Legislature(2001 - 2002)

04/26/2001 01:43 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 26, 2001                                                                                        
                             1:43 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator John Cowdery, Chair                                                                                                     
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Robin Taylor                                                                                                            
Senator Gary  Wilken                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Kim Elton                                                                                                               
COMMITTEE CALENDAR                                                                                                            
SENATE BILL  NO. 130                                                                                                            
"An  Act establishing   the Alaska  Marine  Highway  Authority;  and                                                            
providing for an effective date."                                                                                               
     MOVED SB 130 OUT OF COMMITTEE                                                                                              
SENATE BILL  NO. 195                                                                                                            
"An Act  relating to the  operation of the  Anton Anderson  Memorial                                                            
Tunnel  and related  toll facilities  by the City  of Whittier;  and                                                            
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL  NO. 196                                                                                                            
"An Act  relating  to the toll  for the  use of  the Anton  Anderson                                                            
Memorial Tunnel  and the Portage Glacier Highway;  and providing for                                                            
an effective  date."                                                                                                            
     HEARD AND HELD                                                                                                             
SENATE BILL  NO. 197                                                                                                            
"An Act prohibiting  the imposition  of a toll or other fee  for use                                                            
of  the Anton  Anderson  Memorial  Tunnel  and the  Portage  Glacier                                                            
Highway;  annulling   certain  regulations  of  the   Department  of                                                            
Transportation  and Public Facilities  relating to tolls  for use of                                                            
the Anton Anderson Memorial  Tunnel and the Portage Glacier Highway;                                                            
and providing for an effective date."                                                                                           
     HEARD AND HELD                                                                                                             
CS FOR HOUSE BILL NO. 127(RLS)                                                                                                  
"An  Act relating  to  aviation and  to  emergency equipment  to  be                                                            
carried on aircraft."                                                                                                           
     MOVED SCS CSHB 127(RLS) OUT OF COMMITTEE                                                                                   
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 130 - No previous Senate committee action.                                                                                   
HB 127 - No previous action to record.                                                                                          
SB 195 - No previous action to record.                                                                                          
SB 196 - No previous action to record.                                                                                          
SB 197 - No previous action to record.                                                                                          
WITNESS REGISTER                                                                                                              
Captain George Capacci                                                                                                          
Director, Alaska Marine Highway System                                                                                          
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT:  Opposed to SB 130.                                                                                       
Mr. John Manley                                                                                                                 
Aide to Representative Harris                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified for the sponsor of HB 127.                                                                     
Ms. Juli Lucky                                                                                                                  
Aide to Senator Halford                                                                                                         
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Explained the changes made in SCS CSHB
Senator Donny Olson                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified in favor of SCS CSHB 127(TRA).                                                                 
Mr. Paul Bowers                                                                                                                 
Director, Statewide Aviation                                                                                                    
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
PO Box 196900                                                                                                                   
Anchorage, AK  99519                                                                                                            
POSITION STATEMENT:  Discussed problems with implementing SCS                                                                 
CSHB 127(TRA).                                                                                                                  
Mr. Carl Siebe                                                                                                                  
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
411 Aviation Drive                                                                                                              
Anchorage, AK  99502                                                                                                            
POSITION STATEMENT:  Discussed enforcement problems with Alaska's                                                             
aviation statutes.                                                                                                              
Mr. Butch Halford                                                                                                               
Address not provided                                                                                                            
POSITION STATEMENT:  Commented on SCS CSHB 127(TRA).                                                                          
Mr. Tom Crafford                                                                                                                
Alaska Miners' Association                                                                                                      
POSITION STATEMENT:  Discussed problems with SCS CSHB 127(TRA)                                                                
regarding the use of public runways used in mining operations.                                                                  
Brad Thompson, Director                                                                                                         
Division of Risk Management                                                                                                     
Department of Administration                                                                                                    
PO Box 110218                                                                                                                   
Juneau, AK  99811-0200                                                                                                          
POSITION STATEMENT:  Discussed the current and proposed insurance                                                             
requirements of air carriers under SCS CSHB 127(TRA).                                                                           
Mr. Kip Knudson                                                                                                                 
ERA Aviation                                                                                                                    
6160 Carl Brady Drive                                                                                                           
Anchorage, AK  99502                                                                                                            
POSITION STATEMENT:  Commented on the insurance provisions                                                                    
related to SCS CSHB 127(TRA).                                                                                                   
Mr. Matt Rowley                                                                                                                 
City of Whittier                                                                                                                
PO Box 608                                                                                                                      
Whittier, AK  99693                                                                                                             
POSITION STATEMENT:  Commented on SB 195, SB 196, and SB 197.                                                                 
Mr. Ben Butler, Mayor                                                                                                           
City of Whittier                                                                                                                
PO Box 608                                                                                                                      
Whittier, AK  99693                                                                                                             
POSITION STATEMENT:  Commented on SB 195, SB 196, and SB 197.                                                                 
Mr. Dennis Poshard                                                                                                              
Special Assistant                                                                                                               
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT:  Commented on DOTPF's concerns with SB 195,                                                               
SB 196, and SB 197.                                                                                                             
ACTION NARRATIVE                                                                                                              
TAPE 01-14, SIDE A                                                                                                            
Number 001                                                                                                                      
CHAIRMAN  JOHN COWDERY called  the Senate  Transportation  Committee                                                          
meeting to order  at 1:43 p.m. Present were Senators  Taylor, Wilken                                                            
and Cowdery.   He announced the committee would hear  the resolution                                                            
at another time;  the first bill to come before the  committee would                                                            
be  SB 130.   Chairman  Cowdery  asked the  sponsor  to address  the                                                            
              SB 130-ALASKA MARINE HIGHWAY AUTHORITY                                                                        
SENATOR  ROBIN  TAYLOR,  sponsor  of  SB  130,  gave  the  following                                                            
explanation of the measure.                                                                                                     
SB 130 is essentially  the same measure that he introduced  about 10                                                            
years ago when  he was a member of  the House.  Senator Lloyd  Jones                                                            
introduced a companion  bill in the Senate.  The concept  originated                                                            
from studies done  on Southeast Alaska transportation  over the last                                                            
25 years.  Those  studies have concluded that transportation  issues                                                            
should be removed from  the influence of politics by establishing an                                                            
autonomous board  that would hire staff.  An autonomous  board would                                                            
also provide  for  continuity and  hopefully  develop an  intermodal                                                            
system of transportation  to interconnect the expanding  road system                                                            
of Southeast  Alaska.   None  of that has  occurred  in the last  37                                                            
years. Unfortunately,  that  operation, in  the words of Jim  Ayers,                                                            
"is in a death spiral."                                                                                                         
SENATOR TAYLOR  said that without  continuity in transportation,  he                                                            
doesn't believe  the ferry system will continue to  exist, even as a                                                            
shadow of what it was in  the past.  The entire economy of Southeast                                                            
Alaska depends  upon a certain level of service that  may or may not                                                            
be available.  If those  communities are going to survive and have a                                                            
viable  transportation  link, this  bill is  crucial.   This  matter                                                            
always  come down  to a confrontation  between  the legislative  and                                                            
executive branches.  Every  governor wants to be able to appoint the                                                            
people who will  run the Alaska Marine Highway System  (AMHS).  This                                                            
administration  has been no more successful in that  effort than has                                                            
any previous administration.   Senator Taylor expressed concern that                                                            
the head of the entire  transportation system and the people who run                                                            
it change every  four years and the replacements have  no background                                                            
in that  system.  That has  led to a lack  of continuity, a  lack of                                                            
expertise, and wildly vacillating concepts.                                                                                     
SENATOR TAYLOR  noted he is not aware  of any marine highway  system                                                            
in the world  that is building high  speed ferries for normal  runs.                                                            
High  speed ferries  are being  built for  critical  runs where  the                                                            
existing system has no  capacity left.  Passengers are paying two to                                                            
three times the cost to get to their destination quicker.                                                                       
Number 467                                                                                                                      
CHAIRMAN  COWDERY asked  if the high  speed ferries  are capable  of                                                            
running in big seas.                                                                                                            
SENATOR  TAYLOR said  that every system  he has  contacted does  not                                                            
operate  fast ferries in  adverse weather  conditions. In  addition,                                                            
staff from  the Department of Transportation  and Public  Facilities                                                            
(DOTPF) have  said they would  not be able  to operate a fast  ferry                                                            
several days  each year; high  seas are a  major factor, as  well as                                                            
cost  and  maintenance.     High  speed  ferries  are   probably  an                                                            
innovative  idea that will develop  over time to where they  will be                                                            
less expensive  to operate.   He  pointed out  that issue should  be                                                            
resolved  by  a  board   of  directors  with  expertise   in  public                                                            
transportation, and specifically marine transportation.                                                                         
CHAIRMAN  COWDERY  noted that  Senators  Ward, Taylor,  Wilken  were                                                            
present  and  that Senator  Elton  was ill.    He then  took  public                                                            
Number 664                                                                                                                      
MR. GEORGE  CAPACCI, General  Manager of  the Alaska Marine  Highway                                                            
System, read the following prepared statement to the committee.                                                                 
     It  is  important  that I  be  here today  to  express  my                                                                 
     concerns  about  the  proposed  marine highway  authority                                                                  
     contained  in SB 130.  These concerns are essentially  the                                                                 
     same as Commissioner Perkins  presented in 1997, with some                                                                 
     important  updates about the  management and direction  of                                                                 
     the Alaska Marine Highway.                                                                                                 
     Let  me begin  with  a review  of  why the  Alaska Marine                                                                  
     Highway  Authority  is not  in the  best interest  of  our                                                                 
     customers,  the citizens of Alaska, and the Alaska  Marine                                                                 
     Highway employees.                                                                                                         
     First  off, the authority  creates more  problems than  it                                                                 
     solves.  SB  130 diminishes public accountability.   Under                                                                 
     the present  system, the marine highway system  management                                                                 
     is accountable  to the public.  Concerns and requests  are                                                                 
     responded  to quickly  and completely.   They have to  be.                                                                 
     Elected  officials are responsible  for the management  of                                                                 
     the  marine  highway  and elected  officials  have  to  be                                                                 
     responsive to the public  they serve.  Sometimes that is a                                                                 
     time consuming  and cumbersome process but it  is the most                                                                 
     responsive  way  to handle  the  people's business.    The                                                                 
     establishment of an authority  would diminish the publics'                                                                 
     accountability  of marine highway management by  inserting                                                                 
     an  appointed board  between  management and  the people.                                                                  
     Marine highway  management will no longer answer  directly                                                                 
     for  the  elected  governor   or for  any  other  elected                                                                  
     representatives.  The board,  and not the governor nor the                                                                 
     legislature,   will  make  management  decisions.     Once                                                                 
     appointed,  board members will  not be accountable to  the                                                                 
     public.   A board member  may be removed  only for cause.                                                                  
     The  accountability of  the marine  highway management  to                                                                 
     the communities they serve  will be substantially reduced.                                                                 
     We believe this is not desirable.                                                                                          
     SB  130 diminishes  public influence  on decision making.                                                                  
     Alaskans  know  who is  in charge  of the  marine highway                                                                  
     system.   When things are running  well, they know who  to                                                                 
     compliment.   When things aren't going so well,  they know                                                                 
     who  to contact.  Believe  me, they  know who to contact.                                                                  
     This  bill changes all  of that.   When accountability  of                                                                 
     elected officials  changes, public access to the  decision                                                                 
     making  process  also changes.   Although  a  person or  a                                                                 
     community  may ask the  board of directors  of the system                                                                  
     for  a schedule  change  or a special  run,  there may  be                                                                 
     little  or no pressure to respond.   The CEO is insulated                                                                  
     from the effect of public pressure.                                                                                        
     Current  community  input to  the fleet's  schedule is  an                                                                 
     ongoing  effort.    Annually  we solicit  this  input  and                                                                 
     adjust  our schedule  as much  as possible  to meet  those                                                                 
     demands.  We believe Alaskans  appreciate direct access to                                                                 
     the public systems that  most affect their lives, and this                                                                 
     bill  will have  a  substantial  negative impact  on  that                                                                 
     The  Alaska Marine  Highway  System is  not  broken.   The                                                                 
     marketing  and  pricing  study  was  recently  completed.                                                                  
     There  is a  lot that  is right  about the  Alaska Marine                                                                  
     Highway  System.    The  ships  have  an enviable  safety                                                                  
     record,  they generally  run on time,  they provide  safe,                                                                 
     economical,   comfortable  and   reliable  transportation                                                                  
     service   to  our   traveling  public.     The  currently                                                                  
     completed,  back in September of last year, marketing  and                                                                 
     pricing  study, found  that 93  percent  of our customers                                                                  
     rate  their AMHS  experience as  good or very  good.   The                                                                 
     study also  concluded of the top ten locations  visited by                                                                 
     summer of 1999 visitors,  five locations - Anchorage, Mat-                                                                 
     Su/Denali,  Fairbanks, Valdez and the Kenai Peninsula  are                                                                 
     not  even in Southeast  Alaska.   So five  of the top  ten                                                                 
     locations  are not even in Southeast Alaska.   This points                                                                 
     out  that   we  are  carrying   visitors  and  passengers                                                                  
     throughout  the  state  of Alaska.    The  entire state's                                                                  
     economy  therefore  benefits  from  the  marine highway's                                                                  
     Of  course,  I'll be  the  first to  admit  some problems                                                                  
     occur.   They are inevitable  in an  operation that is  as                                                                 
     vulnerable  to as  many variables  as the  marine highway                                                                  
     system  is.  It is a  system that has  a large and varied                                                                  
     constituency,  and  everyone  has an  opinion  as to  what                                                                 
     should  be  done and  how it  should  be operated.    But,                                                                 
     overall,  the system is doing  what it was designed  to do                                                                 
     in  the  mid-60s   -  transporting  people  and  vehicles                                                                  
     throughout coastal Alaska  in the context of an intermodal                                                                 
     transportation  network.    It is  a  credit to  the  hard                                                                 
     working  crewmembers and dedicated  staff that we operate                                                                  
     as well as we do.                                                                                                          
     SB  130 adds  another  administrative  layer.   This  bill                                                                 
     would  set  up another  administrative  layer  over  which                                                                 
     neither  the  governor  nor  the  legislature   will  have                                                                 
     control.   We believe  that is  bad public  policy.   But,                                                                 
     even worse, it doesn't fix  anything.  There is nothing in                                                                 
     the bill  that encourages stability  or financial support                                                                  
     by the  legislature.   There is nothing  in the bill  that                                                                 
     addresses the increasing  capital needs of an aging fleet.                                                                 
     There are major challenges  at marine highways that we are                                                                 
     addressing with strong leadership  and action.  One of the                                                                 
     biggest  problems that  you can help  relieve is the  time                                                                 
     and energy that now is being  spent controlling the damage                                                                 
     caused  by anxiety  over our  future.  That  is a problem                                                                  
     that you can materially  affect by telling the whole story                                                                 
     in this very  successful state adventure by demonstrating                                                                  
     your  support  for  its  future and  helping  us  fix  the                                                                 
     problems  that we  have.  The  system is  nearly 40  years                                                                 
     old.  The ships are aging,  the system is running the same                                                                 
     type  of operation it  did 38 years  ago with more public                                                                  
     service.   In 1976, for example,  Sitka was provided  with                                                                 
     268 trips  and in 1999 that number  was 325 trips.   Today                                                                 
     we are responding  to the challenges of shrinking  funding                                                                 
     and increasing regulatory demands.                                                                                         
     I'd  like  to  talk  a  little  bit about  AMHS  maritime                                                                  
     experience.  Although it  isn't specifically stated in the                                                                 
     proposed   legislation,   an  implicit   purpose  for   an                                                                 
     authority  is apparently  to insulate  the marine highway                                                                  
     system from  inexperienced managers appointed  through the                                                                 
     political  patronage  process.   The 1989  "Acres Report"                                                                  
     recommended  that additional  experienced mariners should                                                                  
     be hired  as managers to better  understand the operation                                                                  
     of the  maritime vessels.   AMHS has  done that and  more.                                                                 
     From  myself,  the  director  of  the  Southeast  region,                                                                  
     through  the   vessel  operations  managers,  the  marine                                                                  
     engineering  manager,  the port  captain,  assistant  port                                                                 
     captain,   the  ISM/STCW  coordinator,   the  three   port                                                                 
     engineers,  the eight  vessel construction  managers,  and                                                                 
     the state's  only naval architect and our safety  officer,                                                                 
     the Alaska  Marine Highway System  is staffed with marine                                                                  
     professionals with over  500 years of vessel operation and                                                                 
     maintenance  experience.    Most of  my staff,  my senior                                                                  
     level  staff, have the title  "captain" in front of  their                                                                 
     names  and we can refer  to them because  of their master                                                                  
     mariners  documents.   This staff  exists  to support  the                                                                 
     Alaska  Marine  Highway  vessels and  conducts  its  daily                                                                 
     business to that end.                                                                                                      
     The Southeast  Transportation Plan and the Prince  William                                                                 
     Sound  Transportation Plan point  toward the future.   The                                                                 
     Southeast  Alaska Transportation Plan was a comprehensive                                                                  
     plan   that  was   developed  through   extensive  public                                                                  
     participation.   The basic tenant of the SATP  is a series                                                                 
     of  shuttle  vessels   connecting  Southeast  communities                                                                  
     coupled with a version of  the exiting mainline vessels to                                                                 
     improve   the  overall  transportation   system  for   our                                                                 
     customers.   The same  holds true for  the Prince William                                                                  
     Sound  Transportation Plan.   A vessel capable of 30  plus                                                                 
     knots is needed  to solve the elemental time and  distance                                                                 
     equation to provide daily  service in Southeast Alaska and                                                                 
     Prince  William  Sound. The  residents of  Prince William                                                                  
     Sound  communities  strongly  support  our transportation                                                                  
     planning efforts.  The residents  of Southeast Alaska have                                                                 
     uniformly supported a Southeast  transportation plan.  The                                                                 
     Southeast  Transportation  Plan  and  the  Prince William                                                                  
     Sound  Transportation Plan  are not perfect  but they  are                                                                 
     good  plans and the  best our public  process can produce                                                                  
     for essential  transportation  improvements.  These  plans                                                                 
     have wide  public support and  endorsement.  We need  your                                                                 
     support to implement these transportation plans.                                                                           
     I  believe a  firm foundation  is  being laid  for future                                                                  
     statewide transportation  services including the essential                                                                 
     Alaska Marine  Highway System. Vessels are being  upgraded                                                                 
     to comply  with ever increasing international  and federal                                                                 
     safety   regulations.      Our   crews   are   undergoing                                                                  
     standardized   training  mandated  by  the  international                                                                  
     regulations   to  be   the  most   professional  mariners                                                                  
     An  authority would  further  isolate the  marine highway                                                                  
     system from  capital funds.  The marine highway  system is                                                                 
     presently managed by DOT/PF  personnel as an integral part                                                                 
     of  Alaska's   intermodal  transportation  system.     The                                                                 
     majority  of the routes have  been designated by Congress                                                                  
     as part of  the national highway system.  As an  operating                                                                 
     arm  of  the  department,  the  system  receives  federal                                                                  
     highway  funds from  the department.   By  separating  the                                                                 
     system from DOT, as an authority,  operating independently                                                                 
     from  the rest of  the Department  of Transportation,  the                                                                 
     debate  for  funding the  marine  highway  system capital                                                                  
     improvement  projects could conceivably shift  more toward                                                                 
     the  legislature  for resolution.    This will  force  the                                                                 
     marine  highway system to compete  more aggressively  with                                                                 
     individual  communities  throughout the  state, other  DOT                                                                 
     regions, and  other agencies for its share of  the federal                                                                 
     highway funds,  rather than sharing them as one  component                                                                 
     of Alaska's intermodal transportation system.                                                                              
     While the commissioner of  DOT would serve on the board of                                                                 
     directors  of this  new authority,  it is  unrealistic  to                                                                 
     think that an organizational  component, which is separate                                                                 
     form   the  rest  of  the  agency,   and  for  which   the                                                                 
     commissioner  no longer has primary  responsibility,  will                                                                 
     receive  the  same  level  of consideration   for federal                                                                  
     highway funds  as it receives as a line agency  within the                                                                 
     The  authority  itself  provides no  mechanism  to reduce                                                                  
     subsidies.   The marine highway  system presently derives                                                                  
     about  55 percent of  its operating  funds from revenues,                                                                  
     with  the remaining  45 percent  of its  operating budget                                                                  
     appropriated  from the  general fund  by the legislature.                                                                  
     The  marine highway  provides  an essential  public  good,                                                                 
     transportation,  that cannot be provided by the  [private]                                                                 
     sector.  As  such, providing a state operating  subsidy is                                                                 
     an  appropriate  role for  government.   This  subsidy  is                                                                 
     essential   for  continuing   service  year  round   at  a                                                                 
     reasonable  price.  Nothing in  this proposed legislation                                                                  
     is  directed toward  changing that  funding relationship.                                                                  
     The  proposed  authority is  not  designated to  be  self-                                                                 
     sufficient.     It   will  continue   to  require  annual                                                                  
     legislative  appropriations  for  operations  and capital                                                                  
     improvements.     What  then  is  the  justification   for                                                                 
     establishing  it as  a state  corporation?   An authority                                                                  
     will  require additional  subsidy  to fund  its increased                                                                  
     overhead costs.                                                                                                            
     Additionally,   administrative   costs   are   likely   to                                                                 
     increase.   The marine highway system is already  unfairly                                                                 
     criticized  for its  large size of  central office staff.                                                                  
     In  truth,  the Juneau  office  staff  has  diminished  in                                                                 
     recent  years despite extensive  additional international                                                                  
     and national  safety and training regulations,  which need                                                                 
     implementation, monitoring,  and oversight.  If the marine                                                                 
     highway  system  is split  from  the rest  of DOT  into  a                                                                 
     quasi-independent    authority,    it   will   lose    the                                                                 
     administrative   support   presently   provided   by   the                                                                 
     department,  and the administrative  costs for the marine                                                                  
     highway  system will  certainly increase.   Personnel  and                                                                 
     accounting  services, which  are now  provided in part  by                                                                 
     headquarters,   would  fall  entirely  on  the  authority                                                                  
     itself,  so would engineering  services now being provided                                                                 
     by  the Southeast  region.   The system  would further  be                                                                 
     removed  from the  Federal  Highway Administration.    The                                                                 
     relations with DOT and the  Federal Highway Administration                                                                 
     would  be  complicated  since our  CFR  Title 23  for  the                                                                 
     administration of the Federal  Highway funding programs is                                                                 
     the responsibility  of the state highway agency,  which is                                                                 
     the Department of Transportation.                                                                                          
     Separate  accounting  and data  processing  systems  would                                                                 
     almost certainly  be necessary.  That authority  would not                                                                 
     be   exempt  from   the  Executive   Budget   Act,   state                                                                 
     procurement  code,  and  other state  mandated  rules  and                                                                 
     Finally, and  thankfully, in summary, the proposed  marine                                                                 
     highway authority  would be a move in the wrong  direction                                                                 
     as far as  transportation in Alaska is concerned.   We all                                                                 
     recognize  that the marine highway system cannot  continue                                                                 
     to operate as if it were  still in the 1960s.   Times have                                                                 
     changed  and the  needs of  Alaska's communities  and  the                                                                 
     traveling   public  have  changed.    The  transportation                                                                  
     network  along  Alaska's   coastline  has  changed.    The                                                                 
     changes   needed  in   the  marine   highway  system   are                                                                 
     evolutionary  as the system adapts to meet the  demands of                                                                 
     our  varied customers.   However, SB 130  takes us in  the                                                                 
     wrong  direction.  With  the help of  the legislature,  we                                                                 
     will continue to work to  ensure the marine highway system                                                                 
     truly  functions as an  integral system  and element in  a                                                                 
     well designed  state transportation system.  I  am working                                                                 
     to  bring about this  evolutionary change  to improve  the                                                                 
     marine  highway system  but this transition  must be  well                                                                 
     thought out and have the  support of the people of Alaska.                                                                 
     This takes  time and the worst  action we can take now  is                                                                 
     to create  another level of unneeded  bureaucracy as  this                                                                 
     bill  proposes to do.   Thank you for  allowing that  many                                                                 
     pages  and I would be  happy to answer  any questions  you                                                                 
     might have.                                                                                                                
Number 1400                                                                                                                     
CHAIRMAN  COWDERY asked  if the ferry  systems in  other states  are                                                            
privately owned  and, if so, how they  deal with federal  subsidies.                                                            
MR. CAPACCI said there  are a number of ferry systems throughout the                                                            
country, both  publicly and privately  owned.  Most of the  publicly                                                            
owned ferry  systems get  federal dollars  to improve and  construct                                                            
their vessels.   Their operating funds come from their  own revenues                                                            
and  from  their  state  legislatures.     Those  systems  are  very                                                            
different  from Alaska's.    Alaska has  passenger  ships that  also                                                            
carry cars  and are not used as commuter  systems. Most other  state                                                            
ferry systems do not have to deal with long distances.                                                                          
SENATOR WARD asked for  a copy of Mr. Capacci's written comments. He                                                            
also asked if any other ferry systems are run by an authority.                                                                  
MR. CAPACCI  said  he is not  aware of  all the  authorities,  but a                                                            
number of bodies  advise the Washington  Legislature and  do studies                                                            
for it, such  as tariff pricing studies.   He does not believe  that                                                            
Washington State  has a true authority that directs  the CEO of that                                                            
ferry system.                                                                                                                   
SENATOR   WARD  asked   if  the   existing  authorities   are   port                                                            
MR.  CAPACCI  said  he  would  have to  do  more  research  on  that                                                            
SENATOR WARD  commented that  he asked because  Mr. Capacci  said he                                                            
was not  in favor of authorities.   He then  noted the Governor  has                                                            
proposed  new regulations  on  cruiseships  to deal  with waste.  He                                                            
asked if the ferry  system is already complying with  the Governor's                                                            
proposed regulations.                                                                                                           
MR. CAPACCI  replied, "Through the  Chair, yes - Senator  Ward there                                                            
are a number of different ...."                                                                                                 
SENATOR WARD responded, "Okay, that's fine, thank you."                                                                         
MR. CAPACCI said, "...but yes."                                                                                                 
SENATOR  WARD asked if  the AMHS  has the ability  to acquire  state                                                            
lands so that it can develop,  sell or lease those lands in order to                                                            
supplement   its  operations,   similar  to   the  Alaska   Railroad                                                            
Corporation (ARRC).                                                                                                             
MR. CAPACCI  said he  did not  know what possibilities  exist  along                                                            
that line.                                                                                                                      
SENATOR WARD asked if Mr.  Capacci has read Sec.19.55.210, regarding                                                            
acquisition  of land and easements,  on page  6 of SB 130.  He noted                                                            
that  one of  the  cornerstones  of this  bill  is to  transfer  1.4                                                            
million acres of state  land to this new authority to offset some of                                                            
the  operational  costs.    He  again  asked if  the  AMHS  has  the                                                            
authority to accept land now.                                                                                                   
MR.  CAPACCI  said he  did  not see  that  section in  the  previous                                                            
edition of  the bill.  He repeated  that he is not sure whether  the                                                            
AMHS can accept  land at this time.  He noted that  is an intriguing                                                            
SENATOR  WARD  said,  regarding  Mr.  Capacci's   comment,  that  an                                                            
authority  would separate  the people from  the operations,  that he                                                            
believes an authority  would bring the two into closer  contact.  He                                                            
asked if that  would be eliminated  if the members of the  authority                                                            
are elected rather than appointed.                                                                                              
MR. CAPACCI said  he would have to give that question  more thought.                                                            
SENATOR WARD  said to serve  on other authorities,  candidates  must                                                            
fit certain  criteria, such  as geographic  location.  He felt  that                                                            
should solve the public  input problem and asked Mr. Capacci if that                                                            
is what he is proposing.                                                                                                        
Number 1693                                                                                                                     
MR. CAPACCI  said he  does not know  that the  Port of Bellingham's                                                             
authority runs  a maritime transportation system.   DOTPF deals with                                                            
the facilities  in Bellingham but  he is only aware of the  terminal                                                            
facilities that they operate.                                                                                                   
SENATOR  WARD  asked  Mr.  Capacci  if  he  is  familiar  with  that                                                            
MR. CAPACCI  said he is  aware they have  an authority with  elected                                                            
SENATOR  WARD again  asked  if that  would alleviate  Mr.  Capacci's                                                            
concern about public participation.                                                                                             
MR. CAPACCI  said he is not sure how  that authority relates  to the                                                            
public  and how  responsive  it is  to the  public.   He noted  that                                                            
authority  is not  developing  a transportation  system.   It  makes                                                            
decisions about the shore side facilities.                                                                                      
CHAIRMAN  COWDERY  said he  is glad  the  marine highway  system  is                                                            
already conforming  to the proposed cruiseship regulations  on waste                                                            
MR. CAPACCI said there will be expenses.                                                                                        
CHAIRMAN  COWDERY  said  the  marine  highway  system  must  not  be                                                            
conforming then.                                                                                                                
MR. CAPACCI said,  "We do conform with the outflows  but the testing                                                            
requirements  and  the reporting  requirements  and  the  monitoring                                                            
requirements   are  going  to  be   additional  administrative   and                                                            
additional costs  if the periodicity is changed.   The sampling that                                                            
we  do -  we  weren't initially  sampling  effluent,  we  had  other                                                            
measures of  whether the systems are  effective or not, but  we took                                                            
it upon ourselves to sample  those outflows and found that they were                                                            
within  specifications  so, if  a lot of  those  bills get  enacted,                                                            
there's going to be some expenses involved in that, yes sir."                                                                   
There being no further  testimony or questions, SENATOR TAYLOR moved                                                            
SB 130 from committee with  individual recommendations.  There being                                                            
no objection, the motion carried.                                                                                               
          HB 127-AVIATION & AIRCRAFT EMERGENCY EQUIPMENT                                                                    
CHAIRMAN COWDERY  announced that the committee discussed  the Senate                                                            
version [SB 100] of HB 127 at a previous hearing.                                                                               
SENATOR WARD  moved to adopt  SCS CSHB 127(TRA),  Version F,  as the                                                            
working document  of the committee.   There being no objection,  the                                                            
motion carried.                                                                                                                 
The committee took a brief at-ease.                                                                                             
CHAIRMAN COWDERY  called the meeting  back to order and took  public                                                            
MR. JOHN MANLEY,  staff to Representative  Harris, prime  sponsor of                                                            
HB  127,  told  committee   members  that  Representative   Harris's                                                            
original  intention was  to make it  easier for  private pilots  who                                                            
take  off  from  Alaska  and  land  in  Canada  to  do  so  legally.                                                            
According  to recent federal  legislation in  Canada, a person  must                                                            
get a  permit to bring  in a firearm,  meaning  a rifle or  shotgun.                                                            
Handguns are  not allowed.  Alaska  statutes require private  pilots                                                            
to carry  a  firearm to  take off  from Alaska.    The new  Canadian                                                            
legislation  creates  a  situation  where Alaskan  pilots  would  be                                                            
acting illegally  if they took off  without a firearm and  illegally                                                            
if they landed in Canada with one.                                                                                              
HB 127 exempts  private pilots flying under an FAA  flight plan into                                                            
Canada  from  carrying  a  gun.    A  few other  changes   regarding                                                            
emergency equipment to be carried were made in the House.                                                                       
MS. JULI LUCKY,  staff to Senator  Rick Halford, sponsor  of SB 100,                                                            
explained that  most of the provisions  of SB 100 were added  to SCS                                                            
CS HB 127(TRA) but it differs  from SB 100 in the following ways.  A                                                            
section regarding  survival rations was removed; provisions  related                                                            
to communications  were removed  as no  reference to communications                                                             
was made in the  title of HB 127; and new language  was added to the                                                            
civil liabilities section  (Section 11), which Senator Taylor worked                                                            
Number 2005                                                                                                                     
SENATOR TAYLOR  expressed concern about lessening  the life, health,                                                            
and safety  aspects of the law.  He  pointed out that a flight  from                                                            
Fairbanks to  Dawson covers a significant  distance and pilots  will                                                            
be less well-equipped to  deal with difficulties with this bill.  He                                                            
said  he understands  the  reasons  for  the  compromise  but he  is                                                            
frustrated that it has to be done.                                                                                              
SENATOR DONALD  OLSON told the committee that this  bill will affect                                                            
two air  taxi businesses he  owns.  He has  been a pilot since  1969                                                            
and  has had  to make  about 14  or 15  forced landings  during  his                                                            
flying career;  he has needed the emergency gear he  carries various                                                            
times.   He  noted  that during  the  past 30  years,  the air  taxi                                                            
business  has  changed.    Airlines  used  rudimentary  Cessna  180s                                                            
whereas  now multi-engine  turbine  aircraft  are used.    Regarding                                                            
searches, emergency  locator transmitters  were not required  in the                                                            
early  1970s so  searches  could take  months.   Now  that they  are                                                            
required for air  taxi businesses and private aircraft,  search time                                                            
has been dramatically reduced.   For those reasons, he supports this                                                            
bill.  Senator  Olson pointed out that some pilots  are reluctant to                                                            
carry  all required  emergency gear,  such as  handguns, because  of                                                            
MR. PAUL BOWERS,  Director of State Aviation for DOTPF,  agreed that                                                            
vandalism is  a problem.  He said  that requiring pilots  in Nome to                                                            
carry  firearms onboard  a flight  might cause  problems if  Russian                                                            
airspace is  opened up to private  flights. He suggested  making the                                                            
firearm  requirement  an optional  part  of emergency  equipment  or                                                            
rewording the  bill so that it applies  to any international  flight                                                            
instead of Canada  only.  Mr. Bowers also suggested  exempting large                                                            
airlines  from Section 1  as they are already  exempted by  the FAA.                                                            
Regarding signaling devices,  he suggested listing a small mirror as                                                            
an alternative device.                                                                                                          
CHAIRMAN COWDERY announced  that an error was made when adopting the                                                            
previous committee substitute  and asked that a member move to adopt                                                            
the correct version.                                                                                                            
SENATOR TAYLOR  moved to adopt SCS CSHB 127(TRA),  Version L, as the                                                            
working document  of the committee.   There being no objection,  the                                                            
motion carried.                                                                                                                 
CHAIRMAN COWDERY continued to take public testimony.                                                                            
MR.  CARL  SIEBE,  airports  engineer  for  the  Statewide  Aviation                                                            
Division  of  DOTPF,  made the  following  comments.    The  current                                                            
statutes create  enforcement problems  for DOTPF by requiring  it to                                                            
do selective  enforcement.   Foreign  pilots fly  into Alaska  every                                                            
year  and try  to  get their  book  rating,  yet under  federal  law                                                            
foreign visitors  to the United States are prohibited  from carrying                                                            
weapons.  In addition,  licensed pilots with a felony conviction are                                                            
prohibited by  other statutes from carrying weapons.  Last, business                                                            
aircraft  often stop  in Alaska  for a "pit  stop"  on their way  to                                                            
other countries.                                                                                                                
TAPE 01-14, SIDE B                                                                                                              
MR. SIEBE  said an aircraft  cannot land in  those countries  with a                                                            
weapon  so they  typically  do not  carry weapons.    He noted  that                                                            
clarification  of the original legislative intent  of that provision                                                            
would help DOTPF to administer  the statute.  Regarding the survival                                                            
gear  statutes  in  general,  he pointed  out  the  U.S.  Air  Force                                                            
survival school has excellent  guidelines for survival gear, many of                                                            
which differ  from Alaska's statutes.   The Air Force requires  that                                                            
survival  gear be simple  enough to  be carried on  the person.   He                                                            
informed  the  committee   the  revised  [1999]  Canadian   aviation                                                            
regulations  require pilots  to carry shelter,  signaling  equipment                                                            
and equipment to make potable  water.  He asked that whatever is put                                                            
forth in statute be reasonable and enforceable.                                                                                 
CHAIRMAN  COWDERY said  when he was  flying in  Alaska he carried  a                                                            
sealed metal container  filled with survival gear that could only be                                                            
used,  under penalty,  for  an emergency.    He asked  if that  same                                                            
concept could be applied to this bill.                                                                                          
MR.  SIEBE  said his  first  concern  with that  approach  would  be                                                            
enforceability.  DOTPF  aviation staff are extremely limited and the                                                            
State Troopers are also limited as far as what they can do.                                                                     
CHAIRMAN COWDERY said most  pilots want to conform so a random check                                                            
should suffice.                                                                                                                 
MR. SIEBE said the FAA  doesn't want to get into the requirement for                                                            
carrying survival  gear on small aircraft.  If an  annual inspection                                                            
was required,  someone in DOTPF would have to enforce  that statute.                                                            
CHAIRMAN  COWDERY  asked  the  next testifier  his  opinion  of  the                                                            
concept of a sealed packet of survival gear.                                                                                    
MR. BUTCH HALFORD said  he is not well-versed on that element of the                                                            
proposed legislation.                                                                                                           
SENATOR  TAYLOR asked  Mr.  Halford to  comment  on the  need for  a                                                            
proposed amendment regarding  occupancy related contracts and leases                                                            
at airports.                                                                                                                    
MR. HALFORD  said the issue  is one of liability.   The Division  of                                                            
Risk Management  has recently required  that anyone who enters  into                                                            
an agreement with  the state, whether it be through  a contract or a                                                            
lease, must indemnify the  state against any liability less than 100                                                            
percent of sole responsibility  of the state.  He pointed out if the                                                            
state was 99 1/2  percent responsible for a problem,  the person who                                                            
entered  into the  lease would  have to  assume 100  percent of  the                                                            
liability.   He felt that  is not reasonable  and it is not  common.                                                            
It would be far  more reasonable to adopt a position  of comparative                                                            
fault so that  each party shares in  the liability to the  degree of                                                            
Number 1984                                                                                                                     
SENATOR  TAYLOR  informed  committee  members  he  has  submitted  a                                                            
proposed  amendment  (Amendment  1) to  take care  of  part of  that                                                            
problem.   The amendment  does  not cover  as broad  a scope as  Mr.                                                            
Halford  would like on  all liability  issues, but  it does  adopt a                                                            
comparative  fault  policy  on DOTPF-owned  airports  with  lessees,                                                            
permittees  and concession owners.   He moved to adopt Amendment  1.                                                            
There being no objection, the motion carried.                                                                                   
CHAIRMAN COWDERY proposed  to delete on page 5, line 17, of SCS CSHB
127(TRA) the reference to AS 02.35.110(b).                                                                                      
SENATOR  TAYLOR so moved  Chairman Cowdery's  proposed amendment  as                                                            
Amendment 2.  There being no objection, the motion carried.                                                                     
MR. TOM CRAFFORD, representing  the Alaska Miners Association (AMA),                                                            
made the following comments  about the civil liability provisions in                                                            
SCS CSHB  127(TRA).  He noted  he is a geologist  by training.   The                                                            
concerns  of the AMA  relate to  the civil liability  exposure  of a                                                            
miner who,  out of necessity, maintains  an airstrip to support  his                                                            
operations in  rural Alaska.  Under existing law,  the miner may not                                                            
close  the airstrip  for  public use,  even  though  it is  intended                                                            
solely for the support  of the mining operations.  As a consequence,                                                            
this  opens  the  miner  up  to  certain  liability   issues.    The                                                            
provisions  of Section 11 seek to  provide some limitations  of that                                                            
liability  exposure to  the operator  of the airstrip  but it  still                                                            
leaves  a  paid  employee,  perhaps   a grader   operator,  open  to                                                            
liability.   He  pointed  out  that section  does  extend  liability                                                            
protection  to damage  to an aircraft,  which was  suggested  by the                                                            
AMA.   He  felt  it would  be  appropriate  to further  extend  that                                                            
protection to the contents of the aircraft.                                                                                     
MR. CRAFFORD explained  that Section 11(b) extends  the right to the                                                            
owner or operator  of an airstrip  located on private land  to close                                                            
that airstrip  by placing  a large X on it  that is readily  visible                                                            
from the  air.  The  AMA supports  the concept  but would like  that                                                            
provision to  apply to airstrips on  public land also.  Most  miners                                                            
operate  on  mining  claims  and  leases  from  either  the  federal                                                            
government  or the  state  so the  airstrips associated  with  those                                                            
operations  are  not located  on private  land.   In  addition,  the                                                            
limitation  on liability in subsection  (b) should also be  extended                                                            
to the contents of the aircraft.                                                                                                
Number 1730                                                                                                                     
SENATOR TAYLOR  commented that, in his opinion, there  is no risk of                                                            
liability  whatsoever  because  no one  has ever  been  sued in  the                                                            
history of  the state for  negligence on the  maintenance of  one of                                                            
these remote  airstrips. He explained  that one lawsuit was  brought                                                            
against  a person  who parked  a large vehicle  in  the middle  of a                                                            
runway and did  not move when told to do so.  A pilot  had to make a                                                            
landing and damaged the  aircraft.  The pilot sued the vehicle owner                                                            
and won.                                                                                                                        
SENATOR TAYLOR  said that  since there is  no risk of liability,  he                                                            
structured this section  so that it would only apply to a person who                                                            
had  grossly  acted.   That  section applies  to  the  boss and  any                                                            
employees,  even though  an employee  was  paid.  The  boss was  not                                                            
being  compensated  for  operating  the  airfield.    Regarding  the                                                            
ability to  close the runway, that  subsection was structured  to be                                                            
limited to private landowners  with the understanding that there are                                                            
operators  who  work  off  of  public  land that  do  not  have  the                                                            
authority  to close  a  runway on  public  land.   That  is why  two                                                            
separate subsections were created.                                                                                              
CHAIRMAN COWDERY asked  Mr. Crafford if Senator Taylor's explanation                                                            
satisfied his concerns.                                                                                                         
MR.  CRAFFORD  said it  does  in large  part  but  the AMA  is  also                                                            
concerned about  whether painting an X on a runway  is sufficient to                                                            
close  a runway.   He noted  the placer  miners want  to be able  to                                                            
restrict access  to a runway when they are absent  during the winter                                                            
season to  prevent vandalism.   He agrees  that it is arguable  that                                                            
closing a runway with an X will be an effective deterrent.                                                                      
SENATOR TAYLOR responded  that litigation against private landowners                                                            
on access roads  and trails did not  occur until private  landowners                                                            
tried  to  close  them off.    Instead  of  closing  them off  in  a                                                            
reasonable  fashion, 99  percent of  those landowners  strung  a 1/2                                                            
inch  diameter steel  cable  across  the road  and someone  hit  the                                                            
cable.  He suggested that  putting an X on the runway should keep 99                                                            
percent of  pilots from landing.   He added  that this section  will                                                            
not provide protection  if a runway operator set up  a "booby" trap.                                                            
MR. CRAFFORD  said the  AMA does  not believe  any operators  should                                                            
obstruct a runway in a  dangerous fashion but with this bill a miner                                                            
is prohibited from closing  a runway with an X because the runway is                                                            
not on private land.                                                                                                            
CHAIRMAN  COWDERY  asked if  this  bill has  a referral  to  another                                                            
MS. LUCKY  answered this  is the last committee  of referral  before                                                            
the  Senate Rules  Committee.   She  explained that  the  previously                                                            
mentioned topics were considered  by the sponsor.  Regarding closing                                                            
a runway  on public  lands,  the public's  right to  access must  be                                                            
balanced  with the  problem of  private property  being vandalized.                                                             
The problem  with obstructing runways  on public lands is  that they                                                            
may need to be  used for emergency access.  Another  concern is that                                                            
people  are  not charting  these  runways  because  of the  fear  of                                                            
liability.   Senator  Halford wanted  to give those  people who  are                                                            
maintaining  runways but have not  charted them because of  the fear                                                            
of liability a little more incentive to do so.                                                                                  
SENATOR TAYLOR said he  knows there was some concern about Amendment                                                            
1 and he hopes it does not burden the problem.                                                                                  
MS. LUCKY said the sponsor has no problem with Amendment 1.                                                                     
SENATOR TAYLOR  said one  issue remains that  could be addressed  by                                                            
this legislation,  and that  is the Lake  Hood/DOTPF problem  of who                                                            
gets tie-downs.   He hopes  that Commissioner  Perkins will  address                                                            
that  problem through  regulation  but,  if not,  this  would be  an                                                            
appropriate vehicle to deal with it.                                                                                            
SENATOR WILKEN  noted that  Amendment 1 seems  to be a common  sense                                                            
thing that  people take at face value.   He asked that someone  from                                                            
the Division  of Risk Management  address Amendment  1 and  tell the                                                            
committee why  it has not been done  before.  He also asked  to hear                                                            
from aircraft owners on Amendment 1.                                                                                            
CHAIRMAN COWDERY said due  to a lack of time, he would hold the bill                                                            
and asked Mr. Thompson to address the committee.                                                                                
MR. BRAD  THOMPSON,  Director of  the Division  of Risk Management,                                                             
said his division  advises DOTPF as  to contract terms of  insurance                                                            
and indemnity.   He noted he has been  involved in negotiations  for                                                            
the user agreement  at the Anchorage international  airport, as well                                                            
as the rural airports.   Many discussions have taken  place over the                                                            
allocation  of fault.   Comparative  fault  was a term  used at  the                                                            
Anchorage international  airport negotiations.  The  state attempted                                                            
to revise  and follow  a form  that was  used by  other airports  in                                                            
other jurisdictions.  The  insurance requirements are very difficult                                                            
in  Alaska today  because  of  problems with  the  availability  and                                                            
affordability  of  insurance  for  air  carriers.    The  state  has                                                            
negotiated a user agreement  with comparative fault at the Anchorage                                                            
international  airport and  he intends to do  the same at the  rural                                                            
airports.  SCS CSHB127(TRA) will force the state to do so.                                                                      
The second section  of the bill will require the state  to evidence,                                                            
in regulation, the type  and limit of insurance coverage required of                                                            
each  class  of  aviation-related   lease,  permit  and   concession                                                            
contract.  That's a difficult  challenge.  It is not something he is                                                            
trying  to avoid,  but the  differences  and disparity  between  the                                                            
users  of the Anchorage  international  airport and  lessees at  the                                                            
rural airports  is large.  The state has tried to  use general terms                                                            
in the past on comprehensive  public liability so that it can tailor                                                            
the specific lease contract  or the certificate of insurance used as                                                            
evidence for public  liability to respond to individual  activities.                                                            
There  is  no  such  animal  as a  comprehensive   public  liability                                                            
insurance policy.  That  term was used in a prior regulation but the                                                            
diversity  of operations at  a state airport  in Alaska is  so great                                                            
that it is  a difficult challenge  to put into regulation  something                                                            
that will apply to everyone.                                                                                                    
Number 960                                                                                                                      
SENATOR WILKEN  asked if some airports  in Alaska are maintained  by                                                            
MR. THOMPSON said they are.                                                                                                     
SENATOR WILKEN asked if  a grader was left on a runway and caused an                                                            
accident, whether DOTPF  would be responsible for any portion of the                                                            
liability under current law.                                                                                                    
MR. THOMPSON said it would.                                                                                                     
SENATOR WILKEN  asked for  clarification as  he thought Amendment  1                                                            
allowed for  apportionment of liability  where there is none  today.                                                            
MR.  THOMPSON  explained  that  the  former  use  agreement  at  the                                                            
Anchorage  international   airport  did  have  a comparative   fault                                                            
allocation  as a term of  the contract.   Typically, the state  does                                                            
not  identify in  detail  in statute  or  regulation  the terms  and                                                            
conditions  that will be  used in negotiated  contracts.  The  state                                                            
has responded  to events when  it is legally  liable.  If the  state                                                            
has a contract  with comparative fault,  the state will participate                                                             
to the  extent of its  fault.  He  noted the  state did suggest  and                                                            
propose language  so that the state  would not begin to participate                                                             
unless  it  was at  least  60 percent  at  fault.   Many  times  the                                                            
proximate  cause  of  an  accident  is  the  use  and  operation  of                                                            
aircraft.   Often, through creative  pleading, allegations  are made                                                            
against any party involved, including the state.                                                                                
SENATOR WILKEN asked if Amendment 1 will have a fiscal impact.                                                                  
MR. THOMPSON  said any change  to the state's  risk is incorporated                                                             
into the  overall state risk  management program.   The Division  of                                                            
Risk Management  does not submit a fiscal note when  it has a slight                                                            
variation.  The  division is funded on a pay-as-you-go  basis on its                                                            
self insured program because  it too speculative to suggest a fiscal                                                            
SENATOR  WILKEN asked  Mr. Thompson  if he would  like more  time to                                                            
analyze the impact of Amendment 1.                                                                                              
MR. THOMPSON  said Amendment 1 will  create a significant  challenge                                                            
since  the Division  of Risk  Management  will have  to specify,  in                                                            
regulation,  the type and  limit of insurance  coverage required  of                                                            
each  class  of  aviation-related   lease,  permit  and   concession                                                            
SENATOR WILKEN questioned the need for Amendment 1.                                                                             
Number 564                                                                                                                      
SENATOR TAYLOR  asked if  the lessee is now  asked to indemnify  the                                                            
state for all risk.                                                                                                             
MR. THOMPSON  answered that in a rural  airport lease, the  language                                                            
in regulation  in the past required  the lessee to assume  liability                                                            
for  certain  things resulting  from  or  arising  out of  any  act,                                                            
commission,  or omission by  the lessee,  his agents, employees,  or                                                            
customers arising  from or out of lessee's occupation  or use of the                                                            
premises or privileges granted.                                                                                                 
SENATOR  TAYLOR  asked if  the lessee  had  to indemnify  the  state                                                            
against any liability for any of his activities.                                                                                
MR. THOMPSON said yes,  for any activities arising from the lessee's                                                            
use and operation.                                                                                                              
SENATOR  TAYLOR clarified  that this legislation  will only  require                                                            
the Division of  Risk Management to identify levels  of risk against                                                            
levels  of  aircraft, users  or  lessees  and  to provide  that  the                                                            
division provide  for apportionment  of fault, as opposed  to saying                                                            
the state  will only  step up to  the plate and  be responsible  if,                                                            
after the lessee  has gone to court,  the lessee can prove  that the                                                            
state is more than 60 percent liable.                                                                                           
MR.  THOMPSON  said the  60  percent apportionment  was  a  proposed                                                            
allocation  method in a contract negotiation  that was not  adopted.                                                            
He noted that most international  airports require the users to have                                                            
strict indemnity  and that major airlines  that land in Alaska  sign                                                            
similar terms  and conditions in other  locations.  That  is why the                                                            
division  tried to pattern  the proposed  language in the  Anchorage                                                            
international  airport use agreement  with provisions used  in other                                                            
Number 295                                                                                                                      
SENATOR  WILKEN said  his concern  lies with  the smaller  airports,                                                            
such as Fort Yukon.                                                                                                             
MR. THOMPSON said  if there is a loss involving the  use of aircraft                                                            
arising from the state's  responsibility, the state has paid for its                                                            
responsibility.   The state  is liable for  activities performed  by                                                            
its own employees and its contractors.                                                                                          
SENATOR TAYLOR  noted the real issue  is what the division  requires                                                            
users  of state airports  to have  in insurance  policies  regarding                                                            
state indemnification.   He  noted the state  is self-insured  while                                                            
the users  have to buy an  insurance policy.   He said the  level of                                                            
the risk the state is requiring  the user to indemnify the state for                                                            
is what is in question.                                                                                                         
MR. THOMPSON  said the state  does purchase  airport insurance.   It                                                            
self-insures for the first  $250,000, but purchases excess liability                                                            
coverage to  protect the state's assets  and operations for  a large                                                            
loss in excess  of that amount.  In  the past, the regulation  for a                                                            
lessee  at  a  rural airport  required:   property  damage  coverage                                                            
arising from  one accident  in a sum of not  less than $50,000;  and                                                            
personal injury or death  liability insurance not less than $100,000                                                            
per person and $300,000  per accident.  Those sums were revised in a                                                            
regulation requiring  limits of $1 million for each  occurrence.  He                                                            
pointed out  there is subjective language  for additional  limits to                                                            
be required, depending  upon the level of activity and the location.                                                            
MR. THOMPSON  said the division is  asking for a greater  sum at the                                                            
Anchorage  international airport.   The insurance  required  in 1986                                                            
for all users  was characterized on a per seat basis  and was set at                                                            
$1,000,000.  Minimum  limits for propeller aircraft  were set at $10                                                            
million and  for jet aircraft  at $20 million.   Those requirements                                                             
were for Anchorage only.                                                                                                        
SENATOR WILKEN  asked if this bill with the amendment  will help the                                                            
small  air carriers  and,  if so,  whether it  will  cost the  state                                                            
anything to help them.                                                                                                          
MR. THOMPSON  said he does  not think it  will significantly  affect                                                            
the state's risk  or the state's cost.  It may in  the future with a                                                            
comparative  situation.    Regarding  whether  it  helps  the  small                                                            
operator, he thought  the division will be challenged  with the task                                                            
of developing  a matrix to address, in regulation,  all of the types                                                            
and varied operations.                                                                                                          
SENATOR WILKEN  asked if an air cargo business will  be able to show                                                            
this new  law to its insurance  company and  expect its rates  to be                                                            
MR. THOMPSON  said he does not believe  any relief will be  provided                                                            
to the aircraft  owner/operator because of this bill.   The division                                                            
checked with  the markets  as to the difference  in rates  depending                                                            
upon the  use agreements;  the users  will get  no extra premium  or                                                            
relief if they sign something with a less favorable location.                                                                   
SENATOR TAYLOR  said with the exception  of those that may  be large                                                            
enough to be self insured.                                                                                                      
MR. THOMPSON  responded that is true  of anyone who insures  for the                                                            
first layer.                                                                                                                    
SENATOR TAYLOR  said what they are  talking about is that  the state                                                            
self insures to  $250,000, but it is requiring the  other parties it                                                            
is dealing  with to indemnify  the state to  $1 million.  That  also                                                            
provides  another layer  between  the state  and  the liability.  He                                                            
asked  if that  becomes  another  step  between  the state  and  the                                                            
potential claimant that the state will have to pay.                                                                             
MR.  THOMPSON  said he  thought  Senator  Taylor was  confusing  the                                                            
indemnity and  the insurance.  The indemnity is the  hinge pin as to                                                            
allocating  responsibility between  two defendants.  Whether  one of                                                            
the  defendants does  or  does not  have the  ability  to pay  their                                                            
obligation is a separate issue.                                                                                                 
TAPE 01-15, SIDE A                                                                                                              
MR. KIP KNUDSEN, ERA Aviation,  informed the committee he sat on the                                                            
negotiating committee  for the operating agreement  at the Anchorage                                                            
and  Fairbanks  international  airports.    He  said  the  issue  of                                                            
comparative  versus sole proximate  cause has  been an ongoing  one.                                                            
The airlines that  operated at those two airports  up until now have                                                            
benefited from  a comparative fault  clause, which is fair.   During                                                            
the  negotiations,  the  state's  position  has been  that  it  will                                                            
transfer  all  of its  contracts  over  to a  sole  proximate  cause                                                            
SENATOR  WILKEN asked  if  all airports,  other than  Anchorage  and                                                            
Fairbanks, will be excluded.                                                                                                    
MR. KNUDSEN  said regarding  the rest of  the state's airports,  the                                                            
same  language, regarding  sole  proximate  cause,  is contained  in                                                            
draft  regulations   for  Title  17.    If  those  regulations   are                                                            
promulgated, an  operator working out of Venetie,  for example, will                                                            
have to  bear the financial  burden of sole  proximate cause  if the                                                            
state is 99 percent  responsible for that airport.   Currently, most                                                            
leases  contain an  apportioned  or comparative  fault  clause.   He                                                            
explained  that  the Anchorage  and  Fairbanks  airports  are  self-                                                            
financed;  airlines pay  the fees to  pay the bill.   If going  to a                                                            
comparative  fault system costs the  airport system more  money, the                                                            
airlines  will pay it.  Every  one of the  airlines involved  in the                                                            
negotiations  has come  to  the table  saying it  wants comparative                                                             
fault and will  pay the burden because it will give  them a break on                                                            
their  insurance rates.   Some  airlines sign  sole proximate  cause                                                            
contracts at other airports  but a majority of them have comparative                                                            
fault contracts.                                                                                                                
Number 322                                                                                                                      
SENATOR WILKEN  asked if  the state will  change the contracts  from                                                            
comparative fault  to sole proximate cause, which  is the reason for                                                            
Amendment 1.                                                                                                                    
MR.  THOMPSON   said  his  role  with   DOTPF  is  advisory.     His                                                            
understanding  is that the state is trying to be consistent  in both                                                            
the rural  and  Anchorage and  Fairbanks  airports.   The state  did                                                            
attempt to  move to a stricter  indemnity  standard but he  was told                                                            
the  state  is now  moving  to  a  comparative  standard,  which  is                                                            
effectively the same standard that is proposed in the bill.                                                                     
SENATOR WILKEN  questioned  whether the state  will have to  use the                                                            
apportioned standard under Amendment 1.                                                                                         
MR. THOMPSON said that is correct.                                                                                              
There  being no further  testimony,  SENATOR TAYLOR  moved SCS  CSHB
127(TRA) as amended  from committee.  There being  no objection, the                                                            
motion carried.                                                                                                                 
          SB 195-OPERATION OF WHITTIER TUNNEL BY WHITTIER                                                                   
          SB 196-EXEMPTION FROM TOLL FOR WHITTIER TUNNEL                                                                    
             SB 197-PROHIBIT TOLL FOR WHITTIER TUNNEL                                                                       
CHAIRMAN COWDERY  announced that he  would hear SB 195, SB  196, and                                                            
SB 197  simultaneously  as  they all  have to  do with  the City  of                                                            
MR. MATT ROWLEY,  City of Whittier, said he will address  two issues                                                            
related to the tunnel toll.   The first is the impact of the toll on                                                            
the residents  of Whittier  and the  second is  the impact the  toll                                                            
will have on  Whittier's business  community.  Mr. Rowley  commented                                                            
that  Governor Knowles  observed  that the  Whittier  tunnel is  the                                                            
city's lifeblood  of commerce.  Concerning the impact  on Whittier's                                                            
residents, this is the  only toll road in Alaska.  The imposition of                                                            
this toll is unprecedented  in Alaska and creates a potential burden                                                            
that is  not imposed  on any other  community  on the state  highway                                                            
road  system.   Anyone who  travels  into or  out of  Whittier on  a                                                            
regular basis  under the current toll  structure will pay  $3,000 to                                                            
$4,000 per year in toll fees.                                                                                                   
Regarding Whittier's economy,  which relies on a 100-day season, the                                                            
Whittier  business community  is in  direct competition  with  other                                                            
business communities  around Anchorage, the Kenai  Peninsula and the                                                            
rest of the state.  The  Whittier business community will be bearing                                                            
the added cost  unfairly, which will  adversely affect the  business                                                            
community's  ability to compete  in an open  market.   Visitors  who                                                            
travel  down the  Seward Highway  only  have so  many discretionary                                                             
dollars to spend. If those  travelers are faced with the prospect of                                                            
spending  $15 to  $40  to travel  to Whittier,  it  is questionable                                                             
whether they  will opt to  come to Whittier.   If they do  spend the                                                            
$40, in  the case  of motor  homes, that  $40 will  not be spent  at                                                            
local businesses.                                                                                                               
MR. ROWLEY said a second  issue is the effect on passengers arriving                                                            
in Whittier  via the marine  highway system.   Passengers coming  to                                                            
Whittier  to get on the  ferry will be penalized  because they  will                                                            
have to pay  the full round trip tunnel  fare.  Although  the tunnel                                                            
has a different set of  maintenance operation circumstances than the                                                            
highway,  he believes  it  is the  responsibility  of  the state  to                                                            
maintain the tunnel as it does the highways.                                                                                    
MAYOR  BEN  BUTLER  of the  City  of  Whittier  made  the  following                                                            
comments about SB 195.   The City of Whittier believes it would make                                                            
good sense for  the State of Alaska to give the city  the ability to                                                            
control the tunnel to help  with the operational expenses.  The city                                                            
feels it impacts Whittier  more than any other place in the state so                                                            
the city should  have a voice in the  matter. The city assembly  has                                                            
discussed  setting  up  an authority  to  operate  the tunnel.    An                                                            
authority would provide  the ability to bring everybody to the table                                                            
to discuss  the fee structure  and it would  prevent any one  entity                                                            
from being in control of the tunnel.                                                                                            
Number 872                                                                                                                      
MR.  DENNIS  POSHARD,   Special  Assistant  with  DOTPF,   made  the                                                            
following  comments on  SB 195, SB  196, and SB  197.  Regarding  SB
195, the effective date  of July 1, 2001 is problematic.  Currently,                                                            
the  design-build-operate    contract  signed   by  DOTPF  for   the                                                            
construction and  operation of the tunnel runs through  May of 2002.                                                            
Should DOTPF have  to cancel that contract by July  1 of 2001, DOTPF                                                            
would  be liable  to  the  contractor  for lost  profits  and  other                                                            
expenses incurred.   In addition, the design-build-operate  contract                                                            
contains a warranty because  it is a one-of-a kind new tunnel system                                                            
with  a  lot of  complicated  computer   software  programs,  tunnel                                                            
controls, ventilation  systems, and  other features.  Under  the two                                                            
year operation  agreement, the contractor has two  years to identify                                                            
and  correct any  problems  before  DOTPF agrees  to  take over  the                                                            
ownership.  Should DOTPF  cancel the contract in order to enter into                                                            
a  contract with  the  city,  that would  pose  a problem  with  the                                                            
CHAIRMAN  COWDERY asked if  Mr. Poshard is  suggesting changing  the                                                            
effective date.                                                                                                                 
MR. POSHARD  said  he cannot  say that there  is a  certain time  at                                                            
which this bill  makes sense, but he repeated the  effective date of                                                            
July 1, 2001 causes  problems for DOTPF.  At a minimum,  DOTPF would                                                            
request delaying the date  until after the current contract expires.                                                            
Delaying the effective  date will also allow time  for a prospective                                                            
contractor  to  get  the training  required  to  operate  a  tunnel.                                                            
Anyone who  works on the tunnel must  be trained and qualified  as a                                                            
firefighter  and must  take safety  training that  is unique  to the                                                            
tunnel.   Workers  will also  have to  learn about  the operations,                                                             
scheduling, and other matters  related to the tunnel.  That training                                                            
will take time.  He maintained  that the July 1, 2001 effective date                                                            
is not realistic.                                                                                                               
MR. POSHARD  said his next  point is that  although SB 195  requires                                                            
DOTPF to enter  into a contract with the city, it  does not speak to                                                            
what reasonable  terms  and limitations  should be  included.   This                                                            
approach puts  the state in a poor  negotiating position  as it will                                                            
give  a potential  contractor  a lot of  leverage.   Although  DOTPF                                                            
would contract  with  the City of  Whittier to  operate the  tunnel,                                                            
DOTPF's  contract with the  Alaska Railroad  Corporation (ARRC)  for                                                            
the use of  the tunnel might be problematic  also.  He was  not sure                                                            
whether DOTPF could abrogate  that responsibility to the contractor.                                                            
As a part of that  contract, DOTPF has assumed a substantial  amount                                                            
of liability  for anything  that occurs  within  the tunnel.   DOTPF                                                            
will retain that contractual  liability whether it contracts for the                                                            
operation  of that  facility  or not.    Therefore,  DOTPF would  be                                                            
forced to contract  with the city  for the operations of  the tunnel                                                            
but still  be on the hook  for any liability,  including  liquidated                                                            
damages that might arise out of a delay of the train.                                                                           
MR. POSHARD  said DOTPF's  biggest concern  with both SB 196  and SB
197 is  that the  provisions related  to tolls  will cause  problems                                                            
with federal  agencies.  He anticipates  that federal agencies  will                                                            
not allow  a specific  class of  people to be  exempted from  paying                                                            
tolls.   DOTPF  pursued  charging  one rate  on the  marine  highway                                                            
system for  residents of Alaska and  another rate for non-residents                                                             
but was  prevented from  doing so  by the federal  agencies  because                                                            
federal money  is used.  In the case  of the marine highway  system,                                                            
the federal agency  said charging different rates  could trigger pay                                                            
back  provisions  associated  with  federal highway  projects.    He                                                            
anticipates  that the  same pay back  provision  would apply  to the                                                            
toll collection  portion of  the tunnel.   DOTPF expects to  collect                                                            
$2.5 million  in tolls during  its first  full year of collections.                                                             
That money was slated to  cover the state's cost for maintaining the                                                            
tunnel.  If SB 197 does  move forward, those funds will have to come                                                            
from elsewhere and a fiscal note would reflect those changes.                                                                   
CHAIRMAN COWDERY asked  if any of the tolls that are collected go to                                                            
the ARRC now or are slated to in the future.                                                                                    
MR. POSHARD said he does not believe so.                                                                                        
SENATOR  WARD asked  Mr. Poshard to  supply the  committee with  the                                                            
warranty language for the  tunnel and an explanation of the specific                                                            
problems with that warranty if the operators are changed.                                                                       
MR. POSHARD agreed to do so.                                                                                                    
CHAIRMAN  COWDERY commented  that the City  of Whittier has  trained                                                            
firefighters  and  some Whittier  residents  currently  work at  the                                                            
tunnel.  He announced that  he would hold all three bills until some                                                            
of the  concerns expressed  today are resolved.   He then  adjourned                                                            
the meeting.                                                                                                                    

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