02/26/2002 03:20 PM House MLV
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON MILITARY AND
VETERANS' AFFAIRS
February 26, 2002
3:20 p.m.
MEMBERS PRESENT
Representative Mike Chenault, Chair
Representative Beverly Masek
Representative Lisa Murkowski
Representative Joe Green
Representative Pete Kott
Representative Joe Hayes
MEMBERS ABSENT
Representative Sharon Cissna
COMMITTEE CALENDAR
HOUSE BILL NO. 438
"An Act relating to motor vehicle registration plates for
disabled veterans; and providing for an effective date."
- MOVED CSHB 438(MLV) OUT OF COMMITTEE
HOUSE BILL NO. 324
"An Act making supplemental and other appropriations for
homeland security; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 438
SHORT TITLE:DISABLED VETERANS LICENSE PLATES
SPONSOR(S): REPRESENTATIVE(S)MCGUIRE
Jrn-Date Jrn-Page Action
02/15/02 2286 (H) MLV, STA, FIN
02/15/02 2286 (H) READ THE FIRST TIME -
REFERRALS
02/26/02 (H) MLV AT 3:00 PM CAPITOL 124
BILL: HB 324
SHORT TITLE:HOMELAND SECURITY APPROPRIATIONS
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
01/16/02 1972 (H) READ THE FIRST TIME -
REFERRALS
01/16/02 1972 (H) MLV, STA, FIN
01/16/02 1972 (H) GOVERNOR'S TRANSMITTAL LETTER
01/16/02 1972 (H) SPREADSHEET BY DEPT. COST
02/12/02 (H) MLV AT 3:00 PM CAPITOL 124
02/12/02 (H) Heard & Held
02/12/02 (H) MINUTE(MLV)
02/19/02 (H) MLV AT 3:00 PM CAPITOL 124
02/19/02 (H) Heard & Held
MINUTE(MLV)
02/21/02 (H) MLV AT 3:00 PM CAPITOL 124
02/21/02 (H) Heard & Held
MINUTE(MLV)
02/26/02 (H) MLV AT 3:00 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE LESIL McGUIRE
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of HB 438.
CHARLES R. HOSACK, Deputy Director
Division of Motor Vehicles (DMV)
Department of Administration
3300B Fairbanks Street
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 438 and answered questions;
conveyed DMV's preference of having one plate with the newer
design, rather than three different plates.
JIM POUND, Staff
to Representative Lesil McGuire
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions pertaining to HB 438.
ED KNOEBEL
P.O. Box 84
Glennallen, Alaska 99588
POSITION STATEMENT: Asked questions relating to HB 438;
expressed interest in the proposed license plate and the former
style of plate for Purple Heart recipients.
NANCY SLAGLE, Director
Division of Administrative Services
Department of Transportation & Public Facilities (DOT&PF)
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Explained Items 107, 115, 128, and [133-
135] of DOT&PF's appropriation requests encompassed in HB 324.
BRAD THOMPSON, Director
Division of Risk Management
Department of Administration
P.O. Box 110218
Juneau, Alaska 99811-0218
POSITION STATEMENT: During hearing on HB 324, answered
questions regarding war-risk insurance pertaining to [Items 133-
135].
ACTION NARRATIVE
TAPE 02-13, SIDE A
Number 0001
CHAIR MIKE CHENAULT called the House Special Committee on
Military and Veterans' Affairs meeting to order at 3:20 p.m.
Representatives Chenault, Masek, Murkowski, Green, and Kott were
present at the call to order. Representative Hayes arrived as
the meeting was in progress.
HB 438-DISABLED VETERANS LICENSE PLATES
CHAIR CHENAULT announced the first order of business, HOUSE BILL
NO. 438, "An Act relating to motor vehicle registration plates
for disabled veterans; and providing for an effective date."
Number 0112
REPRESENTATIVE LESIL McGUIRE, Alaska State Legislature, sponsor,
noted that HB 438 authorizes the [Division] of Motor Vehicles
(DMV) to create a special license plate for disabled veterans.
She offered her belief that this small step will send a big
message to the 900 disabled veterans in Alaska - a number she
said is estimated to grow next year alone by 50 to 70 percent
[50 to 70 registrations, according to DMV]. Bringing attention
to page 2, line 20, paragraph (16), she pointed out that
although the drafter had referenced a fee, no fee is currently
charged for disabled veterans for "any kind of registration."
Therefore, the proposed committee substitute (CS) [Version C]
corrects that drafting error.
REPRESENTATIVE McGUIRE told members she believes the $5,700
fiscal note from the DMV is miniscule and will be recouped. She
highlighted the DMV's estimation, in the fiscal note analysis,
of $3,000 in first-year revenue; according to the statistics,
she said, it appears 70 percent of the fiscal note will be paid
back within two years. She called it a "small investment to
make in a community that has invested a whole lot of their life
for us, in representing our country ... in foreign wars."
Number 0380
REPRESENTATIVE HAYES asked how many different Alaskan license
plates recognize veterans currently.
REPRESENTATIVE McGUIRE deferred to Mr. Hosack of the DMV. She
said there are roughly 812 [855 according to the fiscal note
analysis] disabled veterans using other types of [Alaskan]
license plates.
Number 0485
CHARLES R. HOSACK, Deputy Director, Division of Motor Vehicles,
Department of Administration, responded via teleconference that
currently 10 [categories of] plates, out of the 41 issued [by
DMV], are dedicated to veterans. He listed the following that
the DMV currently issues: "the regular veterans' plates for
every type of service"; "the disabled veterans, with the
wheelchair logo [or] without the wheelchair logo"; ex-prisoner
of war; Purple Heart; National Guard; and Pearl Harbor
survivors.
REPRESENTATIVE McGUIRE added that even though it seems there are
a lot [of plates already], "there is certainly a community that
we've heard from, of individuals who are interested in having
that special recognition and honor." She offered that in the
bill she'd tried to be fiscally responsible: although it
provides an option for a plate, there is a $30 fee, and it is
estimated that $3,000 will be recouped in the first year.
Number 0634
JIM POUND, Staff to Representative Lesil McGuire, Alaska State
Legislature, in response to Representative Hayes, explained that
this bill gives a disabled veteran an opportunity to have a
plate that is distinctively different from handicapped license
plates available in Alaska now: the proposed plate is red,
white, and blue; the current DAV [Disabled American Veterans]
plate is a standard gold-and-blue handicapped-type license plate
that simply has the letters "DAV" on it. In response to
Representative Murkowski about whether someone would want to pay
$30 for another plate, he explained that he'd been approached at
the VFW [Veterans of Foreign Wars] in Eagle River by some
disabled veterans whose interest was to have a red, white, and
blue plate that would be more noticeable and distinctive than
the current plate, and that would indicate those veterans had
served their country and given part of themselves in doing so.
Number 0819
REPRESENTATIVE GREEN brought attention to the fiscal note
analysis, which references a minimum of 900 pairs of plates, for
a cost of $5,750 [under the current license plate contract]. He
asked how often a change will be required and suggested that
eventually the plates will have to be replaced.
REPRESENTATIVE McGUIRE offered her understanding that the design
of the plate and logo is what requires the investment cost. She
reiterated that the estimated recoupment the first year is about
$3,000; she said it might even be more. She indicated that
although DMV is doing an estimate, Mr. Pound is doing one as
well, based on the "disabled veteran community"; she said it is
hard to match those numbers. She added her understanding that
"once the structure is in place, it's in place, and then it
would just be a matter ... of continuing to order as demand came
about." She deferred to Mr. Hosack for a further response.
MR. HOSACK explained that the minimum order of license plates,
"with the sheeting and aluminum," is 900 pairs, reflected in the
DMV's fiscal note at 5.7 [thousand dollars]. Noting that in the
last five years [DMV] has seen an increase of 50 to 70
registrations a year for disabled veterans' plates, he offered
that 900 pairs of plates will last [DMV] quite awhile. Because
some people with existing plates likely will switch over to the
new design, Mr. Hosack told members he'd estimated 100 [would
switch] in the first year; in succeeding years a small portion
of those 50 to 70 new registrants would opt for this plate,
rather than the gold-and-blue one [for which there is no
charge].
REPRESENTATIVE GREEN asked whether that will also take care of
the fact that the plates will wear out [eventually] and have to
be reissued.
MR. HOSACK agreed that someday there would be a need to reorder,
but said the 900 plates will take care of replacement plates; in
addition, [DMV] still has a quantity of regular gold-and-blue
plates. "And that will be picked up in our regular operating
expenses for license plates," he added.
Number 1054
REPRESENTATIVE MURKOWSKI asked Mr. Hosack when the gold-and-blue
plates were initially made available to disabled veterans, and
how many are left now. She surmised that an initial order of
900 [pairs] had been required for those as well.
MR. HOSACK answered that [DMV] has been issuing disabled-
veterans plates since at least 1980. Although he didn't know
when the last order was placed, he surmised it was probably in
the early 1990s. Of that order, [DMV] has about 800 plates left
- split between those with and without the logo.
REPRESENTATIVE MURKOWSKI expressed surprise that 800 plates are
left after ten years.
REPRESENTATIVE McGUIRE emphasized that this [new plate has been
requested by the disabled veteran] community. She conveyed her
understanding, from Mr. Pound's involvement with VFW, that
veterans don't see [the current plates] as a distinct honor or
as distinctive in any way, since they just say ["DAV"]. These
people are asking for these license plates to "give a
distinctive honor" so that when they are driving, they'll be
recognized and stand out.
Number 1283
REPRESENTATIVE KOTT acknowledged his involvement in many of the
discussions relating to this special license plate. He agreed
the existing plates aren't something disabled veterans will
clamor to have on their cars. He also surmised that the
estimate is low [in the fiscal note analysis] with regard to how
many disabled veterans would switch to these plates, or obtain
them in the first place. He conveyed his understanding that the
plates would only cost [DMV] $6.30 [each], and suggested it
would only take about 200 to break even. He said he believes
perhaps 100 people from the Eagle River VFW post would [buy
these new plates].
REPRESENTATIVE MURKOWSKI related her understanding that the lack
of use has been due to the design, then.
REPRESENTATIVE KOTT suggested [the proposed plates] are a good
deal for disabled veterans, giving them recognition at a very
cheap cost to the state - or no cost [after the break-even point
in reached].
Number 1396
REPRESENTATIVE HAYES expressed his understanding that this would
replace one of the ten [types of] existing plates [offered by
the DMV]. He asked whether there would be separate plates with
and without the wheelchair logo.
MR. POUND related his understanding that the handicapped logo
could be through use of a sticker, for instance, for the purpose
of being able to park in a handicapped-parking zone. He added
that the existing inventory of gold-and-blue plates would
remain; those are free to [disabled veterans] who request them,
and would remain so. By contrast, there is a $30 charge for the
proposed plates; that fee is to cover the cost.
Number 1479
REPRESENTATIVE HAYES asked whether there are [special] plates
for Gulf War veterans, for example; he said he could foresee
having a plate for veterans of the war on terrorism, for
example. He acknowledged that he was just curious.
REPRESENTATIVE McGUIRE answered, "We kind of have kicked around
some of those ideas, but I think in this particular instance
we've tried to amalgamate ... the category as much as we can."
These plates would be for disabled veterans, she said, whether
from the war in Afghanistan, World War II, or the Gulf War, for
instance; having [special plates for any of those] would go a
step too far, and the bill is a middle ground. She acknowledged
that perhaps a sticker system could be used for people to
delineate that they are disabled veterans from a specific war,
but she suggested it is too cumbersome for this bill. She
specified that her main concern, when the legislation was
presented to her, was to give an opportunity to honor disabled
veterans, "but through a fiscally responsible way."
[There was a brief discussion of "regular veteran plates," which
have a white background with light blue and red.]
REPRESENTATIVE MURKOWSKI offered her understanding that only the
disabled veterans ended up with the old-style [gold-and-blue]
plate "with nothing unique to it," because the Purple Heart
[plate] is unique, for example.
REPRESENTATIVE McGUIRE concurred, suggesting it might have been
an oversight [when the issue of special plates was brought to
legislators' attention previously].
Number 1780
REPRESENTATIVE KOTT noted that under the bill a [veteran] who is
70 percent [disabled will qualify]; he asked Mr. Pound whether
it is the same threshold used for a property tax exemption.
MR. POUND said he didn't know for a fact and would look into it,
but believed it to be 50 percent. He recalled that a friend had
obtained an exemption from the Fairbanks North Star Borough with
a 50-percent disability, to his belief.
REPRESENTATIVE McGUIRE responded that if that fact could be
ascertained, a committee substitute (CS) could be offered in a
subsequent committee to "marry" the two [percentages].
REPRESENTATIVE KOTT agreed that if it is 50 percent for [a
property tax exemption], it should be 50 percent [under the
bill]. He offered to have his own staff research it.
Number 1825
REPRESENTATIVE KOTT moved to adopt the proposed CS, version 22-
LS1503\C, Ford, 2/26/02, as a work draft.
CHAIR CHENAULT announced that [Version C] was adopted.
Number 1845
ED KNOEBEL testified via teleconference, noting that he is a
disabled veteran, "category 2" under the VA [Department of
Veterans Affairs]; he asked whether that specification would
qualify for the [proposed plate]. Mr. Knoebel pointed out that
many of these people are disabled and have a hard time getting
around, although they might not use wheelchairs. He also
indicated originally there was a colored Purple Heart plate,
whereas now the equivalent plate just has a Purple Heart stamped
on it; he said he'd been told that when [DMV] runs out of
plates, it will order the [former] type. He asked Mr. Hosack
whether [DMV] still has the old plate or will be issuing "the
new type of Purple Heart one."
MR. HOSACK answered that [DMV] has had a request from the
"Purple Heart or combat-wounded association" to change the
plate's design when it is reordered. "We will accommodate their
request," he told Mr. Knoebel, adding that he wasn't sure what
the [DMV's] current inventory was of that [stamped] plate.
MR. KNOEBEL specified that he'd be interested in another Purple
Heart plate - since he doesn't have one now and doesn't like
[the stamped version] - as well as this [proposed plate].
Number 2004
MR. HOSACK explained that the major portion of the cost for new,
specialty plates is for the design and "getting our manufacturer
to do a small quantity of the special sheeting." He affirmed
Representative Kott's calculation that it would cost "$6 and
something" [for each proposed plate]. With respect to the 800-
some plates currently on hand, those were done when Alaska had
gold-and-blue plates for all license plates, so there was some
economy of scale: they only cost $2.50 each, to his
recollection; thus the cost of the 800 plates in the current
inventory was about $2,100.
MR. HOSACK, although agreeing that the disabled veteran
community certainly deserves recognition, voiced DMV's concern
with having three different types of plates for a fairly small
community. He explained that existing [law] allows [DMV] just
to issue a special plate; it doesn't specify the design. He
told members:
So if it is the [desire] of the committee to go to a
new design, rather than having three different types
of plates, DMV would prefer just to take our existing
inventory of gold-and-blue plates, donate them to a
metal recycling, and just adopt a new design and have
one plate - the newer design - for all the disabled
veterans.
Number 2120
CHAIR CHENAULT thanked Mr. Hosack and asked whether anyone else
wished to testify. He then closed public testimony.
CHAIR CHENAULT called an at-ease at 3:52 p.m. He called the
meeting back to order at 3:55 p.m.
[A motion to move the bill out of committee was interrupted in
order to make the following amendment.]
Number 2255
REPRESENTATIVE KOTT moved to adopt conceptual Amendment 1, as
follows: indicating he'd just received word that it conforms to
the property tax exemption, he explained that Amendment 1 "takes
it [the disability requirement] down to 50 percent and basically
defines 'disabled veteran' meaning a person who is separated
from the military service of the United States under a condition
that is not dishonorable, who is a resident of the state, whose
disability was incurred or aggravated in the line of duty in the
military service of the United States, and whose disability has
been rated as 50 percent or more by the branch of service in
which that person served (indisc.) the United States Department
of Veteran Affairs or, (b), who served in the Alaska Territorial
Guard, was a resident of the state, whose disability was
incurred or aggravated in the line of duty while serving in the
Alaska Territorial Guard, and whose disability has been rated as
50 percent or more."
Number 2295
REPRESENTATIVE GREEN asked Representative Kott what he was
reading from.
REPRESENTATIVE KOTT said it conforms to the provision currently
in statute that allows disabled veterans to receive a property
tax exemption.
REPRESENTATIVE GREEN suggested, rather than adding the
foregoing, that a reference could just say "disabled veterans"
has the meaning in [the appropriate specified statute]. It
would keep it from being cumbersome.
REPRESENTATIVE KOTT agreed, provided the drafters would do it.
REPRESENTATIVE McGUIRE proposed that it might be simpler to make
a conceptual amendment on page 2, line 4, to insert "50" percent
instead of "70".
REPRESENTATIVE KOTT responded that [Representative McGuire's
suggestion] probably captures the intent, but offered his belief
that the definition of "disabled veteran" is [already in
statute], and agreed with Representative Green that referencing
it in the bill would keep it simple.
REPRESENTATIVE GREEN moved to adopt the foregoing [reference to
the definition of "disabled veteran" in statute] as a friendly
amendment to Amendment 1.
REPRESENTATIVE KOTT concurred, saying the drafters could figure
it out.
Number 2418
CHAIR CHENAULT asked whether there was any objection to
[conceptual] Amendment 1 [as amended]. There being no
objection, Amendment 1 was adopted.
Number 2429
REPRESENTATIVE HAYES moved to report CSHB 438 [version 22-
LS1503\C, Ford, 2/26/02], as amended, out of committee with
individual recommendations and the accompanying fiscal note.
There being no objection, CSHB 438(MLV) was moved out of the
House Special Committee on Military and Veterans' Affairs.
HB 324-HOMELAND SECURITY APPROPRIATIONS
CHAIR CHENAULT announced the final order of business, HOUSE BILL
NO. 324, "An Act making supplemental and other appropriations
for homeland security; and providing for an effective date."
Number 2490
NANCY SLAGLE, Director, Division of Administrative Services,
Department of Transportation & Public Facilities (DOT&PF), came
forward to discuss DOT&PF's requests [listed in the document
titled "Terrorism Disaster Policy Cabinet: Cost Estimates for
Highest Priority Recommendations," dated 1/14/02].
MS. SLAGLE first addressed Item 107 ["Northern Region Highways
and Aviation: Add municipal law enforcement officers for rural
airports to meet FAA's mandatory 15 minute response time"]. She
indicated the request is for FY 03 and a supplemental request
for FY 02, and is for contract officers. Although the total
listed is $1,596,000, Ms. Slagle pointed out that the department
had submitted amendments to OMB [Office of Management & Budget],
which the committee should probably receive tomorrow. The total
request for [Item 107] will be $158,100: $88,100 for FY 02 and
$70,000 for FY 03.
MS. SLAGLE explained that following the [terrorist] attacks on
September 11 there was a push by the Federal Aviation
Administration (FAA) to increase security at all airports. One
requirement was ensuring local law enforcement presence at
Alaska's 16 certificated airports - those that accommodate
airlines [carrying] 60 passengers or more: Barrow, Bethel, Cold
Bay, Cordova, Deadhorse, Dillingham, Gustavus, King Salmon,
Kodiak, Kotzebue, Nome, Petersburg, Sitka, Unalaska, Wrangell,
and Yakutat. This was in addition to the presence of the
National Guard, she indicated. She noted that the FAA has
specific requirements for those airports under Section 107 of
the C.F.R. [Code of Federal Regulations] with regard to
"aviation security items."
MS. SLAGLE said [DOT&PF] had done what it could using whatever
was available in communities, including contractual
relationships with [security firms]. Other requirements of
rural airports included a 300-foot setback for vehicles.
Because of the high cost, [DOT&PF] had requested and recently
received waivers from the FAA for Alaska's rural airports for
those two specific areas: the [local] law enforcement presence
and the 300-foot setback. Thus the department's [requested
amount] has dropped substantially because of no longer needing
to provide that 24-hour-a-day law enforcement presence at or
near those rural airports. In response to Chair Chenault, Ms.
Slagle explained that Juneau hasn't been included because its
airport isn't state-operated, but said to her belief it is
pursuing a waiver as well.
Number 2740
REPRESENTATIVE MURKOWSKI requested clarification about the
mandatory 15-minute response time and whether it has been
waived.
MS. SLAGLE answered that it means law enforcement people must be
within 15 minutes of the airport - available and close enough so
that if something happens at the airport, they can respond
immediately. That hasn't been waived. Rather, the full-time
law enforcement presence has been waived. There are some
projected expenditures for FY 03, Ms. Slagle pointed out. In
the Southeast Region, for example, there will be additional
costs for Gustavus, where [the state] has no law enforcement
presence now. There is considerable [summer] activity there
because of the tourist industry, and Alaska Airlines flies
there. Thus [DOT&PF] will have to hire [a security firm] to
provide that 15-minute [response time].
Number 2825
REPRESENTATIVE MURKOWSKI asked why Alaska Airlines personnel
posted at a security checkpoint [in Gustavus] couldn't be used
while the airport is open.
MS. SLAGLE answered that it is the state's responsibility and
that she doesn't believe Alaska Airlines would be willing to
provide the needed assistance beyond baggage screening and so
forth. The state also needs to check perimeters, to make sure
somebody is there to respond to any incident, and so on. "The
FAA guidelines are pretty specific on how we need to deal with
it and respond to those security items," she added.
REPRESENTATIVE MURKOWSKI noted that security people at the
airport aren't Alaska Airlines [personnel].
MS. SLAGLE concurred. With regard to the baggage-screening
personnel, she pointed out that at the [Ted Stevens] Anchorage
International Airport, for example, those are provided by the
airlines, not the airport, although in the future they will be
federal [employees]. It is different depending on location:
rural airports are different from Anchorage's airport.
Number 2918
CHAIR CHENAULT asked whether there is a federal mandate relating
to whether federal employees, for example, are being put in [as
security personnel], in stages, depending on the size of the
airport.
MS. SLAGLE pointed out that those [federal] requirements are
changing all the time, and that DOT&PF must keep up with them.
She added that on December 6, FAA also "did some changes to the
14 C.F.R." that required fingerprinting of all [individuals in
secure areas at both rural and international airports; she
indicated background checks are required for all those
individuals]. [The last portion isn't on the tape, but was
transcribed from the Gavel to Gavel audio file.]
TAPE 02-13, SIDE B
Number 2972
MS. SLAGLE mentioned that for airport personnel,
concessionaires, or others with access to secure areas,
"badging" is also required in the rural airports. Part of the
[funding] request is to add somebody who can deal with those
fingerprinting [and badging] requirements. Ms. Slagle reported
that [DOT&PF] has until December of this year to make sure all
existing staff have been fingerprinted and have had criminal
background checks; until now, there hasn't been that type of
security in rural airports, including badging or fingerprinting.
She added, "That is a requirement that FAA will not waive."
CHAIR CHENAULT offered his assumption that the Central Region
and Southeast Region will have some modifications and the same
issue.
MS. SLAGLE responded that it is part of the amendment [DOT&PF]
is submitting: for the Central Region, the total [request] for
FY 02 and FY 03 will drop to $129,000; although she didn't have
the amount for the Southeast Region, she said that also will
drop substantially.
Number 2863
MS. SLAGLE began discussion of Item 115 ["Have DOT/PF
maintenance personnel check key bridges on a daily basis and
block access to roads under bridges"], which she said has no
monetary impact. She explained that Item 115 is to have
existing maintenance people, as they are "traveling through" and
doing their appointed tasks on a daily basis, be able to report
any suspicious activities or anything out of the ordinary about
which they may need to contact law enforcement agencies. It
acknowledges another level of security that those maintenance
personnel need to assume in their regular job duties, including
the [need] to identify [suspicious activities or anything out of
the ordinary] to law enforcement or investigative agencies, and
to know what those may be. It may require some training, for
which [the department] has some federal dollars available.
Number 2795
REPRESENTATIVE MURKOWSKI asked whether right now [DOT&PF]
workers have a set schedule for going out and observing road
conditions, for example.
MS. SLAGLE affirmed that, mentioning the level of maintenance
that happens on the road system and the bridges; the latter are
critical, she said, and are more difficult to deal with than
regular roadways because of icing, for instance.
REPRESENTATIVE MURKOWSKI asked whether [the maintenance
personnel] have a daily route on an individual basis.
MS. SLAGLE questioned whether it would be on a daily basis, but
said [Item 115] would be part of their responsibilities. It
wouldn't take them out of a set routine or divert them from
their regular activities, but would ensure that those bridges
and areas are being observed a little more carefully. Prior to
September 11, it wasn't even an issue, she noted.
REPRESENTATIVE MURKOWSKI requested clarification, since [Item
115] says the bridges are to be checked on a daily basis. She
said it sounds as though it would be in addition to regular
duties.
MS. SLAGLE agreed it would be an addition because, she was
assuming, they would have to stop and look at a particular
bridge, for example, which takes time [away] from what they
normally would do. "But if they're going by the bridge, ... it
certainly seems a reasonable thing for them to do," she added.
Number 2664
MS. SLAGLE addressed Item 128 ["Port of Anchorage Access Road
Security: Provide increased security at the Port of Anchorage
Access Road"]. She explained that it was "felt that there was a
requirement" for dealing with increased security into the
Anchorage port facility for road traffic. The road to the port
facility, a [DOT&PF] road, is part of the NHS [National Highway
System]. Probably in early October, before the freeze-up, the
guard shack for that area was moved and a loop was made so that
if vehicles going up to the guard shack were turned back, those
vehicles could leave. She offered her understanding that the
port had provided the shack and moved it, whereas [DOT&PF]
basically did the roadwork; she indicated that is what Item 128
pays for. Referring to the amendment she'd discussed earlier,
she pointed out that part of it reduces [Item 128] from $30,000
to $17,000, which reflects [DOT&PF's] actual expenses in
relation to this piece of road.
Number 2584
REPRESENTATIVE MURKOWSKI pointed out that she has been following
this particular issue because it is "just below my district, and
we've kind of helped them with ... the security component of
it"; she said that seems to be working out just fine. However,
one of her concerns is that this is an "interim fix." She
explained that there is a need to tighten security into the port
area, and yet "the folks within the port," and certainly the
truckers, have been clamoring for years for additional access
into and out of the port. After September 11, there has been a
need to restrict it despite the desires of [the truckers, for
instance] to have another road, a tunnel, or [the ability to]
"cut down through the neighborhood." She added, "They're
recognizing now that the security component ... is very real and
very legitimate." She continued:
But now we're talking about the possibility of a Knik
Arm crossing, and the crossing will come right through
that port area. And it's not really an issue ... for
this particular measure that we have in front of us,
but I guess I'd just encourage the department to
always be conscious of the fact that we do have a
security issue down there in the port. And if we put
a major thoroughfare right through the port, you're
going to have some real serious security concerns.
Number 2498
MS. SLAGLE began discussion of Item 133 ["Central Region
Highways and Aviation: Purchase short-term War Risk Insurance
for rural airports and analyze need for longer term insurance"].
[This discussion also involves Items 134 and 135, relating to
the Northern Region and Southeast Region, respectively.] Ms.
Slagle explained that within days of September 11, the insurance
industry canceled war-risk and terrorism-related liability
insurance coverage for all airports. The state administration
believed it was important to continue to have that coverage,
however; once it became available, she indicated, the state
purchased [the coverage] for this year. She deferred to Brad
Thompson to answer questions.
CHAIR CHENAULT requested that Mr. Thompson explain not only what
the war-risk insurance is, but also what it has cost the state
in the past and will likely cost in the future.
Number 2434
BRAD THOMPSON, Director, Division of Risk Management, Department
of Administration, explained that his division operates and
manages the state's self-insurance program; it also purchases
excess catastrophe-level [insurance] for the huge potential
liability arising from "our operations" for airports, aircraft,
and the spaceport. Prior to September 11, [the state] had $500
million of liability insurance protection for which it paid
$589,000 for the current fiscal year. That is just one of the
"excess-insurance policies in our program," he said. Another is
comprehensive marine insurance for the marine highways, which
has a $250-million liability limit for the value of the vessel
and injury to the crew or passengers; he indicated an
approximate cost of [$1,200,000] for that. He explained:
We purchased the war-risk [insurance] back. And the
thing you have to understand is, for those two
specialty insurances, there is an endorsement added
in, as a normal course in any renewal, for the acts of
terrorism, sabotage. And it's characterized or
labeled "war risk." ... It doesn't become effective if
you go to war. If the U.S. actually engages in war
with a foreign power, we lose - that's an automatic
termination.
The underwriters, as a policy condition, have the
option of issuing a notice of cancellation. Now,
these insurances are placed with Lloyd's of London,
other "major aerial syndicate" London companies, and
international reinsurers. All of the aviation and
marine insurance, post 9/11, including these war-risk
endorsements, were canceled - not just for airports,
[but for] all aircraft manufacturers, all airline
operators. Congress passed a piece of legislation to
protect the aircraft [manufacturers] and the aircraft
operators, with a protection provided by the federal
government if they were canceled and not able to renew
the war-risk [insurance], and, in fact, continues to
protect them above $100-million limits with financing
from the U.S. Treasury for those extra, increased
premiums.
The airports were given no such protection; the
airports attempted to get added into that airline
transportation safety Act, unsuccessfully. That left
the airlines, when it was available, with the dilemma
of purchasing back the protection that [they] had.
And, again, it's the liability insurance: if someone
was able to gain access to an aircraft through one of
our airports, do damage to the aircraft, somehow
sabotage that aircraft, we would be, likely, named
defendant on a liability claim, as is Logan Airport
for those flights arising on 9/11.
Number 2255
So we purchased back two layers - a primary layer of
$50 million and an excess layer of $100 million - for
the airport program; ... the first primary layer was
214,000 [dollars], and the second was 265 [thousand
dollars]. We [are] now protected again for liability
arising from not just the airports, but our aircraft.
Our aircraft are fairly small in size compared to
airlines, et cetera. But our major exposure is our
airports - the security and the maintenance and
operation of those airports. So we bought [it] back
for the airport, and we also did the same thing for
the marine highways.
MR. THOMPSON concluded by indicating the detailed budget
itemizes those charges incurred to date for [FY] 02, and
projects those for [FY] 03; it is broken out for the major
airports at Anchorage and Fairbanks, and then "the rural or the
regional cost allocation."
Number 2190
CHAIR CHENAULT offered his understanding: before September 11
there was $500 million in war-risk insurance at a cost of
$589,000, whereas today there is $150 million [of insurance] at
an approximate cost of $500,000.
MR. THOMPSON responded with the following clarification:
We have $500-million limits, except for today. So if
our maintenance somehow [inappropriately] leaves a
piece of equipment on the runway at Anchorage
International [Airport] and a jet goes down, we have
that available to us. That's not arising from an act
of terrorism [or] sabotage, ... that other category
labeled "war risk," which would be the terrorism-
sabotage-type activity - intentional damage. That
would be limited to $150 million today, ... at an
additional cost of $480,000.
Number 2140
REPRESENTATIVE MURKOWSKI requested confirmation that when the
[war-risk insurance] was canceled, the state basically lost the
$589,000 it had paid in already.
MR. THOMPSON replied:
We retained the coverage that we purchased. But in
the policy form is a condition that subject to certain
major world events, or on their own initiative, they
can cancel this specialty protection. During the Gulf
War, we were issued a notice of cancellation - we were
able to purchase that back for a very small amount,
under $25,000; that was not something that we brought
to [the legislature's] attention - we just bought it
back as a matter of course.
These costs were the greater part of what we initially
paid for the program. ... We paid on a per-$100 rate
for the program, pre-9/11, 12 cents per $100; we paid
32 cents to buy back the war-risk [insurance].
MR. THOMPSON highlighted other airports as an example: for
$150-million limits, Atlanta paid $3 million; LAX [in Los
Angeles] paid $1.8 million for $50 million worth of coverage;
and Chicago paid $10 million for $150 million [of coverage]. He
cited the figures, on a per-$100 basis, of $3.60, $2.00, and
$6.67 [respectively]. Mr. Thompson indicated that the more
major an airport is, and the more toward the East Coast, the
higher the rate. He added, "We paid a different rate for the
two pieces: the 50 million [dollars] and then the 100 [million
dollar] excess, but it averaged 32 cents per $100 of
protection."
CHAIR CHENAULT offered his understanding that the "buy-back" was
just for the war-risk component that had been taken away.
MR. THOMPSON specified that it is just that component for war-
risk [insurance] that is being presented in [Items 133-135].
Number 2025
REPRESENTATIVE MURKOWSKI suggested the risk in rural areas
wouldn't be nearly as high as in Anchorage or Newark [New
Jersey]. She surmised that for smaller airports in the
Southeast Region, there would be a much better rate because of
the lower risk, which would be the reason for the smaller dollar
amount being requested there.
MR. THOMPSON answered:
Quite frankly, ... I think that's purely an allocation
throughout the segments of the operating budget of
[DOT&PF]. There's no different rate from the
underwriter. We have, for our risk, a single rate:
it protects all of our aircraft, all of our airports,
and our spaceport, quite frankly.
REPRESENTATIVE MURKOWSKI asked how short "short-term" is.
MR. THOMPSON answered:
This purchase of the 480 [thousand dollars] was to
replenish, to 150 [million dollars], what we had,
through the end of this term. The projection for [FY]
03 is also ... presented, ... and we do not know with
any certainty what the costs will be on renewal ... at
7/1 [the beginning of the next fiscal year].
AN UNIDENTIFIED SPEAKER asked whether this represents seven or
eight months' worth of coverage. [There was no response.]
Number 1943
REPRESENTATIVE MURKOWSKI referred to discussion in the House
Labor and Commerce Standing Committee [which she chairs] of the
widespread increase in insurance costs as a consequence of the
September 11 events. She suggested this particular instance is
one "where they get you coming and going." She asked whether
any assistance is being discussed on the federal level.
MR. THOMPSON offered his belief that there is still an effort to
seek a federalized program to assist the total reinsurance
market - not just for aviation or marine insurance. He said
other countries have done so following September 11, "addressing
airports." While Canada stepped in at the federal level and
extended an umbrella to airport operators, the United States did
not. Noting that he has information from all over the world,
Mr. Thompson said many [countries provide this] on a national
level to address terrorism, especially the European countries,
which have experienced [terrorism] for years. Emphasizing that
it is a very difficult issue for the reinsurers, he concluded,
"But any certainty - I don't know."
Number 1864
MS. SLAGLE returned attention to Item 107, the law enforcement
presence, fingerprinting requirements, and so forth. She
informed the committee that Congress had passed some
appropriation bills; specifically, $175 million was made
available for operating expenses for small, rural airports in
the U.S. as a result of September 11. "We have applied to FAA
for a portion of that," she reported. "And it looks very
hopeful that we will ... may be receiving federal dollars to
cover these expenses. And so we may be coming in with an
amendment to change these from general fund to federal - just so
you know that we are pursuing that."
Number 1806
CHAIR CHENAULT asked whether there was any idea of an amount
[DOT&PF] would be looking at receiving, in federal funds
overall, not just for this particular item.
MS. SLAGLE said she didn't have that figure. She pointed out
that the items for the Anchorage International Airport are quite
large, and she said most have been identified [by DOT&PF] for
federal funding. She added:
Some of them ... we've requested specifically from
another $1.5-billion appropriation bill that the
Congress has also, which would include operating and
capital expenditures. And so we're pursuing that; ...
I believe June is the deadline for that. ... If we
don't get that, then there's also ... the ability to
use some of our airport improvement program funding
towards ... some of these items. So I don't know
exactly how much we could anticipate from the federal
government, but I think a large portion of it could be
covered, specifically for the airports.
CHAIR CHENAULT thanked testifiers and asked whether there were
further questions; none were offered. [HB 324 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Military and Veterans' Affairs meeting was
adjourned at 4:35 p.m.
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