CS FOR SENATE BILL NO. 371(TRA) "An Act relating to the powers and duties of the Department of Transportation and Public Facilities; relating to a long-range program for highway construction and maintenance; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated this bill sponsored by the Senate State Affairs Committee, "relates to the powers and duties of the Department of Transportation and Public Facilities. It affirms the validity of the current Department's planning process." He noted the provisions of the legislation would be retroactive to 1977. AT EASE JEFF OTTESON, Director, Division of Program Development, Department of Transportation and Public Facilities, testified this legislation is "vitally important to both the Department and to the State." It has been discovered through a lawsuit, that the Department must undertake a consideration of costs and benefits at the time of project selection for the capital budget in the Statewide Transportation Improvement Program (STIP). This has not been done for a significant number of projects and all such projects currently underway are at risk. Mr. Otteson furthered that undertaking cost and benefit analyses at the time a project is under consideration for inclusion in the capital budget would not always be useful. This would not be meaningful information to decision makers for several classes of projects, or would incur such costs as to be overwhelming to the project. Mr. Otteson outlined Section 1 reflects language recommended by the Department of Law as necessary to instruct the court that the current project involved in litigation should be allowed to proceed. Section 4 has been the most widely discussed substance of the bill and pertains to the consideration of cost and benefits for new transportation projects and facilities. The language in statute was codified from administrative code in 1977 and has never undergone the legislative process. Section 6 stipulates the new provisions would be retroactive to 1977. This would allow any project underway to be covered by the amended statute, some of which actually are 30 years old, including the Cooper River Project on the Sterling Highway. Mr. Otteson stressed the importance of this legislation to the Illiamna/Nondalton project, which has been underway since 1975 and is nearly complete. The key portion of the project is the construction of a bridge across the Newhalen River. This legislation is important to address other projects that could be similarly litigated. Environmental organizations have indicated using the existing statute to halt other projects. He warned that this would be easily accomplished for these groups were the statute not changed. Mr. Otteson compared the stoppage of the project at the Pogo Mine to the potential existing for projects with the existing statute. The Pogo Mine project obtained all permits and was underway, until the project was halted due to complications in federal law. State statute could not address the Pogo Mine issues, but this legislation could prevent such occurrences for State projects. SENATOR GARY STEVENS informed that Governor Walter Hickel signed an executive order in 1977 establishing the Alaska Transportation Council and stipulated that no project could be undertaken without review and approval by the Council. However, the Governor never appointed members to this Council and adherence to the approval requirement was overlooked. The existing statute should be amended to avoid future lawsuits and to prevent further delays with the Illiamna/Nondalton project. JEFF PARKER, Attorney, testified via teleconference from Anchorage and indicated he is the attorney to the plaintiffs of the Illiamna/Nondalton litigation, Bob Gilliam [spelling not verified] and Trout Unlimited. Mr. Parker recommended the bill be held in Committee. The requirement of cost benefit analyses relate directly to fiscal issues. If the ability to undertake cost benefit analyses for new transportation modes and facilities is undermined, the legislature would "put fiscal resources of this State at risk" because projects would be constructed that are not cost effective and would therefore not be maintained. The cost benefit requirement does not apply to improvements or repairs to existing transportation projects and facilities. Cost benefit analyses allow the legislature to make reasonable decisions about the most effective use of fiscal resources. Absent this requirement, projects become "political horse trading" because no other objective criterion is imposed in statute to facilitate decisions. Existing statute does not prohibit the undertaking of certain projects that do not have a favorable cost benefit ratio. Mr. Parker informed that the litigation over the Illiamna/Nondalton project arose because it was one of two projects included in the Southwest Regional Transportation Plan in which the Department decided "on the record" to not conduct a cost benefit analysis. Although Mr. Otteson warns that all transportation projects are at risk without the adoption of this legislation, Mr. Parker countered that cost benefit analyses were conducted for all other projects and are therefore not subject to the provisions of current statute. Co-Chair Wilken asked Mr. Otteson the threat to the Illinois/Barnett Street Connector bridge project located in Fairbanks if this legislation were not adopted. Mr. Otteson surmised it would be, along with many of the projects included in the bond package approved by voters in the last statewide general election. He listed the North Pole interchange, C Street extension, Donlin Creek Mine project, as examples. Cost benefit analyses could be conducted for each of these projects, although only at significant expense. A cost benefit analysis was recently completed for a Naknek River bridge project at a cost of $185,000 and six months of time. An analysis is underway for the Illiamna/Nondalton project with a projected cost of $55,000 for the consultants alone. In both instances, the analysis confirmed the Department's assessment that the projects are legitimate. Mr. Parker countered that this legislation "creates a greater likelihood of projects getting into the ten year time track". He defined the "ten-year time track" as a provision of federal law that stipulates that if federal funds are expended on a project for planning, design or other activities, and the project does not reach construction within ten years, the State is potentially liable to refund the federal funds. The STIP includes approximately 60 projects within the ten-year time track and involve hundreds of millions of dollars of federal funding. Mr. Parker contended that the more options to facilitate making better-informed decisions that are eliminated, the greater the likelihood that "mere politics" would move a project forward. As "more reasoned" decision-making is implemented later, these projects are "put on the back burner". This is the situation that occurred with the Illiamna/Nondalton project. He stated that project is not near completion, as attested to by Mr. Otteson and he spoke of the high cost and political motivation behind the project. Co-Chair Green offered a motion to report the bill from Committee with individual recommendations and accompanying fiscal note. There was no objection and CS SB 371 (TRA) MOVED from Committee with zero fiscal note #1 from the Department of Transportation and Public Facilities.