HB 63-ALASKA MARINE HIGHWAY OPERATIONS BOARD  3:50:20 PM CHAIR KREISS-TOMKINS announced that the final order of business would be HOUSE BILL NO. 63, "An Act relating to the duties of the Department of Transportation and Public Facilities; renaming the Alaska Marine Transportation Advisory Board the Alaska Marine Highway Operations Board; relating to the membership and duties of the Alaska Marine Highway Operations Board; and providing for an effective date." [Before the committee was CSHB 63(TRA).] 3:50:27 PM The committee took an at-ease from 3:50 p.m. to 3:53 p.m. 3:53:18 PM KERRY CROCKER, Staff, Representative Louise Stutes, Alaska State Legislature, on behalf of Representative Stutes, prime sponsor, introduced HB 63 with a PowerPoint presentation, titled "HB 63" [hard copy included in the committee packet]. He began on slide 2, titled "Background Information," which read as follows [original punctuation provided]: AK FERRY SYSTEM ESTABLISHED ?M/V Chilkat, became operational in 1957 ?1959, Alaska becomes 49thstate making M/V Chilkat first state-owned ferry ?Alaska Legislature approved the Alaska Ferry Transportation Act, 1959 ?Voters approved bond issues totally $18 million to expand services and build four new vessels and docks ?1963, Alaska Marine Highway established AMHSTASKFORCE CREATED ?Governor Sheffield created AMHS Taskforce in 1984 ?Focus of Taskforce was to assess AMHS structure and rates ?Conclusion of Taskforce: system was archaic with a lack of continuity or purpose ?Suggestion of Taskforce: need change in management structure MR. CROCKER conveyed that meanwhile, while the Alaska Marine Highway System (AMHS) management structure was lacking without a proper business structure, new boats were built throughout the 1960s and 1970s, followed by several decades without the construction of new ships. This lack of planning and direction is one of the core challenges that AMHS continues to face today, as 7 out of 10 vessels are more than 40 years old, he said. He directed attention to slide 3, which depicted the "aging fleet" of ferries that are still in operation. 3:55:47 PM MR. CROCKER continued to slide 4, titled "Management Issues Early On," which highlighted a section of a 1989 memorandum from the Department of Transportation & Public Facilities (DOT&PF) commissioner [Mark Hickey], which read as follows [original punctuation provided]: The combination of our inability to articulate the comprehensive system plan, and the real and perceived impacts resulting from the growing budget dilemma (including the resulting impact on legislative perceptions about the System's efficiency), has served as the primary impetus for may to support the establishment of a public authority as a way to address existing problems. 3:56:34 PM MR. CROCKER proceeded to slide 5, titled "Same Problems, Same Answers," which read as follows [original punctuation provided]: ?1984, Alaska Marine Highway System Taskforce ?Determination: Need change in management structure to help provide business directive and success in system ?2016, Alaska Marine Highway System Reform Initiative ?Determination: Need management to invest in long-term planning and strategy ?2020, Alaska Marine Highway Reshaping Work Group ?Determination: Management needs to be restructured and privatization not feasible MR. CROCKER reported that one of the recommendations from Governor Dunleavy's Alaska Marine Highway Reshaping Work Group was to create a "Marine Operation's Board" or ferry commission. The Marine Operation's Board of directors would have the ability to suggest and assess marine business and procurement practices, enhance revenue, reduce costs, and offer experience and knowledge in marine and personnel management. 3:58:04 PM MR. CROCKER advanced to slide 6, titled "What HB 63 Accomplishes," which read as follows [original punctuation provided]: Creates a nine-member Marine Transportation Operations Board ?Marine Highway Director ?2 members appointed by Speaker of House ?2 members appointed by Senate President ?4 members appointed by Governor Changes reporting of long-range comprehensive plan from every five years to every three years. MR. CROCKER conveyed that HB 63 would replace the current Alaska Marine Transportation Advisory Board with a smaller, nine-member AMHS Operation's Board. He noted that one of the four members appointed by the governor would be a representative of an Alaska Native organization or tribe who is from a community served by AMHS; another member [appointed by the governor] would represent a maritime union. The bill also requires the commissioner of DOT&PF to incorporate the board's recommendations in a long- range comprehensive transportation plan for the state. 3:58:59 PM REPRESENTATIVE TARR sought verification that the reoccurring determination has been that AMHS is not structurally sound. She surmised that the current infrastructure does not allow [the Alaska Marine Transportation Advisory Board] influence over the management and operations, which is "the missing component of transitioning from one [board] to the other." MR. CROCKER explained that the current board is composed of 12 members who are appointed by the governor. He noted that the appointments are primarily geographical. Additionally, he shared his understanding that the current board's recommendations are not always followed. He conveyed that under CSHB 63(TRA), the new board would be composed of marine professionals and incorporate the director of AMHS; further, the commissioner of DOT&PF would be required to incorporate their recommendations, which would ultimately, give the new board more authority. REPRESENTATIVE STORY asked why the effective date is January 1, 2022, instead of July 1, 2021. MR. CROCKER said [January 1, 2022] would allow an appropriate amount of time to for board [members] to be appointed and to transition. REPRESENTATIVE STORY inquired about the decision to select the AMHS director [Captain John Falvey] to head the board instead of the commissioner [of DOT&PF]. MR. CROCKER stated his belief that it would be more appropriate to involve the director because he is more intimately involved with the day-to-day operations of AMHS. 4:02:17 PM REPRESENTATIVE EASTMAN referred to Section 5 of the bill and inquired about the head of the division of marine transportation's intended participation in the board. MR. CROCKER said that individual's presence would be required. He explained that the head if the division could not be removed from the board due to lack of attendance unless done so by the governor himself, as that position works for the governor. He added that the exemption in question was a drafting determination by Legislative Legal Services. MR. CROCKER in response to Representative Eastman's question regarding whether the position could be filled by an authorized designee, said [the bill sponsor] would consider the suggestion. 4:03:58 PM REPRESENTATIVE KAUFMAN remarked: I noticed that there's nothing about continuous improvement - the whole slate of quality management knowledge and understanding that allows organizations to transform without causing undue upset or the negative effects of change. REPRESENTATIVE KAUFMAN asked whether that would help achieve the bill's mission. MR. CROCKER answered "absolutely." CHAIR KREISS-TOMKINS suggested including that in a "Findings and Intent" section. 4:05:08 PM REPRESENTATIVE VANCE questioned why the board's title would be changed from the Alaska Marine Transportation Advisory Board to the Alaska Marine Highway Operation's Board. MR. CROCKER said the title originated from a report by the Alaska Marine Highway Reshaping Work Group. CHAIR KREISS-TOMKINS expressed his hope that the board would be as empowered as possible. He opined that "operation's board" gives a more "forceful" impression than "advisory board." REPRESENTATIVE VANCE expressed support for the language [in Section 1 of the bill] that speaks to developing short-term and comprehensive long-range plans for AMHS. Additionally, she inquired about the meaning of the language "who serve at the pleasure of" in Section 3, paragraphs (5) and (6). MR. CROCKER noted that typically, the board would work at the pleasure of the governor; however, because the presiding officers would appoint [4] board members, those members would work at the pleasure of the speaker of the house and the president of the senate, so they could not be arbitrarily removed. 4:08:23 PM CHAIR KREISS-TOMKINS inquired about the current precedents that exist under statute for board and commissioner appointments by presiding officers of either body. MR. CROCKER said he had asked Legislative Legal Service for an opinion on that matter. CHAIR KREISS-TOMKINS asked Mr. Crocker to share that information with the committee upon receipt. 4:09:16 PM REPRESENTATIVE EASTMAN referred to Section 4, subsection (c), which states that if a vacancy arises on the board, the governor or the presiding officer of either body, as applicable, shall appoint a new person within 30 days. He pointed out that twice in the last several years, the House had been without a speaker for 30 days. He suggested changing that language. MR. CROCKER acknowledged the point made by Representative Eastman; however, he said the bill sponsor is comfortable with the current language. REPRESENTATIVE EASTMAN shared his understanding that Section 9 of the bill would repeal the requirement that [at least two] members should be members who are residents of areas not directly served by AMHS. He asked why [those seats] "[are] being taken away." MR. CROCKER stated his belief that those seats are not being taken away, because nothing in CSHB 63(TRA) would preclude the governor or either presiding officer from appointing a member [who is a resident of areas not directly served by AMHS] if he/she met the requirements. REPRESENTATIVE EASTMAN opined that there would be value in maintaining that diversity on the board, as the state is subsidizing AMHS. He asked why that requirement is being eliminated. MR. CROCKER pointed out that geographical appointments from specific areas would be eliminated altogether. He added that the bill enables the governor and presiding officers to appoint from any geographic area. He maintained that if an individual from Willow, Alaska had the appropriate credentials, he/she could still be appointed to the board under CSHB 63(TRA). 4:12:46 PM REPRESENTATIVE CLAMAN asked why the head of the division of marine transportation would sit on the board rather than take direction from the board. MR. CROCKER said that comment has been raised numerous times. He explained that the bill sponsor determined that the director's expertise would be needed. He further noted that the board would make recommendations to the commissioner of DOT&PF instead. 4:13:43 PM REPRESENTATIVE KAUFMAN asked what is reported and who it's reported to. Additionally, he questioned how the bill ensures that the board would achieve its mission. MR. CROCKER said the board would report annually to Senate and House transportation committees. Furthermore, under AS 44.42.050, the commissioner is required to develop a statewide comprehensive intermodal long-range transportation plan for the state. He added that if the bill were to pass, the commissioner would be required to adopt the recommendations of the board into that plan. REPRESENTATIVE KAUFMAN pointed out that most consider AMHS as critical infrastructure and acknowledge the need for its improvement. He asked whether it would be beneficial to implement a more detailed "progress-reporting structure" in which targets would be identified and tracked to drive and sustain a high rate of improvement. MR. CROCKER stated that the board can only have so much constitutional authority. He continued to explain that the board cannot have "teeth" to direct DOT&PF, per the advisement of Legislative Legal Services. CHAIR KREISS-TOMKINS addressed the notion of a public corporation, which is a fully and formally empowered government structure. He expressed his support for that concept even though it's outside the scope of the bill. Nonetheless, he shared is belief that there would be room for a "Findings and Intent" section in CSHB 63(TRA), which could state the legislature's intent for the board to set performance goals. 4:18:11 PM REPRESENTATIVE STORY expressed concern about the current effective data of January 1, 2022, adding that she would like to see a product sooner. MR. CROCKER said [the bill sponsor] would entertain that suggestion. 4:19:31 PM CHAIR KREISS-TOMKINS announced that HB 63 was held over.