JOINT COMMITTEE ON ADMINISTRATIVE REGULATION REVIEW April 22, 1999 3:06 p.m. MEMBERS PRESENT Senator Robin Taylor, Chairman Representative Jeanette James, Vice-chair Senator Georgianna Lincoln Representative John Harris Senator Pete Kelly MEMBERS ABSENT Representative Mary Kapsner COMMITTEE CALENDAR Proposed Airport Regulations WITNESS REGISTER Mr. Kurt Parkan, Deputy Commissioner Department of Transportation and Public Facilities 3132 Channel Dr. Juneau, AK 99801-7898 POSITION STATEMENT: Presented proposed regulations Mr. Steve Pavish, Leasing Officer Department of Transportation and Public Facilities 2525 Aviation Blvd. Anchorage, AK 99519 POSITION STATEMENT: Presented proposed regulations Mr. John Steiner, Assistant Attorney General Department of Law 1031 W. 4th Ave. Suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT: Commented on proposed regulations Ms. Kim Ross, Executive Director Alaska Air Carriers' Association 929 E. 81st #108 Anchorage, AK 99518 POSITION STATEMENT: Offered testimony on proposed regulations Mr. Felix Maguire Alaska Airmen's Association 1515 E 13th Ave. Anchorage, AK POSITION STATEMENT: Commented on proposed regulations Mr. Kip Knutson ERA Aviation 6160 Carl Brady Dr. Anchorage, AK POSITION STATEMENT: Commented on proposed regulations ACTION NARRATIVE TAPE 99-04, SIDE A Number 001 VICE-CHAIR JEANETTE JAMES called the Joint Committee on Administrative Regulation Review meeting to order at 3:06 p.m. to consider proposed airport regulations by the Department of Transportation and Public Facilities (DOTPF). MR. KURT PARKAN, Deputy Commissioner of the Department of Transportation and Public Facilities, informed committee members that Steve Pavish was available via teleconference to give a general overview of the information he provided at the last meeting. DEPUTY COMMISSIONER PARKAN noted that Commissioner Perkins decided to extend the comment period on airport regulations an additional 90 days due to the comments it has received so far. He noted DOTPF wants the focus of the comments to be the regulations, not the length of the comment period. VICE-CHAIR JAMES noted legislators' appreciation of the extension. STEVE PAVISH, leasing officer at DOTPF, explained the packet distributed at the previous meeting is a collection of summary materials. The first item is an amplified list of the project objectives presented by Commissioner Perkins to legislators in March. Those project objectives include: the replacement of obsolete regulations with new ones; the adoption of regulations necessary to implement Federal Aviation Administration (FAA) requirements; the adoption of regulations to comply with AS 02.15.090(c)-(e), also known as HB 543; and addressing numerous airport parking problems at both the international and rural airports. Section 2 of the packet contains project history information, beginning with the first public presentation given in June of 1994. Public hearings were held in July of 1995; drafts and proposals are included. Section 3 contains statistical information from the first comment period, such as the number of notices published. Prior to the March, 1999 proposal, there had been 250 days of public comment period. That material is not included. MR. PAVISH continued his explanation of the packet materials. Section 4 pertains to obsolete regulations and ambiguities in existing regulations. Existing regulations are silent on the topic of leasing and environmental issues; that silence, in regard to procedures and policy statements, has created many problems. Section 5 contains an eight-page comparison of existing and proposed regulations. The most problematic current regulations are either silent, obscure, incomplete, or in conflict with recently passed legislation. Section 6 is DOTPF's response to comments suggesting that DOTPF take a "bite-size" approach so that regulations can be adopted progressively. DOTPF believes that approach would be too confusing because many of the regulations are interrelated so that changes to one could impact others inadvertently. MR. PAVISH said Section 6 contains DOTPF's reasons for not submitting this set of regulations to the negotiated regulation- making process (NRP) under AS 44.62.720. The NRP is advantageous when applied at the beginning of an agency's consideration of regulations, and, in particular, to regulations about a discrete subject. When the proposed regulations relate to a discrete subject, it is easy to identify the impacted parties to organize a committee to review the regulations. However, DOTPF's proposed regulations are being developed with a comprehensive, wholesale approach, covering every aspect of airport operations. It is extremely difficult to form committees that can cover the field. DOTPF considered splitting the regulations up into five or six segments and establishing separate committees to address each one, but that approach would require 30 to 35 people to serve on those committees. Again, the regulations before each committee would overlap with other committees and cause confusion. MR. PAVISH explained Section 7 contains examples of DOTPF's response to public comments on past proposals. The example of the regulation regarding fuel storage tanks shows the three stages of revisions made to the draft regulations. The original regulations were silent regarding temporary and mobile storage tanks. The first proposal allowed aircraft operators to store fuel in barrels at an airport where fuel was not available from a fixed, or mobile, tank. That proposal was restricted to an aircraft operator at airports where those conditions apply. After further comments were received from people who felt the proposal was too restrictive, the March 10 draft was changed to specifically allow the use of mobile fuel tanks as long as the tanks do not leak. In addition, users, other than aircraft operators, can store fuel with permission of the airport manager. MR. PAVISH concluded by saying it is important to keep in mind that airports are complex facilities used by people and businesses with many conflicting interests; accommodating the conflicting interests in a safe and successful manner requires rules. He noted the linking program contemplated in the proposed regulations for the state and community airport leasing program is the most liberal in the nation. The regulations provide more detail, part of which is at airport operator discretion, more so than is typical at public airports. He pointed out the airport regulation program is not perfect, but he looks forward to improving it. Number 347 CHAIRMAN TAYLOR joined the meeting. VICE-CHAIR JAMES asked Mr. Pavish if he could offer any comments, in hindsight, on what he could have done differently to make this process smoother. MR. PAVISH replied the statutory structure in 1994 made the process a bit difficult, but to have more interaction in the beginning, as contemplated by the NRM process, would have been helpful. Much of the interaction over the years has been frustrating for people on both sides of the proposal, but the series of public proposals, comments, and redrafting has been a useful exercise to arrive at a consensus on the regulations. The draft regulations have undergone some dramatic changes. Had people from the industry provided input at the inception stage, they would have known why DOTPF was making its proposal and the comments could have focussed on achieving the objectives. VICE-CHAIR JAMES suggested that DOTPF consider what people are doing at a specific time of year before scheduling the public comment period. MR. PAVISH noted DOTPF ran a proposal during every season of the year during this process, and found that while one group of airport users is busier in the spring, most users are busy every season of the year. Number 390 SENATOR LINCOLN thanked those involved for extending the comment period. She noted that people have said that public comments submitted in the past were not taken into consideration. She hopes that with the extension, all public comments are contained in the record and remain valid so that people do not have to testify again but have the opportunity if they so choose. DEPUTY COMMISSIONER PARKAN said he will discuss with the Department of Law whether the comments from the previous period can be included in this comment period. SENATOR LINCOLN said that is a "big ticket" item she wants to leave on the table because she does not want people to have to testify and go through the entire process again. DEPUTY COMMISSIONER PARKAN said the Department of Law is concerned about using the previous comments during this comment period but they will discuss the issue. Number 428 SENATOR LINCOLN asked Chairman Taylor if he could request, on behalf of the committee, that the comments made in that narrow window extend into the new three month period. DEPUTY COMMISSIONER PARKAN clarified that the comments from the past 40 days would be included. CHAIRMAN TAYLOR asked Senator Lincoln if she wanted comments made before that period included. He noted there may be a legal notification problem. Number 444 SENATOR LINCOLN said she was not addressing the comments made prior to the 40 day period. She noted that DOTPF's response to the inclusion of the earlier comments was that so much time had lapsed and the proposal contained major changes, so many of the comments no longer applied. DEPUTY COMMISSIONER PARKAN said he understood Senator Lincoln's concern. SENATOR LINCOLN stated her second concern is in regard to the fact that the number of hearings and workshops in rural areas listed in the history highlights is very limited. She noted that hearings were held in 1994 in Anchorage, Bethel, Dillingham, Fairbanks, Homer, Kotzebue, Nome, Juneau, and Sitka, but subsequent hearings were primarily held in urban areas. She maintained that problems differ among rural airports because of varying climates and terrain. She asked how many airport regions have been designated by DOTPF. DEPUTY COMMISSIONER PARKAN said three. SENATOR LINCOLN said she cannot stress strongly enough the need for representation from the rural element. She questioned whether DOTPF has only accepted written testimony, and asked that it accept oral testimony. DEPUTY COMMISSIONER PARKAN said DOTPF is talking about that right now, and that it will provide opportunities for people to submit testimony in all forms. He has asked staff to look at ways of taking oral testimony it has not considered in the past, possibly by providing a toll free phone number with a voice mail recording system so that a person could comment from anywhere. SENATOR LINCOLN noted she finds it unacceptable that DOTPF has designated 139 rural airports but public hearings and/or workshops were held in only six of those communities. She asked Mr. Parkan to discuss the administrative order about using plain English, and whether DOTPF could possibly draft regulations using both a comprehensive and "bite-size" process. Number 501 DEPUTY COMMISSIONER PARKAN said it is difficult to break the regulations into segments because they are so interrelated, and the time period that would be required to get through them would be even greater. SENATOR LINCOLN recommended that both be done. CHAIRMAN TAYLOR said that Alaska has 261 airports, and that DOTPF is trying to draft regulations that encompass aircraft movement including 747 cargo planes from the Orient to Cessna 150s landing on gravel strips. He cautioned that trying to structure one set of regulations that all can live by, and to do so using the regulatory process, does not work. He noted that DOTPF has employees throughout the state. He suggested sending the draft regulations to those personnel and having them sit down with the local people to explain the regulations and take comments. He maintained that process would save everyone a lot of time and would provide for more input from people who work and use rural airports. Number 554 DEPUTY COMMISSIONER PARKAN thought John Steiner was available to speak to the possibility of Senator Taylor's suggestion. He noted DOTPF attempted to provide two sets of regulations instead of one; one set dealt with the regulations that pertain to international airports. CHAIRMAN TAYLOR noted he shares Senator Lincoln's concerns about rural airports. The Sitka and Ketchikan airports are fully rural in character, however they do have to be geared up for one jet per day. He expressed hope that the airports be classed into several categories with regulations for each. He repeated that employees and people who live in the rural areas know what is needed in those areas. He asked Mr. Steiner if there is a problem with DOTPF using the scenario he outlined. Number 576 JOHN STEINER, Department of Law, said he did not see a problem with the classifications based on legitimate differences between the airports, however that might be more complex because it might require more regulations to apply to each. He indicated the suggestion about holding meetings for public comments at the various airports is problematic in that the Administrative Procedures Act requires public notices to state the date, time, and place of the public hearing. Everyone would have to be noticed of each public hearing. The existing statute does not give DOTPF the flexibility to set a time for a hearing at each airport and notify the people in that area. Also, some employees at the airports might be knowledgeable about airport maintenance but unable to understand and explain all aspects of the regulations to the public. TAPE 99-04 SIDE B CHAIRMAN TAYLOR said all it would take to comply with regulations is to notify the public with a list of airports where meetings are to be held; all meetings could be held on the same day at the same time. He agreed that all airport employees will not be knowledgeable of every single aspect of the proposed regulations, however he noted when the comments are written up, they will be in plain English and the local people will understand them. He suggested that DOTPF be more creative in the way it looks at the process to find a way to provide meaningful public input from the real users and operators of the airports. MR. STEINER maintained Chairman Taylor's and Senator Lincoln's concerns are valid, and as the agency attorney, he will bring their ideas to the Department of Law attorneys to see what they can do. Number 563 REPRESENTATIVE JAMES stated the Department of Health and Social Services' employees, when they were writing regulations for assisted living homes, sat down with the consumers and operators to find out what would work. She believes that as long as the public hearing process is followed, DOTPF has the right to ask questions of the people who will be affected before drafting the regulations. She asked Mr. Steiner to check out that possibility. SENATOR LINCOLN questioned how Sitka, which is an international airport, would respond to the proposed regulations as an international airport as well as a rural airport. DEPUTY COMMISSIONER PARKAN replied the book of international airport regulations refers to the international airport system which includes Anchorage and Fairbanks only. SENATOR LINCOLN asked whether personnel at the Wrangell airport, which is international, would learn what the international regulations are by reading the rural airport regulations. DEPUTY COMMISSIONER PARKAN explained the distinguishing features of the international airports are size, and the fact that they have operating agreements, and not just that a plane from a mine in Canada lands at it. CHAIRMAN TAYLOR added the true distinction is whether the airport has a duty-free store. He thanked Deputy Commissioner Parkan for DOTPF's participation in the meeting. KIM ROSS, Executive Director of the Alaska Air Carriers' Association (AACA), stated no one is more thankful than she for the 90 day comment period extension. She said she is one of the few people in the State who have been able to read the 226 page document, and because of its length, it is hard for her membership to read and respond to it. She stated many years ago more carriers were involved and worked on the draft regulations, but most are worn out. She informed committee members that she attended the three day workshop in Anchorage two weeks ago: participants were disgruntled when they saw the notice that said that all prior comments were no longer being considered and that the workshops would not be recorded, so that the only thing going on the record would be written comments. She noted 12 DOTPF employees were at the workshop and two members of the public. She felt DOTPF created an adversarial relationship with participants by arranging a meeting in which no comments would be recorded. MS. ROSS discussed four issues the AACA has with the proposed regulations. The AACA needs fair and reasonable rents and fees. Second, the AACA needs reasonable lease terms and renewal provisions. Third, AACA needs reasonable provisions for ownership, sales or sublease of those improvements. Fourth, AACA needs reasonable general provisions for use and quiet enjoinment. MS. ROSS said she learned a lot from speaking with DOTPF employees at the workshop. Afterward, she read through HB 543, which passed in 1996. She thought HB 543 was a great outline of what the users want to see within the regulations. She hoped the proposed regulations would follow the intent of HB 543 but was told by the attorney who has been working on the draft regulations for years that she was being naive because the first section of HB 543 provides discretion to DOTPF and lacks a definition of what is in the state's best interest, rendering HB 543 meaningless. Number 445 CHAIRMAN TAYLOR said he worked on HB 543 and understands the frustration over this issue. He asked Ms. Ross whether it is conceivable to AACA that the Legislature could revisit that statute, remove the areas of discretion and provide specific direction to DOTPF. He maintained the Legislature set a policy that they and the users understand; DOTPF has not. MS. ROSS said she is trying to be more open-minded during this regulation go-around, and has been brainstorming with legislative staff. They have discussed the possibility of including a mission statement or goals and objectives as a preamble to the regulations. They also went through DOTPF's budget and pulled out the language that speaks to the goals of DOTPF's divisions. CHAIRMAN TAYLOR informed Ms. Ross that the mission statement for DOTPF within the budget was vetoed by the Governor. MS. ROSS repeated that HB 543 was a very good bill that contained intent language. She questioned the purpose of that language if DOTPF does not have to abide by it. CHAIRMAN TAYLOR repeated that maybe the Legislature needs to remove some of the discretion given to DOTPF in HB 543 by replacing the word "may" with the word "shall." MS. ROSS said to be fair to DOTPF, sometimes AACA wants it to have discretion, but in many instances, HB 543 actually reads "shall" yet the intent is not followed. She provided the following example. About 10 years ago, managers at Merrill Field implemented a new leasing policy, similar to the policy proposed in the draft regulations. The leasing policy emphasized an increase in new revenues, resulting in a decrease in the number of takeoffs and landings from over 500,000 per year to 190,000 per year. A lot of those users moved to the Birchwood airport. ERA Aviation has a hangar at Merrill Field that has been vacant for five years; ERA cannot sell or lease it because of the regulations that Merrill Field operates under. Number 383 FELIX MAGUIRE, representing the Alaska Airmen's Association, an association of 1200 pilots throughout Alaska, stated he appreciates the 90 day comment extension period. He made the following comments. His membership has regional offices in Bethel, Kenai, Fairbanks, and Juneau; it is concerned with rural airports as well as the Anchorage airport. When he read the regulations, a few things struck him immediately. First, the local FAA administrator does not have the discretion to change the FAA regulations, yet the draft state regulations give a lot of discretion to local managers and DOTPF headquarters. Much of that discretion needs to come out. The draft regulations are written like an operations manual; they tell airport managers how to run their businesses. The regulations should allow airport managers to have their own in-house operations manuals. The regulations should distinguish between international and rural airports, to cut down on duplication. Leasing has always been on a first come, first serve, basis. Existing regulations set the fee for the first five years. The new draft regulations allow fee revisions every two and one-half years which will be a serious obstacle to business financing. In addition, ownership will revert to the State after 55 years. That restriction will discourage people from investing as much in their facilities. HB 543 requires that the lessee be in compliance with the existing lease. The new draft regulations will require that the lessee have the property evaluated which may outweigh the cost of the lease. Asking people to go through that many hoops is shortsighted. The AAA realizes that something must be done about the shortage of tie-down spaces, however a pilot who invests $150,000 in a plane needs to know he/she can lease a spot for more than five years, especially when people wait 20 years to get a space. The new regulations will require applicants to have a float rating to get on the wait list. Aircraft owners are not going to want to get a float rating every year when they have to wait 20 years before they get a spot. Pilots should be able to get a float rating when their names are in the top ten on the list. MR. MAGUIRE said he has asked his members for input to the draft regulations, and he will submit those comments to DOTPF. He expressed concern about how DOTPF will maintain continuity in this process being that Mr. Pavish is retiring next week. Number 272 CHAIRMAN TAYLOR said he agrees with Mr. Maguire's comment that the draft regulations read more like an operator's manual. He asked Mr. Maguire to review HB 543 and, if users are unsatisfied with DOTPF's regulatory process this time, work with him to revisit legislation next session. LAURIE SUTTMEIER and RON SIMPSON of the Federal Aviation Administration noted they were present to observe the hearing. CHAIRMAN TAYLOR noted the FAA regulations regarding airport security machines are incredible. He said a person can carry a five pound metal anchor through an airport security machine in San Francisco or Washington, D.C., but he can't wear a pair of suspenders through an airport security system in Wrangell, Petersburg, Yakutat or Cordova. He said he does not understand the different standards set at tiny airports that have never had a problem with hijacking. MR. SIMPSON said he will forward Chairman Taylor's concerns to Federal Aviation Security. CHAIRMAN TAYLOR asked Mr. Simpson to have someone from the FAA complaint section contact his office to discuss 737 200 series combies being flown by Alaska Airlines that have a history of mechanical problems far and above an acceptable level. He thanked Mr. Simpson and Ms. Suttmeier for their attendance and asked them to provide input on the draft regulations. DEPUTY COMMISSIONER PARKAN stated DOTPF would be happy to accept the minutes from today's meeting to be included on the record for consideration. He also noted that Mr. Pavish has been with DOTPF for 30 years and is retiring next week. Mr. Pavish has been the principal navigator of airport regulations and many issues related to airports. He thanked Mr. Pavish for his hard work. CHAIRMAN TAYLOR also thanked Mr. Pavish on behalf of the committee and the Senate, and said he has been a rock in the DOTPF institution and will be missed. SENATOR LINCOLN asked whether the extension of the comment period will have any affect on the people who testified at the last meeting whose leases are up for renewal. DEPUTY COMMISSIONER PARKAN said any extension will exacerbate a bit those folks who are waiting for the regulations to be finalized in order to take advantage of certain aspects that benefit people. DOTPF will work with them to mitigate any harm the extension might have. Number 181 SENATOR LINCOLN stated she hopes DOTPF will use the teleconferencing system at all hearings to allow people to comment, however she does not want teleconference use to be used as an excuse to not go to rural Alaska. She stated DOTPF could take comments from Anchorage over the teleconference in Aniak. DEPUTY COMMISSIONER PARKAN said her point was well taken and he would consider her comments. CHAIRMAN TAYLOR asked DOTPF to reply to Mr. Maguire's concerns about the lease renewal time of 2+ years as banks will want a minimum time period of 5 years; the evaluation of properties which will be time consuming and expensive and could be done by airport managers; and the float rating requirement which could be required when a space becomes available. DEPUTY COMMISSIONER PARKAN agreed, and said many of Mr. Maguire's points have good answers and can be clarified; DOTPF will speak with him. Number 139 KIP KNUTSON, ERA Aviation, said ERA is delighted to have an additional 90 days to comment which will allow for reasonable and appropriate feedback. He noted the draft regulations are supposed to govern the landlord-tenant relationship. Right now the majority of power is given to the landlord. ERA, as tenants, believes a better balance is necessary so that tenants do not always have to go to court for interpretation of discretionary powers of airport managers. Neither the "discretionary powers" of airport managers, the "state's best interest," nor "reasonable" are defined in statute or in the packet proposed by DOTPF. He suggested that specific language be put in the regulations so that users have something concrete to work with. CHAIRMAN TAYLOR asked Mr. Knutson to also review HB 543 and let legislators know how the law can be tightened up. MR. KNUTSON commented the term "state's best interest" might be different for rural and urban airports, but that key concept should not be tossed into the court for clarification. CHAIRMAN TAYLOR thanked all participants, and wished Mr. Pavish the best in his retirement. He then adjourned the meeting at 4:37 p.m.