Legislature(2003 - 2004)
03/26/2004 08:03 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 327-POWERS/DUTIES DOTPF [Contains brief mention of SB 371.] Number 1312 CHAIR WEYHRAUCH announced that the next order of business was HOUSE BILL NO. 327, "An Act relating to the powers and duties of the Department of Transportation and Public Facilities; and repealing a requirement that public facilities comply with energy standards adopted by the Department of Transportation and Public Facilities." Number 1335 REPRESENTATIVE HOLM asked if the committee had previously adopted [CSHB 327(TRA)]. Number 1350 CHAIR WEYHRAUCH responded, "So moved, and I'll object for discussion purposes." REPRESENTATIVE HOLM, speaking as sponsor of HB 327, invited a representative from the Department of Transportation & Public Facilities to address the sectional analysis for the committee. Number 1372 JEFF OTTESEN, Director, Division of Program Development, Department of Transportation & Public Facilities, noted that Jim Cantor from the Department of Law is available to answer any legal questions that may arise. He stated his belief that the proposed legislation is important to the state; it potentially could ensure that transportation projects are accomplished in the coming years that otherwise might be subject to litigation. MR. OTTESEN, speaking to the prepared sectional analysis, noted that he would not address Sections 3, 6, and 7, which he described as housekeeping sections that are "the first look at DOT&PF's power and duties in 30 years" and the changes that have taken place in that time. He stated that the substantive portions of the bill have two purposes: One is to ensure that a specific road and bridge project known as the Iliamna to Nondalton is not subject to endless planning and litigation. He told the committee that this project has been started and stopped since the mid 1970s and currently is under a preliminary injunction, because the judge found that the state had not "followed a particular aspect of the planning of statute in question." The second [purpose], he noted, is to make the planning process more efficient by eliminating duplication between federal and state law and to [remove] provisions that subject other projects to the same type of litigation surrounding the Iliamna to Nondalton project. MR. OTTESEN stated that Section 1 is recommended to DOT&PF by the Department of Law. Section 1, particularly coupled with Section 8, ensures that "the law will directly apply to the subject project currently before the superior court in Anchorage." Section 2, he noted, applies to the statutory requirement that existed when [DOT&PF] was the Department of Highways, prior to the merger of "highways and public works." He said [Section 2] clarifies that the requirement for a program of projects is a piece of the overall program of projects now required at AS 44.42.050. Furthermore, it would change the timing from annual to periodic. MR. OTTESEN said Section 4 of the bill applies to the state's requirement for a multi-modal transportation plan and clarifies that the plan is comprised of many different documents - perhaps as many as 80 or 100. He emphasized that this is a key point. He offered examples. Furthermore, he noted that [Section 4] sets the standard for planning to be the federal standard, "primarily at [23 U.S.C. 135]." He noted that the committee packet includes "several documents that help describe just how significant those steps are." He noted one of the documents is from a Power Point presentation and describes the federal process. He offered his understanding that there is also a chart that describes the growth in federal law that applies to transportation planning. He stated that the transportation planning process is not static, but continues to become more cumbersome and process-driven. Number 1555 REPRESENTATIVE HOLM said Mr. Ottesen mentioned something to him yesterday that he thought may be of interest to the committee: He recollected that Mr. Ottesen had indicated that [the Transportation Equity Act: a Legacy for Users] (TEA-LU), which was recently passed through the [House Transportation Standing Committee] was over 500 pages in length. MR. OTTESEN replied yes. He explained that TEA-LU is the House version of the reauthorization of the transportation program at the federal level and is over 500 pages in length. The companion bill on the Senate side, known as [the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2004] (SAFETEA) is also over 500 pages in length. He said that he has read both bills from cover to cover and there are "hardly ten pages in them that [are] in common." Number 1592 REPRESENTATIVE BERKOWITZ asked how the permissive "may" in the language of state statute intersects with the requirement of 23 U.S.C. 135 and the supremacy clause of the U.S. Constitution. He said it seems to him that [the legislature] cannot optionally decided whether or not to follow federal law. MR. OTTESEN replied that the name was chosen because 23 U.S.C. 135 applies to surface transportation, primarily ferries, transit, highways, and trails. It does not apply to aviation, ports and harbors, and "some of the other modes that we're also responsible for." He stated, "We could not find comparable sections in federal law for those modes not covered by 23 U.S.C. 135." He explained as follows: Saying "shall" would then lead to the conclusion that we must apply the surface transportation (indisc. - paper shuffling) programs to modes of transportation which they are not directed to do. The truth is, if this entire section was extinguished from the state law, we would still have to comply with 23 U.S.C. 135, where it is applicable; it's simply a requirement of our federal funds. REPRESENTATIVE BERKOWITZ asked what would happen if 23 U.S.C. 135 is amended subsequently. He asked, "Aren't we adopting, by reference, the possibility of future changes?" MR. OTTESEN answered that's true. He said he thinks changes are anticipated. He said, "I know the bill that's in [U.S. Congress] right now will almost undoubtedly have changes in it from the current statutes at the federal level. I'd have to go back and look at that. I thought we'd said, 'as amended', or 'as modified'." REPRESENTATIVE BERKOWITZ stated for the record that he is uncomfortable with "adopting by reference" federal statutes or any other statutes that are subject to change. He added, "It seems to me it's an abrogation of our legislative power." MR. OTTESEN returned to his coverage of the sectional analysis. Section 5 of the bill, he noted, applies to eliciting a project slated to be set up for design and construction. He noted that those projects are called: the Statewide Transportation Improvement Program (STIP), regarding highways; the Transportation Improvement Program for urban areas (TIP), regarding programs prepared by Metropolitan Planning Organizations (MPOs) in Fairbanks and Anchorage; and the Aviation Improvement Program (AIP), regarding the use of aviation funding. He said the department basically wants to set up state law to comply with the several aspects of federal law. MR. OTTESEN turned to Section 8, which he said makes HB 467 retroactive to the time that AS 44.42 was first adopted. He explained that this section of statute was adopted by executive order, not as a matter of a legislative Act. He stated that Section 9 makes the effective date immediate. Number 1743 MR. OTTESEN pointed to a write-up regarding why the section on cost and benefits should not be mandatory. He returned to the Power Point presentation and the examples in the growth of laws that have applied to the federal side since 1977 "and earlier." He also indicated a matrix of "the requirement, the consultation, and public outreach in the transportation planning process." He noted that there are about seven or eight different laws that [the department] has to comply with, and virtually all of them apply to the STIP process. Many of the laws are new since 1977. He concluded, "Pointing to the federal process, or simply even extinguishing this particular law, would not leave us without a significant public process and planning requirement that we have to live with." Number 1775 CHAIR WEYHRAUCH stated his understanding that a specific case "brought [DOT&PF] here." Notwithstanding that, he observed that HB 467 is a broad bill that would change a lot of DOT&PF's policies. He asked, "If we're worried about the bridge or the road on that case, why don't we just deal with that?" MR. OTTESEN explained that he thinks the department fears that there are many other projects that are currently at risk. CHAIR WEYHRAUCH indicated that people have expressed concern to him that "this is abrogating the public involvement in a process that [DOT&PF] is engaged in." He mentioned cost benefit analysis and a broad array of projects. MR. OTTESEN, regarding cost benefit analysis, stated that the current law requires the department to do a cost benefit analysis for any new project or facility. He said, "It unfortunately leads to the law of unintended consequences." For example, he said last week the department considered vans for the elderly and the disabled. Every community has a different set of facts and costs and the department will have to do a cost benefit analysis in order to issue the vans to "those 12 report- paying communities." He explained that [doing the cost benefit analysis] will slow down the process, as well as cost more money. He said the department knows that whether there are 10, 100, or 1,000 seniors in a community, vans will be needed to transport them to various activities. He said, "Those are the kinds of projects that simply don't lend themselves to cost benefit analysis." He continued as follows: Trails, transit, ferries are never undertaken with cost benefit analysis. If we were to compare ferries to roads - where it's possible to build roads - we would almost inevitably come up with a completion that the road is the right solution, or that the ferry ... in Southeast is not warranted because a new road in another part of the state would have more benefits. So, it's a slippery slope we walk on when we require cost benefit [analyses] in all cases. Number 1862 REPRESENTATIVE BERKOWITZ said he would like to know more about the need for retrospectivity. MR. OTTESEN deferred to Mr. Cantor. JAMES CANTOR, Transportation Section, Civil Division (Anchorage), Department Of Law, told Representative Berkowitz that retrospectivity addresses a couple of issues. He continued as follows: One is on the Iliamna [to] Nondalton road, where costs were not ignored, but there was not a cost benefit weighing, because it's a rural project where it may not be susceptible to that kind of analysis. And the court said, "No, the state law says you must use cost benefit analysis." Now, the type of analysis that was done on that case was through the federal process - which ... is the 500 pages of ISTEA [Intermodal Surface Transportation Efficiency Act of 1991] or TEA-21 [Transportation Equity Act for the 21st Century - 1998], and now TEA- LU - that sends us through an inordinate amount of analysis and public process, but not cost benefit analysis. The cost benefit analysis is left over from this executive order, during the [Governor] Hammond administration, that became law. And so, part of the retrospectivity is addressed specifically to that case, to essentially overrule the judge and continue proceeding with that project. The remainder of the retrospectivity looks at projects that we thought were appropriately and legally conducted using federal money over the last 20 years, or so, and other ones that are still in the pipeline. It's kind of similar to what Mr. Ottesen was saying, [regarding] the types of incidences that are not susceptible to cost benefit analysis. REPRESENTATIVE BERKOWITZ asked Mr. Cantor to review the status of "the case that necessitates these actions." MR. CANTOR offered his understanding that the superior court issued a preliminary injunction on the basis of this cross benefit language, and the state has "gone back to comply with the order to conduct that analysis." Number 1968 JEFF PARKER, Attorney at Law, informed the committee that he is representing the plaintiffs in Trout Unlimited and Bob Gillam v. ADOT&PF. He noted that the state has advised the court "in its papers" that it will complete its cost benefit analysis by July. REPRESENTATIVE BERKOWITZ asked, "Why are we jumping in the middle of a court case?" MR. CANTOR offered his understanding that [DOT&PF] is concerned that "this case could be litigated forever." He noted, "This is the second piece of litigation on this project - it was first litigated in about 1996 or 1997." He indicated that there is concern that even the department's attempts to comply will be litigated. He stated, "The department believes that even its attempts to comply - and it hopes to comply fully - are ones that are unnecessary to the planning process, which is why they've backed up and taken kind of a broader view." In response to questions from Representative Berkowitz, he said the first case was a federal case and the second case has not yet reached the supreme court. He said there is not an appeal pending, because currently the case is still in court. He proffered that there was a preliminary injunction motion and there could be further proceedings, "depending on the next steps." REPRESENTATIVE BERKOWITZ asked how long the second case has been proceeding. Number 2053 MR. PARKER said the case has been pending for approximately 18 months, for discovery and pretrial practice. In response to a follow-up question from Representative Berkowitz, he noted that the motion was issued January 6, 2004, about two months after argument. He announced he would like to fully address the question of project delays. He noted that Mr. Ottesen had previously stated that the project has been delayed since the 1970s. In fact, he said, the department suspended the project in 1986 after doing a cost benefit analysis and concluding that [the project] was not economically justified. He indicated that the benefit cost ratio [from that analysis] "worked out at 0.26" and the department judged that it is not "normal" to build a project with a benefit cost ratio of less than one. He noted, "The costs were in excess of $12 million to complete the project; the benefits were calculated at $3 million." MR. PARKER CONTINUED as follows: Now also, in response to the large picture of what Mr. Cantor and Mr. Ottesen just said, if you look in a regional Southwest transportation plan, you'll see that the defendants, [DOT&PF], did cost effectiveness [analyses] on every ... new road project that is proposed in that plan, including the Williams Port, West side Cook Inlet to ... King Salmon and King Salmon to the Chignik (ph). And you can calculate and see the cost effectiveness dollars right there. What caught them up in this case was that they excluded this project from that cost effectiveness analysis. And if you read the court's opinion with a decision, which I think you have in front of you, you'll see that the court says that [the department] did cost effective [analyses] for every other project in the Southwest regional transportation plan. It similarly did it for projects - all new facilities - in the Prince William Sound regional transportation plan and in the Southeast Alaska regional transportation plan. And Mr. Ottesen can correct me, but I think it also did them for marine-improved new facilities and new vessels, when you look at those plans. So, the information has been put in front of you for many projects, and it is an excellent basis upon which to make decisions. And what this bill is: this bill eliminates putting that information in front of you. And what caught [the department] up in the [Iliamna to Nondalton] case is its affirmative decision not to do cost benefit [analyses], and I surmise it so decided because there was such a negative determination made in 1986 - that it had a 0.26 and you never build at less than one. Number 2207 DEE ESSERT testified on behalf of Sand Lake Community Council in opposition to amending the state's transportation statute, AS 44.42.050, which would eliminate the state's obligation to review the cost of improvements to existing roads and the cost and benefits to new roads. She explained the opposition was due to her experience with Anchorage Metropolitan Area Transportation Solutions (AMATS), the local MPO. She stated that the cost of AMATS projects have escalated because engineers and project managers have failed to consider hidden costs [resulting from] soils, environmental impacts, and property impacts. MS. ESSERT continued as follows: Why is the state seeking to eliminate a key statutory requirement at state level that would control costs, when it has initiated policies at the local level to address costs? The cost overruns for Anchorage projects initiated a change by state [DOT&PF], whereby the policy committee of AMATS is now required to provide quarterly obligation reports. As a project increases funding for a phase by more than $500,000, or 50 percent of the project phase, the city must approve the change. At the March 11 policy committee, members were asked to approve approximately $3 million to cover additional construction costs for C Street - phase three - due to extensive peat deposits in the right-of-way. If there had been a better cost benefit analysis of C Street, would the initial design or right-of-way have changed to allow for greater economy? I am also among many who oppose the coastal trail extension below the buffer in the refuge. The project has risen from $12 million to $37 million as the cost of the environment and private property is escalated. The [Draft Environmental Impact Statement] (DEIS) is an example of a politically motivated document and does not reflect accurate billable costs, because there is no objective cost benefit analysis. Engineers and attorneys who have considered the legal and construction costs estimate the cost in the $60- million to $80-million-range. House Bill 327 eliminates the public claim that costs and benefits must be considered. Projects in remote areas are subject to greater cost overruns. When federal dollars are declining and state resources are limited, it makes no sense to eliminate the only objective criteria applicable to transportation planning. With the new administration that is emphasizing resource development, transportation planning in remote areas must be cost-effective and accountable. Transportation projects in metropolitan areas must emphasize traffic flow, air quality, and safety, and serve vehicular traffic, public transit, and pedestrians; it must not be based on Bush's entrails exclusively. The state must allocate scarce resources for those projects that provide the greatest benefit for the most reasonable cost. With appropriate cost benefit criteria, a change in administration won't mean a bridge to nowhere .... In a time of declining revenues, the state must retain all statutory requirements that preserve an orderly transportation system by subjecting all subjects to a cost benefit analysis. I oppose HB 327 and its companion SB 371. Number 2345 CHAIR WEYHRAUCH asked Ms. Essert if there is any part of HB 327 that she does not oppose. MS. ESSERT replied that it is a complex bill. She said that when she began studying the bill, she thought it was about energy requirements, but when she got into it, she became more confused about certain sections of it. She indicated that she would [limit] her comments [to those parts of the bill regarding] cost benefit analysis. In response to a follow-up question from Chair Weyhrauch, she clarified where the Sand Lake Community Council area is. Number 2348 MARY WHITMORE testified on behalf of herself to address two sections in the bill regarding the issues of cost benefits and retroactivity. She stated her belief that HB 327 is really a "slap in the face to American tax payers," because it removes the economic analysis, [which is how] projects should be evaluated. TAPE 04-47, SIDE B Number 2378 MS. WHITMORE opined that economic competitive analyses of projects is really a driving force in how projects should be done, and also "it's the way our economy works." She explained, "You have to look at the competitive basis of projects." Ms. Whitmore said HB 327 is insulting and detrimental to every Alaskan, because it means that projects will not be considered for benefits and costs to the community, but will be influenced by whim and political clout. She said she'd like to know what the justification is for this. MS. WHITMORE continued as follows: I find that HB 327 is offensive, because it raises my suspicions of why a bill would be retroactive to 1977 - 27 years. This means that any person who's raised any objection to a transportation plan over the last 27 years is cut out if the basis of that dispute is based on cost. There's something very wrong with this approach. I think that HB 327 gives the green light to any project. No matter how poorly conceived it is, it could go forward. If it has political backing or clout, you never have to look at the measure [of] the project, as far as its benefits to the community and how much it's going to cost. MS. WHITMORE urged the committee not to pass HB 327 but, conversely, to bury it. Number 2302 BOB DOLL told the committee that although he is a former director of the Southeast region of [DOT&PF] and speaks from that viewpoint, he is testifying on behalf of himself. He asked the committee to withhold support from those portions of HB 327 that would delete the cost benefit analysis in transportation planning. He continued reading his testimony as follows: I make this request with some understanding of the dilemma you face. You're being asked, in this bill, to endorse bad government. You're being asked to lend your support to enshrining the terms "arbitrary" and "capricious," not as accusations to be avoided but as the standard for government decision-making. I have appeared before the committee only recently in connection with another such arbitrary and capricious decision, and my apprehension of such events is all too clear. And what is it that the bill seeks to avoid? I cannot imagine an economist with an ounce of imagination who could not make a positive cost benefit conclusion for a marginal project, if that were his tasking. Such "taskings" are accomplished routinely. Only with the most worthless proposals would he fail, and properly so. The current statute does not provide us with certainty regarding the value of a project, but it does offer some objective criteria for us to use in examining how our tax dollars are being spent. And given the general deference of courts to executive agencies which have complied with their own regulations and the statutes in effect at the time, it is difficult to understand why this requirement is so onerous. Federal dollars pay for the work and the time required is measured in months. In the timeline for most transportation projects that's inconsequential. As a transportation professional, I would not want to spend my time, or that of my staff, on a project which could not meet this simple test. As a citizen, I hope that public money will not be thus squandered on a project which could not meet that test. Number 2226 MR. DOLL pointed out that federal dollars pay for "this whole thing"; there is no imposition on the state for it. He continued reading his testimony as follows: The dilemma that I mentioned earlier arises because there are transportation projects currently under consideration that may not meet this test. Those projects represent some of the most cherished hopes and dreams of the residents of the locations where they're contemplated. If their ambitions are not realized, they would be, to say the least, disappointed. I would suggest to you that you could measure the value of the project inversely to the protest at having it examined closely. In fact, if a positive cost benefit ratio is as easily achieved as I've suggested to you, you may well wonder why anyone would object to the requirement, particularly since it does not require that the project be positive in its cost benefit analysis. It only requires that that information be produced so that the public and you, as members of the legislature, can see it as well. HB 327 endorses bad government and ... should not receive the committee's approval. Number 2150 CHAIR WEYHRAUCH asked Mr. Doll if he conducted cost benefit analyses for projects when he was director. MR. DOLL answered, "Yes, Mr. Chairman, with the exceptions that Mr. Ottesen has mentioned, we did, routinely. ... I believe that whatever difficulty [DOT&PF] may have with this, they have ample opportunity to overcome it." He suggested that if the department were to encounter a project that obviously doesn't require a cross benefit analysis - such as Mr. Ottesen's previously stated example of "the transit case" - it would be a simple matter to provide a two-page statement explaining that the analysis is unnecessary. He surmised that is all that would be required. Number 2128 CHAIR WEYHRAUCH observed that although part of the Southeast transportation plan indicated that it would be less expensive to have a road than a ferry, "we didn't move forward too quickly on the road north from Juneau." MR. DOLL responded that writing a cost benefit analysis for that project would be a task. He stated that he is not certain that anyone should ever do a cost benefit analysis that compares water transportation with land transportation, because the two are so different that the conclusions reached would be questionable. He added, "But I'm sure we could do it, and have done it." Number 2090 REPRESENTATIVE HOLM asked Mr. Doll why he didn't testify on this issue before the House Transportation Standing Committee. MR. DOLL responded that he had been unaware of [that committee's meeting]. Number 2074 REPRESENTATIVE SEATON told Mr. Ottesen that the second point made in the handout from Mr. Parker [available in the committee packet] states that passage of HB 327 would increase the likelihood that the state will have to refund money to the federal government. He asked Mr. Ottesen if he is familiar with that argument and would address it. Number 2053 MR. OTTESEN replied, "I don't know the reason he's making that statement, so no, I don't ... see the connection." REPRESENTATIVE SEATON suggested that Mr. Ottesen could review the handout from Mr. Parker and respond to the question at a later date. Number 2030 CHAIR WEYHRAUCH, in response to a question from Representative Berkowitz, stated his intention for the bill is to not take action on HB 327 until the next time the committee hears the bill. He revealed that a lot of people have voiced their concerns about the bill with him. He said he wants to air those concerns and "talk about how sensitive the sponsor is to amending it." Number 2006 REPRESENTATIVE BERKOWITZ noted that he has amendments in mind, as well. He stated his intent is to basically strip [the bill] down to "just the housekeeping." [HB 327 was heard and held.]
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