ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 13, 2014
1:08 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Doug Isaacson, Vice Chair
Representative Eric Feige
Representative Lynn Gattis
Representative Bob Lynn
Representative Jonathan Kreiss-Tomkins
MEMBERS ABSENT
Representative Craig Johnson
COMMITTEE CALENDAR
HOUSE BILL NO. 260
"An Act relating to transportation of commercial motor
vehicles."
- HEARD & HELD
HOUSE BILL NO. 271
"An Act making a special appropriation to the University of
Alaska Fairbanks for a study of the feasibility of constructing
a railroad between Fairbanks and Deadhorse; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 260
SHORT TITLE: COMMERCIAL MOTOR VEHICLE EXCEPTION
SPONSOR(s): REPRESENTATIVE(s) ISAACSON, KELLER
01/21/14 (H) PREFILE RELEASED 1/17/14
01/21/14 (H) READ THE FIRST TIME - REFERRALS
01/21/14 (H) TRA
02/06/14 (H) TRA AT 1:00 PM BARNES 124
02/06/14 (H) Heard & Held
02/06/14 (H) MINUTE(TRA)
02/13/14 (H) TRA AT 1:00 PM BARNES 124
BILL: HB 271
SHORT TITLE: APPROP: RAILROAD FEASIBILITY STUDY
SPONSOR(s): REPRESENTATIVE(s) ISAACSON
01/22/14 (H) READ THE FIRST TIME - REFERRALS
01/22/14 (H) TRA, FIN
02/06/14 (H) TRA AT 1:00 PM BARNES 124
02/06/14 (H) Heard & Held
02/06/14 (H) MINUTE(TRA)
02/13/14 (H) TRA AT 1:00 PM BARNES 124
WITNESS REGISTER
ANMEI GOLDSMITH, Assistant Attorney General
Transportation Section
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 260.
DAN SMITH, Director
Anchorage Office
Division of Measurement Standards & Commercial Vehicle
Enforcement
Department of Transportation & Public Facilities (DOT&PF)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 260.
AVES THOMPSON, Executive Director
Alaska Trucking Association, Inc. (ATA)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 260.
BARBARA HUFF TUCKNESS, Director
Governmental and Legislative Affairs
Teamsters Local 959
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to Version R.
PAUL METZ, Professor, Ph.D., P.G.
Geological Engineering
University of Alaska Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 271.
ACTION NARRATIVE
1:08:05 PM
CHAIR PEGGY WILSON called the House Transportation Standing
Committee meeting to order at 1:08 p.m. Representatives Gattis,
Kreiss-Tomkins, Isaacson, and P. Wilson were present at the call
to order. Representatives Feige and Lynn arrived as the meeting
was in progress.
HB 260-COMMERCIAL MOTOR VEHICLE EXCEPTION
1:08:56 PM
CHAIR P. WILSON announced that the first order of business would
be HOUSE BILL NO. 260, "An Act relating to transportation of
commercial motor vehicles."
1:09:37 PM
REPRESENTATIVE GATTIS moved to adopt the proposed committee
substitute (CS) for HB 260 labeled 28-LS1155\R, Martin, 2/12/14
as the working document. There being no objection, Version R
was before the committee.
1:10:44 PM
REPRESENTATIVE ISAACSON, speaking as one of the joint prime
sponsors of HB 260, stated that this bill was introduced to
solve a specific issue, which is to allow dealers [or their
employees] to drive smaller intrastate commercial vehicles from
Anchorage to point of sales elsewhere in the state. Issues were
raised during the initial hearing on HB 260, including that
under the bill Alaska dealers may have an unfair competitive
advantage for in-state upfitters. He said he "went back to the
drawing board" to find an easier way to address this issue.
Additionally, questions were raised with respect to the DOT&PF
inspection that commercial drivers' license do not apply until
the vehicle is 26,000 pounds in weight. He suggested that the
proposed committee substitute (CS) resolves the inspection
issues and avoids the application of interstate commerce
regulations. The proposed CS would exempt vehicles up to 19,500
pounds from the commercial vehicle requirements. He described
the applicable vehicles as being typical pickup trucks, with
modified beds, but not ones equipped with air brakes.
1:12:52 PM
CHAIR P. WILSON asked for clarification that the specific weight
of vehicles up to 19,500 was selected since commercial vehicles
over 19,500 pounds typically are equipped with air brakes.
REPRESENTATIVE ISAACSON agreed. He understood that using this
limit addressed the issues dealers were having as well as some
other user groups, such as agricultural.
1:14:27 PM
ANMEI GOLDSMITH, Assistant Attorney General, Transportation
Section, Department of Law (DOL), stated that interstate and
intrastate is defined in the federal regulations. She related
the definition of interstate commerce as being defined as the
"trade, traffic, or transportation between a state and a place
outside the state, or between two places in state through
another state or place outside the United States, or between two
places in a state as part of trade, traffic, or transportation
originating or terminating outside the state." Thus, the
definition of interstate commerce is fairly clear. The U.S.
regulations define intrastate commerce as being "any trade,
traffic or transportation in a state that is not included in
interstate commerce." She stated that the federal regulations
leave the distinction between the interstate and intrastate
commerce a little bit "fuzzy." She did not believe [Version R]
poses any legal issue since the federal regulations very
specifically allow states to deregulate intrastate commercial
motor vehicles up to 26,000 pounds. Thus, the 19,500 limit
falls within the federal regulations allowances.
CHAIR P. WILSON recalled this was an issue that Representative
Johnson was concerned about so she was glad that was taken care
of [in Version R].
1:16:19 PM
DAN SMITH, Director, Anchorage Office, Division of Measurement
Standards & Commercial Vehicle Enforcement, Department of
Transportation & Public Facilities (DOT&PF), introduced himself.
1:16:41 PM
CHAIR P. WILSON asked whether he could comment on Version R, in
terms of the 19,500 pound limit.
MR. SMITH answered that the DOT&PF uses the Federal Highway
Administration's (FHWA) vehicle classification when it considers
classification of vehicles. Last year the legislature passed HB
15 which exempted vehicles up to 14,000 - typically pickups,
vans, and trailers consisting of one or two axles. The next
FHWA class, class 4, includes buses. By changing the weight to
[19,500] HB 260 will affect class 5 vehicles, which are two-axle
single units that are generally used in commerce and typically
encounter a much harder use. He explained that the enforcement
challenge to identify the larger class 5 vehicles as ones used
in intrastate commerce. While it is easy to clearly identify a
pickup truck as being outside the DOT&PF's authority for
commercial vehicle enforcement regulations, it is much more
difficult for enforcement officers to identify box trucks and
flatbed trucks used in intrastate commerce from those used in
interstate commerce, which are subject to vehicle enforcement.
The changes made last year with passage of HB 15 did not affect
the vehicle enforcement officer's ability to easily identify the
exclusion; however, it is more difficult to identify the class
of vehicle affected by HB 260 - the two-axle single-unit trucks
- as being limited solely to intrastate commerce regulations.
1:18:42 PM
CHAIR P. WILSON asked whether he could comment on Version R.
She wondered if the DOT&PF's preference is to leave the
commercial weight at 14,000.
MR. SMITH answered that the definition in statute is at the
legislature's discretion, but the weight limit increase will be
considerably more difficult for commercial enforcement to
monitor. For example, the DOT&PF currently receives complaints
when a vehicle is stopped for intrastate commerce, and they're
not over the threshold, even though it is much easier to
identify those vehicles. He suggested it would be helpful to
clearly identify the vehicles by markings requirements that
indicate whether the vehicles are subject to inspections.
1:19:38 PM
REPRESENTATIVE ISAACSON related his understanding from
discussions with the DOT&PF that the department viewed Version R
more favorably as a simplified inspection process. He explained
that the goal of HB 260 is to help deliver vehicles with the
pickup chassis from the point of origin to the purchaser. He
asked whether it would be clearer to identify interstate
commercial vehicles based on the gross vehicle weight (GVW)
decal that identifies ownership - and provides other details,
noting [class 5 trucks used for intrastate commerce] will not be
required to have the decals.
MR. SMITH agreed that is correct. Certainly the division can
use the U.S. Department of Transportation (US DOT) number -
markings that establish the operating authority -to identify the
vehicles. He said his earlier favorable comments were
specifically made with respect to the earlier committee
substitute, Version O.
1:21:25 PM
REPRESENTATIVE ISAACSON related his understanding that Version R
was considered a much more universal way to address the problem
and the language would make it easier for vehicle enforcement.
Again, the proposed language change is designed to help dealers
and fabricators [such as those upfitting vehicles]. He recalled
that one committee member had expressed concern about potential
lawsuits if preferential treatment was given to Alaskan
fabricators over Lower 48 fabricators. He commented that the
chassis has been used for other applications, not necessarily
commercial applications. He pointed out 16-plus passenger
vehicles would still considered under commercial vehicle
activities. Again, he reiterated his understanding from
conversations with the Department of Law and the DOT&PF that
Version R was a more simplified method to exempt [the modified
chassis vehicles] from the necessity to stop at weigh stations
for inspections. Further, the exemption would also help the
DOT&PF in the Northern Region since their vehicle inspection
staff is limited.
1:23:09 PM
MR. SMITH responded that the department is still considering the
pros and cons of Version R. He acknowledged that certainly the
staffing issues are challenging in the DOT&PF's Northern Region.
He said that the division can focus on the commercial motor
vehicles (CMV) that require a commercial driver's license (CDL)
over 26,001 pounds. However, he strongly believes in the
federal motor carrier safety regulations and as vehicles "creep
up" to the higher weights these vehicles should probably have
additional scrutiny. For example, he recalled [Version O]
required fire extinguishers for the aforementioned trucks,
although they were not required to be mounted. In terms of
vehicle enforcement, when a 19,500 vehicle collides with a
smaller 5,000 pound vehicle, the "big vehicle always wins."
Therefore, not securing a fire extinguisher becomes more of an
issue since the fire extinguisher would be "coming from a
larger, much heavier vehicle." His perspective has been to
frame this issue in terms of safety; however, he also believes
in the effectiveness of the motor carrier safety regulations.
He hoped to find a solution that makes sense without being
overly burdensome on industry.
REPRESENTATIVE ISAACSON understood the department is still on
track with the bill.
1:25:23 PM
AVES THOMPSON, Executive Director, Alaska Trucking Association,
Inc. (ATA) stated that the ATA is a statewide organization,
representing the interests of more than 200 members from Barrow
to Ketchikan. Freight movement represents a large chunk of the
state's economy and impacts all of us each and every day. He
said, "The simple truth is that if you got it, a truck brought
it." He stated that last year, the ATA testified in favor of HB
15, which increased the weight threshold for intrastate
commercial vehicles for purpose of commercial vehicle regulation
and inspections from 10,000 to 14,000 pounds. The ATA's
reasoning at the time was that these smaller vehicles of 14,000
pounds or less fell into the definition of commercial vehicles
greater than 10,000 pounds that historically were not considered
commercial vehicles, such as pickup trucks, small step vans, and
small trailers. However, [Version R) proposes to change the
definition of what have traditionally been considered medium
duty commercial vehicles to medium duty non-commercial vehicles.
He explained that these vehicles are the local pickup and
delivery trucks, some household goods moving company vehicles,
some larger equipment trucks, mechanic trucks, boom trucks, some
tow truck, and other vehicles larger than the class 3 vehicles
that were addressed in HB 15 last legislative session.
1:27:21 PM
MR. THOMPSON reminded members that he testified last year that
class 3 vehicles do not require the level of scrutiny that the
larger class 4 and 5 vehicles require. He stated that class 4
and 5 trucks between 14,001 and 19,500 require a higher level of
maintenance and inspection due to their heavier use. And as
mentioned last year, safety is the ATA's very first concern.
The streets and highways of Alaska are where ATA's drivers go to
work each day and the organization wants to do its best to
provide a safe workplace for their employees and contractors.
While he agreed an argument could be made that there isn't any
statistical basis for drawing the conclusion that intrastate
operators are less safe than interstate carriers, the DOT&PF
simply doesn't have that data to draw conclusions about these
carriers.
1:28:23 PM
MR. THOMPSON related that he has been provided a list of
interstate and intrastate carriers that operate in Alaska. He
provided statistics, such that 874 interstate motor carriers
operate in Alaska, 124 operated 10 or more trucks, and 372
operate only one truck. Of the more than 4,570 intrastate motor
carriers, 285 have 10 trucks or more, and 2,176 operate only one
truck. He cautioned that these statistics are about two years
old and the figures do not consider vehicles eliminated by
passage of HB 15. It seems fair that interstate and intrastate
vehicles of similar size and use should be held to the same
standard to the greatest extent possible. It also seems that
this bill is trying to fix a problem that does not require
deregulation of safety requirements for a large portion of the
truck population in Alaska. He urged members to oppose this
bill. In response to a question, he repeated these interstate
and intrastate motor vehicles operate in Alaska.
1:29:41 PM
CHAIR P. WILSON asked whether any of the vehicles are government
vehicles operated by the state.
MR. THOMPSON answered that the figures refer only to commercial
vehicles that have been issued U.S. DOT numbers. He added that
these vehicles are privately-owned vehicles and not government
vehicles.
1:31:12 PM
REPRESENTATIVE GATTIS asked whether it would be possible to get
a brief summary of the bill. She related her understanding that
vehicles are transported from the Lower 48, upfitted in
Anchorage, and delivered to their final destination. She
apologized but admitted she has forgotten the advantages of HB
260.
CHAIR P. WILSON asked for clarification on Version R.
REPRESENTATIVE ISAACSON responded that Version R would allow
intrastate movement of vehicles up to 19,500 pounds without the
vehicles being classified as commercial vehicles. This means
these vehicles will not be subject to a DOT&PF inspection that
requires identification of the end user, the gross vehicle
weight - which may change with application and ownership. These
vehicles and drivers would also not be required to have safety
equipment permanently mounted, maintain log books, or be subject
to medical certifications. Under the bill, dealers could move
vehicles from the Port of Anchorage to other points in Alaska
without running the risk of giving preferential treatment to
Alaska fabricators upfitting the vehicles over those upfitted
outside Alaska.
1:33:38 PM
CHAIR P. WILSON asked whether he was aware of any unintended
consequences to the bill.
REPRESENTATIVE ISAACSON acknowledged that the original version
of HB 260 was written to solve the issue. It was his
understanding that an unintended consequence arose, with respect
to the potential problems with upfitters in Alaska and those
outside Alaska being treated differently. Thus, he changed HB
260 [Version R] to reflect a more global application. However,
the points Mr. Thompson and Mr. Smith have raised may present
problems. He was he was inclined to think Version R's benefits
outweigh the drawbacks since these vehicles are primarily used
by handymen or for agriculture. He said, "This is the type of
user we're trying to protect. There's nobody who's going to go
up against one of the big moving companies with a '550' frame
and successfully compete against them. So I don't think this
would be the business model that's going to conflict, in large
part with the safety issues mentioned by the Alaska Trucking
Association." He offered his belief the vehicles in question
are ones used on the road by people who know how to drive them.
He said other states allow intrastate application and in fact,
many allow vehicles up to 26,000 pounds although he chose not to
raise the limit beyond 19,500 pounds. Again, he reiterated that
he is working to address the issues raised since HB 15 passed
when some folks didn't realize the increase in weight limit was
happening or they would have "jumped on the band wagon" last
year.
1:36:11 PM
REPRESENTATIVE FEIGE related his understanding the original
purpose of HB 260 was to enable dealers to ferry vehicles from
Anchorage to Fairbanks and points beyond. He asked whether the
vehicles being "ferried" would also be taking on cargo or
transporting passengers.
REPRESENTATIVE ISAACSON answered no; that the vehicles in
question would not be carrying commercial equipment or
passengers, other than perhaps immediate family or employees.
1:36:59 PM
REPRESENTATIVE FEIGE referred to page 1, line 7 of Version R,
which read, "(A) used to transport passengers or property for
commercial purposes." He said it appears the very operation he
is trying to help is already excluded under existing statute.
Thus, the only effect of Version R would be to eliminate
inspections on vehicles being used for commercially transporting
passengers or cargo up to vehicle weights of 19,500 pounds.
REPRESENTATIVE ISAACSON agreed; however, the DOT&PF regulations
require that the department must review and ensure regulatory
compliance and HB 260 will simplify these requirements. He
recalled that DOT&PF might not be able to easily see the
required markings on commercial vehicles listing the owner, the
gross vehicle weight, and U.S. DOT number painted on the side of
the vehicle.
1:38:26 PM
REPRESENTATIVE FEIGE related his understanding that vehicles
used specifically for intrastate commerce up to 19,500 would be
affected by Version R. He asked whether the bill would reduce
the safety of vehicles below 19,500 used for intrastate commerce
or if other regulations will supercede [Section 1 of Version R.]
REPRESENTATIVE ISAACSON answered that unintended consequences
may affect certain safety equipment that will not be required.
1:39:18 PM
REPRESENTATIVE FEIGE understood [Version R] will remove
requirements for vehicles under 19,501 pounds, which includes
safety equipment. He asked whether ferrying vehicles falls
outside this requirement, too.
REPRESENTATIVE ISAACSON understood the question is whether
certain safety equipment will not be required on the vehicles
being ferried unless they are considered commercial vehicles.
REPRESENTATIVE FEIGE stated that existing law is being amended
to remove requirements for vehicles between 14,000 pounds to
19,500 pounds.
REPRESENTATIVE ISAACSON agreed.
REPRESENTATIVE FEIGE further understood the requirements
included certain safety equipment, not just for vehicles being
ferried, since ferrying operations already fall outside this
[sub-subparagraph].
REPRESENTATIVE ISAACSON acknowledged that this might be one of
those unintended consequences. He said it if it is the will of
the body not to pass Version R and revert back to the original
version of HB 260, "then we could go that route." However, he
asked whether it is better to have a benefit that will affect
the most people and still allow for the greatest level of
safety. He offered his belief that from discussions with
various parties and the Department of Law that [Version R] would
still allow quantifiable public safety. It is when vehicles are
over 19,500 pounds that the vehicles have equipment such as air
brakes plus more maintenance is necessary. Further,
recreational drivers would not be able to operate such vehicles.
He indicated that the majority of users driving a "Ford 550 or
equivalent" would not have that many safety issues, depending on
modifications to the vehicle bed. He related that the bill
started out trying to fix a particular problem, but he
discovered other problems arose and [Version R] seemed to be the
most global fix to help regulatory issues.
1:42:06 PM
CHAIR P. WILSON recalled testimony that it may be difficult to
track commercial vehicles. She asked whether [provisions in
Version R] will jeopardize highway safety since the bill will
increase the gross vehicle weight to 19,500 pounds.
MR. SMITH said he would look to the commercial vehicle
enforcement operations which hinge on infrastructure protection
and safety. He said that as the definition changes commercial
motor vehicles [from 10,000 pounds to 19,500 pounds] the
department needs to consider whether it is the will of
legislature to define intrastate commerce vehicles as being up
to 19,500 pounds. If so, this means much larger vehicles are
not required to stop at a local weigh station or have any of the
safety requirements. Certainly, every one of the motor carrier
safety regulations was written because "bad things" happened.
He said the DOT&PF must examine a significant number of
unintended consequences that might occur if this segment of
motor vehicles is unregulated. For instance, load securement is
specifically addressed by [U.S. regulation]. For example,
commercial vehicles are required to have a certain number of
straps to secure loads depending on the load size and weight.
Once this [14001-19,500 weight vehicle class] is unregulated, it
will be up to the vehicle operator to decide how to secure the
load. The person may or may not have the knowledge or expertise
to determine appropriate safety equipment and load securement.
He offered his belief that there would be many unintended
consequences if larger vehicles were unregulated, particularly
since the same vehicles being used for interstate commerce are
required to comply with safety equipment provisions and adhere
to load securement regulations.
1:44:49 PM
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, stated when HB 260 was initially
introduced it impacted a small segment of vehicles; however, the
proposed Version R raises substantial concern since thousands of
unregulated trucks will be on Alaska's roadways. She said that
the safety of the motoring public is huge, particularly since
Alaska's roads have icy conditions. She reported that the
trucks in question are class 5 trucks, which are "good-sized"
pieces of equipment that potentially would be unregulated. She
stated that Teamsters Local 959 would go on record as being
opposed to Version R.
1:46:38 PM
CHAIR P. WILSON asked whether the changes incorporated in
Version R would be less expensive for businesses to implement.
MS. HUFF TUCKNESS answered that her answer may not be applicable
to all companies, but part of the cost of doing business is
making sure that the drivers have safe equipment. In instances
in which vehicles are not regulated, businesses may believe they
don't need to follow the same rules and legally that would be
true. However, from a cost perspective companies could save
money by not following the important safety rules and
regulations.
1:48:15 PM
REPRESENTATIVE ISAACSON asked whether original version of HB 260
is fine due to the specific application.
MS. HUFF TUCKNESS agreed.
REPRESENTATIVE ISAACSON asked whether there would be a risk of
lawsuits if a fabricator in Anchorage had an unfair advantage
over a fabricator in Seattle.
MS. HUFF TUCKNESS answered that she wasn't able to answer the
question. She recalled Representative Feige's comments with
respect to commerce. She understood that under HB 260 the
process of moving vehicles did not involve commercial commerce,
so the activity would be exempt; however, she acknowledged that
she is not an attorney.
CHAIR P. WILSON remarked that some questions need to be
considered and more closely examined. She asked to the sponsor
to work with the DOT&PF and the enforcement to [address the
issues raised today.] She clarified that Version R is before
the committee.
1:50:52 PM
REPRESENTATIVE ISAACSON commented on Representative Feige's
remarks. He referred to proposed Section 1, which read:
(1) "commercial motor vehicle" means a self-
propelled or towed vehicle
(A) used to transport passengers or property
for commercial purposes;
(B) used on [UPON] a highway or vehicular
way; and ...."
REPRESENTATIVE ISAACSON focused on "and" as the important word,
noting that the vehicles also have specific weight restrictions.
He said that is what Version R attempted to address. He agreed
to take the language back to the parties and make sure the
changes will address the concerns.
1:51:36 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed testimony on HB 260.
[HB 260 was held over].
1:51:46 PM
HB 271-APPROP: RAILROAD FEASIBILITY STUDY
CHAIR P. WILSON announced that the final order of business would
be HOUSE BILL NO. 271, "An Act making a special appropriation to
the University of Alaska Fairbanks for a study of the
feasibility of constructing a railroad between Fairbanks and
Deadhorse; and providing for an effective date."
1:52:20 PM
REPRESENTATIVE ISAACSON, speaking as sponsor of HB 271, offered
to keep his remarks brief. He referred to information in
members' packets, including a copy of a PowerPoint and academic
paper by Dr. Paul Metz [entitled, "Economic Impact of a North
Slope Rail Extension on Northern Energy and Mineral
Development."] He stated this paper highlights a number of
natural resources that could be accessed if the rail between
Fairbanks and Deadhorse is built. He predicted that if 10
percent of the available natural resources were put into place
it would generate $18 billion in revenue to Alaska's treasury
without changing any tax structures. He indicated that DNR
confirmed that "we're not far off the mark." He also
highlighted an e-mail [in members' packets] from Great Bear
Petroleum LLC [Great Bear] which indicates that the proposed
rail project between Fairbanks and Deadhorse could provide
significant transportation cost savings for delivering materials
and another option for North Slope product delivery to in-state
locations or tidewaters. He asked members for their support for
HB 271.
1:54:09 PM
PAUL METZ, Professor, Ph.D., P.G., Geological Engineering,
University of Alaska Fairbanks, stated that he provided a report
and PowerPoint presentation to the committee to outline the
benefits of extending the Alaska railroad to the North Slope,
which is in members'' packets. He offered to answer any
questions members may have.
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 271.
1:56:22 PM
REPRESENTATIVE KREISS-TOMKINS stated that the proposed rail
extension project would be a huge infrastructure investment to
the North Slope. While he finds the idea intriguing and
compelling, the price tag for the feasibility study is
substantial. He asked why the private sector hasn't made any
initial investment in the feasibility of extending the railroad
to enhance North Slope mineral development.
CHAIR P. WILSON remarked that since Alaska does not have a
transportation plan it leaves private industry in limbo. She
emphasized the focus of this committee is to consider the policy
and decide what is best for the state and to pass on any
financial considerations to the House Finance Committee. She
acknowledged the importance of verbalizing the financial
concerns.
1:58:37 PM
REPRESENTATIVE KREISS-TOMKINS said he has difficulties
subscribing to the philosophy that this committee can't consider
the financial implications of investments since that seems to be
the fundamental policy of transportation. He commented that the
difficulty is that if the state spends $2 million for a
feasibility of a railroad to Deadhorse, it means the state will
not have $2 million to spend on the Northern Rail Extension or
the Port MacKenzie Rail Extension since state funds are limited.
He acknowledged the importance of considering investing
substantial sums of money to ensure the best return.
CHAIR P. WILSON agreed that it is important to consider the
financial realities.
1:59:48 PM
REPRESENTATIVE FEIGE said he agreed with the representative from
Sitka. He pointed out $2 million is a lot of money and thus far
there hasn't been a lot of interest in this project other than
one e-mail from Great Bear. He surmised that Great Bear will
need to travel a significant distance before providing
assurances that it will develop those areas. He suggested
alternate shipping, such as barging in any sand and steel Great
Bear might suffice. He stated that railroads are designed to
carry lots of heavy material cheaply. In order to make a $5
billion investment to build a railroad without capitalization
will require a significant economic driver that results in heavy
loads moving from point A to point B. He acknowledged that
someday oil production might be so low that transporting by rail
will be more economical; however, he offered his belief that
transporting oil by rail is a long way down the road. He
commented that mines in the Ambler and Livengood represent
potential customers, but these projects are not at that stage
either. In concept, perhaps the state should consider a shorter
line since the committee has essentially only heard from one
potential customer. He acknowledged the [1972] vintage study
previously mentioned, but noted that the mountains haven't moved
a whole lot since then. While that particular route through
Atigun Pass - including a tunnel - certainly could be an
adequate route, he questioned the legislature funding the
university for this study without a reasonable expectation that
the project is going to go forward. He said that it's also not
the legislature's job to "come up with welfare-type projects to
keep university researchers engaged." He viewed the decision
[on HB 271] from the perspective of whether to fund $2 million
to the university to study [the Fairbanks to Deadhorse rail
extension project] when the university could focus its research
and intellect on other efforts that would provide a much more
immediate return.
2:03:04 PM
REPRESENTATIVE GATTIS echoed Representative Feige's comments.
She related her constituents complain that the state funds
feasibility studies but does not further it with an actual
project. She emphasized that given declining revenues she is
reluctant to fund yet another study that may not result in any
project. Instead, she would prefer to fund projects that have
not yet been finished. She said, "I won't be voting for this."
The committee took an at-ease from 2:03 p.m. to 2:04 p.m.
2:04:58 PM
REPRESENTATIVE ISAACSON asked to first address this bill and
then hold the bill over to get some of the points fine-tuned.
He acknowledged the importance of frugality during declining
revenues; however, he urged the state to take the necessary
steps to diversify its economy. He said, "Folks, we are so
addicted to oil that is all we can see and oil is declining in
its revenue stream so we need to diversify." He offered his
belief that the proposed rail extension could help open new
mines, oil development, and expand other economic opportunities
for the state. He characterized [the feasibility study in HB
271] as being a very good use of money. He argued that the
project doesn't represent "university welfare." He pointed out
that frequently when the state makes an investment it is also
sending a signal to the resource development industry that the
state is serious about diversifying its economy and providing
access and transportation. He lamented that he didn't ask Dr.
Metz to provide more details and outline the benefits of this
project. He referred to a four-page brief on this [study] in
members' packets. He lauded Dr. Metz's knowledge and project
experience. He emphasized the aforementioned study indicates
that the state could realize a 30 percent return on investment
from just one application this railroad would serve.
2:08:52 PM
REPRESENTATIVE ISAACSON offered his belief that the rail
investment is worthwhile, particularly since the railroad has
been suffering staggering revenue losses due to Flint Hills
Resources' refinery and Usibelli Coal Mine, Inc.'s decisions.
For example, Flint Hills Resources refinery has not elected to
ship any fuel in April. He predicted that the legislature will
be asked to "help prop up" the Alaska Railroad Corporation
(ARRC) with far more than $2 million based on the drastic
revenue reductions the ARRC is experiencing. He supports HB 271
as an investment to assist the ARRC, to provide economic
diversity, and to take advantage of a great opportunity. He
vowed to "crank out" a simplified bullet sheet to outline the
importance of this bill including any benefits to the state.
Further, he stressed that ultimately private funds will build
the railroad if it proves viable so it won't be necessary to
spend general fund or capital fund monies to do so. He
emphasized that the state must begin by proving the concept and
send signals to the parties and the bond markets that the rail
extension project from Fairbanks to Deadhorse is viable. He
characterized this project as an important one for the general
welfare of the state.
2:10:32 PM
REPRESENTATIVE LYNN echoed Representative Isaacson's comments.
He offered his belief that no one will fund a railroad extension
project unless a study verifies that the project is feasible.
He asked which will come first, the chicken or the egg. He
recognized the tremendous potential of North Slope development
and eventually a rail link could spur a connection to Lower 48.
He hoped the bill would come back before the committee. He
pointed out that the state has studied the gasline countless
times, yet the state is currently closer than ever before in
making the gasline a reality. He asked members to evaluate the
bill and take action.
2:12:24 PM
REPRESENTATIVE GATTIS emphasized that she isn't suggesting that
a study isn't important. She understands that sometimes "we
have to spend money to make money." She acknowledged the
importance of building infrastructure. She said she did not
hear the compelling reason to move forward. She agreed with
Representative Lynn that it is important, but not at this time.
[HB 271 was held over].
2:13:43 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:13
p.m.