Legislature(2005 - 2006)SENATE FINANCE 532

05/08/2005 01:00 PM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Call of the Chair --
Moved CSHB 26(FIN) Out of Committee
Moved SCS CSHB 94(STA) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SCS CSSSHB 53(FIN) Out of Committee
Moved SCS CSHB 98(FIN) Out of Committee
Moved SCS CSHB 279(FIN) Out of Committee
Moved SCS CSHB 130(FIN) Out of Committee
     CS FOR HOUSE BILL NO. 279(FIN)                                                                                             
     "An Act relating to encroachments in the right-of-way of a                                                                 
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
BEN MULLIGAN, Staff to  Representative Bill Stoltze, recounted that,                                                            
during  the  first  hearing  on  this  bill,   Senator  Stedman  had                                                            
requested the  Department of Transportation  and Public Facilities'                                                             
input on certain provisions of the bill.                                                                                        
Senator  Stedman stated  his  desire was  to hear  the Department's                                                             
position regarding  the right of way  restrictions addressed  in the                                                            
JOHN  MACKINNON,   Deputy  Commissioner,   Highways  and   Aviation,                                                            
Department  of Transportation  and Public  Facilities, informed  the                                                            
Committee  that the  Department "welcomes  the  legislation",  as it                                                            
would  allow  the  Department  to conduct  activities  in  a  manner                                                            
desired.  While  the Department  currently  has  authority  in  this                                                            
regard, this bill  would clarify that authority and  improve current                                                            
regulations  by  implementing  a  six-part  encroachment  test.  The                                                            
Department  worked  closely  with both  the  Senate and  House  bill                                                            
sponsors  in the development  of the bill.  While the bill  has been                                                            
improved during  its transit through the committee  hearing process,                                                            
some additional  amendments would be desired. The  Department of Law                                                            
also supports the bill.                                                                                                         
SENATOR  CHARLIE HUGGINS,  Senate  Transportation  Committee  Chair,                                                            
explained  that Amendment  #1 would  align language  in HB 279  with                                                            
that of the Senate Transportation Committee's companion bill.                                                                   
[NOTE: Amendment  #1 was  adopted during the  May 7, 2005  Committee                                                            
hearing on this bill.]                                                                                                          
Co-Chair Green  noted that Amendment #1 specified  that in order for                                                            
an encroachment  to  be considered  it would  have had  to exist  by                                                            
January 1,  2005. It also removed  the liability on the part  of the                                                            
State for any damages.                                                                                                          
Senator Huggins concurred.                                                                                                      
AT EASE 7:17:06 PM / 7:18:10 PM                                                                                             
Amendment #2:  This amendment deletes  all material in Sec.  2(c)(2)                                                            
on page two, lines  ten and eleven of the bill and  replaces it with                                                            
the following.                                                                                                                  
     (2) The applicant has demonstrated the encroachment was                                                                    
     erected with the good faith belief it was lawful to erect and                                                              
     maintain the encroachment in its location.                                                                                 
The  amendment also  deletes  the  entirety of  Sec.  2(g) that  was                                                            
adopted in  Amendment #1  during the May  7, 2005 Committee  hearing                                                            
and replaces it with the following.                                                                                             
     (g) The state is not liable for damage to, or damage or injury                                                             
     resulting from the presence of, an encroachment in the right-                                                              
     of-way of a state highway.                                                                                                 
Co-Chair Wilken moved for the adoption of Amendment #2.                                                                         
Co-Chair Green clarified  that she was the sponsor of the amendment.                                                            
Mr. MacKinnon  explained  that the  proposed  Sec. 2(c)(2)  language                                                            
would  further "strengthen"  the intent  of the  term "good  faith".                                                            
This language change was suggested by the Department of Law.                                                                    
There being no objection, Amendment #2 was ADOPTED.                                                                             
Mr. Mulligan pointed  out that the Department of Law  also suggested                                                            
that the Sec.  2(g) language adopted in Amendment  #1 be replaced by                                                            
that proposed  in Amendment #2 in  order to "completely"  remove the                                                            
State from  any liability issues were  someone harmed as  the result                                                            
"of hitting an encroachment".                                                                                                   
Senator Hoffman  questioned the need  to hire four new right-of-way                                                             
agents as  depicted in the  Department's April  28 2005 fiscal  note                                                            
Mr.  MacKinnon  stated  that  considerable  effort  was  exerted  in                                                            
refining  the fiscal note;  initial expenses  were much higher.  The                                                            
note is  an estimate  based on  the average  number of encroachment                                                             
issues  the Department  deals with  on an annual  basis. The  actual                                                            
expense is  unknown as there is no  history pertaining to  the terms                                                            
included  in the bill.  Prior activity in  regards to encroachments                                                             
was simply  to have  them removed.  The note  anticipates that  one-                                                            
third  of  the  annual   encroachments  would  undergo   the  permit                                                            
application  process. The  note would  be lower  were fewer  permits                                                            
requested. The six-part  test would assure that permits would not be                                                            
"rubber stamped". Permits  would not be issued for things that would                                                            
place the  public in  an unsafe  position or  something "that  would                                                            
likely  be   hit".  A  thorough  determination   process   would  be                                                            
7:22:55 PM                                                                                                                    
Senator Hoffman stated,  therefore, that the question is whether the                                                            
end result of the bill would be worth the expense.                                                                              
Co-Chair Green understood  that the provisions of the bill would not                                                            
apply to commercial operations.                                                                                                 
Mr. MacKinnon  affirmed that it is not the intent  of the Department                                                            
to apply  the  provisions  of this  bill to  commercial operations.                                                             
However,  he  noted that  50  commercial  encroachment  permits  are                                                            
currently handled under  existing regulations, and that the existing                                                            
fee  structure  contributes   approximately  $107,000   annually  in                                                            
economic rent to the Department  including approximately $7,000 each                                                            
from four  cellular  phone towers.  Most of  the current  commercial                                                            
encroachments   involve   small   areas   whose  rent   amounts   to                                                            
approximately $100 per year.                                                                                                    
Mr. MacKinnon  stated that an application  fee would be imposed  for                                                            
the residential  application. Permits are issued for  five years and                                                            
could be renewed in five-year  increments. No annual rent is charged                                                            
for residential encroachments.                                                                                                  
Senator Stedman asked how quickly a permit could be cancelled.                                                                  
Mr.  MacKinnon replied  that,  were the  area required  for  highway                                                            
purposes, a  30-day cancellation notification  would be required  by                                                            
regulation.  Highway   needs  take  precedence  over   the  public's                                                            
privilege to use the right of way "granted through permit".                                                                     
Co-Chair  Green questioned  the reason  that  four new right-of-way                                                             
agent  positions  would be  required  since the  Department  already                                                            
conducts this activity.                                                                                                         
Mr. MacKinnon  responded that while  the Department could  currently                                                            
conduct this activity,  this legislation would implement  a new "set                                                            
of rules".  There would be  a higher application  fee and an  annual                                                            
fee. This  legislation would  also "differentiate"  the residential                                                             
encroachments from all the others.                                                                                              
Co-Chair  Green  noted  that  the fiscal  note  specifies  that  the                                                            
expenses would  lower in the out-years.  However, she asked  whether                                                            
it  would  be  necessary  to  retain  the  four right-of-way   agent                                                            
positions over time.                                                                                                            
Mr. MacKinnon  assured  that the  Department would  not endeavor  to                                                            
create  a   program  that  would   seek  to  identify  right-of-way                                                             
encroachments.  Right-of-way  encroachments would  be identified  in                                                            
conjunction  with the undertaking  of a highway  project. This  bill                                                            
would require  more work  than is presently  done in regards  to the                                                            
permitting  process. The  Department,  as property  managers of  the                                                            
right of way, would be  required to insure that the encroachments do                                                            
not change  during the  five-year  permit time and  become a  public                                                            
hazard.  Therefore a  review period  would also  be assigned  to the                                                            
five-year period.                                                                                                               
Senator  Dyson  voiced   appreciation  for  the  work   involved  in                                                            
developing  this legislation as it  relates to situations  occurring                                                            
in  his   election  district.   He  specifically   appreciated   the                                                            
Department's   comments  spoken   during   this  hearing.   Improved                                                            
regulations would be appreciated.                                                                                               
Mr. MacKinnon  allowed that  some in the  Department do not  support                                                            
this  action;   however,   the  clarifications   provided  by   this                                                            
legislation would be appreciated.                                                                                               
Senator Huggins stated  that Senator Dyson and Senator Stedman could                                                            
both attest  that,  when dealing  with areas  that have "restricted                                                             
terrain",  people tend to  build right on  the road. This  activity,                                                            
however,  makes it  difficult to  widen or  improve  a road. In  the                                                            
past, in  order to meet  the federal funding  guidelines, the  State                                                            
has  simply   bulldozed   down  right-of-way   encroachments.   This                                                            
legislation  would  "formalize  a  process" and  allow  citizens  to                                                            
petition for  a permit. He voiced  appreciation for Mr. MacKinnon's                                                             
efforts   in  spearheading   this  effort   in  a  cooperative   and                                                            
understanding  manner. Efforts have  been made to address  this in a                                                            
manner that is good for Alaskans.                                                                                               
Co-Chair  Green agreed  that  the process  has been  conducted  in a                                                            
different  manner  than it  was  approximately  ten years  prior  in                                                            
regards to a similar issue.                                                                                                     
Co-Chair  Wilken  moved  to  report   the  bill,  as  amended,  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
There being no  objection, the SCS CS HB 279(FIN)  was REPORTED from                                                            
Committee with  $418,500 fiscal note  #1, dated April 28,  2005 from                                                            
the Department of Transportation and Public Facilities.                                                                         

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