SB 371-POWERS/DUTIES DOTPF    CO-CHAIR WAGONER announced SB 371 to be up for consideration. SENATOR GARY STEVENS, sponsor, said this bill cleans up an obsolete statute at the request of the DOTPF and Attorney General. An Executive Order (EO) created an Alaska Transportation Council in the 1970s, which directed the DOT commissioner to consult with the council on all transportation projects, but the council never was appointed. The state is not complying with this old statute and it could be the basis for litigation. SB 371 amends the statute and makes it retroactive as well. Other changes allow the commissioner to study alternative fuels for use in state vehicles and changes annual requirements to periodic, which will allows the commissioner discretion in choosing sensible times. SENATOR LINCOLN asked what projects are being held up because of litigation on this issue. SENATOR GARY STEVENS answered the Iliamna bridge project is being held up for one. MR. OTTESEN elaborated that the EO became law years ago when the legislature did not take action to keep it from becoming law - by default. It never underwent an approval process. The bridge lawsuit has three issues: the council was not formed, DOTPF didn't consider cost and benefits at the time the project was selected and that the project was baselined [this project was treated as on-going in the Southwest Alaska Transportation Plan and it shouldn't be subject to additional planning]. The court found in favor for the state on two of those arguments - having no council and baselining, but the cost and benefits had to be fully evaluated. He explained that the department didn't feel at that time that rural projects would ever measure up to urban projects if they were measured by the same test, simply because rural projects serve far fewer people. Rural and urban projects didn't have the same set of questions on the department's scoring criteria. This is the fault the court found. The department is backing up in its Southwest Transportation Plan and selecting this bridge and one other that was also under construction. It is reconsidering costs and benefits for both projects, which will cost about $50,000. Our fear is that this particular legal theory, which now has been upheld by the courts, can be used on many other projects, including projects that are under construction right now, projects that are in the design pipeline and will soon be under construction. He explained that his major concern was that selecting only the most cost effective projects would leave out all rural projects and would make 40 percent of Alaska's population transportation orphans. SENATOR LINCOLN said she didn't want to see the state without performance standards for rural Alaska facilities in reference to language on page 3, line 24. MR. OTTESEN answered that years ago the department was the architect of school district facilities in rural Alaska, but authority was transferred typically to the local governments, rural education attendance areas or boroughs 15 years ago. SENATOR LINCOLN said that thankfully there were not a lot of boroughs out there, but she didn't know if anyone was identified as the responsible party to accomplish what the bill is deleting. MR. OTTESEN replied that he understood her concern, but the bill before the committee is truly housekeeping and isn't at the heart of what the department is doing to try to save rural transportation projects. "We're really concerned about the cost and benefit language and how that may be applied to projects all across the state." SENATOR THERRIAULT asked if the same result could be accomplished by just passing a letter of intent with the legislation. MS. SUSAN YURIG, Department of Law (DOL), said that the language in the bill protected regulations from being exposed. SENATOR LINCOLN moved Amendment 1 to reinsert the deleted section on page 3, line 24, through page 4, line 19. The sponsor didn't object. There were no objections and it was so ordered. MR. MARK HICKEY, representing the Lake and Peninsula Borough, supported SB 371 and said the focus of the lawsuit is on a project that has been this borough's number one priority for over 10 years. It completes a road connection between three communities that has tremendous benefits in terms of saving transportation costs and lives. He said the goal of the Executive Order was to give DOT a strong presence working on public facilities. After the change in planning authority, the department has not had the facilities technical expertise for the last 15 years. It has had all federally funded and no state funded projects. CO-CHAIR WAGONER commented that often the cost benefit analysis overshadows issues of loss of life and safety and the socio- economic impact of a project. "I think that should have just as much weight as the cost benefit analysis in some cases." MR. JEFF PARKER, representing Bob Gillam and Trout Unlimited presented the other side of the issue, which is whether a cost benefit analysis needs to be present in statute for all projects or amended. He said this legislation would not block every project under construction, because the requirement to consider cost and benefits applies only to new projects. The second issue is that the current statute does not require a positive cost benefit ratio; it only requires the department to consider it. He referenced attachment D in his letter, the Southwest Regional Transportation Plan that gives the cost effectiveness data on five proposed projects in the Lake and Peninsula Borough, and it shows the Williams Port to Pyle Bay road coming out as paying for itself. He asked the committee why a project like Iliamna Nondalton should be funded, with a cost benefit ratio of 0.26 instead of a project that comes out with a favorable cost benefit ratio. He said there has been only one reported fatality in the last 15 years of someone drowning in the Nondalton area. The state trooper's report on that fatality says a snow machine went through the ice and the driver was inebriated. There is no evidence that the person was trying to cross the river from Nondalton to Iliamna. Mr. Ottesen conceded that was the only death. A much more effective use of dollars from a safety point of view would be to build a bridge between old and new Naknek. I am convinced you will end up funding projects that will not be well justified if you abandon this requirement from state law. It simply makes sense, particularly in times of budgetary constraint.... He referred the committee to section (1)(b) of the bill that affirms the validity of the State Transportation Planning process and asked, "Affirmed with respect to what?" He didn't think that question was answered at all. Further, he pointed out that Mr. Hickey was commissioner when portions of that money was spent, but the project didn't get completed before his successor found that it was economically unjustified. "If you want to continue that process of wasting money on poorly justified projects, then go for the bill." TAPE 04-15, SIDE A    MR. PARKER noted copies of cost benefit analysis that he had sent the committee and asked if it didn't make sense for the department to have that kind of information. CO-CHAIR WAGONER said he just received the information today and wanted to hold the bill for further review. There being no further business to come before the committee, he adjourned the meeting at 3:35 p.m.