD said the AMA does not believe any operators should
obstruct a runway in a dangerous fashion but with this bill a miner
is prohibited from closing a runway with an X because the runway is
not on private land.
CHAIRMAN COWDERY asked if this bill has a referral to another
committee.
MS. LUCKY answered this is the last committee of referral before
the Senate Rules Committee. She explained that the previously
mentioned topics were considered by the sponsor. Regarding closing
a runway on public lands, the public's right to access must be
balanced with the problem of private property being vandalized.
The problem with obstructing runways on public lands is that they
may need to be used for emergency access. Another concern is that
people are not charting these runways because of the fear of
liability. Senator Halford wanted to give those people who are
maintaining runways but have not charted them because of the fear
of liability a little more incentive to do so.
SENATOR TAYLOR said he knows there was some concern about Amendment
1 and he hopes it does not burden the problem.
MS. LUCKY said the sponsor has no problem with Amendment 1.
SENATOR TAYLOR said one issue remains that could be addressed by
this legislation, and that is the Lake Hood/DOTPF problem of who
gets tie-downs. He hopes that Commissioner Perkins will address
that problem through regulation but, if not, this would be an
appropriate vehicle to deal with it.
SENATOR WILKEN noted that Amendment 1 seems to be a common sense
thing that people take at face value. He asked that someone from
the Division of Risk Management address Amendment 1 and tell the
committee why it has not been done before. He also asked to hear
from aircraft owners on Amendment 1.
CHAIRMAN COWDERY said due to a lack of time, he would hold the bill
and asked Mr. Thompson to address the committee.
MR. BRAD THOMPSON, Director of the Division of Risk Management,
said his division advises DOTPF as to contract terms of insurance
and indemnity. He noted he has been involved in negotiations for
the user agreement at the Anchorage international airport, as well
as the rural airports. Many discussions have taken place over the
allocation of fault. Comparative fault was a term used at the
Anchorage international airport negotiations. The state attempted
to revise and follow a form that was used by other airports in
other jurisdictions. The insurance requirements are very difficult
in Alaska today because of problems with the availability and
affordability of insurance for air carriers. The state has
negotiated a user agreement with comparative fault at the Anchorage
international airport and he intends to do the same at the rural
airports. SCS CSHB127(TRA) will force the state to do so.
The second section of the bill will require the state to evidence,
in regulation, the type and limit of insurance coverage required of
each class of aviation-related lease, permit and concession
contract. That's a difficult challenge. It is not something he is
trying to avoid, but the differences and disparity between the
users of the Anchorage international airport and lessees at the
rural airports is large. The state has tried to use general terms
in the past on comprehensive public liability so that it can tailor
the specific lease contract or the certificate of insurance used as
evidence for public liability to respond to individual activities.
There is no such animal as a comprehensive public liability
insurance policy. That term was used in a prior regulation but the
diversity of operations at a state airport in Alaska is so great
that it is a difficult challenge to put into regulation something
that will apply to everyone.
Number 960
SENATOR WILKEN asked if some airports in Alaska are maintained by
DOTPF.
MR. THOMPSON said they are.
SENATOR WILKEN asked if a grader was left on a runway and caused an
accident, whether DOTPF would be responsible for any portion of the
liability under current law.
MR. THOMPSON said it would.
SENATOR WILKEN asked for clarification as he thought Amendment 1
allowed for apportionment of liability where there is none today.
MR. THOMPSON explained that the former use agreement at the
Anchorage international airport did have a comparative fault
allocation as a term of the contract. Typically, the state does
not identify in detail in statute or regulation the terms and
conditions that will be used in negotiated contracts. The state
has responded to events when it is legally liable. If the state
has a contract with comparative fault, the state will participate
to the extent of its fault. He noted the state did suggest and
propose language so that the state would not begin to participate
unless it was at least 60 percent at fault. Many times the
proximate cause of an accident is the use and operation of
aircraft. Often, through creative pleading, allegations are made
against any party involved, including the state.
SENATOR WILKEN asked if Amendment 1 will have a fiscal impact.
MR. THOMPSON said any change to the state's risk is incorporated
into the overall state risk management program. The Division of
Risk Management does not submit a fiscal note when it has a slight
variation. The division is funded on a pay-as-you-go basis on its
self insured program because it too speculative to suggest a fiscal
note.
SENATOR WILKEN asked Mr. Thompson if he would like more time to
analyze the impact of Amendment 1.
MR. THOMPSON said Amendment 1 will create a significant challenge
since the Division of Risk Management will have to specify, in
regulation, the type and limit of insurance coverage required of
each class of aviation-related lease, permit and concession
contract.
SENATOR WILKEN questioned the need for Amendment 1.
Number 564
SENATOR TAYLOR asked if the lessee is now asked to indemnify the
state for all risk.
MR. THOMPSON answered that in a rural airport lease, the language
in regulation in the past required the lessee to assume liability
for certain things resulting from or arising out of any act,
commission, or omission by the lessee, his agents, employees, or
customers arising from or out of lessee's occupation or use of the
premises or privileges granted.
SENATOR TAYLOR asked if the lessee had to indemnify the state
against any liability for any of his activities.
MR. THOMPSON said yes, for any activities arising from the lessee's
use and operation.
SENATOR TAYLOR clarified that this legislation will only require
the Division of Risk Management to identify levels of risk against
levels of aircraft, users or lessees and to provide that the
division provide for apportionment of fault, as opposed to saying
the state will only step up to the plate and be responsible if,
after the lessee has gone to court, the lessee can prove that the
state is more than 60 percent liable.
MR. THOMPSON said the 60 percent apportionment was a proposed
allocation method in a contract negotiation that was not adopted.
He noted that most international airports require the users to have
strict indemnity and that major airlines that land in Alaska sign
similar terms and conditions in other locations. That is why the
division tried to pattern the proposed language in the Anchorage
international airport use agreement with provisions used in other
locations.
Number 295
SENATOR WILKEN said his concern lies with the smaller airports,
such as Fort Yukon.
MR. THOMPSON said if there is a loss involving the use of aircraft
arising from the state's responsibility, the state has paid for its
responsibility. The state is liable for activities performed by
its own employees and its contractors.
SENATOR TAYLOR noted the real issue is what the division requires
users of state airports to have in insurance policies regarding
state indemnification. He noted the state is self-insured while
the users have to buy an insurance policy. He said the level of
the risk the state is requiring the user to indemnify the state for
is what is in question.
MR. THOMPSON said the state does purchase airport insurance. It
self-insures for the first $250,000, but purchases excess liability
coverage to protect the state's assets and operations for a large
loss in excess of that amount. In the past, the regulation for a
lessee at a rural airport required: property damage coverage
arising from one accident in a sum of not less than $50,000; and
personal injury or death liability insurance not less than $100,000
per person and $300,000 per accident. Those sums were revised in a
regulation requiring limits of $1 million for each occurrence. He
pointed out there is subjective language for additional limits to
be required, depending upon the level of activity and the location.
MR. THOMPSON said the division is asking for a greater sum at the
Anchorage international airport. The insurance required in 1986
for all users was characterized on a per seat basis and was set at
$1,000,000. Minimum limits for propeller aircraft were set at $10
million and for jet aircraft at $20 million. Those requirements
were for Anchorage only.
SENATOR WILKEN asked if this bill with the amendment will help the
small air carriers and, if so, whether it will cost the state
anything to help them.
MR. THOMPSON said he does not think it will significantly affect
the state's risk or the state's cost. It may in the future with a
comparative situation. Regarding whether it helps the small
operator, he thought the division will be challenged with the task
of developing a matrix to address, in regulation, all of the types
and varied operations.
SENATOR WILKEN asked if an air cargo business will be able to show
this new law to its insurance company and expect its rates to be
lowered.
MR. THOMPSON said he does not believe any relief will be provided
to the aircraft owner/operator because of this bill. The division
checked with the markets as to the difference in rates depending
upon the use agreements; the users will get no extra premium or
relief if they sign something with a less favorable location.
SENATOR TAYLOR said with the exception of those that may be large
enough to be self insured.
MR. THOMPSON responded that is true of anyone who insures for the
first layer.
SENATOR TAYLOR said what they are talking about is that the state
self insures to $250,000, but it is requiring the other parties it
is dealing with to indemnify the state to $1 million. That also
provides another layer between the state and the liability. He
asked if that becomes another step between the state and the
potential claimant that the state will have to pay.
MR. THOMPSON said he thought Senator Taylor was confusing the
indemnity and the insurance. The indemnity is the hinge pin as to
allocating responsibility between two defendants. Whether one of
the defendants does or does not have the ability to pay their
obligation is a separate issue.
TAPE 01-15, SIDE A
MR. KIP KNUDSEN, ERA Aviation, informed the committee he sat on the
negotiating committee for the operating agreement at the Anchorage
and Fairbanks international airports. He said the issue of
comparative versus sole proximate cause has been an ongoing one.
The airlines that operated at those two airports up until now have
benefited from a comparative fault clause, which is fair. During
the negotiations, the state's position has been that it will
transfer all of its contracts over to a sole proximate cause
standard.
SENATOR WILKEN asked if all airports, other than Anchorage and
Fairbanks, will be excluded.
MR. KNUDSEN said regarding the rest of the state's airports, the
same language, regarding sole proximate cause, is contained in
draft regulations for Title 17. If those regulations are
promulgated, an operator working out of Venetie, for example, will
have to bear the financial burden of sole proximate cause if the
state is 99 percent responsible for that airport. Currently, most
leases contain an apportioned or comparative fault clause. He
explained that the Anchorage and Fairbanks airports are self-
financed; airlines pay the fees to pay the bill. If going to a
comparative fault system costs the airport system more money, the
airlines will pay it. Every one of the airlines involved in the
negotiations has come to the table saying it wants comparative
fault and will pay the burden because it will give them a break on
their insurance rates. Some airlines sign sole proximate cause
contracts at other airports but a majority of them have comparative
fault contracts.
Number 322
SENATOR WILKEN asked if the state will change the contracts from
comparative fault to sole proximate cause, which is the reason for
Amendment 1.
MR. THOMPSON said his role with DOTPF is advisory. His
understanding is that the state is trying to be consistent in both
the rural and Anchorage and Fairbanks airports. The state did
attempt to move to a stricter indemnity standard but he was told
the state is now moving to a comparative standard, which is
effectively the same standard that is proposed in the bill.
SENATOR WILKEN questioned whether the state will have to use the
apportioned standard under Amendment 1.
MR. THOMPSON said that is correct.
There being no further testimony, SENATOR TAYLOR moved SCS CSHB
127(TRA) as amended from committee. There being no objection, the
motion carried.
SB 195-OPERATION OF WHITTIER TUNNEL BY WHITTIER
SB 196-EXEMPTION FROM TOLL FOR WHITTIER TUNNEL
SB 197-PROHIBIT TOLL FOR WHITTIER TUNNEL
CHAIRMAN COWDERY announced that he would hear SB 195, SB 196, and
SB 197 simultaneously as they all have to do with the City of
Whittier.
MR. MATT ROWLEY, City of Whittier, said he will address two issues
related to the tunnel toll. The first is the impact of the toll on
the residents of Whittier and the second is the impact the toll
will have on Whittier's business community. Mr. Rowley commented
that Governor Knowles observed that the Whittier tunnel is the
city's lifeblood of commerce. Concerning the impact on Whittier's
residents, this is the only toll road in Alaska. The imposition of
this toll is unprecedented in Alaska and creates a potential burden
that is not imposed on any other community on the state highway
road system. Anyone who travels into or out of Whittier on a
regular basis under the current toll structure will pay $3,000 to
$4,000 per year in toll fees.
Regarding Whittier's economy, which relies on a 100-day season, the
Whittier business community is in direct competition with other
business communities around Anchorage, the Kenai Peninsula and the
rest of the state. The Whittier business community will be bearing
the added cost unfairly, which will adversely affect the business
community's ability to compete in an open market. Visitors who
travel down the Seward Highway only have so many discretionary
dollars to spend. If those travelers are faced with the prospect of
spending $15 to $40 to travel to Whittier, it is questionable
whether they will opt to come to Whittier. If they do spend the
$40, in the case of motor homes, that $40 will not be spent at
local businesses.
MR. ROWLEY said a second issue is the effect on passengers arriving
in Whittier via the marine highway system. Passengers coming to
Whittier to get on the ferry will be penalized because they will
have to pay the full round trip tunnel fare. Although the tunnel
has a different set of maintenance operation circumstances than the
highway, he believes it is the responsibility of the state to
maintain the tunnel as it does the highways.
MAYOR BEN BUTLER of the City of Whittier made the following
comments about SB 195. The City of Whittier believes it would make
good sense for the State of Alaska to give the city the ability to
control the tunnel to help with the operational expenses. The city
feels it impacts Whittier more than any other place in the state so
the city should have a voice in the matter. The city assembly has
discussed setting up an authority to operate the tunnel. An
authority would provide the ability to bring everybody to the table
to discuss the fee structure and it would prevent any one entity
from being in control of the tunnel.
Number 872
MR. DENNIS POSHARD, Special Assistant with DOTPF, made the
following comments on SB 195, SB 196, and SB 197. Regarding SB
195, the effective date of July 1, 2001 is problematic. Currently,
the design-build-operate contract signed by DOTPF for the
construction and operation of the tunnel runs through May of 2002.
Should DOTPF have to cancel that contract by July 1 of 2001, DOTPF
would be liable to the contractor for lost profits and other
expenses incurred. In addition, the design-build-operate contract
contains a warranty because it is a one-of-a kind new tunnel system
with a lot of complicated computer software programs, tunnel
controls, ventilation systems, and other features. Under the two
year operation agreement, the contractor has two years to identify
and correct any problems before DOTPF agrees to take over the
ownership. Should DOTPF cancel the contract in order to enter into
a contract with the city, that would pose a problem with the
warranty.
CHAIRMAN COWDERY asked if Mr. Poshard is suggesting changing the
effective date.
MR. POSHARD said he cannot say that there is a certain time at
which this bill makes sense, but he repeated the effective date of
July 1, 2001 causes problems for DOTPF. At a minimum, DOTPF would
request delaying the date until after the current contract expires.
Delaying the effective date will also allow time for a prospective
contractor to get the training required to operate a tunnel.
Anyone who works on the tunnel must be trained and qualified as a
firefighter and must take safety training that is unique to the
tunnel. Workers will also have to learn about the operations,
scheduling, and other matters related to the tunnel. That training
will take time. He maintained that the July 1, 2001 effective date
is not realistic.
MR. POSHARD said his next point is that although SB 195 requires
DOTPF to enter into a contract with the city, it does not speak to
what reasonable terms and limitations should be included. This
approach puts the state in a poor negotiating position as it will
give a potential contractor a lot of leverage. Although DOTPF
would contract with the City of Whittier to operate the tunnel,
DOTPF's contract with the Alaska Railroad Corporation (ARRC) for
the use of the tunnel might be problematic also. He was not sure
whether DOTPF could abrogate that responsibility to the contractor.
As a part of that contract, DOTPF has assumed a substantial amount
of liability for anything that occurs within the tunnel. DOTPF
will retain that contractual liability whether it contracts for the
operation of that facility or not. Therefore, DOTPF would be
forced to contract with the city for the operations of the tunnel
but still be on the hook for any liability, including liquidated
damages that might arise out of a delay of the train.
MR. POSHARD said DOTPF's biggest concern with both SB 196 and SB
197 is that the provisions related to tolls will cause problems
with federal agencies. He anticipates that federal agencies will
not allow a specific class of people to be exempted from paying
tolls. DOTPF pursued charging one rate on the marine highway
system for residents of Alaska and another rate for non-residents
but was prevented from doing so by the federal agencies because
federal money is used. In the case of the marine highway system,
the federal agency said charging different rates could trigger pay
back provisions associated with federal highway projects. He
anticipates that the same pay back provision would apply to the
toll collection portion of the tunnel. DOTPF expects to collect
$2.5 million in tolls during its first full year of collections.
That money was slated to cover the state's cost for maintaining the
tunnel. If SB 197 does move forward, those funds will have to come
from elsewhere and a fiscal note would reflect those changes.
CHAIRMAN COWDERY asked if any of the tolls that are collected go to
the ARRC now or are slated to in the future.
MR. POSHARD said he does not believe so.
SENATOR WARD asked Mr. Poshard to supply the committee with the
warranty language for the tunnel and an explanation of the specific
problems with that warranty if the operators are changed.
MR. POSHARD agreed to do so.
CHAIRMAN COWDERY commented that the City of Whittier has trained
firefighters and some Whittier residents currently work at the
tunnel. He announced that he would hold all three bills until some
of the concerns expressed today are resolved. He then adjourned
the meeting.
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