Legislature(1995 - 1996)
03/28/1996 01:36 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE TRANSPORTATION
March 28, 1996
1:36 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Robin Taylor, Vice Chair
Senator Lyda Green
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Al Adams
COMMITTEE CALENDAR
SENATE BILL NO. 315
"An Act relating to procurement by the Alaska Railroad
Corporation."
CS FOR HOUSE BILL NO. 210(STA) am
"An Act relating to issuance of motor vehicle registrations and
titles, and to licenses and permits to operate a motor vehicle."
HOUSE BILL NO. 411
"An Act naming Mountain View Road in Gustavus."
PREVIOUS SENATE ACTION
SB 315 - No previous action to record.
HB 210 - See Senate Transportation minutes dated 3/19/96.
HB 411 - No previous action to record.
WITNESS REGISTER
Henry Springer, Executive Director
Associated General Contractors of Alaska
4041 B Street
Anchorage, Alaska 99503
POSITION STATEMENT: Emphasized the competitive bidding process.
John Eng
Cornerstone Construction
4141 B Street #201
Anchorage, Alaska 99503
POSITION STATEMENT: Emphasized the competitive bidding process.
Bob Hatfield, President & CEO
Alaska Railroad Corporation
327 Ship Creek Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Discussed how right of way construction
currently happens.
Sam Kito III, Legislative Liaison/Special Assistant
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Answered questions.
Rick Leggett, General Road Manager
327 Ship Creek Avenue
Anchorage, Alaska
POSITION STATEMENT: Discussed layoff possibilities.
Representative Mackie
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime Sponsor of HB 411.
Juanita Hensley, Chief
Driver Services
Division of Motor Vehicles
Department of Public Safety
PO Box 20020
Juneau, Alaska 99811-0020
POSITION STATEMENT: Suggested changes to HB 210.
Anne Carpeneti, Assistant Attorney General
Criminal Division
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Discussed concerns with HB 210.
ACTION NARRATIVE
TAPE 96-9, SIDE A
SB 315 ALASKA RAILROAD PROCUREMENT
Number 001
CHAIRMAN RIEGER called the Senate Transportation meeting to order
at 1:36 p.m. and noted that testimony would be taken until a quorum
arrived. He introduced SB 315 as the first order of business.
HENRY SPRINGER, Executive Director of the Associated General
Contractors of Alaska, emphasized the association's platform of
open competitive bidding processes. He said that there have been
attempts to erode that process in the past few years. Mr. Springer
mentioned that he worked with the Department of Transportation
(DOT) in 1962 and is somewhat familiar with the construction or
changes within the right of way of the Alaska Railroad. He did not
understand why that work could not be done under a competitive
bidding process. The Alaska Railroad would continue to outline the
specifications and the operational demands. Mr. Springer said that
it could be done as a specialty contract where the railroad does
the construction and integrates the construction with their
maintenance and other operations or it can be done through DOT.
Regardless of how the work is done, Mr. Springer believed that the
work could be done as the rest of the state work is done, which is
in compliance with the State Procurement Code. He offered to
answer any questions.
A quorum was established.
Number 082
JOHN ENG, Cornerstone Construction, explained that Cornerstone
Construction is a general contractor that does commercial and
industrial work as well as railroad maintenance and construction.
Mr. Eng believed that tax dollars should be awarded through a
competitive bidding process. He agreed with Mr. Springer that the
owner of the adjacent property whether it be the railroad or
someone else, could establish some technical requirements that
would have to be followed for everyone's benefit. Mr. Eng said
that he was promoting this legislation primarily for the economic
benefit to the state as well as a competitive bid operation and
business opportunity for Cornerstone Construction.
BOB HATFIELD, President and CEO of the Alaska Railroad, said that
the railroad owns the right of way on which the work would be done
and the railroad should do the work it is capable of doing on its
own right of way. As a standard condition to consent to a DOT
grade crossing project, the railroad asks that its employees do
that work which involves changing or moving track. Mr. Hatfield
emphasized that the railroad asks that its employees do such work
due to the liability issues which the railroad accepts through its
normal operations. Therefore, the railroad wants to know exactly
how work has been done. Mr. Hatfield recognized that the work
could be accomplished by contractors, but the railroad's liability
creates the need to know exactly what is done. Also the train and
construction operations have to be coordinated; the railroad can do
this more efficiently. Mr. Hatfield pointed out that the railroad
is reimbursed for doing a project in accordance with the Federal
Highway Administration guidelines. He explained that cost
estimates are submitted to DOT who analyzes the estimates for
reasonableness. Once the project is complete, DOT routinely audits
the payments in order to ensure that the railroad does not receive
payment for work that was not done or not done in the manner
specified. He offered to answer any questions.
Number 145
SENATOR LINCOLN inquired as to why the railroad could not specify
within the contract that the contractor would bear the
responsibility. With regards to the reimbursement by the federal
government, could the contractors or subcontractors submit cost
estimates and DOT could audit them just as the department audits
the railroad? BOB HATFIELD agreed that the audits could be done
for the subcontractor. Mr. Hatfield reiterated that the railroad
can not only do work comparable to that of a contractor, but also
can coordinate the work better. This discussion only refers to
track and signal work. Mr. Hatfield pointed out that the railroad
routinely contracts out other work in the right of way that does
not directly involve the track or the signal.
SENATOR LINCOLN noted that Mr. Eng's letter said that he was
looking at railroad crossings and overpasses when asking how track
and signal work would be involved in overpasses. BOB HATFIELD
explained that often a track must be relocated when there is work
done on an overpass.
SENATOR LINCOLN asked if Mr. Hatfield believed there to be a cost
savings to Alaska by keeping the contract solely with the railroad.
BOB HATFIELD believed there to be a cost savings. The railroad has
the equipment, people, and the expertise to do this work on demand.
Mr. Hatfield noted that the railroad seems to have the same
situation with highway construction as the utility companies do.
SENATOR LINCOLN asked how much the savings would be in one fiscal
year. BOB HATFIELD did not know. There are many factors involved
in such an estimate.
Number 203
SENATOR GREEN asked if this same dilemma applied to any other
governmental entity besides the railroad. Senator Green believed
that a conflict had been created in this public-private entity
which separates the railroad from a normal utility.
SAM KITO III, Department of Transportation & Public Facilities, did
not believe there was another private entity to which this would
apply. Typically, the department does force account work with
villages through Public Health Services or the Department of
Environmental Conservation.
SENATOR TAYLOR said that the substance of SB 315 is to allow the
railroad to defer to DOT. He asked if the railroad would have to
defer to DOT.
CHAIRMAN RIEGER explained that SB 315 would require that the
railroad use the same processes that DOT would have used had DOT
done the work themselves. In response to Senator Taylor, Chairman
Rieger said that the railroad is not doing that.
BOB HATFIELD interjected that the railroad is behaving in the same
manner in which DOT would. DOT can choose to do the work itself of
the work can be contracted out.
SENATOR TAYLOR asked if the railroad was using competitive sealed
bidding. BOB HATFIELD said that the railroad was being asked to do
the work and the railroad is. SENATOR TAYLOR said that if the work
is being done in-house, competitively sealed proposals would not be
required; this law would not effect that, would it? BOB HATFIELD
said that it seems that any work DOT may undertake on the
railroad's property which involved track work would have to be put
out to bid, even routine work.
SENATOR TAYLOR asked if the routine work was being done by DOT, not
the railroad and its employees.
Number 256
BOB HATFIELD explained that DOT may be relocating a road or
building a highway overpass which would require taking apart tracks
or moving tracks. That work is done by the railroad at the request
of DOT. SB 315 would require that work done by the railroad for
the railroad to be competitively bid upon.
HENRY SPRINGER pointed out that under the State Procurement Code,
any money appropriated to DOT under the Capital Program (CIP) or
any projects must have a competitive bidding process. The
department can choose how to proceed with operating and maintenance
funds that are general fund appropriations. Mr. Springer clarified
that he was asking that the railroad, in cases of capital money
coming through DOT to the railroad, have a competitive bid process.
SENATOR LINCOLN understood from previous testimony that this
legislation would cost the state more money. She noted that there
is no fiscal note. Senator Lincoln inquired as to the position of
DOT regarding SB 315 and if SB 315 will cost more money.
CHAIRMAN RIEGER pointed out that there are fiscal notes from the
Alaska Railroad and DOT. SENATOR LINCOLN said those fiscal notes
are zero.
SAM KITO III said that DOT does not believe there to be a fiscal
impact with SB 315. The department cannot project what the fiscal
impact may be for the Alaska Railroad Corporation if the method of
operation is changed. Mr. Kito said that DOT supports the Alaska
Railroad Corporation's position on SB 315.
Number 300
CHAIRMAN RIEGER asked if the Alaska Railroad were a private
corporation and there were no special statutes governing the
railroad, would DOT be able to transfer the ability to do the work
on the railroad's right of way to that private railroad. If the
department could transfer that ability to a private railroad, would
it be subject to State Procurement Code laws?
SAM KITO III believed that if the Alaska Railroad Corporation were
an independent or private entity, DOT would have no say in how the
project was constructed. With regards to the private entity
receiving funds from the department, Mr. Kito did not know if that
would be possible.
CHAIRMAN RIEGER asked if that was done in any other instance or
does the department always own the right of way included in a
project. Perhaps, utilities would be an example. SAM KITO III
informed the chairman that DOT does have lease agreements for
utilities within the road right of way where a utility will have an
easement within the road right of way to place its utility. With
a DOT project or highway project, the department will own the right
of way or have a significant interest. With some airports, the
department leases the land from a corporation or is proposing to
lease the land from a corporation.
CHAIRMAN RIEGER asked if the department did the work in such
situations. SAM KITO III replied yes, the department does the work
directly; it is a public project. The department would have a
lease for the property and the department would have significant
interest in the property in order to operate a public project.
Number 330
CHAIRMAN RIEGER asked if money would be transferred to Alyeska
where the road crosses the pipeline right of way or would the
department do the work. SAM KITO III said that he was unfamiliar
with the statutes and the regulations. Statute specifically
addresses utility relocation in state right of way.
CHAIRMAN RIEGER said that he was still unclear as to what would
transpire if the railroad was private.
SENATOR TAYLOR acknowledged that there may be some specialty or
advantage to doing the work in-house. He asked if this work should
be open to competitive bidding when the railroad is ultimately
liable for the trains running over that work.
SENATOR LINCOLN wanted to know if there would be a significant
difference in the cost of going through a competitive bidding
process. She pointed out that more employment would be created, if
there was not a significant difference in the cost. With regards
to the liability, Senator Lincoln suggested that the construction
of buildings, highways and bridges is no different than building
railroad ties. The liability could be written into the contract.
Is there going to be an additional cost to Alaska and if so, how
much? Would this carry forward if the railroad was sold?
BOB HATFIELD indicated that he would be speculating at this point
with regards to the savings or expense of SB 315. However, Mr.
Hatfield assumed that there would be no savings from the labor cost
component. Furthermore, the railroad has parts and materials that
are bought in bulk which presumes a better price than a contractor
would be able to obtain. Even if a contractor did the work, the
railroad would require that a flagman and track inspector be in
place monitoring the work. Therefore, three more employees would
be present than would if the railroad were doing the project.
SENATOR LINCOLN asked if anyone would have to be laid off if the
bidding process were utilized. BOB HATFIELD said that it could be
possible. With the Bird Creek to Girdwood Project, employees would
have been laid off.
Number 399
RICK LEGGETT, General Road Manager, that the Bird to Gird Project
had about 30 track people on that project and two separate crews.
If that project had been allowed to go through the bidding process,
those railroad employees would have been laid off.
SENATOR GREEN asked if the railroad determines the size of its
staffing based on the assumption that those employees will do those
projects in-house.
JOHN ENG posed the following question: would the work be better on
a competitive bid basis or a cost plus force account basis?
BOB HATFIELD pointed out that the railroad's estimates are reviewed
for reasonableness before the work is done and are further audited
after the work is completed in order to ensure that the railroad
did not do anything out of line.
JOHN ENG said that SB 315 does not prevent the railroad from also
bidding on the work. With a competitive bid process, the railroad
would be able to demonstrate if there would or would not be savings
if the railroad did the work.
SENATOR TAYLOR does not like the current procurement code. It is
burdensome. If the railroad has used private contractors in the
past and this is a policy shift, Senator Taylor did not object to
the legislation.
CHAIRMAN RIEGER pointed out that the additional language in SB 315
refers to "when procuring" and that there would be a competitive
process "when procuring". Chairman Rieger clarified that the
complaint was in regards to the force account. Does the railroad
interpret SB 315 as preventing any in-house work? BOB HATFIELD
replied yes. The railroad believes that SB 315 would require the
railroad to competitively bid a project no matter how small or
large. Mr. Hatfield mentioned the administrative burden which
would be created for the railroad.
CHAIRMAN RIEGER asked if Mr. Eng interpreted the bill in that
manner. JOHN ENG said no. Mr. Eng understood the bill to mean
that public bidding would only be required when the project is
funded by tax payers' dollars.
BOB HATFIELD agreed with Mr. Eng, but some of DOT's projects paid
for by tax payers are relatively insignificant with regards to
cost.
HENRY SPRINGER pointed out that is done under AS 36.30.100 -
36.30.270 which does not preclude the work being done in-house or
by force account; the statute lays out a mechanism. It basically
says that, under the procurement code, anything over $100,000 would
be required to go through a competitive bidding process. If there
are extenuating circumstances, then the competitive bidding process
does not have to be used; it is not a blanket requirement.
CHAIRMAN RIEGER asked if there were other questions from the
committee. Hearing none, Chairman Rieger asked for the pleasure of
the committee.
Number 465
SENATOR TAYLOR moved that SB 315 be moved out of committee with
individual recommendations.
CHAIRMAN RIEGER noted that SB 315 has a referral to Senate Finance.
SENATOR LINCOLN objected for discussion purposes. She had no
objection to moving the bill to Senate Finance, but the bill could
be waived from that committee because of the zero fiscal notes.
Senator Lincoln said that she would not object to moving the bill
out of committee if she was assured that it would be heard in
Senate Finance.
SENATOR TAYLOR shared Senator Lincoln's concerns regarding the
fiscal impacts of SB 315. He hoped the bill would not be waived
from Senate Finance.
SAM KITO III explained that AS 36.30.100 - 36.30.270 does not have
any guidelines for what would constitute a project that should be
eligible for competitive sealed bid or competitive sealed proposal.
Those portions of the procurement code only address the procedures
by which a competitive sealed bid or a competitive sealed proposal
would be implemented.
CHAIRMAN RIEGER said that he would like to move this bill, but he
would also like to review those statutes.
SENATOR TAYLOR withdrew his motion.
CHAIRMAN RIEGER believed that often public projects are
appropriated in part, with the expectation that work would get out
to the private sector. Chairman Rieger said that he was
sympathetic to that. He wanted to have a workable procedure in
place to ensure that happens. If there is a question regarding the
restrictions with the procurement reference, then it would be
appropriate to hold the bill. Chairman Rieger asked if anyone else
would like to testify on SB 315. He informed everyone that staff
would research those statutes, obtain a legal opinion, and share it
with committee members.
HB 411 MOUNTAIN VIEW ROAD - GUSTAVUS
CHAIRMAN RIEGER introduced HB 411 as the next order of business.
REPRESENTATIVE MACKIE, Prime Sponsor, explained that Alaska statute
requires that highway names be done by legislation. This is a
community project which has been consistently called Mountain View
Road since the 1950s. Representative Mackie received a petition
from Gustavus to officially name the road Mountain View Road. Thi
summer the road is being upgraded and the cost of the signs will be
included, there will not be a fiscal impact to the state.
Representative Mackie did not know of any opposition in the
community.
SENATOR TAYLOR moved that HB 411 be moved out of committee with
individual recommendations. Hearing no objections, it was so
ordered.
HB 210 PRIVATE MOTOR VEHICLE LICENSING/TESTING
Number 522
CHAIRMAN RIEGER introduced HB 210 as the next order of business
before the committee. He pointed out that the committee packets
contained a marked up version of a proposed CS which addresses many
of the concerns previously raised. However, the CS does not delete
the contract nor does it address the concern surrounding the
administrative hearing. The prime sponsor had serious objections
to those changes, so Chairman Rieger wanted to bring them before
the committee.
SENATOR GREEN moved that the CS be adopted in lieu of the original
bill. Without objection, it was so adopted.
JUANITA HENSLEY, Driver Services in the Division of Motor Vehicles,
informed the committee that the issues she would be discussing were
brought before the House last year as the bill moved through the
process. She directed the committee to page 5, line 23 when
explaining that she wanted an immediate report of a criminal
complaint of child molestation or sexual abuse; Ms. Hensley did not
want to wait 10 days in these cases. There should also be an
immediate report of embezzlement.
Ms. Hensley was also concerned that the department does not have an
arbitration process. A process would have to be developed. In
statute, there is a provision allowing the department to conduct
administrative hearings with oversight from the Superior Court.
Ms. Hensley proposed that page 6, lines 19-24 be deleted and
replaced with "administrative hearings conducted under AS
28.05.141." That would be easier for the department.
Ms. Hensley felt that the contracts on pages 7-17 are very
cumbersome. It is not necessary to place the contracts in statute
because the bill establishes what would be agreed upon. Ms.
Hensley referred to page 17, line 8 when suggesting that
"preapproval" should be deleted. She expressed concern with the
amount of insurance required on page 18, but did not know what
amount would be appropriate.
TAPE 96-9, SIDE B
Number 587
Ms. Hensley said that the department has some concerns with
subsection (a) on page 19, lines 10-14 regarding civil liabilities.
She noted that the Department of Law also had some concerns with
that section and Anne Carpeneti would speak to those concerns. Ms.
Hensley thanked the committee and the staff for working with the
department on the bill.
SENATOR LINCOLN asked Ms. Hensley to repeat her comments regarding
performing audits on page 17 of the bill. JUANITA HENSLEY
suggested that the word "preapproval" on line 8 be deleted.
SENATOR LINCOLN clarified that she was referring to line 15.
JUANITA HENSLEY recommended deleting the words "with or". SENATOR
LINCOLN inquired as to why Ms. Hensley would suggest that deletion.
JUANITA HENSLEY reiterated that she would recommend deleting
"preapproval" on line 8 which would provide an option of whether or
not to give the person notice of an audit.
ANNE CARPENETI, Assistant Attorney General for the Department of
Law, reiterated her apologies for not being very familiar with
civil law, but she noted that she had talked with the civil
division regarding the civil liabilities section on page 19. Ms.
Carpeneti recalled that the sponsor said that the purpose of
subsection (a) was to create a level playing field, but the state
continues to be liable for negligence acts of its agents. HB 210
would give these private agents, third parties, protection against
liability for negligence which the state does not have. Ms.
Carpeneti recommended that subsection (a) be deleted.
CHAIRMAN RIEGER asked if a state employee performing this function
would be indemnified from negligence. If someone were damaged from
the actions of a state employee would the state be held liable.
ANNE CARPENETI believed that was correct. CHAIRMAN RIEGER asked if
this clause placed the agent in the same position as an employee
would have been in.
SENATOR TAYLOR stated that the employee is individually responsible
as well as the employee's superior. There is an agreement in which
the state indemnifies. He noted that there has always been
discussion regarding whether or not those indemnification
agreements should be extended to third party contractors.
CHAIRMAN RIEGER was under the impression that state employees were
not personally liable.
Number 542
SENATOR TAYLOR said that under HB 210 no one would be held liable,
the bill provides a blanket civil immunity. There has to be proof
of gross negligence before there can be any recourse.
CHAIRMAN RIEGER asked if subsection (b), lines 15-17 were the lines
that do not allow the action against the state. ANNE CARPENETI
clarified that he was referring to subsection (a), lines 10-14.
SENATOR TAYLOR explained that lines 10-14 provide immunity for the
contracted agent. Subsection (b) provides a complete blanket of
liability immunity for the state and all of the agents of the
state. ANNE CARPENETI pointed out that the immunity is provided
for the third party agents not the employees of the state.
SENATOR TAYLOR pointed out that if subsection (a) were deleted,
then the state would receive the blanket of immunity from the
person which the state licensed and placed in the field. ANNE
CARPENETI said that the state is responsible for the employees that
work for them. However, the purpose of subsection (b) is to
protect the state against actions of third parties. HB 210 does
require that the third party be insured against negligence, gross
negligence, and other acts.
CHAIRMAN RIEGER believed that the state must use agents to perform
state functions in other cases. In such a case, is the person
performing the function indemnified? ANNE CARPENETI said that she
would have to research such a scenario.
SENATOR TAYLOR believed that there is an indemnification agreement
that does exist between the State Troopers and Alaska. The
troopers are indemnified by the state.
ANNE CARPENETI referred to page 5, lines 16-18 when saying that
the Department of Public Safety would recommend zero tolerance.
This bill would allow people with .03 BAC to be able to give
driving tests.
CHAIRMAN RIEGER did not have a problem with zero tolerance, but
understood that testimony indicated that federal CDL language
included this language. ANNE CARPENETI said that was correct for
the CDLs, but some states say that .02 is zero tolerance.
SENATOR TAYLOR inquired as to why the states would use .02 to mean
zero tolerance.
Number 493
ANNE CARPENETI believed the reason for that was to not make
criminal an act of driving after drinking a glass of wine with
dinner. The bill currently going through the legislature discusses
zero tolerance for juveniles driving and drinking. Ms. Carpeneti
noted that the Department of Law was taking that position as well.
CHAIRMAN RIEGER understood the concern.
SENATOR TAYLOR discussed how blood alcohol level is determined by
lots of factors such as size, weight, tolerance, age, etc. which
all vary individually.
SENATOR GREEN interjected that what should be addressed was someone
going out for lunch and having two or three drinks and returning to
administer a driving test.
SENATOR TAYLOR discussed the studies on blood alcohol levels.
CHAIRMAN RIEGER asked if anyone else was present to testify on
HB 210. Chairman Rieger said that he wanted to determine if the
committee was interested in changing any of the points that have
been raised. Is there interest in lowering the standard on page 5,
lines 16-18?
SENATOR LINCOLN replied yes.
SENATOR GREEN inquired as to how that would be phrased.
CHAIRMAN RIEGER believed it would be legal to say that a person
could not be visibly under the influence. There must be some way
in which to address that issue.
SENATOR TAYLOR pointed out that negotiated contracts would address
that issue.
CHAIRMAN RIEGER asked if there was interest in tightening that
language. There seemed to be interest in tightening that language.
Chairman Rieger asked if there was interest in adding the language
"within the next business day" or "immediately" upon a criminal
complaint. That language is on page 5, line 22-23. He informed
the committee that the drafter had to choose because the earlier
draft had both.
SENATOR GREEN asked how the immediate language would be used.
CHAIRMAN RIEGER believed that it would be best to specify a time
limit.
Number 431
SENATOR TAYLOR pointed out that paragraph (3) on page 6 which says,
"before the end of the next business day after the agent or
examiner is charged."
CHAIRMAN RIEGER clarified that language was removed by the drafter
because it conflicted with the "10 days of" language. Chairman
Rieger explained that line 23 would have to be deleted and criminal
complaints would have to be dealt with in a separate section.
SENATOR TAYLOR mentioned that currently civil and criminal law was
being mixed.
CHAIRMAN RIEGER asked if there was interest in placing the criminal
language in its own section. There was interest. He asked if the
committee was interested in removing the arbitration requirement on
page 6, lines 20-24.
SENATOR TAYLOR agreed. He said that he liked arbitration as a
resolution, but it is not necessary to create a big fiscal note on
the bill.
CHAIRMAN RIEGER referred to page 7, line 19-page 17, line 5
regarding whether the committee wanted to leave the contract in the
bill.
SENATOR TAYLOR indicated that he would like for the contract to be
deleted. If the department or the contractors wanted to change the
contract, they would have to come before the legislature in order
to do so.
CHAIRMAN RIEGER asked if the committee wanted to delete
"preapproval" on page 17, line 8.
SENATOR TAYLOR suggested deleting the language "with or" as well on
line 15 of page 17.
CHAIRMAN RIEGER informed the committee that he took silence to mean
consent or interest in changing these issues. He referred to page
18 regarding liability.
SENATOR TAYLOR recalled previous testimony that the liability
established in the bill was reasonable and could possibly be a
little higher.
CHAIRMAN RIEGER believed that the department had requested the
increase in liability insurance. What should the exact amount be
for the liability insurance requirement?
A discussion ensued regarding the amount of insurance that should
be required.
ANNE CARPENETI offered to find out what the norm is from the
industry and provide that information to the committee.
CHAIRMAN RIEGER was interested in the premiums of an air taxi
operator.
Number 387
SENATOR TAYLOR recommended deleting lines 10-17 on page 19.
SENATOR LINCOLN summarized that the bill would then contain no
references to civil liability.
SENATOR TAYLOR commented that it would be the same as today; no
one's rights are being taken away.
CHAIRMAN RIEGER asked if it was correct that an individual would be
liable unless there is a statute stating otherwise?
SENATOR TAYLOR said that negligence has to be proved.
ANNE CARPENETI explained that most of the contracts that allow the
state to contract with third party agents include hold harmless
provisions for the state. If lines 15-17 on page 19 are deleted,
the hold harmless provision would be deleted. The Department of
Law would oppose that deletion, but the department would support
the deletion of subsection (a).
SENATOR TAYLOR said that no one would be granted a contract without
a policy of insurance that shows the state as the primary insurer
on the policy. Requiring the contractor to have insurance means
that the contractor would serve as the first line of defense on
liability for the state. Then the state would say that the state
should be held harmless for any possible liability the state had.
Number 363
ANNE CARPENETI clarified that this only holds the state harmless
for damages resulting from the act or omission of the agent or
registrar.
SENATOR TAYLOR believed it to say that the state would not be
liable if the state does a poor job of inspecting an agent and
continues to allow the agent to operate. What is the state's
motivation to ensure that a bad agent is not allowed to operate?
CHAIRMAN RIEGER read this to mean that the state was being held
harmless from the act of the third party, but not from an omission
of the state in how the state has contracted or qualified that
agent.
SENATOR TAYLOR said that was dependent upon the definition of
"performing duties." Senator Taylor surmised that the state could
not be sued by any injured third party because of an action of an
agent. This individual would be an agent of the state.
SENATOR LINCOLN agreed with Senator Taylor. In the interest of the
state, it would be good to leave the language in the bill because
the state would not be sued. However, the state should also be
held accountable if the state utilizes an agent on its behalf.
ANNE CARPENETI pointed out that these agents are not like state
employees, they are independent agents. Ms. Carpeneti agreed with
Senator Lincoln that the agent is described as an agent of the
state as this is drafted, but Ms. Carpeneti did not envision these
individuals as agents of the state.
SENATOR TAYLOR emphasized that these individuals would be agents of
the state for carrying out certain functions of state government
that is being authorized to contract with them.
CHAIRMAN RIEGER posed the following situation: an employee
stationed in a remote location drives their truck into a store. In
that case, the state would be liable. Taking this out would not be
inconsistent with the level of liability that the state has with an
unsupervised employee.
ANNE CARPENETI said that the problem is the level of control the
state has over these independent agents.
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SENATOR TAYLOR said that in order to cover this provision that is
not in law, the state requires that the agent contractor hold the
state harmless and a specific amount of insurance is also required.
He pointed out that the same is done with day care centers. This
insurance basically insures the state. Senator Taylor believed
this to be backwards.
ANNE CARPENETI suggested that Ms. Hensley could give the committee
an example of the type of agent relationships. Ms. Carpeneti
understood that garages that repair cars would be able to issue
renewed registration for automobiles.
CHAIRMAN RIEGER said that already occurs.
SENATOR TAYLOR noted that I/Ms are also done in this way.
JUANITA HENSLEY explained that emissions testing stations in
Fairbanks and Anchorage were already allowed to renew
registrations. HB 210 would allow the department to contract with
groups such as Budget Rent a Car. The department does not have
control over those employees, the department only has control over
the type of work they do. Ms. Hensley pointed out that anyone who
performs this work and has access to the computer systems must pass
the same background investigations that the department's employees
have to pass. She informed the committee that the department is in
the process of forming an agreement with third party testing for
commercial vehicles. That third party may be an individual or a
business such as Princess Tours/Greyline who would not necessarily
have to pass the background investigations, but would have to pass
the standards established in the contract. The department has no
control over those employees other than what is specified in the
contracts.
SENATOR TAYLOR said that there is a middle ground. These employees
could have a hold harmless agreement with the person authorized to
perform the work. That individual could be individually
responsible and hold the state harmless from liability. HB 210
creates a blanket immunity for the state.
SENATOR LINCOLN recalled a question relating to the meaning of
"professional manner" on page 5, line 5. JUANITA HENSLEY explained
that HB 210 has a section requiring that employees meet all the
certifications, training, workshops, seminars, and other
instructive meetings.
SENATOR GREEN asked if that was on page 4, line 7. JUANITA HENSLEY
pointed out that there is a professional code of ethics of the
American Association of Motor Vehicle Administrators Certified
Driver Examiner Program. This code of ethics would be adopted in
regulation.
CHAIRMAN RIEGER said that HB 210 would be before the committee
again either as a CS or with prepared amendments.
There being no further business before the committee, the meeting
was adjourned at 2:58 p.m.
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