ALASKA STATE LEGISLATURE  SENATE TRANSPORTATION STANDING COMMITTEE  March 27, 2014 1:36 p.m. MEMBERS PRESENT Senator Dennis Egan, Chair Senator Anna Fairclough Senator Click Bishop Senator Hollis French MEMBERS ABSENT  Senator Fred Dyson, Vice Chair COMMITTEE CALENDAR  SENATE BILL NO. 197 "An Act extending the termination date of the Department of Transportation and Public Facilities' interim project authorization regarding naturally occurring asbestos; and providing for an effective date." - MOVED SB 197 OUT OF COMMITTEE SPONSOR SUBSTITUTE FOR SENATE BILL NO. 94 "An Act vacating a portion of the Copper Center - Valdez right- of-way; relating to rights-of-way acquired under former 43 U.S.C. 932 that cross land owned by a private landowner; and relating to the use of eminent domain to realign a right-of- way." - HEARD & HELD CS FOR HOUSE JOINT RESOLUTION NO. 10(FIN) Proposing amendments to the Constitution of the State of Alaska creating a transportation infrastructure fund. - HEARD & HELD PREVIOUS COMMITTEE ACTION  BILL: SB 197 SHORT TITLE: NATURALLY OCCURRING ASBESTOS SPONSOR(s): SENATOR(s) OLSON 02/24/14 (S) READ THE FIRST TIME - REFERRALS 02/24/14 (S) TRA 03/13/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/13/14 (S) Scheduled But Not Heard 03/20/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/20/14 (S) 03/25/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/25/14 (S) Scheduled But Not Heard 03/27/14 (S) TRA AT 1:30 PM BUTROVICH 205 BILL: SB 94 SHORT TITLE: RIGHTS-OF-WAY SPONSOR(s): SENATOR(s) OLSON 03/29/13 (S) READ THE FIRST TIME - REFERRALS 03/29/13 (S) TRA, JUD 02/26/14 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 02/26/14 (S) TRA, JUD 03/13/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/13/14 (S) Heard & Held 03/13/14 (S) MINUTE(TRA) 03/20/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/20/14 (S) 03/25/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/25/14 (S) Scheduled But Not Heard 03/27/14 (S) TRA AT 1:30 PM BUTROVICH 205 BILL: HJR 10 SHORT TITLE: CONST. AM: TRANSPORTATION FUND SPONSOR(s): REPRESENTATIVE(s) P.WILSON 02/15/13 (H) READ THE FIRST TIME - REFERRALS 02/15/13 (H) TRA, JUD, FIN 02/26/13 (H) TRA AT 1:00 PM BARNES 124 02/26/13 (H) Moved Out of Committee 02/26/13 (H) MINUTE(TRA) 02/27/13 (H) TRA RPT 6DP 02/27/13 (H) DP: LYNN, FEIGE, ISAACSON, GATTIS, KREISS-TOMKINS, P.WILSON 04/03/13 (H) JUD AT 1:00 PM CAPITOL 120 04/03/13 (H) Heard & Held 04/03/13 (H) MINUTE(JUD) 04/05/13 (H) JUD AT 1:00 PM CAPITOL 120 04/05/13 (H) Moved CSHJR 10(JUD) Out of Committee 04/05/13 (H) MINUTE(JUD) 04/06/13 (H) JUD RPT CS(JUD) 5DP 1DNP 04/06/13 (H) DP: FOSTER, LEDOUX, LYNN, PRUITT, KELLER 04/06/13 (H) DNP: GRUENBERG 02/04/14 (H) FIN AT 8:30 AM HOUSE FINANCE 519 02/04/14 (H) Heard & Held 02/04/14 (H) MINUTE(FIN) 02/28/14 (H) FIN AT 1:30 PM HOUSE FINANCE 519 02/28/14 (H) Moved CSHJR 10(FIN) Out of Committee 02/28/14 (H) MINUTE(FIN) 03/03/14 (H) FIN RPT CS(FIN) 2DP 7NR 03/03/14 (H) DP: T.WILSON, MUNOZ 03/03/14 (H) NR: GUTTENBERG, GARA, NEUMAN, EDGMON, HOLMES, COSTELLO, AUSTERMAN 03/13/14 (H) TRANSMITTED TO (S) 03/13/14 (H) VERSION: CSHJR 10(FIN) 03/14/14 (S) READ THE FIRST TIME - REFERRALS 03/14/14 (S) TRA, FIN 03/20/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/20/14 (S) 03/25/14 (S) TRA AT 1:30 PM BUTROVICH 205 03/25/14 (S) Scheduled But Not Heard 03/27/14 (S) TRA AT 1:30 PM BUTROVICH 205 WITNESS REGISTER DAVID SCOTT, staff to Senator Donald Olson Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Commented on SB 197 for the sponsor. ROGER HEALY, Chief Engineer Department of Transportation and Public Facilities (DOTPF) Juneau, Alaska POSITION STATEMENT: Explained why regulations allowing for the use of gravel aggregate containing naturally occurring asbestos had not been written yet. POKE HAFFNER, Assistant Attorney General representing DOTPF Civil Division Transportation Section Department of Law (DOL) Anchorage, Alaska POSITION STATEMENT: Testified that under AS 01.10.100, the authorizations DOTPF has provided under its interim authority are effective even though the interim authority expired at the end of December. KENT SULLIVAN, Attorney Civil Division Natural Resources Section Department of Law (DOL) Juneau, Alaska POSITION STATEMENT: Explained concerns the DOL had with SB 94. GEORGE HELMS, representing himself Anchorage, Alaska POSITION STATEMENT: Said he is a private land owner who supported SB 94. REPRESENTATIVE PEGGY WILSON, Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Introduced HJR 10, speaking as sponsor. TOM BRICE, lobbyist Alaska Laborers Juneau, Alaska POSITION STATEMENT: Supported HJR 10. SARAH GEARY, Legislative Coordinator Alaska Municipal League Anchorage, Alaska POSITION STATEMENT: Supported HJR 10. ACTION NARRATIVE 1:36:45 PM CHAIR DENNIS EGAN called the Senate Transportation Standing Committee meeting to order at 1:36 p.m. Present at the call to order were Senators Bishop, French, Fairclough and Chair Egan. SB 197-NATURALLY OCCURRING ASBESTOS  1:38:01 PM CHAIR EGAN announced SB 197 to be up for consideration. 1:38:12 PM DAVID SCOTT, staff to Senator Donald Olson, sponsor of SB 197, said this bill provides a one-year extension to the deadline for the Department of Transportation and Public Facilities (DOTPF) to adopt or prescribe a method of bulk testing for gravel or other aggregate material containing naturally occurring asbestos under AS 44.42.420(a). He explained that the underlying bill (House Bill 258), which passed in the 27th legislature, required DOTPF to put into place a system and requirements for this testing, but DOTPF has been unable to quickly establish those regulations. Section 1 of SB 197 is the extension for interim project authorization and Section 2 extends the immunity clause in the underlying legislation. 1:40:24 PM ROGER HEALY, Chief Engineer, Department of Transportation and Public Facilities (DOTPF), Juneau, Alaska, introduced himself. SENATOR FAIRCLOUGH asked why the regulations are not written. MR. HEALY answered that the program is unique within the nation and state, and the department ran into hiring difficulties originally, but someone has been hired and the draft regulations were issued last week. The department is are on schedule to hold the public hearings in the week of April 14 in Juneau, Fairbanks, and Ambler. SENATOR FAIRCLOUGH stated that Representative Joule, who passed the original legislation, was trying to make aggregate available in his community, but it, unfortunately, contains asbestos. She asked if DOTPF had done everything it could to protect the health of the individuals as well as the state and the region where the aggregate is being used. MR. HEALY explained that the original bill provided a period for implementation of interim regulations, which served the purpose of identifying designated areas within the state where this immunity would apply. Ambler is the one area that was designated. Under those interim procedures, the department received and approved a number of applications for projects from the Housing Authority and a few smaller projects including smaller DOTPF projects, namely the airport reconstruction. The interim provision allowed those applications and that project to go forward. 1:43:48 PM Regarding the overall health of the community as a result of these projects, the interim procedures and application approvals identified the provisions within the bill requiring the final product to have some type of coverage over the naturally occurring asbestos material that is identified. 1:44:37 PM POKE HAFFNER, Assistant Attorney General representing DOTPF, Civil Division, Transportation Section, Department of Law (DOL), Anchorage, Alaska, testified that under AS 01.10.100(a), the authorizations DOTPF provided under its interim authority are effective even though the interim authority expired at the end of December. The point of having the extension of the interim authority is in the event that there are additional requests for approval of either naturally occurring asbestos areas or a site- specific plan that comes in before the regulations can become final. SENATOR FRENCH commented that he wasn't a fan of this bill, but wouldn't stop it from going forward. SENATOR FAIRCLOUGH moved to report SB 194, labeled 28-LS1513\A, from committee with attached fiscal note(s) and individual recommendations. There were no objections and SB 197 passed from the Senate Transportation Standing Committee. 1:47:03 PM At ease from 1:47 to 1:48 p.m. SB 94-RIGHTS-OF-WAY  1:48:31 PM CHAIR EGAN announced SB 94 to be up for consideration; the sponsor is Senator Olson. [SSSB 94 was before the committee.] KENT SULLIVAN, Attorney, Civil Division, Natural Resources Section, Department of Law (DOL), Juneau, Alaska, said the DOL had concerns with SB 94. A major concern is that it would cause the state to relinquish, on a massive scale, the RS-2477 property interests that it currently possesses. From a legal perspective, this would make the RS-2477 a far less valuable and effective tool to the state of Alaska. 1:51:24 PM This bill would cause the typical width of a state RS-2477 rights-of-way (ROW) to be narrowed from 100 feet to 60 feet. It would also greatly limit the allowed scope of uses that can occur within an RS-2477 ROW, and it would freeze RS-2477 ROW to the condition, mode, and method of use that existed at the time of its repeal in 1976. Finally, it would effectively grant private property owners veto authority over the state's maintenance and improvement activities on RS-2477 rights-of-way across private property. All of these things would have an impact to the state's RS-2477 property rights. MR. SULLIVAN explained that the state's interest in RS-2477 can be viewed as a bundle of sticks, with each stick considered separately. The width of the ROW, the right to access streams or park or camp within the ROW, and the right to pull over and take pictures are all different sticks. The state's right to maintain and improve the ROW and the different modes of transportation that can be used are also different sticks. He said the state's current RS-2477 rights are very broad and encompassing and include many, many sticks. This bill would effectively strip many of those sticks away, thereby diminishing the state's property interest. Each of those sticks has value, many of which are hard to determine. However, one that can easily be determined is the reduction in the width of the ROW from 100 feet to 60 feet. He explained that currently there is more than 20,000 linear miles of RS-2477 rights-of-way in the state, about half of which occur across private property. DNR estimates that reducing the ROW width would have a fiscal impact to the state of $48.5 million. He emphasized that that is just one of the many ways that SB 94 would reduce the state's property interests in RS- 2477 rights-of-way. 1:53:13 PM MR. SULLIVAN said that another reason for concern is whether or not the bill would cause a problem with regard to the state's obligation to preserve the public trust and constitutional requirements to protect access to state land and resources. RS- 2477 is a valuable tool in achieving access to state land and resources and this bill would effectively give up a lot of rights that the state possesses in that regard. 1:53:33 PM SB 94 would also create a disparate patchwork of property interests. RS-2477s frequently cross state, private and federal land, and this would create a different set of rules that apply to private land from the rules that apply to federal land and state land. There would be different widths, different management rights and responsibilities, and different scope of uses that would apply to each of the underlying land ownerships. That is extremely problematic from a management perspective and from a public use perspective. He said that SB 94 arguably would promote litigation because it creates a mechanism whereby if a private landowner objects to maintenance or improvement activities by the state it would first have to go to mediation and if it didn't go to mediation it would have to go to court. The concern is that this would hold up the state's ability to do those things until that legal action took place. 1:54:54 PM MR. SULLIVAN noted that the state is currently involved in litigation with Ahtna Corporation over the Klutina Lake Road. Under SB 94 anywhere that the Klutina Lake road RS-2477 ROW overlaps a 17(b) easement, the state would give up its RS-2477 ROW and accept a 17(b) easement. The problem is that there are many distinctions between 17(b) easements and RS-2477 rights-of- way. In that situation the bill would create a ROW that's a mix of the two. He explained that one of the problems with the 17(b) easement is that they are much more restrictive; they are owned, possessed and managed by the federal government as opposed to the State of Alaska. The state doesn't have control, and the federal government can unilaterally terminate a 17(b) easement without the state's say-so. Another concern is that the 17(b) easement can only be used for travel. You can't stop along it and take pictures or have day-use sites or camp or launch boats or any of the typical things that you can sometimes do on an RS-2477 ROW. Mr. Sullivan emphasized that it would basically circumvent all of the state's defenses and assertions that it has made in that case. 1:56:51 PM GEORGE HELMS, representing himself, Anchorage, Alaska, said he is a private landowner who would be affected by SB 94. It appears that the state can unilaterally add arterials to these RS-2477s, meaning if additional trails had been created across private property that connect to an existing RS-2477 the state has asserted that it can unilaterally collect those as well. In many cases, the state's routing goes on what are actually privately funded improvements and the state would basically be taking these free of charge for public use. This includes the cabins and outhouses on private land. SB 94 would help to curb some of that behavior and protect the private property interests on the adjacent properties. For those reasons he said he supports the bill. CHAIR EGAN, finding no further comments, held SB 94 in committee. 1:59:53 PM At ease from 1:59 to 2:01 p.m. HJR 10-CONST. AM: TRANSPORTATION FUND  2:01:30 PM CHAIR EGAN announced HJR 10 to be up for consideration [CSHJR 10(FIN) was before the committee]. REPRESENTATIVE PEGGY WILSON, sponsor of HJR 10, Alaska State Legislature, Juneau, Alaska, said two other bills in the other body make up the concept behind HJR 10. She noted that those bills are sitting in House Finance. She asked to be able to present the entire package concept before drilling down into HJR 10. It would give the committee an idea how the fund could come together if the Constitution were changed to allow it. All methods of transportation in Alaska are very important to everyone in Alaska she started. 2:04:09 PM REPRESENTATIVE P. WILSON said Alaska's transportation system is aging; no major road has been built in this state in 30 years. With population growth comes congestion, especially since that growth is primarily in the Railbelt where the population has tripled, she said. She highlighted that the state ferries are well-maintained but cost a lot to operate and are aging. Alaska has over 250 state- owned airports that need upgrades and major maintenance. Barges can only travel up the rivers during the few warm months to bring the necessary gravel to maintain those unpaved airstrips. The state owns 25 harbors and is in the process of transferring them to municipalities, but the harbors are deteriorating and the municipalities often don't have the money for maintenance. 2:06:35 PM REPRESENTATIVE P. WILSON said our natural resources are not normally on the transportation grid or close to railroads, and access to them is needed in order to diversify the sources of revenue the state receives. 2:06:56 PM She said the state has a backlog of projects in excess of $20 billion, and over $700 million in deferred maintenance. The funding from both the state and federal government is not keeping up with the demand. Rural highway traffic across the U.S. is up 23 percent and continues to grow; vehicle miles traveled is up 35 percent and still growing, too. There is an estimated $65 billion loss due to traffic congestion every year and that loss is passed on to consumers. REPRESENTATIVE P. WILSON said federal fuel taxes are not keeping up with inflation. In Alaska and nationally fuel taxes can't keep up with demand. Revenues for fuel taxes aren't going as far because advances in technology result in cars going further on a gallon of gas. Alaska has not had an increase in motor fuel taxes since 1961, and at 8 cents/gallon it's the lowest in the nation. The next closest is Wyoming at 14 cents/gallon. 2:08:24 PM The new federal transportation funding program, MAP-21, focuses on national highways and safety which are great goals, but Alaska only has four national highways. The state used to have greater flexibility with regard to safety dollars, but now it is limited to roads with notable crash histories, and the national highway system funds are now driven by performance. Since the penalties for non-performance are painful, the state match could have to double or triple. The state may be forced to focus more on just keeping up than modernization and there are a lot of maintenance projects that don't provide new lanes or access, which is what Alaska needs. She said the Council of State Governments said states can expect to see a slowdown in payments from the Federal Highway Trust Fund as early as this summer and by next summer the fund will be empty. REPRESENTATIVE P. WILSON said the dwindling pre-MAP 22 allocations to Alaska make it difficult for DOTPF to fund Alaska highways and communities. To further complicate matters, 14 percent of the 28 percent that is allocated for the non-national highways is divided depending on population: 4.4 percent goes to cities that have more than 200,000 in population (only Anchorage qualifies); 5.4 percent is directed to cities with a population less than 200,000 but more than 5,000. That only reaches Sitka, Ketchikan, Juneau, Fairbanks, Wasilla, Kodiak and Kenai. The remaining 4.2 percent is for all the other roads in the state. A portion is flexible, but unfortunately it is consumed by increased mandatory requirements from the federal government like data collection, bridge inspections, geographic information mapping and other necessities leaving very little for project purposes. REPRESENTATIVE P. WILSON said Alaska has always had a serious problem with financing transportation infrastructure; there is a new transportation funding program in the works, but no one knows what that will mean. There will be no more money in the highway trust fund in 2015 and Alaska needs to bring its aging infrastructure into the 21 Century. 2:13:03 PM She emphasized that to access Alaska's natural resources the state needs to take responsibility for developing a transportation system that depends less on the federal government for Alaska's roads, harbors, airports, and railroads. Alaska needs to start planning for the future and that is not happening now. These problems are not new; they are just compounding, she said. She related that the House Transportation Committee started investigating these funding issues five years ago and for three years they listened to DOTPF, grass roots organizations, and transportation organizations identifying the challenges of all the transportation in this geographically diverse state. The committee flew to remote villages to view transportation systems and subsequently started its quest for a solution. The committee heard from the Alaska Municipal League (AML), the MatSu Borough that contracted an independent study on statewide transportation fiscal issues, and from national experts. The committee rejected fixing the problem by bonding, which would make future generations pay the debt. REPRESENTATIVE P. WILSON explained that the proposal in HJR 10 has three parts: the first establishes the dedicated Alaska transportation taxes and fees as a part of the Transportation Fund that was in existence at statehood. She noted that the Alaska Constitution contained two dedicated funds related to transportation: the Highway Fund and the Water and Harbor Facilities Fund. She said the Alaska Transportation Infrastructure Fund (ATIF) will combine these two funds. It requires a vote of the people to change the Constitution to reinstate the fund, but it will ensure that all taxes and fees pay for transportation activities. The second part of the proposal is to continue funding transportation as in the past. This is the key to making real progress and improving the transportation infrastructure. This is the one way to slowly chink away at the $20 billion backlog of projects and to have more 100 percent state funded projects. The third solution is to take advantage of both the cost savings and the time savings for state funded projects (projects without federal strings) while providing for growing transportation needs. This fund will move projects from planning to completion much faster and cost less. With state funded projects Alaskans will see the impact of state dollars in communities much sooner and they will cost less. For example, state funds were used in the construction of the Elmore Road Extension in Anchorage, which was completed in three years as opposed to the 7-10 years it would have taken going through the federal process. She said the intention is to provide a dedicated revenue stream that will allow more projects to be completed faster and cheaper in addition to the ongoing state and federal funds. 2:18:36 PM REPRESENTATIVE P. WILSON said the concept of funding ATIF is to endow it with a large initial investment. It will progress while maximizing federal dollars the state gets. She noted that she heard that a federal dollar is worth 75 cents compared to a state dollar. This endowment will be determined after the Constitution has been changed to reinstate the dedicated Transportation Fund. She highlighted that special use fees - vanity license plates, airport lease revenues - have been preserved. She said the plan would be to have the Department of Revenue (DOR) manage ATIF and appropriate it like the Permanent Fund (each year 5 percent of the market value averaged over the previous 5 years) and 5 percent of the profits would be reinvested into the fund and each year there would be funds available for appropriation - plus half of the taxes and fees collected from the previous year). Also coming out of the fund would be the expenses for the Division of Motor Vehicles, the expenses to administer and manage the fund, and costs for the Advisory Council. The fund would be self-sufficient and not require general funds for administration. The appropriations will follow the regular budgetary process and would be approved by both the governor and the legislature. She said the fund needs to be set up and then next year the projects can be prioritized. Her idea is that it could be handled by a two-panel, two-set process. The first step is to prove and decide if the projects are better suited for development using state funds or going through the regular STIP process, effectively deciding if it will be a federalized project or a 100 percent state funding project. The Alaska Transportation Panel (ATP) could be comprised of seven members: four public, the DOTPF commissioner, a STIP board member, and a member from the Alaska Infrastructure Commission (AIC). Members will serve four-year staggered terms; DOTPF would develop a set of guidelines to decide if a project would be best to be federalized or funded through ATIF. 2:22:21 PM REPRESENTATIVE P. WILSON said the intent is to take the politics out of the decision making process for funding projects. When the project has been selected for using ATIF funds it must then be reviewed by the AIC, which would prioritize ATIF selections using DOTPF criteria. This list will need to be completed by the Advisory Commission by October 15 each year and submitted to both the governor and the legislature to make sure the ranked projects get into the capital budget. She explained that ATIF projects are limited to capital transportation and major maintenance projects. The proposed constitutional amendment states that the appropriations from the fund must be used for transportation and related facilities that are designated by law. In the enabling statutes she proposed to constrain the fund to only be used on capital projects and major maintenance. This keeps the funds functioning as an additional revenue stream to what gets appropriated. The difference in the language from the constitutional amendment to the enabling statutes will give future legislators the ability to use the money from this fund for operations only in times of fiscal shortfalls. All the legislature would have to do is make a statute change, which would allow the fund to be used for operations. Further, she explained that anyone could submit a project for consideration: the state, a borough, the unorganized borough, a municipality, a community or a village. She said she envisions submission forms with enough information for the commission to rank the projects. Every project would be considered. The funds available for federalized projects, which are constrained to use the federal processes, could be no more than 20 percent of the fund. This is to incentivize more state-funded projects. REPRESENTATIVE P. WILSON showed a graph of examples and repeated that a statute change could allow the fund to be used for other things. The payout starts at about $83 million the first year and then $131 million the second year and rises to a rate of about $3.3 million in the early years. She reminded the committee that this is $103 million in addition to the existing operating and capital budgets. 2:25:19 PM She projected that putting in $2 billion now will grow to $5 billion in 20 years. That includes 50 percent of the revenue that had been deposited over the 20 years. This is what can be expected if the other two pieces of legislation in the other body pass, she said. 2:26:35 PM REPRESENTATIVE P. WILSON summarized that the ATIF would allow Alaska to plan for its future and get rid of the deferred maintenance list; it would leverage more federal funds and encourage more state projects to be done; and it would decrease dependence on the federal dollars. It would increase property values, employment, and Alaskans would see an increase in real wages. It would reduce the cost of production and noncommercial travel time. ATIF would improve access to the state's resources and reduce the cost of production resulting in an improved quality of life for Alaskans. Alaska has a majority of the nation's coast lines, but has significant challenges developing and maintaining the state's docks and harbors for access to fishing resources. The state has world class mineral deposits but few transportation corridors to get to those resources. ATF will improve access to those resources which will decrease the cost of production. She summarized the two major issues: declining funds, both federal and state, and an aging transportation system. This constitutional amendment needs to be on the ballot this November; let the people decide, she concluded. 2:30:14 PM TOM BRICE, lobbyist, Alaska Laborers, Juneau, Alaska, stated that HJR 10 will break down some constitutional barriers that exist in terms of long term transportation projects for the state. 2:31:31 PM SARAH GEARY, Legislative Coordinator, Alaska Municipal League (AML), stated that HJR 10 will help the state be ready to maintain and build new infrastructure to meet future needs. CHAIR EGAN found no further comments and held HJR 10 in committee. 2:33:32 PM CHAIR EGAN adjourned the Senate Transportation Standing Committee meeting at 2:33 p.m.