Legislature(2013 - 2014)BUTROVICH 205

02/25/2014 01:30 PM Senate TRANSPORTATION

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Heard & Held
Heard & Held
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                       February 25, 2014                                                                                        
                           1:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Dennis Egan, Chair                                                                                                      
Senator Fred Dyson, Vice Chair                                                                                                  
Senator Anna Fairclough                                                                                                         
Senator Click Bishop                                                                                                            
Senator Hollis French                                                                                                           
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 53                                                                                                              
"An Act exempting specified aircraft operators from certain                                                                     
requirements related to emergency rations and safety equipment."                                                                
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 177                                                                                                             
"An Act relating to the registration and marking of towers;                                                                     
relating to the duties of the Department of Transportation and                                                                  
Public Facilities; and providing for an effective date."                                                                        
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 178                                                                                                             
"An Act relating to the application of the passenger vehicle                                                                    
rental tax; and providing for an effective date."                                                                               
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB  53                                                                                                                  
SHORT TITLE: AIRCRAFT EMERGENCY RATIONS AND EQUIPMENT                                                                           
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
02/13/13       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/13       (S)       TRA                                                                                                    
02/25/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
BILL: SB 177                                                                                                                  
SHORT TITLE: REGULATION OF TOWERS                                                                                               
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
02/18/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/14       (S)       TRA                                                                                                    
02/25/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
BILL: SB 178                                                                                                                  
SHORT TITLE: PASSENGER VEHICLE RENTAL TAX                                                                                       
SPONSOR(s): SENATOR(s) BISHOP                                                                                                   
02/18/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/14       (S)       TRA                                                                                                    
02/25/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
DAVID SCOTT, staff to Senator Donald Olson                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented SB 53 and SB 177 for the sponsor.                                                               
JANE DALE                                                                                                                       
Alaska Air Carriers Association                                                                                                 
Willow, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 53 and SB 177.                                                                               
BOB HAJDUKOVICH, President and CEO                                                                                              
Era Alaska                                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 53 and SB 177.                                                                               
MIKE STEDMAN, co-owner                                                                                                          
Alaska Seaplanes                                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 53.                                                                                          
ROBERT DAY                                                                                                                      
Homer Electric Association (AEA)                                                                                                
Homer, Alaska                                                                                                                   
POSITION STATEMENT: Thought SB 177 needed tweaking.                                                                           
MAX MCGRATH, Enterprise Technology Services                                                                                     
Manager for the State of Alaska Telecommunication System                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Available to answer questions on SB 177.                                                                  
ERIC ERIKSEN, Vice President                                                                                                    
Alaska Electric Light and Power (AELP)                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Wanted to exclude electrical transmission                                                                 
towers from SB 177.                                                                                                             
BRITTANY HUTCHISON, staff to Senator Click Bishop                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented SB 178 for the sponsor.                                                                         
MATT FONDER, Director                                                                                                           
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
POSITION STATEMENT: Commented on SB 178.                                                                                      
JOHANNA BALES, Deputy Director                                                                                                  
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
POSITION STATEMENT: Explained the fiscal note to SB 178 and                                                                   
reasoning behind the vehicle tax.                                                                                               
RYAN PETERKIN, President                                                                                                        
Maytech Alaska                                                                                                                  
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Supported SB 178.                                                                                         
JON COOK, CFO                                                                                                                   
Airport Equipment Rentals, Inc.                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supported SB 178.                                                                                         
ACTION NARRATIVE                                                                                                              
1:30:47 PM                                                                                                                    
CHAIR  DENNIS  EGAN  called  the  Senate  Transportation  Standing                                                            
Committee meeting  to order  at 1:30 p.m.  Present at the  call to                                                              
order were  Senators Fairclough,  Dyson,  French, and Chair  Egan.                                                              
Senator Bishop joined the committee shortly thereafter.                                                                         
1:32:15 PM                                                                                                                    
        SB  53-AIRCRAFT EMERGENCY RATIONS AND EQUIPMENT                                                                     
CHAIR EGAN announced SB 53 to be up for consideration.                                                                          
DAVID  SCOTT, staff  to Senator  Donald Olson,  sponsor of  SB 53,                                                              
said the aviation  industry asked Senator Olson  to introduce this                                                              
bill  to  update  statutes  to  current  industry  standards  that                                                              
require more sophisticated  safety and locator  equipment. Section                                                              
1 adds  some conforming  language  relative to  section 2  that is                                                              
new language  saying the  requirements under  (a) in section  1 do                                                              
not apply  to an operator if  they are following  Federal Aviation                                                              
Administration (FAA)  requirements known in the  maritime industry                                                              
as an  emergency position indicating  radio beacon (EPIRB)  and in                                                              
the  aviation  industry  as  an   emergency  locating  transmitter                                                              
1:34:25 PM                                                                                                                    
SENATOR FAIRCLOUGH  asked  how the language  is being  interpreted                                                              
differently now.                                                                                                                
1:34:40 PM                                                                                                                    
MR.  SCOTT  said  the  language  is ambiguous  as  to  whether  it                                                              
applies to  an aircraft that  did not start  its flight  in Alaska                                                              
and  will  not  end  its flight  in  Alaska  but  travels  through                                                              
Alaskan airspace.                                                                                                               
SENATOR FAIRCLOUGH  said it seems  like they are proposing  to not                                                              
require an airplane  to carry lifesaving equipment  and asked what                                                              
kind they carry now.                                                                                                            
MR.  SCOTT answered  if there  is ever  an incident  an ELT  would                                                              
activate and emergency  operations would get there  very quickly -                                                              
weather permitting.                                                                                                             
SENATOR FAIRCLOUGH  said she  was thinking  about the  life safety                                                              
of passengers  on board any  particular aircraft and  whether it's                                                              
good to  have this equipment  on the aircraft  and if so,  in what                                                              
quantity.  She understood  there was  a cost  of fuel in  carrying                                                              
excess weight and replacement of food that ages.                                                                                
1:37:31 PM                                                                                                                    
JANE  DALE,  Alaska  Air  Carriers  Association,  Willow,  Alaska,                                                              
supported  SB  53,   saying  it  updates  statutes   with  current                                                              
technology and practices.                                                                                                       
1:39:04 PM                                                                                                                    
BOB  HAJDUKOVICH,  President  and   CEO,  Era  Alaska,  Fairbanks,                                                              
Alaska,  supported  SB  53.  He  said there  has  been  a  lot  of                                                              
ambiguity in  this law for  years, but it  was never taken  out of                                                              
context  until a  couple  of years  ago when  the  FAA started  to                                                              
interpret the  state law in  addition its regulations  and started                                                              
questioning  air carriers that  were flying  over the  state's air                                                              
space as  to why they  were not in  compliance with state  law. He                                                              
explained  that  state troopers  had  never  enforced  the law  by                                                              
inspecting aircraft  for survival equipment and that  the original                                                              
intent was  to capture  non-commercial pilots  flying up  from the                                                              
Lower 48  to prepare them  for surviving for  a week in  Alaska if                                                              
they  had  to put  their  plane  down somewhere  here.  As  things                                                              
evolved, the  concepts of satellite  technology and 406  ELTs that                                                              
are  activated  on impact  have  reduced  that worry.  Today,  the                                                              
major issue is accessibility to the accident scene.                                                                             
This issue  came up because the  FAA was specifically  holding ERA                                                              
accountable for  their Dash 8 equipment,  which has 37  seats, and                                                              
requiring them to  carry a sleeping bag per person.  When asked if                                                              
Alaska Airlines,  China Airways, and anybody else  that flies into                                                              
the Anchorage airport  have to be in compliance with  the same law                                                              
they were  told yes. So,  Era took it  all the way  to Washington,                                                              
D.C., and  was told  that it was  between them  and the  FAA, that                                                              
carriers still  need to be in  compliance with their  state's law.                                                              
That's when they started trying to clarify this law.                                                                            
MR.  HAJDUKOVICH  said it's  still  smart  for private  pilots  in                                                              
small  aircraft to  carry survival  gear and  it's also smart  for                                                              
them to  have a 406  ELT. If  they do have  an ELT, waiving  other                                                              
requirements  would be  a fair  tradeoff, because  the best  thing                                                              
that has been  done for aviation  safety in the last 50  years has                                                              
been being able to immediately locate a downed aircraft.                                                                        
His only  question was possibly  defining "real time"  in relation                                                              
to   satellite  tracking   systems   in  subsection   (d).   Items                                                              
(1),(2),(3),  and (4)  have  some redundancy  and  item (1)  could                                                              
potentially exempt  aircraft from  carrying survival  equipment if                                                              
there is  a void in FAA requirement,  so he thought  that language                                                              
could be tightened up.                                                                                                          
MR.  SCOTT said  the  sponsor was  willing  to look  at those  and                                                              
tweak language if necessary.                                                                                                    
1:44:27 PM                                                                                                                    
MIKE  STEDMAN,   co-owner,  Alaska   Seaplanes,  Juneau,   Alaska,                                                              
supported SB  53. He was  also on the  Air Carrier Board  and said                                                              
with  the advent  of  automatic  dependent  surveillance-broadcast                                                              
(ADS-B), real  time tracking of  downed aircraft has  been greatly                                                              
enhanced in the last few years.                                                                                                 
SENATOR DYSON  remembered the requirement  to carry a  firearm and                                                              
how that  caused some  trouble when flying  into Canada  and asked                                                              
if that was still a requirement.                                                                                                
MR. SCOTT  directed attention to  AS 02.35.110(a) that had  a list                                                              
of requirements and said a rifle was not it.                                                                                    
1:46:37 PM                                                                                                                    
SENATOR FRENCH  asked someone  to describe  what the FAA  requires                                                              
for operations within  the state over uninhabited  areas, since it                                                              
goes away if the aircraft is equipped as required by the FAA.                                                                   
MR. SCOTT  answered 14 CFR  121.353 entitled "Emergency  Equipment                                                              
for   Operations   over   Uninhabited    Terrain"   listed   those                                                              
SENATOR   FRENCH   read:  pyrotechnic   devices,   survival   type                                                              
emergency  locator transmitter,  and  survival kits  appropriately                                                              
equipped for  the route to  be flown and  the number  of occupants                                                              
on the airplane  and asked if there was more of  a description for                                                              
the survival  kit, because that  could be interpreted as  having a                                                              
Cliff  Bar for  everybody, but  no  blankets or  snow shoes,  fire                                                              
starter, knife, mosquito netting - nothing.                                                                                     
MR.  SCOTT said  he  dug  into that  but  couldn't  find out  what                                                              
"appropriately equipped" meant.                                                                                                 
SENATOR FRENCH  asked if you  are equipped as in  (d)(1)(2)(3)(4),                                                              
do  you have  to  have each  one  of those  things  to escape  the                                                              
requirements of (a) or just any one of them.                                                                                    
MR. SCOTT said he interpreted them as "or."                                                                                     
SENATOR FRENCH  also remarked that there  was an "and"  on line 20                                                              
and that  lead to his  last question, which  is that (4)  seems to                                                              
be a  combination of  (2) and (3),  which seems redundant  because                                                              
it says  a real-time satellite  tracking system  in (2) and  a 406                                                              
ELT  in (3),  but then  (4) adds  "installed  and operational"  to                                                              
those two pieces of equipment.                                                                                                  
SENATOR BISHOP asked if this bill goes to "135 operators."                                                                      
MR. STEDMAN  answered that the  word "commercial carrier"  is part                                                              
135 and part 121.                                                                                                               
SENATOR  BISHOP asked  if an  Alaska  Airlines 737  was trying  to                                                              
push back  from the gate  here in Juneau  and either one  of those                                                              
two wasn't operational, it wouldn't leave until they were?                                                                      
MR.  STEDMAN said  that  was correct,  but  the 406  ELTs are  not                                                              
required for transport category jets.                                                                                           
1:52:07 PM                                                                                                                    
SENATOR FAIRCLOUGH  said if  they are  going to  take the  time to                                                              
look at  this bill  further, they  probably need  to go  back into                                                              
section 1 and  on page 2, line  7, that says a sleeping  bag "and"                                                              
one wool blanket  for the smaller planes and maybe  change that to                                                              
She  was  also   wondering  why,  if  they  believe   the  federal                                                              
government has set  appropriate codes for survival,  that they are                                                              
not tying FAA requirements  directly to this one, so  that when it                                                              
changes  our statutes  are automatically  updated. "Survival  kit"                                                              
should  be described,  because they  want to  make it  easy for  a                                                              
carrier  to provide  safety to those  on the  plane and  eliminate                                                              
wool blankets and sleeping bags if they are not necessary.                                                                      
1:54:13 PM                                                                                                                    
CHAIR  EGAN, finding  no further  questions, said  SB 53 would  be                                                              
held in committee.                                                                                                              
                  SB 177-REGULATION OF TOWERS                                                                               
1:54:38 PM                                                                                                                    
CHAIR EGAN announced SB 177 to be up for consideration.                                                                         
1:54:43 PM                                                                                                                    
DAVID SCOTT,  staff to  Senator Donald Olson,  sponsor of  SB 177,                                                              
explained  that  this  bill  is about  aviation  safety.  He  said                                                              
section  1 relates  to registering  and  marking of  communication                                                              
structures,  wind towers,  and extreme weather  towers (EWT)  with                                                              
the  Department of  Transportation and  Public Facilities  (DOTPF)                                                              
15 days before installation (now 20 days) if this bill passes.                                                                  
1:57:13 PM                                                                                                                    
Tower owners  have to comply with  all federal laws  and standards                                                              
related  to  lighting,  painting  and visibility  of  the  towers.                                                              
Enforcement  is still  a question,  but he was  looking into  that                                                              
and  violators would  be punished  as  provided by  AS 12.55,  the                                                              
criminal code.                                                                                                                  
MR. SCOTT  said the  sponsor put  this forward,  because he  is an                                                              
active pilot  and feels  Alaska needs  standards for  construction                                                              
and marking of towers.                                                                                                          
1:58:42 PM                                                                                                                    
SENATOR DYSON  said he was struck  by the fact that  towers aren't                                                              
required  to have  a strobe  light,  because of  all the  darkness                                                              
MR. SCOTT said he would get an answer.                                                                                          
SENATOR  DYSON said  he thought  there already  was existing  law,                                                              
maybe   federal,  about   transmission   towers   in  and   around                                                              
MR.  SCOTT said  that  was correct;  the FAA  has  purview if  the                                                              
towers are over 200 ft.                                                                                                         
2:00:34 PM                                                                                                                    
SENATOR FAIRCLOUGH  said Anchorage  has a tower ordinance  already                                                              
and asked  if other  cities already have  local ordinances  and if                                                              
we had collaborated with them to know what is going on.                                                                         
MR. SCOTT  replied that  he hadn't  talked to any  municipalities,                                                              
but he would reach out to them.                                                                                                 
SENATOR   FAIRCLOUGH  echoed   Senator   Dyson's  comments   about                                                              
possibly  working   with  existing   FAA  requirements.   She  was                                                              
concerned   about   the   costs  associated   with   marking   and                                                              
registering  having  noticed  that   it  would  cost  $120,000  to                                                              
upgrade a  wind project  that cost $120,000  to build.  They might                                                              
think about giving  people a period of time to  change rather than                                                              
penalizing them if they don't have everything done in one year.                                                                 
CHAIR EGAN  said Juneau now has  a prohibition on  construction of                                                              
towers  until the  city adopts  an ordinance  that regulates  cell                                                              
tower use and one of the main issues is lighting.                                                                               
2:03:09 PM                                                                                                                    
SENATOR FRENCH said  everyone knows what a tower is,  but it might                                                              
need  a definition  to exclude,  for example,  buildings over  100                                                              
ft. in height.                                                                                                                  
2:03:51 PM                                                                                                                    
ROBERT  DAY,  Homer Electric  Association  (HEA),  Homer,  Alaska,                                                              
said he  thought SB 177 still  needed tweaking. In  his particular                                                              
business,  he was  concerned  that it  may  cause quite  a bit  of                                                              
expense  and for  utilities  throughout  Alaska.  HEA members  had                                                              
indicated  that most of  their towers  are less  than 100  ft. and                                                              
wouldn't fall  under this  bill, but the  towers that  feed Juneau                                                              
from  Snettisham,  for instance,  would.  He  said there  is  also                                                              
quite a body of  regulation from the FAA that  requires marking of                                                              
structures near airport facilities.                                                                                             
He was also  concerned that transmission towers  traversing remote                                                              
areas near  some small airport or  waterway could also  fall under                                                              
this bill.  It sounds silly,  but their transmission  towers carry                                                              
electricity but not  the kind of electricity that  is conducive to                                                              
powering signal  lights. So, placing  signal lights on  each tower                                                              
would be pretty  expensive and any kind of maintenance  would more                                                              
than likely  require an  outage on  that transmission  line, which                                                              
would cost a lot.                                                                                                               
MR.  DAY  said he  was  more  concerned  over registering  50  ft.                                                              
structures  and keeping  them up  to date, because  many of  their                                                              
distribution  poles and  all of  their  transmission towers  would                                                              
fall under the 50  ft. regulation and that also  falls under "make                                                              
them  visible when  close to  the airport,"  for which  a body  of                                                              
safety rules and regulations already exists.                                                                                    
2:06:47 PM                                                                                                                    
He  said  the  requirement  for   registration  and  putting  that                                                              
information  on a public  web page  could fall  afoul of  critical                                                              
infrastructure  Homeland Security  rules  and that  they had  been                                                              
being a  "lot more  coy" about putting  information in  the public                                                              
area  about  electrical  systems   and  how  they  are  built  and                                                              
interconnected   since  9/11,  so   they  would  find   themselves                                                              
possibly in a position of obeying one law and breaking another.                                                                 
For  marking  of guy  wires,  Mr.  Day  explained that  people  in                                                              
Alaska  often use  a  steel transmission  structure  that has  guy                                                              
wires on  both sides and  that would be a  lot of marker  balls if                                                              
they were  required to mark  all of them  from, say,  Bradley Lake                                                              
all the way into Soldotna Substation.                                                                                           
MR. DAY suggested  amending language to simply  exempt towers that                                                              
are primarily for  the transmission or distribution  of electrical                                                              
power, but he added  that putting a communication tower  on top of                                                              
an   electrical  transmission   tower   would   fall  under   this                                                              
2:08:27 PM                                                                                                                    
JANE  DALE,  Alaska  Air  Carriers  Association,  Willow,  Alaska,                                                              
supported SB  177. She  appreciated the  comments of the  previous                                                              
speaker and  related that the FAA  does have requirements  for the                                                              
public to  submit notice of  proposed construction when  the tower                                                              
or obstruction  is greater than 200  ft. or within 2-4  miles of a                                                              
public use airport, in general, depending on its length.                                                                        
She  said the  Federal Communications  Commission  (FCC) would  be                                                              
responsible   for   enforcement   on  communication   towers   and                                                              
statewide  and local  regulations  appear  to be  the  enforcement                                                              
tool for other obstructions.                                                                                                    
MS. DALE  said they  support this bill,  because it  would provide                                                              
some predictability  in the  air space  for carriers and  aviators                                                              
statewide,   so  that  they   would  be   able  to  visually   see                                                              
obstructions  greater than 100  ft., day or  night, or  could look                                                              
up obstructions greater than 50 ft. in a registry.                                                                              
2:10:27 PM                                                                                                                    
SENATOR DYSON asked  what the process is for  structures like this                                                              
to start  showing up on aeronautical  charts and how soon  it gets                                                              
MS.  DALE responded  that not  every obstruction  is charted,  but                                                              
the FAA could best  address that issue. There are  towers that are                                                              
unmarked  and unlit  within close  proximity to  an airport,  some                                                              
within  the  approach of  an  airport,  and often  members  become                                                              
aware of  that only  after they  fly into an  airport and  see the                                                              
CHAIR  EGAN said  he  used to  own radio  stations  and they  were                                                              
required to light  their towers and to file with  the FAA and NOAA                                                              
the name  of the  station and  the tower  height  to put on  their                                                              
SENATOR DYSON  said NOAA  had made all  of their charts  available                                                              
on line  and real time  for nothing and  he was really  interested                                                              
in timeliness  for Alaska's  aviators. Aside  from that,  mariners                                                              
had been using years' old charts.                                                                                               
2:14:24 PM                                                                                                                    
SENATOR FAIRCLOUGH  asked at what height a small  plane travels in                                                              
Alaska and  if they  could consider raising  the elevation  of the                                                              
flight pattern to not have the infrastructure issues.                                                                           
SENATOR FRENCH, referring  to language on page 2, asked  if it was                                                              
the intent  to have four spherical  marker balls attached  to each                                                              
outer guy wire.                                                                                                                 
MR. SCOTT answered four balls per guy wire.                                                                                     
CHAIR EGAN  remarked that  Juneau's Taku winds  would put  "a heck                                                              
of a drag on those guy wires."                                                                                                  
2:16:24 PM                                                                                                                    
MAX  MCGRATH,  Enterprise  Technology Services,  Manager  for  the                                                              
State  of  Alaska  Telecommunication  System,  Anchorage,  Alaska,                                                              
said he was available to answer questions on SB 177.                                                                            
2:17:04 PM                                                                                                                    
ERIC  ERIKSEN, Vice  President,  Alaska Electric  Light and  Power                                                              
(AELP),   Juneau,    Alaska,   wanted   to    exclude   electrical                                                              
transmission  towers from SB  177. He  acknowledged the  intent to                                                              
protect  public  safety, but  additional  unintended  consequences                                                              
may be exposed  without this exclusion. Implementing  this type of                                                              
marking  on transmission  towers  would  expose those  towers  and                                                              
their electrical  service to liability  issues and  endanger their                                                              
personnel  who are  maintaining  and implementing  the devices  on                                                              
the towers that are very remote and at high elevations.                                                                         
2:18:29 PM                                                                                                                    
SENATOR  DYSON  said  he assumed  that  transmission  towers  were                                                              
already  operating under  strict rules  near established  airports                                                              
that  addressed the  issue of  aircraft  encountering power  lines                                                              
and asked what they are required to do now.                                                                                     
MR. ERIKSON  answered before  installing a  new structure  near an                                                              
airport the permitting  process has a review to  determine whether                                                              
additional  navigational   aid  markings  on  maps   or  structure                                                              
requirements  like lighting  are needed.  The requirements  lessen                                                              
the  farther away  you get  from  the airport.  For instance,  the                                                              
Snettisham  lines  went  through  FAA review  since  they  are  on                                                              
federal property  and they would place the  necessary requirements                                                              
on that line.                                                                                                                   
2:20:15 PM                                                                                                                    
SENATOR  DYSON observed  that every  transmission  line in  Alaska                                                              
that crosses a river has balls on it.                                                                                           
MR. ERIKSON said the Snettisham line does as well.                                                                              
SENATOR  DYSON asked  whose  responsibility it  was  to get  those                                                              
lines on the maps and charts.                                                                                                   
MR. ERICKSON  said those lines had  been in existence for  quite a                                                              
while and  he wasn't  directly involved  in their permitting,  but                                                              
his  experience  in  permitting   similar  projects  was  that  he                                                              
provides the  information to  the entities that  then will  put it                                                              
on the maps and charts.                                                                                                         
2:21:53 PM                                                                                                                    
BOB  HAJDUKOVICH,  President  and   CEO,  Era  Alaska,  Fairbanks,                                                              
Alaska,  said this  issue came into  his world  when they  started                                                              
seeing  a  proliferation  of  cell   towers  and  wind  generation                                                              
devices.  He explained that  meteorological  towers (MET)  are put                                                              
up in advance  of wind farms  to measure wind speeds  to determine                                                              
their viability.  They can  go up very  quickly and are  very thin                                                              
with invisible  wires. So,  there is an  MET concern in  the rural                                                              
areas along with  the proliferation of cell towers.   The FAA does                                                              
not require  towers below  200 ft.  tall to  be registered  and if                                                              
they  are   not  in   the  airport   environment  they   are  also                                                              
Era's concern is  that the most likely place to put  towers of any                                                              
sort is  near runways,  especially in  rural communities,  because                                                              
that's  generally  where  the power,  utilities,  maintenance  and                                                              
roads  are. Many  communities they  serve  might have  one or  two                                                              
roads that  go through  the entire  town and  so the most  obvious                                                              
place  to put  a  cell tower  or  wind generator  is  on the  path                                                              
towards  the runway.  Probably  most of  the  accidents that  have                                                              
happened in aviation  occur with low level  helicopter activities.                                                              
The average  height of carriers  going into airports  is generally                                                              
1500-2000  ft.  in  the  immediate   vicinity  and  goes  down  on                                                              
approach to  the runway, and  that is where  the FAA does  its job                                                              
of maintaining the  obstruction clearances to make  sure operators                                                              
have an angled glide path.                                                                                                      
Generally, he  said Era is not  as concerned about  the approaches                                                              
to  airports  as  much  as  they   are  about  the  approaches  to                                                              
communities.  Private aviation  in  low weather  conditions  would                                                              
tend  to follow  roads -  like from  Fairbanks to  Anchorage -  as                                                              
opposed to looking  out the front window for  unmarked towers. So,                                                              
it's important  that the state engage  in registration of  all the                                                              
new activity around  cell towers and wind generators.  They knew a                                                              
lot  of stakeholders  would engage  in this  conversation and  the                                                              
electric folks had brought up some great points.                                                                                
2:25:16 PM                                                                                                                    
SENATOR FAIRCLOUGH  said she served  on Alaska's  Renewable Energy                                                              
Advisory Board  that was permitting  23 projects now and  that she                                                              
would take  this information  to them  and maybe  get in  front of                                                              
this  issue   and  then  fix   the  cell  tower   problem  through                                                              
MR. SCOTT said he would reach out to that board.                                                                                
CHAIR EGAN said SB 177 would be held in committee.                                                                              
              SB 178-PASSENGER VEHICLE RENTAL TAX                                                                           
2:27:36 PM                                                                                                                    
CHAIR EGAN announced SB 178 to be up for consideration.                                                                         
2:27:49 PM                                                                                                                    
BRITTANY HUTCHISON,  staff to Senator  Click Bishop,  Alaska State                                                              
Legislature,  Juneau,  Alaska, sponsor  of  SB 178,  presented  SB
178.  She explained  that  the passenger  vehicle  rental tax  was                                                              
passed in  2003 and  was intended to  raise revenue  from tourists                                                              
using  rental cars  on the state's  road systems.  The tax  wasn't                                                              
supposed to  affect Alaskans  in most cases,  but that is  not the                                                              
case. Back in 2004  the bill was amended to exempt  taxi cabs from                                                              
the tax,  and it was  stated then  that it was  not the  intent of                                                              
the original  bill to negatively  impact small businesses,  but it                                                              
She  explained  that in  2013,  the  Department of  Revenue  (DOR)                                                              
began an  attempt to collect the  rental vehicle tax  from Alaskan                                                              
businesses that may  not even be involved in  the tourist industry                                                              
or  rent  to  tourists.  And  instead   of  announcing  their  new                                                              
position  and applying  it prospectively,  the department  applied                                                              
the  tax   retroactively   back  to  2004.   Though  it   required                                                              
businesses to  pay a 10 percent  rental vehicle tax on  all leases                                                              
for the past nine  years, those taxes had not been  collected from                                                              
the clients  and that could  possibly bankrupt some  small Alaskan                                                              
businesses. A list of those businesses was in their packets.                                                                    
MS. HUTCHISON  said that SB 178  amends the rental vehicle  tax to                                                              
make  it  clear   that  the  tax  should  not   apply  to  Alaskan                                                              
businesses  that are  making long  term rentals  to other  Alaskan                                                              
businesses.  Specifically,  section   1  reduces  the  lease  term                                                              
exemption  from 90  to 30  days and  section 2  reduces the  gross                                                              
vehicle  weight  from 8,500  to  6,500  lbs.  The second  part  of                                                              
section   2  clarifies  that   this  exemption   applies   to  the                                                              
transportation  of  any  goods  whether  commercial  or  personal.                                                              
Section 4 makes these changes retroactive to 2004.                                                                              
She  said  these  changes  reflect  the  original  intent  of  the                                                              
legislature  that the  vehicle rental  tax applies  to short  term                                                              
rentals  to tourists  and  not to  Alaskan  businesses renting  to                                                              
other Alaskan businesses.  This bill is needed because  the DOR is                                                              
trying  to  collect  nine  years  of  back  taxes,  interest,  and                                                              
penalties from Alaskan  businesses that were never  intended to be                                                              
taxed in the first place.                                                                                                       
2:31:02 PM                                                                                                                    
SENATOR DYSON  said he  was startled that  the tax is  retroactive                                                              
for such  a long  time and  was surprised  they could  pass  a law                                                              
that incurs such a liability for companies.                                                                                     
SENATOR FRENCH said  he thought there was a  misunderstanding, but                                                              
he knew what  had happened: they  passed a law in 2003  that began                                                              
taxing rental  cars. It's been in  place ever since that  time and                                                              
now some  companies have  found themselves in  a tax  dispute with                                                              
the DOR. This would  pass an exemption that would  reach back that                                                              
far because of  the misunderstanding and dispute.  He sponsored an                                                              
exemption  due to  the same  kind of  thing addressed  on page  2,                                                              
lines 18-19,  (h) where the  tax was falling  on a  small seasonal                                                              
group of  people and more was  being spent on collection  than was                                                              
actually being collected.                                                                                                       
2:33:18 PM                                                                                                                    
SENATOR FAIRCLOUGH  said  the fiscal note  was quite  interesting,                                                              
because it  went forward in time,  and she wondered what  it would                                                              
look like  in reverse. Would it  take 10 people to  implement this                                                              
2:34:01 PM                                                                                                                    
MATT  FONDER,  Director,  Tax  Division,   Department  of  Revenue                                                              
(DOR), said the  reason for the high number of  employees was that                                                              
the  department would  have to  try to  go back  and identify  and                                                              
refund taxes  to people who rented  cars that may fall  within one                                                              
of the exemptions during the last 10 years.                                                                                     
SENATOR  FAIRCLOUGH  said  she  was  concerned  that  the  90  day                                                              
exemption and trying  to find people who rented  was creating this                                                              
pay back  issue. People come  to Alaska  and rent motor  homes and                                                              
the state  has been trying to  collect from those people  who were                                                              
causing deterioration  on its  highways. The  intent was  to leave                                                              
commercial vehicle rentals out.                                                                                                 
MS. HUTCHISON  said the intent behind  changing 90 days  to 30 was                                                              
because  most tourists  don't rent  for  over 30  days and  anyone                                                              
over  that  would be  an  Alaskan  businesses and,  therefore,  be                                                              
SENATOR FAIRCLOUGH  asked what  part of the  bill was  causing the                                                              
big fiscal note, an estimated $1,293,000, in 2015.                                                                              
MR. FONDER  answered that  was actually  for staff  to set  up the                                                              
refund program  and identify taxpayers  who may have paid  the tax                                                              
that  would  fall  under  one of  the  new  exclusions  and  their                                                              
refund. The  fiscal note  also talks  about a potential  reduction                                                              
of $800,000  in revenue to the state  each year if this  bill were                                                              
to pass.                                                                                                                        
SENATOR FAIRCLOUGH said  there should be a better way  to do this.                                                              
She  asked if  DOR had  been collecting  $800,000 from  commercial                                                              
rentals that hadn't been challenged until now.                                                                                  
2:38:12 PM                                                                                                                    
JOHANNA  BALES,  Deputy  Director,  Tax  Division,  Department  of                                                              
Revenue (DOR),  explained that the  fiscal note represents  all of                                                              
the  bill's provisions.  It  would exempt  anything  over 30  days                                                              
(right  now it's  anything  over 90  days)  from taxable  rentals;                                                              
another provision  exempts  any vehicle weighing  more than  6,500                                                              
lbs. used to transport personal or commercial property.                                                                         
To  prepare  this   fiscal  note,  she  looked   at  records  from                                                              
companies the  department had audited  to get an estimate  of what                                                              
type of  activity they  had. She estimated  no more  than $800,000                                                              
each  year and  applied that  going back  for 10  years and  going                                                              
forward  as lost  revenue. They  would  have to  evaluate all  the                                                              
rental contracts  from the last  10 years to determine  which ones                                                              
would  have been exempt  had this  language been  in effect  since                                                              
2004  forward. They  would  work  with the  about  110 rental  car                                                              
companies  that   have  remitted  the  taxes  to   get  copies  of                                                              
contracts and  send out public notices.  Because a lot  of renters                                                              
are  from  out of  state,  the  department  would be  required  to                                                              
refund  taxes paid  if their  rental  car contracts  meet the  new                                                              
exemption criteria.                                                                                                             
2:40:20 PM                                                                                                                    
SENATOR  FAIRCLOUGH  said  she had  a  hard  time with  hiring  10                                                              
employees to  go back through records  to 2004 and she  also found                                                              
it  challenging  that   they  have  what  appears  to   be  a  new                                                              
interpretation at  the department.  When did the  challenges start                                                              
coming to DOR?                                                                                                                  
MS. BALES  answered it would  be up to  the sponsor to  decide how                                                              
to handle this,  but this is not a new interpretation  of statutes                                                              
that  have been  on the  books since  2004.  It had  just come  to                                                              
their  attention  that  some  companies  were  conducting  vehicle                                                              
rentals  that met  the criteria  to  collect and  remit tax  that,                                                              
because  the department  looks  for  companies that  say  "vehicle                                                              
rental company"  on their  business licenses,  weren't picked  up.                                                              
Companies  that do heavy  equipment leasing  aren't recognized  as                                                              
having  vehicle rentals  that  met this  criterion.  She said  the                                                              
department conducts  compliance projects  to see if  any taxpayers                                                              
need to be educated and need to come back into compliance.                                                                      
As far  as the  fiscal note,  she explained  that those  positions                                                              
would be  needed for  the retroactivity provision  of the  bill to                                                              
make sure that  all the consumers  who paid the tax to  the rental                                                              
car companies  would be  refunded, which is  what this  bill would                                                              
require. However,  without the retroactivity provision  they would                                                              
have a zero fiscal note in terms of needing new people.                                                                         
2:43:07 PM                                                                                                                    
SENATOR FAIRCLOUGH  said she  looked forward  to working  with the                                                              
sponsor to  solve this  problem. She remembered  she had  voted in                                                              
favor of  this bill,  and her  understanding was  that it  was for                                                              
folks  coming  in  at  the  Anchorage   International  Airport  or                                                              
otherwise and  renting a motor home  from someone or a  vehicle to                                                              
explore  Alaska. It  was never the  intent of  the legislature  to                                                              
pick  up commercial  rentals  or long  term  leases for  equipment                                                              
that's moving to and from and being used by Alaskans.                                                                           
CHAIR EGAN  agreed, but added that  the problem is that  there are                                                              
at  least  14  businesses  that   are  by  affected  by  this  tax                                                              
provision but none of them is a car rental agency.                                                                              
SENATOR BISHOP said  the intent of the bill is to  get back to the                                                              
original intent  of 2004, which  is taxing rental cars  and summer                                                              
tourism and  not taxing  Alaskan businesses  doing mining  and oil                                                              
patch  work  and  operating  on unimproved  roads  with  no  state                                                              
support or maintenance.                                                                                                         
2:45:41 PM                                                                                                                    
RYAN   PETERKIN,  President,   Maytech   Alaska,  Kenai,   Alaska,                                                              
supported  SB 178.  He  is a  fourth  generation  Alaskan and  his                                                              
business  is  in  Kenai and  Prudhoe  Bay.  They  rent  industrial                                                              
equipment, but  to satisfy their  clientele, pickup  trucks became                                                              
a byproduct  of their  business. They employ  75 Alaskans  with an                                                              
average salary of $70,000 per year totaling about $6 million.                                                                   
He first learned  about the tax on  November 6 when he  got a call                                                              
from   his  Prudhoe   Bay  operation   saying   that  a   criminal                                                              
investigator  and an  armed enforcement  officer  had arrived  and                                                              
said  they were  in violation  and  that there  would be  criminal                                                              
charges  if they didn't  comply  and to contact  Jonathan  Page in                                                              
the Anchorage  office. They  got in  touch with  him the  next day                                                              
and explained their line of business.                                                                                           
MR. PETERKIN  said they talked and  came to an  understanding that                                                              
personal property  meant their safety  gear, laptop  computers, et                                                              
cetera. He  said they fully  intend to  comply, but with  a 90-day                                                              
period and  if a client extends  a 6-month contract for  another 6                                                              
months, that  6 last  months is taxable.  Most of their  contracts                                                              
are worked off  master service agreements, and  oil companies have                                                              
multiple year  contracts. All  of their  pickup truck  rentals and                                                              
leases are  in commercial  applications, 90  percent of  which are                                                              
in Prudhoe Bay;  the other 10 percent are in the  Kenai Peninsula,                                                              
and 5  percent of  those are  on the  west side  of Cook Inlet  on                                                              
dirt  roads   and  gravel.  He   said  the  6,500  GVW   would  be                                                              
beneficial,  because  oil companies  went  to  half ton  crew  cab                                                              
pickup trucks  that are more cost  effective and have  less impact                                                              
to the road.                                                                                                                    
2:49:13 PM                                                                                                                    
Paying the back  tax on the pickup trucks would  be devastating to                                                              
his  business,  if  it  didn't  put  them  out  of  business,  Mr.                                                              
Peterkin said.  They would have  to seek financial aid,  for sure.                                                              
Theirs  is  a  growing  business  that is  trying  to  respond  to                                                              
clientele,  and they  just  don't have  those  kinds of  reserves.                                                              
They didn't  collect the  tax nor  did they ever  get a  notice or                                                              
any  other   means  of   communication  except   when  they   were                                                              
blindsided by a  criminal investigator and an  enforcement officer                                                              
that showed up in their Prudhoe Bay facility.                                                                                   
CHAIR EGAN asked if his vehicles were getting larger.                                                                           
MR.  PETERKIN said  all  their vehicles  are  half  ton to  three-                                                              
quarter ton  pickups - some  are one ton -  all are rented  to oil                                                              
and  gas  companies  with  commercial   applications;  none  to  a                                                              
private individual.                                                                                                             
SENATOR EGAN asked if the gross vehicle weight had changed.                                                                     
MR. PETERKIN  answered their GVW  probably ranges from  7,000 lbs.                                                              
to 12,000 lbs.                                                                                                                  
2:51:05 PM                                                                                                                    
JON  COOK,  CFO,  Airport  Equipment   Rentals,  Inc.,  Fairbanks,                                                              
Alaska, supported  SB 178. He said  his company is a  family owned                                                              
business  employing  125  people  with locations  in  Dead  Horse,                                                              
Fairbanks, Delta,  Anchorage, and Kenai.  They are the  John Deere                                                              
construction   equipment  dealer  for   Alaska  and   the  largest                                                              
equipment  rental  company in  Alaska  representing  a variety  of                                                              
manufacturers. As  a customer service they offer  rentals to their                                                              
construction equipment  customers who are primarily  producers and                                                              
Alaska contractors  on the  North Slope. Most  of the  rentals are                                                              
for  several months  and often  years  in duration.  Out of  5,000                                                              
rental  units 150  are trucks;  the  rest is  heavy equipment  and                                                              
other pieces of non-mobile equipment.                                                                                           
He  has familiarity  with  this  tax  and its  entire  legislative                                                              
history. His company  owned the National Car Rental  concession at                                                              
the Fairbanks  Airport through  May 2013, and  many know him  as a                                                              
reformed car  dealer (back to 1994).  He said the  original intent                                                              
of  the  tax  was  meant  to  tax   tourists  to  help  fund  road                                                              
maintenance  and tourism marketing.  Some of  the concerns  he has                                                              
regarding  DOR   and  its  retroactive  reinterpretation   of  the                                                              
statute  is  that  it  is  contrary  to  the  legislative  intent,                                                              
specifically with  regards to long  term rentals of  pickup trucks                                                              
between Alaska businesses and primarily on the North Slope.                                                                     
MR. COOK  said their company has  and continues to pay  the rental                                                              
tax, because  as a national car  rental dealership, they  had been                                                              
aware  of  it.  He  learned  about  the  department  retroactively                                                              
collecting the tax  from his competitors. While he  has the utmost                                                              
respect for  Ms. Bales and the  department - they are  just trying                                                              
to do  their job  and protect the  best interests  of the  state -                                                              
some   of  their   interpretations   of  the   statute  are   very                                                              
concerning.  If this  legislation  is not  passed and  the tax  is                                                              
retroactively  collected, several companies  will have  to declare                                                              
bankruptcy.  He said  the truck  rental business  is a low  margin                                                              
business that  they are not  interested in,  so he wanted  to keep                                                              
these competitors around.                                                                                                       
2:55:11 PM                                                                                                                    
He  wanted  to  discuss  the  90 day  exemption  as  well  as  the                                                              
exemption  for 8,500  GWV that  transport  personal property  that                                                              
does not  have a definition.   Specifically  with regard  to North                                                              
Slope rentals,  AS 43.52.099(2) defines  a passenger vehicle  as a                                                              
motor  vehicle that  is driven on  a highway  or public  right-of-                                                              
way, and the North  Slope road system is neither;  it is a private                                                              
road system. He  was also unclear about why 10  people were needed                                                              
to refund the tax.  He didn't have records that go  back 10 years,                                                              
and he wasn't  interested in spending  the state's time  to try to                                                              
refund taxes to customers.                                                                                                      
2:56:37 PM                                                                                                                    
CHAIR EGAN said he was welcome to come back and testify again                                                                   
and mentioned receiving many letters supporting some form of SB
2:57:07 PM                                                                                                                    
SENATOR DYSON  asked Senator  Bishop if  the department  was still                                                              
going  after these  enforcement  actions or  should the  committee                                                              
take  some  action  telling  them  to  stop  until  the  issue  is                                                              
SENATOR BISHOP said he didn't know.                                                                                             
CHAIR EGAN held SB 1`78 in committee.                                                                                           
2:58:48 PM                                                                                                                    
CHAIR EGAN adjourned the Senate Transportation Standing                                                                         
Committee meeting at 2:58 p.m.                                                                                                  

Document Name Date/Time Subjects
SB 53 Sponsor Statement.PDF STRA 2/25/2014 1:30:00 PM
SB 53
SB 177 Sponsor Statement.pdf STRA 2/25/2014 1:30:00 PM
SB 177
SB 178 Sectional Analysis.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 178 Sponsor Statement.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 178 Letters Supporting.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 53 Letter of Support - Air Carriers.PDF STRA 2/25/2014 1:30:00 PM
SB 53
SB 53 Letter of Support - Era 012914.pdf STRA 2/25/2014 1:30:00 PM
SB 53
SB 53 Fiscal Note, DPS 022214.pdf STRA 2/25/2014 1:30:00 PM
SB 53
SB 177 Fiscal Note, Admin 022214.pdf STRA 2/25/2014 1:30:00 PM
SB 177
SB 177 Fiscal Note, DCCED 022114.pdf STRA 2/25/2014 1:30:00 PM
SB 177
SB 177 Fiscal Note, DOTPF 022514.pdf STRA 2/25/2014 1:30:00 PM
SB 177
SB 178 Fiscal Note, DOR-Tax 022014.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 178 Petition Supporting 022514.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 53 - 14 CFR 121.353.PDF STRA 2/25/2014 1:30:00 PM
SB 53
SB 178 Letter Supporting - Lentfer 022414.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 178 Letters Supporting - Second Batch.PDF STRA 2/25/2014 1:30:00 PM
SB 178
SB 177 PCIA Industry Comments 022514.pdf STRA 2/25/2014 1:30:00 PM
SB 177