02/06/2014 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB271 | |
| HB260 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 260 | TELECONFERENCED | |
| *+ | HB 271 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 6, 2014
1:08 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Doug Isaacson, Vice Chair
Representative Eric Feige
Representative Lynn Gattis
Representative Craig Johnson
Representative Bob Lynn
Representative Jonathan Kreiss-Tomkins
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 271
"An Act making a special appropriation to the University of
Alaska Fairbanks for a study of the feasibility of constructing
a railroad between Fairbanks and Deadhorse; and providing for an
effective date."
- HEARD & HELD
HOUSE BILL NO. 260
"An Act relating to transportation of commercial motor
vehicles."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 271
SHORT TITLE: APPROP: RAILROAD FEASIBILITY STUDY
SPONSOR(s): REPRESENTATIVE(s) ISAACSON
01/22/14 (H) READ THE FIRST TIME - REFERRALS
01/22/14 (H) TRA, FIN
02/06/14 (H) TRA AT 1:00 PM BARNES 124
BILL: HB 260
SHORT TITLE: COMMERCIAL MOTOR VEHICLE EXCEPTION
SPONSOR(s): REPRESENTATIVE(s) ISAACSON, KELLER
01/21/14 (H) PREFILE RELEASED 1/17/14
01/21/14 (H) READ THE FIRST TIME - REFERRALS
01/21/14 (H) TRA
02/06/14 (H) TRA AT 1:00 PM BARNES 124
WITNESS REGISTER
DANIEL M. WHITE, Ph.D., Associate Vice-Chancellor for Research
University of Alaska Fairbanks;
Director, Institute of Northern Engineering
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 271.
CLARK HOPP, Vice-President
Engineering
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 271.
BRENDA HEWITT, Staff
Representative Doug Isaacson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the sponsor, answered
questions during the discussion of HB 260.
DAN SMITH, Director
Division of Measurement Standards & Commercial Vehicle
Enforcement
Department of Transportation & Public Facilities (DOT&PF)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 260.
ANMEI GOLDSMITH, Assistant Attorney General
Transportation Section
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 260.
BILL BROWN, President and General Manager
Bob's Services
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 260.
STEVE ANGEL, Fleet Sales Manager
Seekins Ford-Lincoln
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 260.
ACTION NARRATIVE
1:08:26 PM
CHAIR PEGGY WILSON called the House Transportation Standing
Committee meeting to order at 1:08 p.m. Representatives Feige,
Gattis, Johnson, Isaacson, Lynn, Kreiss-Tomkins, and P. Wilson
were present at the call to order.
HB 271-APPROP: RAILROAD FEASIBILITY STUDY
1:09:24 PM
CHAIR P. WILSON announced that the first order of business would
be HOUSE BILL NO. 271, "An Act making a special appropriation to
the University of Alaska Fairbanks for a study of the
feasibility of constructing a railroad between Fairbanks and
Deadhorse; and providing for an effective date."
1:09:39 PM
REPRESENTATIVE ISAACSON, speaking as sponsor, stated that HB 271
is timely given the catastrophic news of Flint Hills Resources
(FHR) refinery shutting down. Historically, FHR has
significantly contributed to the Alaska Railroad Corporation's
(ARRC) revenue. In the early 2000s, FHR provided over 55
percent of the railroad's revenues, but it is now down to 15-20
percent and soon it will be less. He reminded members that this
committee assists Alaskans to make connections to communities,
resources, opportunities, and markets. He recalled during his
time serving as mayor of North Pole asking ARRC's president &
CEO Pat Gamble and later Roald Aadnesen whether the railroad
should be expanded north, west, or south. He reported their
responses were that the railroad should have gone north from the
beginning. He said that an expanded railroad could be the
engine of prosperity for Alaska, especially with so much
resource activity in northern Alaska. He referred to a study in
members' packets entitled "Economic Impact of a North Slope Rail
Extension on Northern Energy and Mineral Development" by Paul
Metz, Colin Brooks, and Mike Billmire that reviews the impacts
of a North Slope rail extension on northern energy and mineral
development.
1:13:09 PM
REPRESENTATIVE ISAACSON remarked on construction activity,
including that Alaska Industrial Development & Export Authority
(AIDEA) is currently working to construct a road to the Ambler
Mining District. Further, North Slope oil and gas and mineral
activity between Deadhorse and Fairbanks could be put into
production. He stated that Ted Leonard, Executive Director,
AIDEA, said that the role of the state is to prove the
feasibility and conduct Environmental Impact Statements (EIS)
prior to the private sector investing and developing in
projects. For example, Red Dog is currently buying back a road
that AIDEA initially financed, he said.
REPRESENTATIVE ISAACSON offered his belief that the
transportation of the heavy sand, steel, cement, equipment, and
fuel necessary to bring shale oil development to Alaska's oil
fields and is estimated to be over 2 million tons. That
potential rail transportation equals approximately five 10,000
ton-freight trains per week, which translates to one hundred
cars per train or 336 eighteen-wheel commercial vehicles per
day. Currently, the haul road can't withstand that type of
activity. Further, it is estimated that an expanded railroad
could bring a 30 percent return on investment based on one
activity alone.
REPRESENTATIVE ISAACSON stated that HB 271 would provide $2
million to the University of Alaska Fairbanks to perform an
economic feasibility study to substantiate these findings before
proceeding with a more costly EIS. This study would identify
whether it is feasible to extend the railroad north. Other
substantial benefits would include connecting communities,
improved delivery of goods, providing a stronger financial base
for our railroad, and providing access to additional mineral
deposits. Rail would increase the viability of development and
lower operational costs while providing greater safety in
transporting materials. The UAF is best suited to conduct the
study due to its world class researchers, who excel in a number
of pertinent disciplines. Additionally, the UAF has the ability
to build on current and previous research and to provide the
commissioned information economically and quickly. He asked
members for their support.
1:16:28 PM
DANIEL M. WHITE, Ph.D., Associate Vice-Chancellor for Research,
University of Alaska Fairbanks; Director, Institute of Northern
Engineering, stated that he has served as an administrator at
the UAF since 1995. He asked to testify in support of HB 271.
He said that compared to other states in the U.S., Alaska's
infrastructure is very underdeveloped. Infrastructure leads to
access, which leads to economic development. Oil and gas and
mining development represent a global market. Companies base
their decisions on costs in Alaska and costs often hinge on the
ability to move goods to market. He emphasized that the North
Slope, in particular, faces high transportation costs and higher
capital and operating costs than other areas in Alaska and the
U.S. Additionally, moving oil, natural gas and minerals and
other materials to Alaska, including concrete, steel, food, and
people make North Slope development expensive. Construction
costs and operating costs factor for the North Slope are three
to five times higher than the national average, he stated.
DR. WHITE said that according to the aforementioned study by
Paul Metz, Professor, Geological Engineering, UAF, developing a
railroad system between the North Slope and major access points
would allow for new project development and lower project
development costs, which would make a variety of new projects
more viable. The cost of rail freight in shale oil development
alone would be roughly one-tenth the cost of trucking.
Additionally, northern mineral development would also benefit
since trucking costs are estimated to be 36 percent of mineral
concentrate values when considering moving freight from the
Ambler Mining District to Port MacKenzie. However, by rail the
cost would be reduced to approximately 12 percent of the
concentrate value at the mine, which is three times less cost.
Dr. Metz provided the economics for a number of projects. He
emphasized that the railroad would carry large amounts of bulk
freight and lowering the cost of production could make the state
and North Slope development competitive with other producers in
the industry. This will allow the state to achieve an
appreciable return on investment from shale royalties alone. He
offered his belief that UAF is the best place to conduct the
research for the feasibility of building a railroad between
Fairbanks and Deadhorse since researchers at the Alaska
University Transportation Center have a long history of working
with DOT&PF, the oil and gas industry, and the broader
transportation industry across the nation.
1:20:14 PM
DR. WHITE said that the studies the Institute of Northern
Engineering has been involved in include the Alaska/Canada Rail
Link Project, the Port MacKenzie Rail Link Project, and the
proposed rail connection through Alaska, Yukon, and Northern BC.
The Water and Environmental Research Center has conducted
transportation research for a variety of roads in the Roads to
Resources programs (R2R), including the Ambler road project, the
road to Umiat, the North Slope Foothills road, the Bullen road,
and ice roads across the oil field exploration areas. The
Institute of Northern Engineering's Water Center has developed
logistics planning tools for North Slope ice road construction,
operations and maintenance. The Alaska Center for Energy and
Power (ACEP) has conducted economic feasibility studies on
energy for nearly all communities in the state. The UAF can
draw on a wide range of technical specialists, including
researchers in geology, economics, engineering, and social
science. Anthony Scott, one of the state's leading resource
economists, was recently hired by the university to work with
ACEP. Mr. Scott previously worked for the Division of Oil &
Gas. He lauded Dr. Paul Metz as the leading geological
engineering researcher in mineral development and freight
logistics. He noted that all of the previous rail studies have
taken advantage of Dr. Metz's expertise. The UAF has the
knowledge and the resources to undertake a feasibility study
such as this under the timelines anticipated to further develop
the economic prosperity of Alaska and lower the cost of
production on the North Slope. He said that improving the
ability to move bulk materials across Alaska will increase the
viability of new projects, particularly in mining and those of
the small oil producers. He concluded that HB 271 is not just a
feasibility study, but represents an investment in the economic
development of Alaska.
1:22:34 PM
REPRESENTATIVE LYNN asked how much difficulty it would to be for
the railroad to traverse the Brooks Range at Atigun Pass. He
understood this is part of the feasibility study but asked for
general comments.
DR. WHITE responded that the goal of the feasibility study is to
look at the economics, land ownership, right-of-way issues,
grade, and access points. Certainly, railroads across the
western U.S. cross similar boundaries, thus, he believed that
the railroads have experience in this area.
1:23:49 PM
CHAIR P. WILSON asked for the timeline and proposed completion
date of the proposed rail extension.
DR. WHITE answered that he didn't know, but the timeline would
be addressed in the feasibility study. He remarked that some
delayed projects in Alaska have been due to permit and land
access issues rather than construction issues.
1:24:35 PM
REPRESENTATIVE ISAACSON, in response to earlier questions,
responded that some of the information in in the data banks. He
referred to a study in members' packets entitled, "Alaska
Transportation Corridor Study, March 1972." He indicated the
transportation corridor hasn't changed much since this study was
conducted and much of the source information is available. He
explained the requested funding in HB 271 will be for compiling
information, examining it from modern standpoint, and ensuring
the ability to make a business case by taking into consideration
studies and facts.
1:25:47 PM
CLARK HOPP, Vice-President, Engineering, Alaska Railroad
Corporation (ARRC), in response to Chair P. Wilson, said he was
unsure of the timeline. He indicated the ARRC has had some
experience with the Northern Rail Extension project and the Port
MacKenzie project. The permitting and environmental process
ranged from two to four years for permitting and environmental.
Since this project is an even larger project, he estimated that
it would probably be "north" of that timeline.
1:27:08 PM
REPRESENTATIVE ISAACSON pointed out that AIDEA has built other
roads and that it is not likely that the road will be built with
general funds. The project would likely be built using revenue
bonds or private investment, although the funding sources would
be identified in the feasibility report.
[HB 271 was held over].
HB 260-COMMERCIAL MOTOR VEHICLE EXCEPTION
1:28:03 PM
CHAIR P. WILSON announced that the final order of business would
be HOUSE BILL NO. 260, "An Act relating to transportation of
commercial motor vehicles."
1:28:25 PM
REPRESENTATIVE FEIGE moved to adopt the proposed committee
substitute (CS) for HB 260 labeled, 28-LS1155\O, Martin,
1/22/14, as the working document. There being no objection,
Version O was before the committee.
1:29:03 PM
REPRESENTATIVE ISAACSON, speaking as joint prime sponsor, stated
that this bill builds on HB 15 that passed the legislature last
year, which increased weight restrictions on vehicles for
pickups from 10,000 to 14,000 pounds. Currently, drivers must
hold a commercial driver's license (CDL) to operate vehicles
26,001 pounds and over. This bill supports truck dealerships,
the "upfitting" industry, and commercial end users by reducing
regulations and costs in Alaska. Currently, commercial trucks
are brought to Alaska by dealerships from assembly plants,
"upfitted" by three or four Anchorage-based manufacturers that
make alterations to complete the vehicle, and transported to
dealers outside Anchorage. He explained "upfitting", that an
upfitter may add a flat bed or a box van to the chassis of a
vehicle similar to a Ford F-150 or a Ram 3300. Once the
upfitting is completed the vehicle becomes too large to put on a
normal vehicle transporter, which necessitates that a driver fly
to Anchorage and transport it to the dealership -typically in
Kenai, Prudhoe Bay, and Fairbanks - to ultimately be sold.
REPRESENTATIVE ISAACSON reiterated that current law requires
drivers transporting dealer-owned vehicle to possess a CDL and
medical certificate even though the trucks being transported to
dealers are not being used to transport commercial or interstate
payloads. Further, the specific rules and regulations of a CDL
entail the maintenance of a logbook and a physical exam.
Additionally, the vehicle is required to have a U.S. Department
of Transportation decal identifying the gross vehicle weight and
pertinent information and the owner must permanently affix
safety equipment. However, the permanent safety modifications
are meant to be made after the point of sale when the vehicle is
actually put into use. Freeing up the dealership to use their
employees as drivers will reduce the ultimate cost to the owners
and allow the dealers to operate more competitively. Providing
exceptions for driving upfitted vehicles without being subject
to commercial vehicle enforcement reduces the impact on the
state's commercial vehicle enforcement division, thereby
allowing the enforcement officers to concentrate on regulating
the commercial vehicles they are charged with overseeing.
1:32:43 PM
REPRESENTATIVE ISAACSON explained that Version O includes two
restrictions requested by the DOT&PF's weights and measures
section. First, it added language that the driver must be 18
years of age or older. Second, Version O excluded 16-passenger
vans.
1:33:02 PM
REPRESENTATIVE JOHNSON asked whether this bill applies only to
new vehicles.
REPRESENTATIVE ISAACSON answered yes.
1:33:18 PM
REPRESENTATIVE JOHNSON said he does not see any restriction
limiting new dealers in Version O.
REPRESENTATIVE ISAACSON answered that Version O would apply to
vehicles in the dealer's possession, which generally are new
vehicles. Typically used vehicles are bought "as is" so
generally the bill will apply to new vehicles.
1:34:13 PM
REPRESENTATIVE FEIGE said the bill is limited up to 19,500
pounds and passenger vans 15 passengers or less. He asked
whether it should be extended to all commercial vehicles and the
reason for the limitation.
REPRESENTATIVE ISAACSON answered that this bill met the needs of
the dealerships, although he is not opposed to expanding the
language. He deferred to the dealers to answer.
1:35:43 PM
REPRESENTATIVE GATTIS asked to piggyback on Representative
Johnson's query. She asked for the downside on adding used
vehicles since farmers often buy used vehicles and have them
retrofitted.
REPRESENTATIVE ISAACSON responded that perhaps he had been too
hasty with his earlier remarks so he corrected himself. He said
he thinks of the vehicles in question as typically being new
vehicles; however, the bill does permit a vehicle in control of
a dealership to be "upfitted." Thus, this bill would apply if
the person purchased the vehicle in one city; the vehicle was
modified by upfitter in a different city than the dealer, [and
transported to the dealer]. He was unsure that this describes
the normal experience for an individual buying a "used" vehicle.
1:37:01 PM
REPRESENTATIVE FEIGE referred to page 1, line 12 of Version O,
which states in part, "The commercial motor vehicle does not
have to be inspected before transport to the dealership ...."
He asked for clarification on which inspection this language
references. He wondered if this is the inspection the
commercial driver performs - the walk around inspection - or if
this is a formal inspection done by a certified shop.
REPRESENTATIVE ISAACSON answered this language refers to the
specific Department of Transportation & Public Facilities
(DOT&PF) inspection decal that is required to be affixed inside
the door that identifies the end user, the gross vehicle weight,
and a series of other identifications. He offered to provide a
photo of the sticker to the committee.
1:38:17 PM
REPRESENTATIVE FEIGE suggested it might be more useful to cite
the specific statutes or regulation.
REPRESENTATIVE ISAACSON offered to do so.
1:38:27 PM
REPRESENTATIVE JOHNSON asked how this bill would affect someone
desiring to upfit a truck or motor home in Seattle and drive it
to Alaska. He acknowledged he would like to see the work
performed in Alaska, but would like to know the implications.
1:39:36 PM
BRENDA HEWITT, Staff, Representative Doug Isaacson, Alaska State
Legislature, on behalf of the joint prime sponsor, stated that
his example would fall under interstate commerce; however, the
bill is aimed at intrastate commerce since Anchorage is the end
point. She explained the circumstances that led to the bill,
such that someone would order a vehicle with the final
destination being Prudhoe Bay, but the vehicle would be upfitted
and most upfitters are currently located in Anchorage. In this
instance the purchase was considered to be interstate commerce,
[which falls under federal regulations] so the upfitting
couldn't be accomplished. Under the bill, the vehicle would be
purchased in Seattle but the end point would be considered to be
Anchorage. At that point, the vehicle could be upfitted and
would be considered intrastate commerce. Substantially, the
vehicle would be moved from Anchorage [to the purchaser or
dealer at the end point, such as Fairbanks or the North Slope].
1:40:27 PM
REPRESENTATIVE JOHNSON related a scenario in which in which a
dealer purchases a truck in Seattle, has it upfitted in Seattle,
transports it via tote on the Alaska Marine Highway System
(AMHS), offloads it in Whittier and then drives it to the North
Slope. He asked whether he would need a CDL to transport the
vehicle since it would be considered interstate commerce.
MS. HEWITT related her understanding that it would be considered
interstate and not covered under the bill, but she suggested the
DOT&PF could also respond.
1:41:18 PM
REPRESENTATIVE JOHNSON, in response to a question, clarified the
vehicle would be outfitted in Seattle.
REPRESENTATIVE ISAACSON answered that if the vehicle was
outfitted in Seattle it would fall outside the scope of this
bill. He provided an example of HB 260, that it will help
rectify an instance in which the oil industry purchases a fleet
of vehicles, retains the similar chassis but needs the back end
of the vehicles to have utility configurations. The "upfitting"
of these vehicles would occur in Anchorage, but the industry
doesn't purchase the vehicle until it arrives at the dealership
[in Fairbanks, Kenai, or the North Slope]. Currently if a
Fairbanks dealer purchases a vehicle, which is upfitted in
Anchorage, the dealer is subject to regulatory requirements for
fire extinguishers, DOT&PF inspections - resulting in stickers
that identify end user, gross vehicle weight, and other
information - even though money hasn't been paid to the dealer.
The dealer wants to transport the vehicle after upfitting in
Anchorage to the Fairbanks or other location. This bill would
"kick in" [and allow this to happen without being subject to
commercial vehicle regulations.]
1:43:22 PM
REPRESENTATIVE JOHNSON asked for clarification on the nuances of
the vehicle being upfitted in Anchorage. He asked for
clarification on the difference between a vehicle that is being
upfitted in Seattle and one being upfitted in Anchorage. He
wondered if the bill would be "running afoul" of interstate
commerce by restricting something from coming in from outside
[Alaska].
REPRESENTATIVE ISAACSON identified the important distinction as
being the point of destination.
REPRESENTATIVE JOHNSON answered the destination in the
aforementioned scenario would be the dealership in Fairbanks.
REPRESENTATIVE ISAACSON responded that currently if the vehicle
is landed in Anchorage on its way to Fairbanks, it would still
be considered interstate commerce. He related his understanding
that if it is landed in Anchorage to be upfitted that the
vehicle [ownership] would still rest with the manufacturer.
Therefore, the intrastate commerce [laws would apply]. He
clarified that his office worked with the DOT&PF on the language
in Version O.
REPRESENTATIVE FEIGE interjected that contractual language
should identify the point of ownership changes.
1:44:34 PM
REPRESENTATIVE JOHNSON, referring to the scenario, understood
the point of ownership would occur in Fairbanks.
REPRESENTATIVE ISAACSON deferred to the DOT&PF to answer.
1:44:57 PM
REPRESENTATIVE FEIGE referred to Version O, page 2, line 2, to
subsection (b) which read, "A driver transporting a commercial
motor vehicle for a motor vehicle dealer under (a) of this
section must be 18 years or older ...." Thus anyone 18 years or
older can move the vehicle from the upfitter to the final
destination - the dealer's point of sale - whether or not they
have a commercial driver's license (CDL). He asked for the
current requirements.
REPRESENTATIVE ISAACSON answered that a person would not need a
CDL to operate vehicle under 26,001 pounds; however, that DOT&PF
could better answer this. He related his understanding that
dealers must technically either use drivers with a CDL or be
subject to the medical as well as the other provisions. He said
this bill addresses the technicality so enforcement officers can
easily identify that the vehicle is still in the dealer's
possession, that the vehicle has dealer's plates and proof of
insurance so it is not subject to commercial vehicle
regulations. Therefore, anyone can drive the vehicle [from
Anchorage to the point of sale without needing a CDL or being
subject to commercial vehicle enforcement].
1:46:45 PM
REPRESENTATIVE FEIGE referred to page 2, line 4 of Version O
that pertains to transporting the vehicle. He asked whether the
language could be interpreted to mean the person is actually
driving the vehicle or if the person is transporting the
vehicles by using a trailer. He said the way the bill is
written someone could drive a semi hauling several vehicles
between Anchorage and Fairbanks without needing a CDL or
complying with other requirements, such as being subject to a
medical examination.
REPRESENTATIVE ISAACSON acknowledged that is a good point. He
offered to obtain clarification on whether the person
transporting the vehicle is driving or operating the vehicle.
He said he understood the nuance.
CHAIR P. WILSON added that some questions the Department of Law
needs and the DOT&PF need to answer.
1:48:46 PM
DAN SMITH, Director, Division of Measurement Standards &
Commercial Vehicle Enforcement, Department of Transportation &
Public Facilities (DOT&PF), stated that the state has the
authority to regulate intrastate commerce for vehicles up to
26,000 pounds. Vehicles designed or used to transport more than
16 passengers automatically fall under the authority of the
Federal Motor Carrier Safety Administration (FMCSA).
MR. SMITH explained that HB 260 would exclude those vehicles
designed to transport passengers. In terms of the inspections,
he understood that this pertains to the "396.17" periodic
inspection [required under federal 49 C.F.R. Part 396.17]. He
stated that the DOT&PF's weigh station inspection can also take
the place of the periodic inspection. He further understood the
inspection would not be required for a brand new vehicle. In
terms of the origin and destination, this bill would apply only
to intrastate commerce. For example, if a vehicle originated in
Ohio with a destination of Prudhoe Bay, the transaction would be
considered interstate commerce and fall under the federal
definition "at 10,000 pounds." However, he clarified that if
the vehicle origination was Ohio with a destination of the Port
of Anchorage - and on to an upfitter or a dealer in Alaska, it
would be considered intrastate commerce.
1:50:30 PM
REPRESENTATIVE FEIGE related his understanding that the
distinction between interstate and intrastate would depend on
where the transfer of ownership takes place. He asked for
clarification of the transfer if a dealer in Fairbanks orders a
vehicle from a [manufacturer]. He further asked whether the
transfer of ownership would happen when the vehicle arrives at
the dealer, if it accomplished through a contractual provision
that specifies when the ownership transfer between the
manufacturer and the dealer occurs, or if these transfers are a
matter of convention.
CHAIR P. WILSON related her understanding that the bill attempts
to provide a remedy for dealers, who wish to avoid the expense
of complying with regulations. The regulatory requirements
include specific provisions pertaining to fire extinguishers;
however, when the vehicle is sold, the buyer might not want the
extras. Under the bill, the [Seattle] dealer [or manufacturer]
has possession. When the Alaska dealer sells the vehicle to
someone else in Alaska it would fall under the intrastate
jurisdiction so the dealer should not be subject to the extra
expense [caused by the federal regulatory requirements].
REPRESENTATIVE FEIGE related his understanding that if a dealer
purchased the chassis in Detroit and moved it across state lines
that it would fall under the jurisdiction of interstate
commerce.
CHAIR P. WILSON agreed that the scenario just described would be
considered interstate commerce until it reaches the dealership
in Alaska.
1:53:09 PM
REPRESENTATIVE ISAACSON said, "To the point of entry if that's
where they designated it ..."
1:53:31 PM
ANMEI GOLDSMITH, Assistant Attorney General, Transportation
Section, Department of Law (DOL), said the change in ownership
transfers would determine whether the transport falls under
interstate or intrastate commerce. She agreed with
Representative Feige that this would most likely be addressed in
the contract between the dealer and the manufacturer. She said
that under HB 260 that transfer point should probably be the
Port of Anchorage.
CHAIR P. WILSON asked for further clarification.
1:54:37 PM
MS. GOLDSMITH responded that a manufacturer builds the vehicle
and the manufacturer owns the vehicle. The manufacturer would
sell the vehicle to the dealership and by contract would specify
the specific point when the ownership of the vehicle will
transfer to the dealer. The contract transferring ownership to
the dealer could specify a day, time, and a place, with the
dealership as the owner. The place of transfer from the
manufacturer to the dealer would be the Port of Anchorage in
order to give the dealership protection under the bill. For
example, the contract could indicate the manufacturer is
shipping a vehicle to the Port of Anchorage, with an anticipated
barge arrival at the Port of Anchorage on February 10 at 10:00
a.m. The dealership would assume ownership once the vehicle is
offloaded from the barge and all the legal rights and
responsibilities of owning a vehicle would transfer to the
dealer.
1:55:52 PM
REPRESENTATIVE JOHNSON offered his belief that dealerships do
not own the vehicles. He suggested that the dealership pays a
flooring fee and the manufacturer owns the vehicles until they
are transferred to private individuals; however, he suggested
the dealerships could testify to clarify this point.
MS. GOLDSMITH agreed that is how many dealerships work. Thus in
order for dealerships to get the protection HB 260 offers,
something may need to be changed, either in the way dealerships
operate or some language may need to be added to HB 260 to
accommodate how things normally occur.
REPRESENTATIVE JOHNSON argued that he did not think dealers will
want to spend money on flooring. He thought perhaps an
important step is being missed, that when something is upfitted,
the process makes it a custom job and the vehicle has likely
already been purchased. For example, someone such as an
electric utility may buy a vehicle under a certain set of
specifications, such as requiring an upfitter to install a lift.
He did not think brand new vehicles sit at the dealership lots
that don't come from the manufacturer. He did not think
dealerships bring trucks to Alaska, have them outfitted on
specification to sell to the utilities.
1:57:31 PM
REPRESENTATIVE ISAACSON agreed. He deferred to the DOT&PF to
answer.
REPRESENTATIVE JOHNSON turned to his previous scenario, in which
a vehicle was purchased, upfitted in Seattle, transported to
Anchorage as compared to purchasing and upfitting the vehicle in
in Anchorage. He expressed concern that the bill treats the
same vehicle differently across state lines. He asked for
assurance that this doesn't violate the law.
REPRESENTATIVE ISAACSON deferred to the DOL to respond.
REPRESENTATIVE JOHNSON remarked that he supports helping
Alaskans, but he wants to be sure the bill doesn't create
problems with federal law.
2:00:25 PM
MS. GOLDSMITH answered that the language in the bill states
"point of assembly," which could be problematic. She thought
the discussion today has assumed that the Port of Anchorage
would be the point of ownership change from the manufacturer to
the Alaska dealership, but the bill language identifies it as
being from "the point of assembly of the vehicle in this state
to a dealership in this state ...." She suggested that the point
of assembly is likely the yard performing the upfitting.
CHAIR P. WILSON offered her belief that the dealerships deal
with these circumstances all the time.
2:01:27 PM
BILL BROWN, President and General Manager, Bob's Services,
agreed that the dealerships encounter this on a daily basis. He
related his understanding that the dealership takes possession
of the vehicle once it is at the final transport point from the
manufacturing. For example, if a dealership orders a vehicle
shipped to Anchorage, the dealership takes responsibility at
that point or when the company picks it up from the port. He
said, "I don't think it is their responsibility from the
manufacturer to their door, that's the manufacturer's
responsibility." He stated that his company also encounters lot
of vehicles in need of transport that are oversized for the
transport industry. It has been costly for the dealership to
hire a drive-away company to transport the upfitted vehicles.
Instead, the dealerships would like to use their own personnel
to do the transport. For example, when a vehicle is sold to
ConocoPhillips Alaska, Inc. or another company in Alaska, the
buyer has specifications and the vehicles must be modified.
2:03:28 PM
REPRESENTATIVE FEIGE asked where his business is located. He
said he assumed that Bob's Services was an upfitter.
MR. BROWN answered that Bob's Services is an upfitter located in
Anchorage.
REPRESENTATIVE FEIGE asked whether the manufacturer maintains
ownership all the way to the dealer's floor or if Bob's Services
transfers ownership.
MR. BROWN explained that typically ownership is transferred at
the first point of delivery. He said that in Mr. Angel's case
[Seekins Ford-Lincoln] the point of delivery would be at Bob's
Service in Anchorage and the Fairbanks dealership would assume
the freight charges to move the vehicle onward.
REPRESENTATIVE FEIGE clarified that the transfer of ownership
typically occurs at the upfitter's location.
MR. BROWN explained that it would not be a transfer of ownership
but rather would be considered a transfer of responsibility and
the vehicle falls within the flooring program of the
manufacturer. He said he was fairly certain that is the case,
that the dealership doesn't take ownership until they have sold
the vehicle.
2:04:40 PM
STEVE ANGEL, Fleet Sales Manager, Seekins Ford-Lincoln, stated
that his job at Seekins Ford-Lincoln entails "specking,"
ordering, and delivering commercial vehicles for customers and
Seekins Ford-Lincoln's sales lots in Fairbanks and on the North
Slope. He said that some of the vehicles are cabin chassis'
have been upfitted with bodies which include boxes, flatbeds, or
service bodies that are too large for standard car carriers due
to the overall dimensions of the upfit. The upfitted vehicles
need to be shipped on a flatbed type trailer, commonly
considered an 18 wheeler, which adds greatly to the dealer's
expense. Those costs would ultimately be passed on to the end
user. As a result, this places dealers outside Anchorage Bowl
at a disadvantage pricewise when competing for commercial
business.
MR. ANGEL said that the majority of the businesses providing the
upfitting services are located in Anchorage and Seekins Ford-
Lincoln has employees pick up and drive completed trucks and
vans to Fairbanks or to Prudhoe Bay. He described the types of
vehicles being transported as not being complex or equipped with
air brakes or towing trailers. Instead, the vehicles in
question are regular trucks and vans that due to the body
configuration are considered to be commercial even though not
yet licensed or titled. These vehicles meet all height, weight,
length, and width requirements and when placed in service
commercially would not require a permit to operate in Alaska.
He explained that current law requires vehicles over 14,000
pounds must have a current DOT&PF inspection. Primarily, that
inspection consists of an equipment inspection, with a placard
placed on the right-hand side of the vehicle, usually on the
fender or the door. The placard lists items, including the
owner, the DOT or ICC number, and gross vehicle weight.
Additionally, these vehicles must carry an inspection document
in the vehicle, which also contributes to additional cost.
Further, not all end users are required to carry the inspections
even though the vehicles may exceed 14,000 pounds. He related
his understanding that government entities, such as the city,
municipalities, and the state are not required to have this
placard on the door. He indicated that some of the vehicles are
ones not yet sold, but are destined for Seekins Ford-Lincoln, so
the dealership doesn't even know the end user; therefore, the
dealership doesn't have an ICC number or other data to make it
legal to move these vehicles.
2:08:30 PM
CHAIR P. WILSON asked whether each individual vehicle is driven
or if the vehicles are transported via a flatbed.
MR. ANGEL explained that Seekins Ford-Lincoln brings some units
to their facility in a cabin chassis, without an "upfit" being
performed. In the event a customer wants a particular upfit,
the dealership will use a commercial carrier to back haul it to
Mr. Brown's facility or to another upfitter in Anchorage. The
upfitter will perform the upfit work. He pointed out that
vehicles without any upfitting will fit on a standard car
carrier. He said the issue occurs after the upfit is completed,
since thee upfitted vehicles won't fit on the standard car
carrier. The upfitted vehicles may be too wide, too high, or
too long. He pointed out that these types of vehicles have the
exact same steering wheel and other configurations as a standard
pickup truck. The only difference is that instead of having
pickup boxes, these vehicles may have a flatbed, a service body,
or any number of similar configurations.
2:10:22 PM
REPRESENTATIVE FEIGE said it seems that the transport must fit
into the definition of intrastate commerce in order for Seekins
Ford-Lincoln to be able to take advantage of the bill.
Mr. ANGEL agreed.
REPRESENTATIVE FEIGE reiterated that currently, the manufacturer
owns the vehicle until it is sold on behalf of the manufacturer.
He asked whether Seekins Ford-Lincoln or the end user took
ownership of it at the Port of Anchorage or if it would fit in
the dealer's business model since it will tie up capital and the
dealership would incur the costs.
MR. ANGEL answered that Seekins Ford-Lincoln typically takes
control of the vehicles at the upfitter or at Seekins Ford-
Lincoln's lot in Fairbanks or Deadhorse. He explained that is
the point at which the dealership has control over the vehicles.
He indicated that Seekins Ford-Lincoln doesn't own any of the
vehicles on their lot, that the vehicles are floored and owned
by Ford Motor Credit. However, the vehicles are considered to
be in Seekins Ford-Lincoln's possession and as far as the
manufacturer is concerned the dealership is responsible for
them.
REPRESENTATIVE FEIGE replied that the committee will need to
decide whether the transfer of responsibility will allow the
vehicles in question to fit into the definition of intrastate
commerce; otherwise the bill will not help the dealerships.
2:12:53 PM
CHAIR P. WILSON asked whether the language could be changed to
address the issue.
MS. GOLDSMITH answered that she discussed this briefly with Mr.
Smith, DOT&PF right now. She said the DOL & DOT&PF doesn't
think a problem exists the way the bill is currently written
because the carrier is responsible to comply with the
regulations. Essentially, it doesn't matter who owns the
vehicle since the person who is legally responsible for the
vehicle is required to comply with the law. She compared it as
being similar to a personal vehicle that is leased. The leased
vehicle is owned by the car company or the bank, but the driver
who leases it is responsible for the insurance and any
accidents. In this instance, the vehicles would be owned by
manufacturer, or the bank, but once the dealership assumes legal
responsibility for the vehicles is the point that the bill would
"kick in." She emphasized that full ownership is probably not
necessary; it would just be the legal responsibility.
2:14:25 PM
REPRESENTATIVE JOHNSON related a scenario in which he picks car
up at an upfitter and is subsequently ticketed. He asked who
would be issued the ticket: the individual or the dealership.
MS. GOLDSMITH asked for clarification on whether he was speaking
as the dealer.
REPRESENTATIVE JOHNSON answered that in this scenario he is
working for dealer and was hired to pick up a truck. He asked
who would get the ticket if the truck did have any documentation
and he was pulled over by a trooper.
MS. GOLDSMITH answered that the driver should not get a ticket
since the dealer is responsible for the vehicle and the driver
is transporting the upfitted vehicle from the point of assembly
in the state to the dealership in the state. She assumed the
vehicle has dealer plates, proof of registration, and proof of
insurance. If the driver was ticketed, the driver could
probably successfully challenge the ticket, she said.
2:15:55 PM
REPRESENTATIVE JOHNSON said referred to the aforementioned
scenario, but asked Ms. Goldsmith to apply current law. He
asked whether the dealer or the driver would be ticketed.
MS. GOLDSMITH answered that without this bill the driver would
be ticketed.
REPRESENTATIVE JOHNSON offered his belief this leads to
responsibility and ownership issues and the driver is
responsible but not the dealer. He was unsure the bill would
give the Alaska firm preferential treatment.
MS. GOLDSMITH deferred to DOT&PF to answer the enforcement
question.
MR. SMITH answered that normally the DOT&PF works with the
operating authority. When a commercial vehicle is brought into
the state and the party registers the vehicle at the Division of
Motor Vehicles (DMV), the DMV requires the party to identify the
carrier who is responsible for safety of the vehicle. He said
this encompasses the motor carrier and safety regulations, and
the U.S. DOT number that establishes the party with operating
authority for either passenger or property carrier. He
explained that at the roadside inspection, it will always be the
operator who is issued any citation for violations. He said the
DOT&PF would make the inspection at the roadside or during a
traffic stop.
2:17:47 PM
REPRESENTATIVE ISAACSON asked for clarification. He recalled an
earlier question was whether not offer the exemption in HB 260
would apply to all vehicles up to 26,001 pounds in weight.
2:18:23 PM
MR. ANGEL answered that lots of times vehicles at 26,000 pounds
are ones equipped with air brakes and other systems that would
fall under a requirements of a commercial driver's license
(CDL). He offered that the bill's intent is to allow
dealerships to move completed vehicles that are not complex
vehicles, but fall under commercial definition due to the body
type after upfitting. He emphasized that he did not want to
avoid any safety regulations since he believes the regulations
are important. He stressed he is not advocating that the bill
exempt the type of vehicle after it's been titled a commercial
vehicle or if the vehicle is beyond realm of the average person
to drive it in a safe and conscientious manner. He pointed out
a lot of variables come into play once the vehicle goes beyond
the 19,500 pound threshold. He said at that point it might take
a bit more skill to operate the vehicle safely, particularly if
it has air brakes or other commercial configurations.
2:20:04 PM
CHAIR P. WILSON offered her belief that the questions raise the
complexity of this bill and the issues.
[HB 260 was held over.]
2:21:02 PM
REPRESENTATIVE LYNN imagined how difficult it would be for a
driver to explain everything that was discussed today with
respect to the vehicles.
2:22:13 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:22
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB260 sponsor statement.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| CSHB 260 ver o.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| Sectional on CSHB260.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| HB260-DOT-MSCVE-1-31-14.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| HB0260A.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| HB 260 Wandler - letter of support.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 260 |
| HB 271 RR - Sponsor Statement.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 271 |
| HB0271A.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 271 |
| Economic Impact of a North Slope Rail Extension.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 271 |
| HB271_Transportation Corridor Study 1972.pdf |
HTRA 2/6/2014 1:00:00 PM |
HB 271 |