Legislature(2001 - 2002)

04/10/2001 01:37 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                  SENATE TRANSPORTATION COMMITTEE                                                                             
                          April 10, 2001                                                                                        
                             1:37 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator John Cowdery, Chair                                                                                                     
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Robin Taylor                                                                                                            
Senator Gary Wilken                                                                                                             
Senator Kim Elton                                                                                                               
MEMBERS ABSENT                                                                                                                
All Members Present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 152                                                                                                             
"An  Act relating  to  the  handling  of and  interest  on  contract                                                            
controversies involving  the Department of Transportation and Public                                                            
Facilities   or   state  agencies   to   whom  the   Department   of                                                            
Transportation  and Public Facilities  delegates the responsibility                                                             
for handling the controversies."                                                                                                
     MOVED SB 152 OUT OF COMMITTEE                                                                                              
CS FOR HOUSE BILL NO. 8(FIN) am                                                                                                 
"An Act establishing  the Legislative Pioneer Road  Development Task                                                            
Force; and providing for an effective date."                                                                                    
     MOVED CSHB 8(FIN)am OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 44                                                                                                              
"An Act establishing  an Alaska Toll Bridge and Causeway  Authority;                                                            
and providing for an effective date."                                                                                           
     MOVED SB 44 OUT OF COMMITTEE                                                                                               
SENATE BILL NO. 45                                                                                                              
"An Act  making  an appropriation  for the  design of  the Knik  Arm                                                            
crossing; and providing for an effective date."                                                                                 
     MOVED SB 45 OUT OF COMMITTEE                                                                                               
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 152 - No previous Senate committee action.                                                                                   
HB 8 - No previous Senate committee action.                                                                                     
SB 44 - See Transportation minutes dated 3/22/01 and 4/3/01.                                                                    
SB 45 - See Transportation minutes dated 3/22/01 and 4/3/01.                                                                    
WITNESS REGISTER                                                                                                              
Janet Seitz                                                                                                                     
Staff to Representative Rokeberg                                                                                                
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified for the sponsor of HB 8.                                                                       
Dennis Poshard                                                                                                                  
Special Assistant                                                                                                               
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT:  Opposed to HB 8 and answered questions about                                                             
SB 44, SB 45 and SB 152.                                                                                                        
Paula Terrell                                                                                                                   
Vice President                                                                                                                  
Thane Neighborhood Association                                                                                                  
Juneau, AK                                                                                                                      
POSITION STATEMENT:  Opposed to studying a road from Juneau to                                                                
Atlin [HB 8].                                                                                                                   
Susan Schrader                                                                                                                  
Alaska Conservation Voters                                                                                                      
PO Box 22151                                                                                                                    
Juneau, AK  99802                                                                                                               
POSITION STATEMENT:  Opposed to the task force membership in, and                                                             
inadequate fiscal note for, HB 8.                                                                                               
Doug Gardner                                                                                                                    
Assistant Attorney General                                                                                                      
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT:  Answered questions about SB 152.                                                                         
Kevin G. Brady                                                                                                                  
745 W. 4th Ave., Suite 502                                                                                                      
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Testified in support of SB 152.                                                                          
Mike Miller                                                                                                                     
Association of General Contractors of Alaska                                                                                    
7101 Debarr Rd.                                                                                                                 
Anchorage, AK  99504                                                                                                            
POSITION STATEMENT:  Testified in support of SB 152.                                                                          
Katelyn Markley                                                                                                                 
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
813 W. Northern Lights                                                                                                          
Anchorage, AK  99503                                                                                                            
POSITION  STATEMENT:  Discussed  the financial  impact of SB  152 on                                                          
ACTION NARRATIVE                                                                                                              
TAPE 01-13, SIDE A                                                                                                            
Number 001                                                                                                                      
CHAIRMAN  JOHN COWDERY called  the Senate  Transportation  Committee                                                          
meeting to order at 1:37  p.m. Senators Ward, Elton and Cowdery were                                                            
present.  The  first order of business to come before  the committee                                                            
was HB 8.                                                                                                                       
         HB   8-LEGIS.PIONEER ROAD DEVELOPMENT TASK FORCE                                                                   
MS. JANET SEITZ, staff  to Representative Rokeberg, sponsor of HB 8,                                                            
described the  bill as follows.  HB 8 sets up a Legislative  Pioneer                                                            
Road Development  Task Force consisting of representatives  from the                                                            
Alaska Trucking  Association, Operating Engineers,  Teamsters Union,                                                            
Alaska  Chamber of  Commerce, Associated  General  Contractors,  and                                                            
other organizations.    The task force's  job would  be to  identify                                                            
roads that are  important to the future of the economic  development                                                            
of Alaska and  to study the feasibility of upgrading  and developing                                                            
some of  these roads.  In  addition, the task  force is to  consider                                                            
rights-of-way  under the  RS 2477  in order to  protect the  state's                                                            
interest  in  those  rights-of-way.   It  should  also  recommend  a                                                            
schedule of appropriations  subject to federal and  other funds.  HB
8 contains  a list  of 25  road projects  to review  and allows  the                                                            
review of  other road  projects with  merit.  The  task force  is to                                                            
submit a written  report of its findings and recommendations  to the                                                            
legislature   before  the   second  session   of  the  22nd   Alaska                                                            
Legislature convenes.   The act will be repealed on  March 15, 2002.                                                            
CHAIRMAN  COWDERY noted that  when federal  funds are involved,  the                                                            
roads have to  meet standards that make the projects  expensive.  He                                                            
asked how that is addressed in HB 8.                                                                                            
MR.  SEITZ  said  the   Department  of  Transportation   and  Public                                                            
Facilities'  (DOTPF) staff  has testified  in other committees  that                                                            
Representative  Rokeberg's vision of gravel roads  would qualify for                                                            
federal  funding.   She  pointed out  that  Representative  Rokeberg                                                            
submitted amendments for the committee's consideration.                                                                         
SENATOR  ELTON  commented   that  DOTPF  has  gone  through  a  very                                                            
extensive   planning    process   [the   Statewide   Transportation                                                             
Improvement  Process  - STIP];  it  may  be too  early  to tell  how                                                            
successful  that process has been.   The benefit to that  process is                                                            
that  it  was  a grounds-up  approach   to transportation   planning                                                            
instead  of  a top-down  approach.    He  asked  how Representative                                                             
Rokeberg  came to include  some roads and  transportation  corridors                                                            
that were not included in that plan.                                                                                            
MS. SEITZ said  the roads listed in HB 8 come from  the work done by                                                            
the  House Special  Committee  on Economic  Development,  Trade  and                                                            
Tourism over  the last few  years.  She  provided committee  members                                                            
with a packet  of information from that committee.   She pointed out                                                            
it is not the  sponsor's intention  to interfere with the  STIP, but                                                            
instead  to  add  to  that  planning  process   and  to  give  DOTPF                                                            
information that it might not have otherwise looked at.                                                                         
CHAIRMAN  COWDERY asked if  the task force  will set the  priorities                                                            
for these roads.                                                                                                                
MS. SIETZ explained that  the task force will identify and establish                                                            
a priority  ranking  for projects  to develop or  upgrade roads  and                                                            
submit the list to the legislature.                                                                                             
CHAIRMAN COWDERY asked a representative from DOTPF to testify.                                                                  
MR. DENNIS POSHARD, Special  Assistant, DOTPF, stated the department                                                            
has some objections to  HB 8.  He said if money was no object, DOTPF                                                            
would support  the study and construction  of many of the  corridors                                                            
listed.  But,  the fact of the matter is, DOTPF is  operating with a                                                            
constrained   budget,  so   it  is  concerned   about  building   up                                                            
expectations  to build roads that  may not be built.  DOTPF  is also                                                            
concerned that  should those roads be built, added  maintenance will                                                            
be  necessary.   Some  of the  corridors  on  the list  will  create                                                            
substantial maintenance  burdens.  He said that one  of the repeated                                                            
arguments  in support of HB  8 is that DOTPF  has not been  building                                                            
any new  roads.  DOTPF has  built some new  small segments  of roads                                                            
recently;  the limiting  factor is  one of dollars.  He pointed  out                                                            
that when one  balances the fact that  over 200 miles of  the Dalton                                                            
Highway  is under  contract  to be  paved, that  project  is a  much                                                            
higher priority  than most of the corridors mentioned  in HB 8.  The                                                            
issue for DOTPF is one  of prioritization and not hesitancy to build                                                            
new roads; its  priority has been to upgrade existing  roads.  DOTPF                                                            
believes HB 8 will create  an unnecessary task force that will build                                                            
up expectations  about road corridors  that don't pencil  out from a                                                            
dollars   and   sense  perspective   and   from   a  prioritization                                                             
Number 614                                                                                                                      
CHAIRMAN  COWDERY commented  the Alcan Highway  helped Alaska  and a                                                            
lot of the pioneer roads.                                                                                                       
SENATOR TAYLOR  asked Mr. Poshard  to clarify what he meant  when he                                                            
talked about building expectations.                                                                                             
MR. POSHARD  said this  task force  will recommend  roads that  most                                                            
would agree  will help develop  corridors in  Alaska but whether  or                                                            
not it is  realistic that  those roads will  be built when  they are                                                            
viewed from  the perspective of statewide  priorities is  not known.                                                            
He  pointed  out that  DOTPF  has  done  studies  on many  of  these                                                            
corridors already. DOTPF  looked at a road from Bethel to Napaskiak,                                                            
which is a short distance,  but it would have cost almost $5 million                                                            
per mile to build.   The road to Nome is currently  being studied in                                                            
the Northwest plan and  maybe recommended in that plan.  The road to                                                            
Cordova is part  of the Prince William Sound planning  process.  The                                                            
community  of Cordova is  split on the issue  and the ferry  service                                                            
improvements pencil  out much better from a dollar  perspective.  He                                                            
noted that several of the  corridors listed in the bill have already                                                            
been studied  and determining  whether  a road segment  will  be the                                                            
best use of money  without taking into consideration  rail, barging,                                                            
airport improvements  and alternative means of transportation  would                                                            
be a disservice in building  expectations on the part of the public.                                                            
SENATOR TAYLOR asked who decides what is realistic.                                                                             
MR.  POSHARD  said that  DOTPF  uses  a public  process  when  doing                                                            
regional  plans that  involves  the general  public.   The  regional                                                            
plans  use   economic  models,   transportation   cost  models   and                                                            
preliminary engineering studies.                                                                                                
SENATOR TAYLOR asked who sets the policy carried out by DOTPF.                                                                  
MR.  POSHARD  said  DOTPF operates  under  the  constraints  set  in                                                            
SENATOR  TAYLOR commented  the  legislature  follows  a very  public                                                            
process  too.   He  said he  finds  Mr. Poshard's  testimony  to  be                                                            
arrogant  and  offensive  in  that  he  indicated  that  DOTPF  will                                                            
determine, on  everyone's behalf, what is realistic.   He stated the                                                            
Legislature determines  what is realistic and it will set the policy                                                            
and  asks  the  departments   to  carry  those  policies   out.  The                                                            
Legislature uses  a public process to set policy and  the reality of                                                            
that policy  should not get measured  by a bureaucrat in  DOTPF.  He                                                            
asked Mr. Poshard  to reconsider some of his comments  and to assist                                                            
the committee  in its efforts  to discern  what the public  believes                                                            
are priorities.                                                                                                                 
MR. POSHARD  apologized and said his  comments were not intended  to                                                            
offend.   He  said he  was trying  to point  out that  DOTPF uses  a                                                            
public process that is  federally required.  It follows that process                                                            
to determine how  best to program in the resources  that the federal                                                            
government  has given  the state  to spend  on transportation.    In                                                            
addition, DOTPF  has to come to the Legislature for  approval of its                                                            
capital  budget  every  year,  and  that will  not  change,  so  the                                                            
Legislature  ultimately has the final  say in what DOTPF  spends the                                                            
federal transportation dollars on.                                                                                              
CHAIRMAN  COWDERY   noted  that  Senator   Wilken  had  a   proposed                                                            
SENATOR  WILKEN moved  to adopt Amendment  1 and  explained that  it                                                            
will add an  item (27) for a roughly  60 mile connection  from Chena                                                            
Hot  Springs  Road  northeast  to  Circle Hot  Springs  Road.    The                                                            
addition would connect  and make a loop from Fairbanks to Circle Hot                                                            
Springs and down the Steese Highway.                                                                                            
CHAIRMAN  COWDERY noted  that  with no  objection,  Amendment 1  was                                                            
SENATOR TAYLOR  moved to adopt Amendment 2, to add  item (28) to the                                                            
list of projects to study a road across the Cleveland Peninsula.                                                                
CHAIRMAN COWDERY asked if that is the Bradfield Canal Road.                                                                     
SENATOR TAYLOR  said it would be an extension of it.   The Bradfield                                                            
Canal Road  would run from the tip  of Bradfield Canal into  British                                                            
Columbia.   The  Cleveland  Peninsula  road  would be  necessary  to                                                            
connect Ketchikan to the Bradfield Canal Road.                                                                                  
SENATOR  ELTON commented  that nothing  in HB 8  precludes the  task                                                            
force  from looking  at any  other projects.   He said  he will  not                                                            
object to the amendment  but advised committee members that he plans                                                            
to offer  an amendment  that will  bring balance;  it will remove  a                                                            
SENATOR TAYLOR added that,  regarding Amendment 2, most of the roads                                                            
on Revilla  Island are  logging roads and  by interconnecting  those                                                            
and building  two small bridges, one  could drive out of  Ketchikan.                                                            
CHAIRMAN COWDERY  asked if there was any opposition  to Amendment 2.                                                            
There being none, Amendment 2 was adopted.                                                                                      
SENATOR ELTON moved to  adopt Amendment 3, to remove on page 3, line                                                            
27,  item  number  (22),  a  road  from  Juneau  to  Atlin,  British                                                            
Columbia.   He said  he believes the  problem with  HB 8 is  that it                                                            
uses a top-down  approach instead of a bottom-up approach  beginning                                                            
at the community  level.  He believes  the Southeast Transportation                                                             
Improvement  Plan  would  be  an appropriate  place  to  make  these                                                            
decisions.  He  noted he has received a lot of comments  about HB 8,                                                            
specifically  about  the  road  from  Juneau  to Atlin.    The  vast                                                            
majority of  people who contacted  him oppose the inclusion  of that                                                            
road. Deleting  that road from the bill will accurately  reflect the                                                            
opinions  he's heard  and if  the community  wants such  a road,  it                                                            
should be discussed at the community level first.                                                                               
REPRESENTATIVE ROKEBERG  commented that the Juneau to Atlin road was                                                            
added at the request  of Representative Hudson from  Juneau when the                                                            
bill was heard in the House Transportation Committee.                                                                           
SENATOR WILKEN asked where  Atlin is located and whether such a road                                                            
would connect to a road system so that he could drive to Juneau.                                                                
SENATOR ELTON  said it does.  Atlin is a short distance  from Juneau                                                            
over the ice field.   The road would run up the Taku  River and into                                                            
Atlin, connecting with the Canadian road system.                                                                                
SENATOR  WILKEN  asked Senator  Elton  whether  he would  prefer  to                                                            
remove it from the bill or to add it to the top of the list.                                                                    
SENATOR ELTON said he would prefer that it be removed.                                                                          
SENATOR TAYLOR  said he has also received comments  from many people                                                            
from Juneau  that favor a road to  Atlin.  He pointed out  the Atlin                                                            
road  could  be built  for  a fraction  of  the  cost of  any  other                                                            
accesses in  or out of the community.   But for the interference  by                                                            
this Administration  on development of the Tulsequah  Chief Mine and                                                            
the permits  that  have already  been granted,  that  road would  be                                                            
there  today.   This road  would go  from Thane  Road through  Sheep                                                            
Creek to  the Tulsequah Chief  Mine Road and  would not involve  the                                                            
environmental  impacts that  would occur on  the eastern Lynn  Canal                                                            
route and it would cost less to maintain.                                                                                       
SENATOR ELTON  said this road has been part of an  ongoing study and                                                            
that it was part  of the access issue study.  The  professionals and                                                            
engineers came  to a different conclusion.  Many of  the people that                                                            
contacted  his office use  the Taku River  as a sports destination,                                                             
commercial fish  in that area, or are from the neighborhood  through                                                            
which  the  road  would  run.   He  repeated  that  these  kinds  of                                                            
decisions need  to be made at the local level. He  added that one of                                                            
the reasons the  Tulsequah Chief Mine is not in operation  has to do                                                            
with First Nations in Canada.                                                                                                   
CHAIRMAN  COWDERY  called  for a  roll  call  vote on  Amendment  3.                                                            
Senator  Elton voted  in favor,  Senators Ward,  Taylor, Wilken  and                                                            
Cowdery voted against, therefore Amendment 3 failed.                                                                            
REPRESENTATIVE  ROKEBERG  asked the  committee  to consider  another                                                            
amendment (Amendment  4) that would change the entity  that appoints                                                            
the  civil engineer  to  the  task force  from  the State  Board  of                                                            
Registration  for Architects,  Engineers and  Land Surveyors  to the                                                            
Alaska Professional  Design  Council.  He  noted this amendment  was                                                            
requested by the State Board.                                                                                                   
SENATOR TAYLOR moved to adopt Amendment 4.                                                                                      
CHAIRMAN COWDERY announced  that with no opposition, Amendment 4 was                                                            
SENATOR TAYLOR noted he  had a proposed amendment in his packet that                                                            
defines a rural area.                                                                                                           
SENATOR  WARD asked to  see a copy  of the amendment  as he  was not                                                            
comfortable with  new definitions of the word "rural."   He asked if                                                            
"rural"  is defined  in current  law to  be anything  50 miles  from                                                            
CHAIRMAN COWDERY said he did not know.                                                                                          
SENATOR TAYLOR  noted that he would have to oppose  the amendment if                                                            
it is offered because it  says that none of the towns visited by the                                                            
Alaska  Marine   Highway  System   in  Southeast  Alaska   would  be                                                            
considered rural, such as Angoon and Hoonah.                                                                                    
SENATOR WARD  asked Representative  Rokeberg what the intent  of the                                                            
proposed amendment is.                                                                                                          
REPRESENTATIVE  ROKEBERG said the task force will  have four members                                                            
appointed from  rural areas.  His  intent was to make sure  that the                                                            
task force had representation from the rural parts of the state.                                                                
CHAIRMAN COWDERY  asked Representative Rokeberg if  he sponsored the                                                            
REPRESENTATIVE ROKEBERG said that is correct.                                                                                   
SENATOR WILKEN  asked Representative  Rokeberg how strongly  he felt                                                            
about the amendment.                                                                                                            
REPRESENTATIVE  ROKEBERG said  he would defer  to the wisdom  of the                                                            
Senators on this issue.                                                                                                         
SENATOR TAYLOR moved SCS  CSHB 8(TRA) from committee with individual                                                            
CHAIRMAN COWDERY noted that two people were waiting to testify.                                                                 
MS.  PAULA  TERREL,   Vice  President  of  the  Thane  Neighborhood                                                             
Association,  asked the committee  to rescind its action  on failing                                                            
to adopt  Amendment 3.   The Thane Neighborhood  Association  is not                                                            
opposed to  HB 8, but it  does oppose a  road from Juneau  to Atlin.                                                            
The association  opposes such as a  road for the following  reasons:                                                            
   · Heavy avalanche danger;                                                                                                    
   · The road would travel through a neighborhood that currently                                                                
     has a dirt road;                                                                                                           
   · The road would travel through the Dupont area, which is                                                                    
     heavily used by local, tourism, and recreational groups;                                                                   
   · In the Juneau access road study the Atlin road project was                                                                 
     ruled out because the British Columbia government opposed that                                                             
     portion of the road;                                                                                                       
   · High maintenance costs;                                                                                                    
   · The First Nations in British Columbia have filed a lawsuit to                                                              
     stop development of the Tulsequah Chiefs Mine, which is why                                                                
     the permit for a road to that mine has been held up.                                                                       
The Thane  Neighborhood  Association  also supports  the  commercial                                                            
fishing  groups and the  Taku River homeowners  association,  groups                                                            
that oppose this road.                                                                                                          
SENATOR TAYLOR  said he completely agrees with Ms.  Terrell and that                                                            
it's not his  intent to take a road  out past Thane Road  because of                                                            
the  reasons she  stated.   He noted  there  is a  hole through  Mt.                                                            
Roberts so if a tunnel  was punched through it, the road would never                                                            
come near the Thane Road neighborhood.                                                                                          
MS. SUSAN SCHRAEDER, representing  Alaska Conservation Voters (ACV),                                                            
said ACV has  several concerns with  this legislation.  Last  month,                                                            
the Senate Transportation  Committee heard testimony on SB 3, a bill                                                            
that would authorize an  appropriation to do a study of North Denali                                                            
access.  A  major criticism of the  Denali Task Force was  that they                                                            
thought the  membership of  that task force  was totally  imbalanced                                                            
with members opposed  to a northern access route.   She believes the                                                            
same criticism  can be leveled at  the Pioneer Road Task  Force.  It                                                            
is almost  exclusively weighted  with pro-road  advocates.   Alaskan                                                            
history  has shown,  time and  again, that  road  projects are  very                                                            
controversial and the best  way to avoid some of that controversy is                                                            
to have  a good public  process.   The fiscal  note associated  with                                                            
this bill does  not provide for many local hearings  or notification                                                            
of comment  periods.  The task force  should be funded sufficiently                                                             
to allow for a meaningful  public process so that the task force can                                                            
determine  what  communities  want.   Ms.  Schrader said  a  healthy                                                            
economy  for Alaska will  not be  found by looking  backwards  at 80                                                            
year old rutted  tractor trails.  She encouraged legislators  to put                                                            
its  time and  resources  into  meaningful  studies to  improve  the                                                            
transportation  needs  of  the  state  that  will  enhance  economic                                                            
opportunities.  HB 8 will  establish a controversial, faulty process                                                            
to take  a look backwards.   She asked the  committee to oppose  the                                                            
SENATOR  TAYLOR moved  and  asked unanimous  consent  that SCS  CSHB
8(TRA) move from  committee with individual recommendations.   There                                                            
being no objection, the motion carried.                                                                                         
         SB  44-ALASKA TOLL BRIDGE AND CAUSEWAY AUTHORITY                                                                     
            SB  45-APPROP: DESIGN OF KNIK ARM CROSSING                                                                        
VICE CHAIRMAN WARD asked Ms. Brown to present SB 44 and SB 45.                                                                  
MS. LORETTA  BROWN, staff  to Senator Ward,  sponsor of both  bills,                                                            
explained  that SB 44 and  SB 45 are related.   SB 44 establishes  a                                                            
toll bridge authority  and SB 45 would facilitate  the building of a                                                            
Knik Arm  causeway.   The bills  are essentially  the same as  bills                                                            
introduced  in the  Thirteenth  Alaska  Legislature.   The  proposed                                                            
legislation would  appropriate $1 million in state  general funds to                                                            
form  an authority  and to  design a  crossing that  will span  Cook                                                            
Inlet  from  the Port  of  Anchorage  to Point  Mackenzie.    Eighty                                                            
percent  of construction  costs will  be covered  by federal  funds.                                                            
The causeway authority  will issue transportation bonds for up to 20                                                            
percent  of  the  cost  and  collect  tolls   to  repay  the  bonds.                                                            
Congressman  Young has stated that  the Knik Arm causeway  is one of                                                            
his two top priorities.                                                                                                         
SENATOR TAYLOR  asked Mr. Poshard  if DOTPF has done any  studies on                                                            
the Knik Arm causeway.                                                                                                          
MR. POSHARD  informed the committee  that some studies were  done in                                                            
the mid-1980s.                                                                                                                  
SENATOR TAYLOR  asked whether DOTPF  studied alternative  methods of                                                            
transportation such as high speed ferries.                                                                                      
MR. POSHARD  said he does not know  what alternatives were  studied.                                                            
SENATOR  TAYLOR  asked  whether  DOTPF  decided  a  causeway  was  a                                                            
realistic project.                                                                                                              
MR. POSHARD said  DOTPF believes it should take a  hard look at this                                                            
project   and  supports   the   appropriation   to   get  into   the                                                            
environmental  process.    DOTPF  requested   $20  million  recently                                                            
through the congressional  delegation for the environmental phase of                                                            
the Knik Arm causeway.   Congressman Young has been  very supportive                                                            
of that request.                                                                                                                
SENATOR  TAYLOR  maintained  that  someone  must  have  decided  the                                                            
project is realistic if those funds were requested.                                                                             
VICE-CHAIRMAN   WARD  explained  that  the  Thirteenth  Legislature                                                             
appropriated $5 million  for a study for the Knik Arm causeway.  One                                                            
component  was the  "do  nothing"  proposal and  that  is where  the                                                            
ferries  came  in  or where  people  would  continue  to  drive  the                                                            
existing route.  He was  the sponsor of that legislation and at that                                                            
time Congressman Young was not in his current position.                                                                         
SENATOR  TAYLOR   moved  SB  44  from   committee  with   individual                                                            
VICE-CHAIRMAN  WARD announced  that with no  objection, SB  44 moved                                                            
from committee.                                                                                                                 
SENATOR  TAYLOR   moved  SB  45  from   committee  with   individual                                                            
VICE-CHAIRMAN  WARD announced that  with no objections, SB  45 moved                                                            
from committee.  He then  stated the committee would take up SB 152.                                                            
               SB 152-DOTPF-RELATED CONTRACT CLAIMS                                                                           
MR.  DON  SMITH,  staff to  Senator  Cowdery,  sponsor  of  SB  152,                                                            
explained that  the measure relates to the handling  and interest on                                                            
contract controversies  involved in DOTPF.  The proposed legislation                                                            
would simply require  that when a contract settlement  with DOTPF is                                                            
in dispute and finally  settled in favor of the contractor, interest                                                            
must be  paid to  the contractor  on the settlement  amount  for the                                                            
time the contract was in  dispute.  The interest would accrue at the                                                            
rate applicable to judgments and interest in state statute.                                                                     
TAPE 01-13, SIDE B                                                                                                            
Disputes do  occur and many take way  too long to settle.   There is                                                            
no  urgency  to settle  on  the  state's  part,  therefore  interest                                                            
expenses would  increase the settlement incentive.   The state earns                                                            
interest  on the money while  it is under  dispute and, many  times,                                                            
financially  strapped  contractors end  up settling  simply  because                                                            
they can't  fight the  time delay.   Contractors  have to pay  their                                                            
expenses  while  the dispute  is  ongoing.    SB 152  would  provide                                                            
fairness.   Letters of support from  the Alaska General Contractors                                                             
and others have been placed in members' packets.                                                                                
SENATOR  TAYLOR said  he met with  Dick Hatten  (ph), the  executive                                                            
director  of the Alaska  General Contractors  and learned that  this                                                            
would apply to cases that do not go to court.                                                                                   
MR. SMITH said that is correct.                                                                                                 
SENATOR  TAYLOR  clarified  that  these  cases  are  arbitrated  and                                                            
involved claims for cost overruns or change orders.                                                                             
VICE-CHAIRMAN  WARD  said  he would  have  DOTPF staff  address  the                                                            
SENATOR TAYLOR  said he believes  if a case  is taken to court,  the                                                            
winning party would have the right to pre-judgment interest.                                                                    
Mr. Dennis Poshard, Special  Assistant, DOTPF, and Mr. Doug Gardner,                                                            
Assistant Attorney General, took the witness stand.                                                                             
SENATOR TAYLOR  asked Mr.  Gardner if SB 152  will apply to  matters                                                            
that are being litigated.                                                                                                       
MR. GARDNER  said the  bill applies  to administrative  claims.   He                                                            
explained  that  an  example   would  be  a  situation  in  which  a                                                            
contractor is  building a road and a condition changed.   Alaska law                                                            
requires  the contractor  to bring  a claim before  DOTPF under  the                                                            
procurement  code.   There  are a  variety  of different  levels  of                                                            
review  and a final  decision is  made by the  Commissioner  after a                                                            
review by a hearing  officer has taken place.  The  party can appeal                                                            
the decision  in Alaska Superior  Court.   If appealed to the  court                                                            
system, the case will always be considered an appellate case.                                                                   
VICE-CHAIRMAN WARD took public testimony.                                                                                       
MR. KEVIN BRADY, an attorney  with Olds, Morrison, Rinker and Baker,                                                            
informed the committee  that he has had the opportunity  to litigate                                                            
approximately   four  claims  through  the  administrative   hearing                                                            
process, even  up into the judicial  review process.  The  cases are                                                            
large and  complex involving  tens of thousands  of documents.   The                                                            
process itself  takes anywhere  from 24 to  60 months.  During  that                                                            
period of time,  no interest accrues  on the contractor's  claim, to                                                            
the  financial detriment  of  the contractor.   Private  owners  pay                                                            
prejudgment  interest, federal  agencies pay  prejudgment  interest,                                                            
municipalities and cities  pay pre-judgment interest, so there is no                                                            
legitimate basis  for DOTPF, or any other state agency,  to withhold                                                            
pre-judgment  interest and  treat contractor  claimants disparately                                                             
from  other  tort or  contract  claimants.    He offered  to  answer                                                            
VICE-CHAIRMAN WARD asked  if any law exists that prevents DOTPF from                                                            
paying pre-judgment interest now.                                                                                               
MR. BRADY said to his knowledge,  there is not.  He said sometime in                                                            
1998,  DOTPF made  the decision,  based on  what he  believes is  an                                                            
erroneous interpretation  of an Alaska  Supreme Court case,  that it                                                            
no longer has to pay.                                                                                                           
VICE-CHAIRMAN WARD asked Mr. Gardner to elaborate on that case.                                                                 
MR. GARDNER said  he is not counsel of record in that  case but that                                                            
case is pending before the Alaska Supreme Court at this time.                                                                   
SENATOR TAYLOR  asked what shift or  change of policy DOTPF  made in                                                            
1998 based upon an interpretation of a Supreme Court decision.                                                                  
VICE-CHAIRMAN  WARD then asked if  the 1998 case is being  appealed.                                                            
MR. GARDNER said  the issue that he believes was raised  in the case                                                            
that  Mr. Brady  was referring  to involves  a 1996  Alaska  Supreme                                                            
Court decision named Danko  Exploration v. State (924 P2nd 432).  He                                                            
noted  it has  been a fairly  long  standing interpretation  of  the                                                            
state's status of its sovereign  immunity that the state only agrees                                                            
to be sued in capacities  where it waves its sovereign immunity.  He                                                            
     I don't believe that the issue has been raised, at least                                                                   
      not to my knowledge, and again the attorney in the case                                                                   
       may know more but I don't believe the question of pre-                                                                   
      judgment interest has come up very often to the extent                                                                    
     that we have  begun litigating it in this case  is because                                                                 
     the claimant, who Mr. Brady  represents, raised the issue.                                                                 
     But, we  believe if the  - and  I don't want to - I  don't                                                                 
     think it would be useful  to go through the Danko decision                                                                 
     here,  but I think that if the  decision is read, it's  my                                                                 
     sense  that this has been a long  standing interpretation                                                                  
     of Alaska law.  The pre-judgment  interest occurs when the                                                                 
     state waives  its sovereign immunity on that issue  and it                                                                 
     has  not, according to  our reading of  the Danko case  by                                                                 
     the Alaska  Supreme Court and by the Superior  Court judge                                                                 
     that visited  this issue on two  occasions and found  that                                                                 
     the  state had not  waved its sovereign  immunity on  this                                                                 
     issue.    So,  I would  say  at  this point,  it  was  the                                                                 
     Department  of Law's position  that pre-judgment interest                                                                  
     wasn't  - couldn't  be awarded  on these  claims and  that                                                                 
     position has now been validated  by a Superior Court judge                                                                 
     and will  be heard by the Supreme  Court.  So, I wouldn't                                                                  
     say it's an erroneous interpretation  of the law, it seems                                                                 
     to be accurate according to the court.                                                                                     
SENATOR  TAYLOR asked  if, prior to  the Danko  case when the  state                                                            
paid [indisc.].                                                                                                                 
MR. GARDNER  said he  is not aware  of any case  in which the  state                                                            
paid  pre-judgment  interest  on a  disputed  claim that  was  going                                                            
through the administrative  process.  He noted there are other cases                                                            
cited within  Danko that  suggest that this  line of logic  has gone                                                            
back further than 1996.                                                                                                         
SENATOR TAYLOR asked Mr. Brady if he had any further comment.                                                                   
MR. BRADY  said he would  like to correct  several of Mr.  Gardner's                                                            
statements.   He  stated the  commissioner's  office had  authorized                                                            
awards  of pre-judgment  interest, even  up to  and including  1998.                                                            
[Mr. Brady's next  statement was inaudible]. He concluded  by saying                                                            
the Department  of Law took the position that pre-judgment  interest                                                            
was an inappropriate  component of  the award, and since  then DOTPF                                                            
discontinued  the  practice  of awarding  pre-judgment  interest  to                                                            
contract claimants.                                                                                                             
VICE-CHAIRMAN thanked Mr. Brady.                                                                                                
MR. MIKE  MILLER,  the immediate  past president  of the  Associated                                                            
General  Contractors  of Alaska,  stated  support  for SB  152.   He                                                            
stated  that  in his  experience,  pre-judgment  interest  became  a                                                            
controversy  in  the  late  1980s  in the  Northern  region.    That                                                            
controversy  was settled at  the regional  level after almost  three                                                            
years  of "butting  heads."   He pointed  out that  in public  works                                                            
construction,  a contractor has no  choice but to complete  the work                                                            
or perform  the work that  he's supposed to  do. Even if there  is a                                                            
dispute,  the  contractor  must  complete  the  work  otherwise  the                                                            
contractor  will  be liable  for  breach  of  contract.   Given  the                                                            
state's ability  to drag  claims out forever,  contractors are  at a                                                            
huge disadvantage  to recover.  The  time value of money  is a basic                                                            
principle in our  economic society and the contractors  only want to                                                            
be treated fairly.  SB 152 will quell any doubt as  to whether state                                                            
sovereignty is  given up.  It corrects an oversight;  the wording of                                                            
SB 152 was in  the model procurement code as it was  contemplated by                                                            
the legislature in the 1980s, but fell out for some reason.                                                                     
MS.  KATELYN  MARKLEY,   Development  Specialist   with  the  Alaska                                                            
Industrial  Development  and  Export Authority  (AIDEA),  said  that                                                            
AIDEA works through DOTPF  under the procurement rules.  Disputes do                                                            
arise  when construction  projects are  underway  and, in the  past,                                                            
AIDEA  has been able  to settle  those disputes  through  negotiated                                                            
settlements.   She said it  is difficult to  estimate a fiscal  note                                                            
for this bill.   It could range from zero, if no disputes  occur, to                                                            
the millions.   She told  the committee that  the contractor  on the                                                            
Healy  [indisc.]  gold  project   originally  had  a  claim  in  the                                                            
millions.   The settlement, just based  on an 18 month time  period,                                                            
could have  been based on a $10 million  claim, and could  have cost                                                            
an  additional  $1.6 million  [in  pre-judgment  interest].    AIDEA                                                            
settled the  claim for approximately  $1.1 million.  Had  AIDEA paid                                                            
interest  based on the dates  the claim when  filed, the cost  would                                                            
have been  an additional  $188,000.  AIDEA  didn't pay interest  and                                                            
once the claim was settled,  the claim was paid the following month.                                                            
Ms. Markley  repeated  that she  cannot  provide a  fiscal note  but                                                            
should this arise, it could have an impact on AIDEA projects.                                                                   
VICE-CHAIRMAN WARD noted there was no further testimony.                                                                        
SENATOR TAYLOR  moved SB 152 from committee and asked  for unanimous                                                            
VICE-CHAIRMAN  WARD announced  that  with no  objection, the  motion                                                            
carried  and that  the bill  does not  have any  further  referrals.                                                            
With no other  business to come before  the committee at  this time,                                                            
he adjourned the meeting at 2:40 p.m.                                                                                           

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