Legislature(2009 - 2010)CAPITOL 17

03/23/2010 01:00 PM TRANSPORTATION


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 47 SMALL VESSEL CARGO EXEMPTION TELECONFERENCED
Moved Out of Committee
+= HB 257 BAN CELL PHONE USE WHEN DRIVING TELECONFERENCED
<Bill Hearing Canceled>
+= HB 357 AK RAILROAD CORP. LAND SALES TELECONFERENCED
Moved CSHB 357(TRA) Out of Committee
+ SB 272 RENTAL CAR CHARGES TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         March 23, 2010                                                                                         
                           1:03 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Peggy Wilson, Chair                                                                                              
Representative Kyle Johansen                                                                                                    
Representative Cathy Engstrom Munoz                                                                                             
Representative Tammie Wilson                                                                                                    
Representative Max Gruenberg                                                                                                    
Representative Pete Petersen                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson, Vice Chair                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 47                                                                                                   
Urging the  United States  Coast Guard  to amend  its regulations                                                               
relating  to  small vessels  transporting  fuel  and supplies  to                                                               
remote communities and businesses in the state.                                                                                 
                                                                                                                                
     - MOVED HJR 47 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 357                                                                                                              
"An  Act  relating to  the  sale  of  land  owned by  the  Alaska                                                               
Railroad that is not needed for railroad purposes."                                                                             
                                                                                                                                
     - MOVED CSHB 357(TRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 272                                                                                                             
"An Act relating to charges  for rented motor vehicles, including                                                               
cost recovery  fees, and making  a violation of the  rented motor                                                               
vehicle charge provisions an unfair trade practice."                                                                            
                                                                                                                                
     - MOVED SB 272 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 257                                                                                                              
"An Act  relating to prohibiting  the use of  cellular telephones                                                               
when  driving a  motor vehicle;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR 47                                                                                                                  
SHORT TITLE: SMALL VESSEL CARGO EXEMPTION                                                                                       
SPONSOR(s): REPRESENTATIVE(s) JOHANSEN                                                                                          
                                                                                                                                
02/23/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/23/10       (H)       TRA                                                                                                    
03/23/10       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 357                                                                                                                  
SHORT TITLE: AK RAILROAD CORP. LAND SALES                                                                                       
SPONSOR(s): REPRESENTATIVE(s) STOLTZE                                                                                           
                                                                                                                                
02/19/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/10       (H)       TRA                                                                                                    
03/16/10       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
03/16/10       (H)       Heard & Held                                                                                           
03/16/10       (H)       MINUTE(TRA)                                                                                            
03/23/10       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: SB 272                                                                                                                  
SHORT TITLE: RENTAL CAR CHARGES                                                                                                 
SPONSOR(s): SENATOR(s) HUGGINS                                                                                                  
                                                                                                                                
02/10/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/10/10       (S)       TRA, L&C                                                                                               
02/23/10       (S)       TRA AT 1:00 PM BUTROVICH 205                                                                           
02/23/10       (S)       Moved SB 272 Out of Committee                                                                          
02/23/10       (S)       MINUTE(TRA)                                                                                            
02/24/10       (S)       TRA RPT   4DP                                                                                          
02/24/10       (S)       DP: MENARD, MEYER, PASKVAN, DAVIS                                                                      
03/11/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/11/10       (S)       Moved SB 272 Out of Committee                                                                          
03/11/10       (S)       MINUTE(L&C)                                                                                            
03/12/10       (S)       L&C RPT   5DP                                                                                          
03/12/10       (S)       DP: PASKVAN, MEYER, THOMAS, BUNDE,                                                                     
                         DAVIS                                                                                                  
03/15/10       (S)       TRANSMITTED TO (H)                                                                                     
03/15/10       (S)       VERSION: SB 272                                                                                        
03/17/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/17/10       (H)       TRA, L&C                                                                                               
03/23/10       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAVID SCOTT, Staff                                                                                                              
Representative Kyle Johansen                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of the prime sponsor                                                                 
during the discussion of HJR 47                                                                                                 
                                                                                                                                
DAVID SPOKELY                                                                                                                   
Power Systems and Supply Alaska                                                                                                 
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HJR 47.                                                               
                                                                                                                                
REPRESENTATIVE BILL STOLTZE                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions as prime                                                                
sponsor of HB 357.                                                                                                              
                                                                                                                                
JIM KUBITZ, Vice President                                                                                                      
Real Estate and Facilities                                                                                                      
Alaska Railroad Corporation (ARRC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 357.                                                               
                                                                                                                                
PHYLISS JOHNSON, Vice-President and General Counsel                                                                             
Alaska Railroad Corporation (ARRC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 357.                                                               
                                                                                                                                
JOHN COAN, Staff                                                                                                                
Representative Bill Stoltze                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 357.                                                               
                                                                                                                                
MARK STEARNS, Owner                                                                                                             
Alaska Wood Molding                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 357.                                                               
                                                                                                                                
PAT GAMBLE, President and CEO                                                                                                   
Alaska Railroad Corporation (ARRC)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 357.                                                                                                           
                                                                                                                                
EDRA MORLEDGE, Staff                                                                                                            
Senator Charlie Huggins                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Presented SB  272 on  behalf of  the prime                                                             
sponsor of SB 272.                                                                                                              
                                                                                                                                
SHANE SKINNER, Controller                                                                                                       
Enterprise Rent-A-Car                                                                                                           
Seattle, Washington                                                                                                             
POSITION STATEMENT:  Testified during the discussion of SB 272.                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:03:43 PM                                                                                                                    
                                                                                                                                
CHAIR  PEGGY  WILSON  called the  House  Transportation  Standing                                                             
Committee  meeting to  order  at 1:03  p.m.   Representatives  P.                                                               
Wilson, Munoz, Petersen,  and T. Wilson, and were  present at the                                                               
call to  order.  Representatives  Gruenberg and  Johansen arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
                                                                                                                              
1:03:54 PM                                                                                                                    
                                                                                                                                
              HJR 47-SMALL VESSEL CARGO EXEMPTION                                                                           
                                                                                                                                
CHAIR P. WILSON announced that  the first order of business would                                                               
be HOUSE JOINT RESOLUTION NO.  47, Urging the United States Coast                                                               
Guard  to  amend  its  regulations   relating  to  small  vessels                                                               
transporting  fuel   and  supplies  to  remote   communities  and                                                               
businesses in the state.                                                                                                        
                                                                                                                                
1:05:56 PM                                                                                                                    
                                                                                                                                
DAVID SCOTT,  Staff, Representative  Kyle Johansen,  Alaska State                                                               
Legislature, on behalf  of the prime sponsor,  explained that HJR
47  would  urge the  U.S.  Coast  Guard  (U.S.C.G.) to  amend  it                                                               
regulations  relating  to  small vessels  transporting  fuel  and                                                               
supplies to  remote communities and  businesses in the state.   A                                                               
constituent  brought  this  matter to  Representative  Johansen's                                                               
attention.  Mr. Spokely is on-line to testify today, he stated.                                                                 
                                                                                                                                
DAVID  SPOKELY,  Power Systems  and  Supply  Alaska, stated  that                                                               
problems  exist  in  delivering fuel  and  freight  to  Southeast                                                               
Alaska  and remote  sites.   He explained  that twenty  years ago                                                               
logging barges  were available in  Southeast Alaska to  help move                                                               
goods.  He modified a vessel for  fuel delivery.  He then built a                                                               
brand new vessel and worked  with the Department of Environmental                                                               
Conservation (DEC)  to develop  a spill  response that  meets the                                                               
U.S.  Environmental  Protection  Agency's (EPA)  2010  standards.                                                               
The  vessel he  designed and  built is  a triple-hull  high-speed                                                               
landing  craft.   Although the  local and  state branches  of the                                                               
U.S.C.G. liked  his system, when  he applied for an  exemption to                                                               
the federal law,  the national offices limited him  to one vessel                                                               
until the  matter could be  further investigated.  He  would like                                                               
to have  several ships in  order to serve local  communities, but                                                               
has since  been advised that  due to cutbacks the  U.S.C.G. would                                                               
not develop any regulations to allow operation of his vessels.                                                                  
                                                                                                                                
1:09:15 PM                                                                                                                    
                                                                                                                                
MR. SPOKELY  restated that  the local  and state  U.S.C.G. "liked                                                               
what  his  company was  doing."    He  explained that  his  spill                                                               
response plan meets the EPA's  2010 standards that the state will                                                               
implement for fuel delivery.   His triple-hull lightweight vessel                                                               
cruises at 23  knots and can navigate into  shallow waters, which                                                               
allows him  to traverse bays and  rivers.  During its  five years                                                               
of  operation  his vessel  has  never  "spilled  any fuel".    He                                                               
detailed  other aspects  of his  vessel's  system, including  the                                                               
self-regulating  pumping system.   The  state DEC  and the  local                                                               
U.S.C.G. offices assisted him with  the vessel design, certified,                                                               
and  inspected his  vessel as  a  passenger vessel,  a bulk  fuel                                                               
carrier, and a bulk cargo carrier.   He reported that as of today                                                               
his vessel is  the only vessel in the U.S.  that has obtained all                                                               
three designations  at once.   The U.S.C.G. did not  identify any                                                               
issues or  request any  modifications or  changes to  his vessel.                                                               
In fact,  the state DEC office  would like his company  to expand                                                               
throughout the state to serve coastal areas, he stated.                                                                         
                                                                                                                                
MR.  SPOKELY,  in response  to  Chair  Wilson, replied  that  his                                                               
vessel delivers fuel,  cargo, and passengers.   The difficulty is                                                               
that the regulations that apply  to his vessel were developed for                                                               
supertankers.     Thus,  the  U.S.C.G.  has   not  addressed  the                                                               
requirements  that apply  to smaller  vessels.   So  long as  his                                                               
vessel remains  under 15 gross  tons the bulk of  the regulations                                                               
do not  really apply, but since  his tanks are internal,  he must                                                               
meet the cargo  tanker vessel regulations intended  for large oil                                                               
tankers.  In  order to obtain relief, the U.S.C.G.  must create a                                                               
new subchapter in regulation that  would apply to smaller vessels                                                               
transporting  fuel,  freight,  and  passengers.    He  said,  "We                                                               
addressed  that through  this  exemption.   They  thought it  was                                                               
great.   They  loved  what we  did.   They  agreed  we should  be                                                               
building more of these and  supplying them everywhere.  Maine has                                                               
been  calling us  and asking  if they  can get  our boats."   The                                                               
limitation arises  since his  vessel is  built from  aluminum and                                                               
the regulations  require tankers to  be built from steel.   Thus,                                                               
his  issue requires  the U.S.C.G.  to  create a  new category  of                                                               
vessel.  The U.S.C.G. was  moving forward on regulations and then                                                               
decided on  other priorities to  fund.  Therefore, no  funding or                                                               
staff has been authorized to write the regulations.                                                                             
                                                                                                                                
1:13:58 PM                                                                                                                    
                                                                                                                                
MR. SPOKELY reported  that he has worked with  the local U.S.C.G.                                                               
office on draft regulations, but  the Juneau office does not have                                                               
resources  to move  forward, either.   Meanwhile,  he is  "stuck"                                                               
with one  boat in  Ketchikan while Alaska  needs more  boats like                                                               
his to serve  the small Alaskan communities.  He  pointed out the                                                               
exemption  would   apply  to  all  companies   providing  similar                                                               
service, not just his company.                                                                                                  
                                                                                                                                
1:14:57 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON related her understanding  that this resolution,                                                               
HJR  47, would  ask  the U.S.C.G.  to create  a  new category  of                                                               
vessel  and separate  it  out from  the  requirements for  larger                                                               
vessels.                                                                                                                        
                                                                                                                                
1:15:47 PM                                                                                                                    
                                                                                                                                
MR.  SCOTT, in  response to  Representative Gruenberg,  explained                                                               
that he had an expert witness  lined up to testify but the person                                                               
was  not  able to  make  the  meeting.    He explained  that  the                                                               
U.S.C.G.  personnel  offered to  answer  any  questions that  are                                                               
submitted in writing.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  offered his belief that  it sounds like                                                               
the statutory authorization exists  but the U.S.C.G. must publish                                                               
a  regulation  to  cover  vessels that  carry  fuel,  cargo,  and                                                               
passengers concurrently at the same time.                                                                                       
                                                                                                                                
MR. SCOTT agreed.                                                                                                               
                                                                                                                                
1:17:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  stated  that  he  does  not  have  any                                                               
problem  passing HJR  47  out of  committee.   He  asked why  the                                                               
U.S.C.G.  has not  yet  adopted regulations  since  not doing  so                                                               
makes it  tough for Southeast  Alaska businesses.  He  asked what                                                               
needs to  happen, whether  a U.S.C.G.  Admiral could  come before                                                               
the committee or if the  U.S. Congressional delegation would need                                                               
to assist in addressing the issue.                                                                                              
                                                                                                                                
REPRESENTATIVE  JOHANSEN   said  he   appreciated  Representative                                                               
Gruenberg's point of  view.  He would like to  see the resolution                                                               
keep moving through the process.                                                                                                
                                                                                                                                
CHAIR P. WILSON  said she would also like to  pass the resolution                                                               
out of committee.   She asked the sponsor's staff  to contact the                                                               
U.S.C.G.                                                                                                                        
                                                                                                                                
1:18:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ related her  understanding that the U.S.C.G.                                                               
in Alaska  is supportive but  the matter just needs  attention at                                                               
the national level.                                                                                                             
                                                                                                                                
MR. SCOTT agreed.                                                                                                               
                                                                                                                                
CHAIR P.  WILSON commented that  she hoped this  resolution would                                                               
help alleviate the problem.                                                                                                     
                                                                                                                                
1:19:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   PETERSEN  asked   whether  the   Ketchikan  boat                                                               
building facility could build boats of that size.                                                                               
                                                                                                                                
MR. SCOTT answered yes.                                                                                                         
                                                                                                                                
REPRESENTATIVE PETERSEN expressed support  for using this type of                                                               
vessel in Western Alaska.  He offered his strong for HJR 47.                                                                    
                                                                                                                                
1:20:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  whether  this  vessel was  built                                                               
from the hull up.                                                                                                               
                                                                                                                                
MR. SPOKELY explained that his vessel  is a one of a kind vessel.                                                               
This  vessel is  44 feet  long and  he plans  to keep  any future                                                               
vessels under 65  feet and under 10,500 gallons.   He stated that                                                               
his  company does  not want  to compete  with "giant  barges" but                                                               
would like to  deliver small quantities of fuel in  a safe manner                                                               
to rural  areas.  He envisioned  using the 50 to  60 foot vessels                                                               
as well as  the 40-foot vessel designed  specifically for shallow                                                               
water navigation.  It takes less  than ten minutes to convert his                                                               
vessel  from a  freight or  passenger  vessel to  a fuel  vessel.                                                               
Fuel transport  operations cannot  occur while passengers  are on                                                               
board, which he characterized as a good policy.                                                                                 
                                                                                                                                
CHAIR P. WILSON related her  understanding that Mr. Spokely has a                                                               
"sister ship" waiting in the wings to be built.                                                                                 
                                                                                                                                
MR. SPOKELY answered yes.                                                                                                       
                                                                                                                                
REPRESENTATIVE MUNOZ  thanked Mr. Spokely for  his investment and                                                               
transportation in the Southeast Alaska region.                                                                                  
                                                                                                                                
1:22:42 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HJR 47.                                                                                     
                                                                                                                                
REPRESENTATIVE  JOHANSEN remarked  that  the  vessel Mr.  Spokely                                                               
designed  is  in demand.    He  characterized  the vessel  as  an                                                               
"amazing  vessel"  manufactured  and  designed  in  Alaska,  with                                                               
potential  applications  statewide.    He said  he  is  proud  to                                                               
represent District 1.  He wants  to "cut that red tape" and allow                                                               
Mr. Spokely to  move forward with his second ship.   He said, "We                                                               
should all get behind it and make it happen."                                                                                   
                                                                                                                                
REPRESENTATIVE JOHANSEN removed his objection.                                                                                  
                                                                                                                                
REPRESENTATIVE  MUNOZ moved  to report  HJR 47  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HJR 47 was reported  from the                                                               
House Transportation Standing Committee.                                                                                        
                                                                                                                                
1:24:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG added  he was  on a  landing ship  tank                                                               
(LST)  in Vietnam,  which he  thought  was very  similar to  this                                                               
vessel.   He stated that  the LSTs  hauled cargo and  people, but                                                               
did not need a pier to unload.                                                                                                  
                                                                                                                                
              HB 357-AK RAILROAD CORP. LAND SALES                                                                           
                                                                                                                                
1:25:27 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  announced that the next order  of business would                                                               
be   HOUSE BILL  NO. 357, "An  Act relating to  the sale  of land                                                               
owned  by the  Alaska Railroad  that is  not needed  for railroad                                                               
purposes."                                                                                                                      
                                                                                                                                
1:25:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   BILL   STOLTZE,    Alaska   State   Legislature,                                                               
introduced his staff.                                                                                                           
                                                                                                                                
JOHN  COAN,  Staff,  Representative Bill  Stoltze,  Alaska  State                                                               
Legislature, on  behalf of  the prime  sponsor, related  that two                                                               
questions arose  at the  last hearing: whether  the ARRC  land is                                                               
considered  state   land  and  if   it  is,  whether   any  legal                                                               
ramifications  to in  stating a  right  of first  refusal on  the                                                               
land.   He  stated that  the Alaska  Railroad Corporation  (ARRC)                                                               
land is  state land and  the legislature approves any  land sales                                                               
and  disposals.   Thus,  a right  of first  refusal  is fine,  he                                                               
stated.                                                                                                                         
                                                                                                                                
1:27:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE  offered that this bill  really represents                                                               
a policy  call for the legislature.   The purpose of  the bill is                                                               
captured by  the letter  from the  Alliance in  members' packets.                                                               
The  Alliance  called  the   bill  a  "pro-business,  pro-private                                                               
sector, pro-investment, pro-jobs,  and pro-Alaska Railroad" bill.                                                               
He said  he said  he stumbled  into this "unrest."   He  bill has                                                               
spurred lots of discussion from  the business community.  Without                                                               
the  ability  to  have  the  opportunity to  own  the  land,  the                                                               
business owners do  not have the confidence to  make the business                                                               
investments.  He  remarked on the breadth of  letters he received                                                               
on this matter.                                                                                                                 
                                                                                                                                
1:29:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T.  WILSON asked whether  the bill would  give the                                                               
Alaska Railroad Corporation (ARRC) the option to sell land.                                                                     
                                                                                                                                
REPRESENTATIVE  STOLTZE  answered  that  the  bill  provides  the                                                               
permission  to  do  so.    He  remarked  on  what  he  termed  as                                                               
"arrogance" that  the ARRC has  shown to private businesses.   He                                                               
offered that  the ARRC properties  are taxable  properties, which                                                               
will likely only increase in  value.  He anticipated that lessees                                                               
would be  more likely to improve  the property if they  owned it,                                                               
similar to how  homeowners versus renters are more  apt to invest                                                               
and care for property.                                                                                                          
                                                                                                                                
1:32:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred  to  the  sponsor  statement,                                                               
which read:                                                                                                                     
                                                                                                                                
     To  spur economic  development throughout  the state,  House                                                               
     Bill  357 adds  a  fourth clause  to  the existing  language                                                               
     governing how  the Alaska  Railroad Corporation  may dispose                                                               
     of land.  House Bill  357 will enable  the railroad  to sell                                                               
     land  that is  not needed  for essential  railroad purposes.                                                               
     This bill  does not  ask for  any irresponsible  disposal of                                                               
     land,  as  the  sale  must  be initiated  by  the  board  of                                                               
     directors  on two  conditions. The  first condition  is that                                                               
     the land  is not essential  to railroad operations,  and the                                                               
     second condition  is that the  sale is in the  best interest                                                               
     of the state of Alaska.                                                                                                    
                                                                                                                                
     As support has shown,  current leaseholders are very unhappy                                                               
     with the inability to purchase  their leased properties from                                                               
     the  railroad.  In  general real  estate  dealings,  private                                                               
     purchases are made in mutually  beneficial sales. House Bill                                                               
     357 encourages these sales after  determination by the board                                                               
     of directors  of the  railroad looks at  each sale  with the                                                               
     overall benefit  to the state  of Alaska as the  key driver.                                                               
     Not only will the private  sector benefit from this addition                                                               
     to state law, the railroad  will also have increased ability                                                               
     to  make  decisions  regarding  their  overall  real  estate                                                               
     portfolio.                                                                                                                 
                                                                                                                                
     The sale  and relationship of  private and public  lands are                                                               
     vital to the  economic growth of the state of  Alaska. I ask                                                               
     for  your consideration  and support  of House  Bill 357  to                                                               
     promote Alaskan  growth through the diversification  of land                                                               
     ownership,  increasing  the  tax  base  of  the  state,  and                                                               
     encouraging responsible development of Alaskan land.                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG  stated   that  the  sponsor  statement                                                               
outlines the first condition for sale  would be that "the land is                                                               
not essential to railroad operations..."   He referred to page 1,                                                               
lines  11-12,  which  read,  "the   land  is  not  necessary  for                                                               
essential railroad purposes,..."  He  pointed out the language is                                                               
not the same.                                                                                                                   
                                                                                                                                
1:33:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE  asked members  to refer  to the  bill and                                                               
not his letter for the true meaning.                                                                                            
                                                                                                                                
1:33:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  offered his belief that  the bill would                                                               
provide  the Alaska  Railroad Corporation  (ARRC)  a little  more                                                               
flexibility.                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE  agreed that  is his intent.   He  said he                                                               
hoped  the ARRC  would not  abuse the  business owner's  trust by                                                               
being inflexible.                                                                                                               
                                                                                                                                
1:33:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked  whether the  leases  generate  more                                                               
money at eight percent interest  than the ARRC would earn through                                                               
investments,  in  practical  terms  if  the  ARRC  would  have  a                                                               
compelling case to sell the land.                                                                                               
                                                                                                                                
REPRESENTATIVE STOLTZE  again noted that  this is a  policy call.                                                               
He  suggested that  the  bill  is not  just  about enhancing  the                                                               
state's revenue,  but is about the  ARRC's impact on jobs  in the                                                               
private sector.   He characterized the provisions in  the bill as                                                               
"a balancing  act" that  the legislature  must weigh  in on.   In                                                               
terms  of pure  revenue,  he  considered that  it  is probably  a                                                               
better deal for the ARRC "to  have a hammer over lessee," but the                                                               
correspondence  he  received reflects  that  HB  357 may  promote                                                               
business and "spur" more activity.                                                                                              
                                                                                                                                
1:35:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  supported  fostering business  growth  and                                                               
opportunities for  business.  She  wondered whether  the language                                                               
is strong  enough.  She  asked whether the sponsor  believes that                                                               
HB 357  will lead to  opportunities for individual  businesses to                                                               
acquire the properties.                                                                                                         
                                                                                                                                
REPRESENTATIVE STOLTZE  said he  hoped the  bill would  alert the                                                               
ARRC that the legislature is  interested in the ARRC developing a                                                               
better   working  relationship   with  businesses   operating  on                                                               
railroad property.   He recalled anecdotal  comments from lessees                                                               
who  would  like  to  make  investments but  cannot  due  to  the                                                               
uncertainty of  "dealing with  the railroad."   This is  not just                                                               
about the  financial aspect but is  also about how the  ARRC will                                                               
react  to  lessees  in  five   years.    He  recalled  the  terms                                                               
"arbitrary  and capricious"  have been  used in  relation to  the                                                               
ARRC.    He  related  his  understanding  that  lease  terms  are                                                               
erratic.  He  has observed this first hand when  working with the                                                               
ARRC  on other  issues.   He believed  that fiscal  certainty and                                                               
right of first refusal is important to lessees, he stated.                                                                      
                                                                                                                                
1:37:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG referred  to page  1, line  12, to  the                                                               
word "essential"  yet the  language on  page 2,  line 3  does not                                                               
refer  to  "essential."    He asked  whether  the  sponsor  would                                                               
consider  deleting "essential"  from the  provision on  the first                                                               
page.                                                                                                                           
                                                                                                                                
1:38:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STOLTZE  responded  that   the  change  may  read                                                               
better, although  he would probably prefer  adding "essential" to                                                               
the language on page 2.                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG  suggested that  he would prefer  not to                                                               
say "essential" in order to give ARRC more leeway.                                                                              
                                                                                                                                
REPRESENTATIVE STOLTZE  offered his belief that  the ARRC already                                                               
has a  lot of  flexibility.   He stated  that "essential"  was to                                                               
protect the ARRC.                                                                                                               
                                                                                                                                
REPRESENTATIVE   GRUENBERG  asked   whether   the  language   was                                                               
discretionary.                                                                                                                  
                                                                                                                                
REPRESENTATIVE   STOLTZE  stated   that   he   would  leave   the                                                               
punctuation and grammar to Representative Gruenberg to consider.                                                                
                                                                                                                                
1:39:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred  to  page 2,  lines  8-11  to                                                               
subsection  (c).   He asked  whether the  funds are  deposited to                                                               
general fund (GF) or to a separate account.                                                                                     
                                                                                                                                
REPRESENTATIVE STOLTZE  stated that  the funds are  not deposited                                                               
to  the  GF, but  are  retained  by the  ARRC.    Thus, the  land                                                               
proceeds are not used for the general ARRC operations.                                                                          
                                                                                                                                
1:40:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to page 2,  lines 10-11, which                                                               
read, "Money  in the  account may  be appropriated  in accordance                                                               
with  45  U.S.C.  1207(a) (5)(Alaska  Railroad  Transfer  Act  of                                                               
1982)."  He  inquired as to whether  the legislature appropriates                                                               
these funds.                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE did not recall.   He stated that the state                                                               
must comply  with the Alaska Railroad  Transfer Act of 1982.   He                                                               
explained that the ARRC does not  appear in the state budget.  He                                                               
thought the language referred to activities within the ARRC.                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked  whether "appropriated"  is  the                                                               
correct  term since  that is  generally reserved  for legislative                                                               
bodies.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  STOLTZE responded  that the  legislature is  at a                                                               
disadvantage since  the ARRC  does not  fall under  the Executive                                                               
Budget Act.                                                                                                                     
                                                                                                                                
1:42:48 PM                                                                                                                    
                                                                                                                                
JIM KUBITZ,  Vice President, Real  Estate and  Facilities, Alaska                                                               
Railroad Corporation  (ARRC), introduced  himself.   He explained                                                               
that "appropriated"  is not likely  the best term.   He suggested                                                               
that the ARRC's legal counsel is on-line.                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  also asked the  ARRC to comment  on the                                                               
word "essential" that he previously mentioned.                                                                                  
                                                                                                                                
CHAIR P. WILSON opened up public testimony on HB 357.                                                                           
                                                                                                                                
PHYLISS  JOHNSON,  Vice  President   &  General  Counsel,  Alaska                                                               
Railroad Corporation  (ARRC) introduced herself.   In response to                                                               
Representative   Gruenberg,  said   she  thought   that  deleting                                                               
"essential" on page 1 would give the ARRC more flexibility.                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG referred  to page 2, line  10, and asked                                                               
whether some  other language than "appropriated"  should be used.                                                               
She recommended that "expended" be used.                                                                                        
                                                                                                                                
1:45:25 PM                                                                                                                    
                                                                                                                                
MS.  JOHNSON, in  further response  to Representative  Gruenberg,                                                               
stated that  she did  not have any  other recommended  changes to                                                               
the bill.   In response  to Chair  P. Wilson, she  responded that                                                               
having the  reference to the  Alaska Railroad Transfer Act  was a                                                               
good  to have  in the  bill, since  "railroad funds  be used  for                                                               
railroad  and  related  purposes."   She  also  recalled  similar                                                               
language in  the state transfer  act, as  well.  She  stated that                                                               
this  language helps  to clarify  the continued  use of  railroad                                                               
funds for railroad purposes.                                                                                                    
                                                                                                                                
1:46:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  referred  to  two fiscal  notes.    He                                                               
pointed out  that one fiscal  note was  approved on 3/23/10.   He                                                               
assumed that the  fiscal note supersedes the one  with an earlier                                                               
signature date.                                                                                                                 
                                                                                                                                
MR. KUBITZ answered yes.  He believed that was correct.                                                                         
                                                                                                                                
1:47:37 PM                                                                                                                    
                                                                                                                                
MR. KUBITZ referred to  page 1, line 12, and read:   "...(2)  the                                                               
sale of  the land  is in  the best  interest of  the state."   He                                                               
explained  that the  determination  must be  made  by the  ARRC's                                                               
Board of Directors in order to  sell land.  He offered his belief                                                               
that what is in the best interest  of the state may not mesh with                                                               
what  is  in  the  best  interest of  the  ARRC,  since  economic                                                               
development  and  self-sufficiency  are   listed  in  the  ARRC's                                                               
mission  statement.   The state's  historic properties  group may                                                               
have a best interest statement that  may be contrary to the ARRC.                                                               
He suggested that  this may not be a huge  problem but he related                                                               
that this  language would  require the  ARRC's Board  to consider                                                               
what is in the best interest of the state.                                                                                      
                                                                                                                                
1:49:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG offered  his belief  that this  is "the                                                               
heart of the  bill."  The ARRC's  board must make a  finding.  He                                                               
Normally,  when  a  court  makes  a finding  it  is  not  usually                                                               
reviewable  by a  higher court  unless it  is clearly  erroneous.                                                               
That  term means  the  court is  left with  a  definite and  firm                                                               
conviction  that the  facts the  lower body  found were  wrong or                                                               
else the  court misapplied the  law.   This forms the  twin basis                                                               
for determining an erroneous decision.   He said he does not know                                                               
whether that applies  to a finding of the board,  but the sponsor                                                               
says that  this is discretionary.   Further, the use of  the term                                                               
"may" on  line ll makes it  discretionary.  He asked  Ms. Johnson                                                               
if she thought he was correct in his assessment.                                                                                
                                                                                                                                
1:49:51 PM                                                                                                                    
                                                                                                                                
MS. JOHNSON said,  "Certainly it's discretionary with  the use of                                                               
the  word 'may.'"   She  agreed with  Mr. Kubitz,  that the  ARRC                                                               
Board's has  a lack of  familiarity in applying the  state's best                                                               
interest standard.   She said  to use  this standard casts  us "a                                                               
little bit  adrift in  an area of  expertise that  previously the                                                               
ARRC has not been called upon  to consider.  She offered that the                                                               
best interest  of the  ARRC is more  economically based  than the                                                               
state's best  interest.  She  recalled that if the  Department of                                                               
Natural Resources  (DNR) was considering  whether to  lease land,                                                               
the department  must consider other  things such as  fish habitat                                                               
or  game management  since the  state is  comprised of  multi-use                                                               
agencies.    She suggested  that  the  standard of  appeal  would                                                               
generally be determined by the Superior Court.                                                                                  
                                                                                                                                
1:52:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  related that the ARRC  may tactfully be                                                               
suggesting that on  page 1, line 13  and on page 2,  line 4, that                                                               
the committee consider changing "state" to "railroad."                                                                          
                                                                                                                                
MS.  JOHNSON answered  yes.   She thought  the language  would be                                                               
more satisfactory.                                                                                                              
                                                                                                                                
REPRESENTATIVE MUNOZ asked  to hear from the sponsor.   She asked                                                               
whether the  sponsor intended that  this language would  apply to                                                               
the best interest of the economic vitality of the area.                                                                         
                                                                                                                                
1:53:11 PM                                                                                                                    
                                                                                                                                
JOHN  COAN,  Staff,  Representative Bill  Stoltze,  Alaska  State                                                               
Legislature, on behalf  of the prime sponsor,  offered his belief                                                               
that the  intent of the  specific language "in the  best interest                                                               
of the state" was multi-faceted.   He suggested that the language                                                               
would provide another  vehicle for responsible sale  of land, and                                                               
for  the ARRC  to take  a greater  role in  community development                                                               
instead of being  a hindrance.  He further thought  that the ARRC                                                               
should facilitate  a better level  of contact between  the quasi-                                                               
public  agency   and  the  private   sector.    He   related  his                                                               
understanding  that  replacing   "state"  with  "railroad"  might                                                               
change the focus of the bill.                                                                                                   
                                                                                                                                
1:54:28 PM                                                                                                                    
                                                                                                                                
MARK STEARNS,  Owner, Alaska Wood  Molding, stated that he  has a                                                               
business located at the Port of Anchorage.   He said that he is a                                                               
nine-year   leaseholder  and   the   ARRC   has  generally   been                                                               
supportive.  He  stated that one source of  frustration that many                                                               
have is  the issue of uncertainty.   He explained that  the terms                                                               
of his lease went from $790 per  month in 2001 to over $1600 over                                                               
a three-year  period and then increased  to $3000 per month.   He                                                               
related  that the  terms contained  in leases  typically restrict                                                               
any increases  to 135 percent  of the  lease payment over  a five                                                               
year period.   He pointed out that his business  was not afforded                                                               
similar terms or  any official notification process.   Changes to                                                               
the terms of his lease have  created a climate of uncertainty and                                                               
makes  it difficult  for him  to consider  any improvements.   He                                                               
recapped that having lease terms  dramatically increase by nearly                                                               
400  percent  over  nine years  without  an  explanation  clearly                                                               
created uncertainty.  He described  the situation as "random" and                                                               
"a scary situation."                                                                                                            
                                                                                                                                
1:58:17 PM                                                                                                                    
                                                                                                                                
MR. STEARNS  explained that lessees  do not have any  process for                                                               
relief.  The ARRC "pretty much  does what the railroad would like                                                               
to do."  He urged members  to support HB 357 to afford businesses                                                               
an opportunity to have some certainty.                                                                                          
                                                                                                                                
1:58:57 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON asked for the length of his lease.                                                                              
                                                                                                                                
MR.  STEARNS responded  that he  is in  the process  of extending                                                               
their lease to 35  years, but he has not yet  heard back from the                                                               
ARRC.   He said  he hopes the  lease will not  allow the  ARRC to                                                               
increase payments more  than 35 percent over  a five-year period.                                                               
In further response to Chair P.  Wilson, he explained that he has                                                               
read  his lease  but some  question remains  as to  which is  the                                                               
valid  lease.   He  pointed out  that the  potential  to own  the                                                               
property   would  afford   him   greater   flexibility  to   make                                                               
investments.                                                                                                                    
                                                                                                                                
CHAIR P. WILSON commented that  the newer ARRC leases contain the                                                               
language.                                                                                                                       
                                                                                                                                
MR. STEARNS  agreed that the  provision limiting the  increase is                                                               
in the new lease.                                                                                                               
                                                                                                                                
2:01:35 PM                                                                                                                    
                                                                                                                                
PAT  GAMBLE,  President  and  CEO,  Alaska  Railroad  Corporation                                                               
(ARRC),  offered his  belief that  the dialogue  is healthy.   He                                                               
referred to page  2, line 2, to the public  notice, best interest                                                               
of the state, and to the first  right of refusal.  He described a                                                               
scenario  in  which  a  parcel   is  for  sale  and  the  current                                                               
leaseholder  makes an  offer  to  purchase the  property.   If  a                                                               
member of  the public makes a  higher offer, he wondered  if that                                                               
would be considered as acquiring  the best interest for the state                                                               
or if  some other determination  would be made.   He acknowledged                                                               
that  if the  scenario arose  that  he would  recommend the  ARRC                                                               
board take  the higher offer.   However,  he was not  certain how                                                               
that would  "square with the  first right of refusal"  or obtains                                                               
the  best return  for the  state.   He  concluded that  practical                                                               
issues  like this  arise,  but overall  the  discussion has  been                                                               
large healthy discussion.                                                                                                       
                                                                                                                                
2:03:30 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked whether  first right of refusal  refers to                                                               
paying the "going  rate" and when another offer is  made that the                                                               
"going rate" would prevail.                                                                                                     
                                                                                                                                
2:03:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  clarified that this raises  issues that                                                               
are  addressed  in the  memorandum  from  the Division  of  Legal                                                               
Services.   He asked whether  Ms. Johnson has reviewed  the March                                                               
20, 2010 memo.                                                                                                                  
                                                                                                                                
MS. JOHNSON answered no.                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG  suggested   that  the  ARRC's  lawyers                                                               
should review the memo.                                                                                                         
                                                                                                                                
MS. JOHNSON agreed to do so.                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to  a letter August  25, 2004,                                                               
from  Steve  Van  Sant,  State  Assessor,  to  Marty  McGee,  the                                                               
Municipality  of   Anchorage's  Assessor,   and  asked   for  its                                                               
relevance to the bill.                                                                                                          
                                                                                                                                
MR. KUBITZ  replied that  he made  copies of  the letter  for the                                                               
committee.    He  explained  the   contention  was  that  selling                                                               
railroad land would increase local  tax revenue.  He acknowledged                                                               
tenants  are  taxed  following a  somewhat  complicated  formula.                                                               
Basically  as  the lease  approaches  the  termination date,  the                                                               
actual value goes  down.  The letter of August  25, 2004 informed                                                               
the MOA  that it needed to  tax the tenants as  though they owned                                                               
the land.   Thus, this letter provided the  justification for the                                                               
lessee's taxes on ARRC leased land  and the reason that the taxes                                                               
will not go up.                                                                                                                 
                                                                                                                                
2:07:15 PM                                                                                                                    
                                                                                                                                
MR.  KUBITZ, in  response  to  Representative Gruenberg,  related                                                               
that the  tenants understood the  reason the leased  property was                                                               
being tax.  He said that  represents one reason that some tenants                                                               
believe  they "may  as well"  own the  land since  they must  pay                                                               
taxes  on  the  land.   In  further  response  to  Representative                                                               
Gruenberg, he agreed  that the assessed amount is  reduced as the                                                               
lease draws closer to the end of the term.                                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG  remarked that  the property  tax amount                                                               
is less at  the end of the  lease than it would be  if the lessee                                                               
was a fee simple owner.                                                                                                         
                                                                                                                                
MR. KUBITZ agreed.                                                                                                              
                                                                                                                                
2:07:59 PM                                                                                                                    
                                                                                                                                
CHAIR  P. WILSON  related that  the committee  must consider  the                                                               
reason the ARRC does not request  state funding, which is that as                                                               
a quasi-independent  agency it owns  land and has the  ability to                                                               
earn income.                                                                                                                    
                                                                                                                                
MR. KUBITZ,  in response to  Representative T.  Wilson, explained                                                               
that  the appraisal  and appeal  process  is up  to the  tenants.                                                               
Typically, tenants  often appeal  tax assessments  and that  is a                                                               
relationship  with   the  taxing   agency.    Some   tenants  are                                                               
successful in their appeals and others are not.                                                                                 
                                                                                                                                
2:09:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T.  WILSON related  a scenario  in which  the ARRC                                                               
appraisal is set  at $500,000, but the borough  assessment is set                                                               
at  $400,000.   She  asked  whether the  tenant  could appeal  by                                                               
furnishing the borough assessment.                                                                                              
                                                                                                                                
MR. KUBITZ  answered that the  tenant has  the right to  obtain a                                                               
third  party appraisal  and  can  present that  to  the ARRC  for                                                               
consideration.  Per  a mechanism in the lease, if  the tenant and                                                               
the  ARRC cannot  reach  an  agreement, the  matter  would go  to                                                               
binding  arbitration for  a decision.   A  third party  appraisal                                                               
must  be  performed   by  a  "Member  of   the  Appraisal  (MAI)"                                                               
appraiser.                                                                                                                      
                                                                                                                                
2:10:39 PM                                                                                                                    
                                                                                                                                
MR.  KUBITZ,   in  response  to  Representative   T.  Wilson,  he                                                               
explained that the ARRC appraises  its property every five years.                                                               
He pointed  out that Mr.  Stearns will  be operating under  a new                                                               
lease,  which  provides  adequate protection.    Previously,  Mr.                                                               
Stearns was operating under a  50-year old federal lease that did                                                               
not contain any  cap.  Thus, any time an  appraisal increased the                                                               
property value, the lease also  increased accordingly, as per the                                                               
lease terms.   He pointed  out that  the ARRC's leases  limit the                                                               
term increases to 135 percent over a five-year period.                                                                          
                                                                                                                                
2:11:34 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  asked whether the amount of  the lease increases                                                               
applied to all tenants.                                                                                                         
                                                                                                                                
MR. KUBITZ explained that not all  the leases are ARRC leases and                                                               
a few  leases remain that date  back to the 60s,  although little                                                               
time  remains on  those  leases.   The old  leases  did not  even                                                               
contain environmental language.  He  assured Chair P. Wilson that                                                               
the  ARRC strives  to  have  everyone under  the  new leases  for                                                               
everyone's benefit.                                                                                                             
                                                                                                                                
2:12:13 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HB 357.                                                                                     
                                                                                                                                
2:12:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment 1, on page 1, line 12 to delete "essential."                                                                          
                                                                                                                                
REPRESENTATIVE T. WILSON objected for purpose of discussion.                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  expanded  Conceptual Amendment  1,  on                                                               
page  1,  line 10  to  delete  "essential."   He  explained  that                                                               
removing the  two references to  "essential would conform  to the                                                               
language on  page 2,  line 3.   This  would give  the corporation                                                               
more flexibility  and would  lower the  standard in  instances in                                                               
which the  ARRC board determines  the land is necessary  for ARRC                                                               
purposes.   He offered  that this would  avoid the  discussion of                                                               
deciding  the   whether  the  land  is   essential  for  railroad                                                               
purposes.    He  commented  that  the  sponsor  does  not  oppose                                                               
Conceptual  Amendment   1  and   the  ARRC   supports  Conceptual                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON removed her objection.                                                                                 
                                                                                                                                
There being no objection, Conceptual Amendment 1 was adopted.                                                                   
                                                                                                                                
2:14:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment  2,  on page  1,  line  1,  in  the title,  to  replace                                                               
"needed" with "necessary".                                                                                                      
                                                                                                                                
REPRESENTATIVE T. WILSON objected for purpose of objection.                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG offered  his  belief  that this  change                                                               
would be grammatically correct.                                                                                                 
                                                                                                                                
MR. COAN suggested that pending  the legal drafter's consent that                                                               
the change should be fine.                                                                                                      
                                                                                                                                
REPRESENTATIVE T.  WILSON removed her  objected.  There  being no                                                               
further objection, Conceptual Amendment 2 was adopted.                                                                          
                                                                                                                                
2:15:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment 3,  on page  2, line 10,  to remove  "appropriated" and                                                               
insert "expended."                                                                                                              
                                                                                                                                
REPRESENTATIVE  T.  WILSON objected.    She  asked whether  funds                                                               
could be deposited  so the ARRC could spend  the interest instead                                                               
of spending the principal.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG explained  that Conceptual  Amendment 3                                                               
provides  a  grammatical  change,  which is  that  the  ARRC  can                                                               
"expend" only in accordance with federal law.                                                                                   
                                                                                                                                
REPRESENTATIVE PETERSEN  recalled that the federal  definition in                                                               
45  U.S.C. 1207(a)  (5) (Alaska  Railroad Transfer  Act of  1982)                                                               
required that  the funds  be used for  railroad purposes.   Thus,                                                               
the funds would  be "expended" for railroad purposes.   He agreed                                                               
the term "appropriate" referred to legislative action.                                                                          
                                                                                                                                
REPRESENTATIVE MUNOZ  suggested that  "expend" means to  spend so                                                               
she thought it  may be clearer to use "budgeted."   She explained                                                               
that the ARRC may want to invest the funds.                                                                                     
                                                                                                                                
MS. JOHNSON  offered that her  first response is that  using "may                                                               
be expended"  would also give the  ARRC the latitude to  save the                                                               
funds in  an account.   She pointed  out reference to  "45 U.S.C.                                                               
1207  (a) (5)  (Alaska Railroad  Transfer  Act of  1982)" was  to                                                               
ensure the  funds are  spent for  railroad and  related purposes.                                                               
She  recalled  when  another   committee  member  summarized  the                                                               
federal law  that the  member left  out "related  purposes" which                                                               
could be significant.                                                                                                           
                                                                                                                                
2:19:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  stated that  she preferred  "invested"                                                               
for the  intent it implies since  she would rather see  the funds                                                               
invested and "to send the ARRC a better message."                                                                               
                                                                                                                                
MR. COAN  pointed out that  he not  an attorney, but  he believed                                                               
the drafter  used the  term "appropriated" since  it is  the term                                                               
used in  Alaska Railroad Act  of 1982.   He said, 45  U.S.C. 1207                                                               
(a) (5)  reads, "Revenues generated by  the state-owned railroad,                                                               
including any amount appropriated  or otherwise made available to                                                               
the state-owned  railroad should be  retained and managed  by the                                                               
state-owned railroad for railroad and related purposes."                                                                        
                                                                                                                                
2:20:18 PM                                                                                                                    
                                                                                                                                
MR. COAN,  in response to  Representative Gruenberg,  re-read the                                                               
federal law.                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON said she  thought that the language  referred to                                                               
an appropriation made to the legislature.                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG agreed.  He  said this language seems to                                                               
be just the opposite of the language in the bill.                                                                               
                                                                                                                                
MR. COAN related  his understanding that the  specific section in                                                               
federal law  references "appropriation" so  using "appropriation"                                                               
in the bill is correct.                                                                                                         
                                                                                                                                
2:21:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG offered  his  belief  that the  federal                                                               
language the sponsor's staff read  is correct, but he opined that                                                               
it is not correct to use "appropriated"  in the bill.  He said he                                                               
believes that  a person can  "budget money without  spending it."                                                               
He  said  he prefers  not  to  use  the  term "budget"  and  that                                                               
"expended" is the legal term.                                                                                                   
                                                                                                                                
CHAIR P. WILSON preferred the use of "expended."                                                                                
                                                                                                                                
REPRESENTATIVE  T. WILSON  disagreed, stating  that the  language                                                               
"expended" sends the wrong message to the ARRC.                                                                                 
                                                                                                                                
2:22:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  related that this provision  sets out a                                                               
limitation, which  is that  the funds could  only be  expended in                                                               
accordance  with the  federal  law.   He  asked  Ms. Johnson  for                                                               
clarification.                                                                                                                  
                                                                                                                                
MS.  JOHNSON  answered  yes,  that  Representative  Gruenberg  is                                                               
correct.                                                                                                                        
                                                                                                                                
REPRESENTATIVE PETERSEN  asked whether  "money in account  may be                                                               
used" is a possible clarification.                                                                                              
                                                                                                                                
MS. JOHNSON stated that "used" is acceptable.                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG  explained that a person  does not "use"                                                               
money in  an account,  but "spends  it."   He offered  his belief                                                               
that "spend" or "expended" is the normal legal term.                                                                            
                                                                                                                                
2:24:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN  made  a   motion  to  amend  Conceptual                                                               
Amendment 3, to  delete "appropriated" and insert  "used."  There                                                               
being no objection,  the amendment to Conceptual  Amendment 3 was                                                               
adopted.                                                                                                                        
                                                                                                                                
2:25:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON removed her objection.                                                                                 
                                                                                                                                
There  being no  further  objection, Conceptual  Amendment 3,  as                                                               
amended, was adopted.  Thus, subsection (c) read:                                                                               
                                                                                                                                
     (c) The corporation shall separately account for the                                                                       
     proceeds from the sale of land under this section and                                                                      
     shall report the earnings and balance in the account                                                                       
     in the annual report required by AS 42.40.260. Money                                                                       
     in the account may be used in accordance with 45                                                                           
     U.S.C. 1207(a)(5) (Alaska Railroad Transfer Act of                                                                         
     1982).                                                                                                                     
                                                                                                                                
2:25:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON moved to  report HB 357, as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal  notes.  There  being no objection,  the CSHB
357(TRA)  was reported  from  the  House Transportation  Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
2:25:40 PM                                                                                                                    
                                                                                                                                
                   SB 272-RENTAL CAR CHARGES                                                                                
                                                                                                                                
CHAIR P. WILSON announced that  the final order of business would                                                               
be SENATE  BILL NO. 272, "An  Act relating to charges  for rented                                                               
motor  vehicles,  including  cost  recovery fees,  and  making  a                                                               
violation  of  the  rented motor  vehicle  charge  provisions  an                                                               
unfair trade practice."                                                                                                         
                                                                                                                                
2:25:54 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
EDRA MORLEDGE, Staff, Senator Charlie Huggins, Alaska State                                                                     
Legislature, paraphrased from the sponsor statement, as follows                                                                 
[original punctuation provided]:                                                                                                
                                                                                                                                
     SB 272 is a technical bill that would allow rental car                                                                     
    companies to do in Alaska what they already do in thirty                                                                    
     other states. Alaska law is currently silent on the issue                                                                  
     of separately-listed charges on rental car statements for                                                                  
     the recovery of fees. This bill would require those fees to                                                                
     be listed separately and clearly identified on the rental                                                                  
     car agreement.                                                                                                             
                                                                                                                                
     The industry standard is to turn over the rental car fleet                                                                 
     every twelve months and to associate the costs of licensing                                                                
     the vehicles, concessions, and airport or facility-related                                                                 
     costs with the vehicles themselves. In addition to                                                                         
     government taxes and surcharges, rental car companies                                                                      
     assess additional "cost recovery fees" to offset those                                                                     
     costs. Consumers should be made aware, and be able to see                                                                  
     the fees they are charged, on both the rental bill and in                                                                  
    an online quote. This bill would provide full disclosure                                                                    
     and transparency of "cost recovery fees" included in rental                                                                
    car agreements. In addition, this legislation would make                                                                    
     violating the provision an unfair trade practice.                                                                          
                                                                                                                                
                                                                                                                                
2:27:32 PM                                                                                                                    
                                                                                                                                
MS. MORLEDGE explained that the bill passed the other body                                                                      
without any opposition.  The Department of Law supports the                                                                     
bill, as does the industry, she stated.                                                                                         
                                                                                                                                
2:29:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  referred to  the "Business  Advisory" dated                                                               
August 30, 2006 from the Department  of Law and asked whether the                                                               
bill is necessary.                                                                                                              
                                                                                                                                
MS.  MORLEDGE explained  that  the  "Business Advisory"  resulted                                                               
because complaints  arose that fees  were being charged  that may                                                               
be  in   violation  of  the  federal   Consumer  Protection  Act.                                                               
However, it came  to the attention of the Department  of Law that                                                               
the state did not have any enforceable laws.                                                                                    
                                                                                                                                
2:29:54 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON passed the gavel to Representative Munoz.                                                                       
                                                                                                                                
2:30:15 PM                                                                                                                    
                                                                                                                                
SHANE SKINNER, Controller,  Enterprise Rent-A-Car, explained that                                                               
he  represents Enterprise  Rent-A-Car  in  Alaska and  Washington                                                               
State.   He concurred that  the current Alaska statute  is silent                                                               
and this  bill would create  clarity since it would  require full                                                               
disclosure of all  taxes and fees.  The bill  would limit the fee                                                               
amounts  to the  amounts paid  to government  entities, including                                                               
rental taxes, airport fees, or license and registration fees.                                                                   
                                                                                                                                
2:31:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG referred to  Section 1, and related that                                                               
the fees must  be listed in the rental car  agreement, which is a                                                               
document people sign before "they take  the keys to the car."  He                                                               
stated that if the intent is  disclosure, that the fees should be                                                               
clear in  any advertising  and quotes, not  just be  contained in                                                               
the "fine print."                                                                                                               
                                                                                                                                
MS.  MORLEDGE  agreed  the  intent   is  full  disclosure,  which                                                               
includes when potential customers are  perusing quotes and at the                                                               
time that the car is being returned to the car rental agency.                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG suggested  that it  should be  clear in                                                               
the bill.   He  referred to  page 2, line  1, which  he suggested                                                               
should read,  "in the  written car  rental agreement"  for better                                                               
disclosure.  He  then referred to page 2, line  3, to "government                                                               
tax, or  government surcharge." He  offered his belief  that this                                                               
language is  broader than the sponsor's  intent, since government                                                               
taxes could include withholding or  municipal property taxes.  He                                                               
related his  understanding that the  sponsor would like  to limit                                                               
the tax to certain types of taxes.                                                                                              
                                                                                                                                
MS. MORLEDGE agreed that is the sponsor's intent.                                                                               
                                                                                                                                
2:35:07 PM                                                                                                                    
                                                                                                                                
MR. SKINNER explained that the  current statute allows car rental                                                               
agencies to pass  through property taxes or  employment taxes but                                                               
car  rental companies  do  not currently  assess  those types  of                                                               
charges.    Currently,  a facility  management  charge  (FMC)  is                                                               
assessed at the Anchorage airport,  through an agreement with the                                                               
concessionaire.   He expressed  concern that  if the  language is                                                               
narrowed down  that the  effect may be  to disrupt  the agreement                                                               
currently in place with the state.                                                                                              
                                                                                                                                
2:36:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he did  not intend  to do so.   He                                                               
did not want  additional government charges to  be passed through                                                               
to customers.                                                                                                                   
                                                                                                                                
MS. MORLEDGE agreed  that it is not the sponsor's  intent to pass                                                               
on superfluous  taxes.  She  pointed out  that the intent  of the                                                               
bill is to ensure that any  taxes charged by a car rental company                                                               
must  be included  in the  quote  and agreement  so the  consumer                                                               
could make the choice.                                                                                                          
                                                                                                                                
2:37:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG clarified  his understanding  that this                                                               
is a disclosure  bill and a car rental company  could "do what it                                                               
wanted to do" but must disclose the fees.                                                                                       
                                                                                                                                
MS. MORLEDGE answered yes.                                                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG  wanted the  bill to provide  clarity as                                                               
to whether  companies are  allowed to pass  through a  variety of                                                               
taxes, including corporate income  taxes and employee withholding                                                               
taxes.   He suggested that  the sponsor should  define government                                                               
taxes or surcharges.                                                                                                            
                                                                                                                                
MR. SKINNER  reiterated that current  Alaska statute  provides "a                                                               
blank  check."   The intent  of  SB 272  is to  "tighten up"  and                                                               
create some foundation since no restrictions currently apply.                                                                   
                                                                                                                                
2:39:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  related  her  understanding that  this                                                               
bill is not telling a car rental company how to run its company.                                                                
                                                                                                                                
MS. MORLEDGE answered that is correct.                                                                                          
                                                                                                                                
REPRESENTATIVE T. WILSON  summarized that SB 272  would require a                                                               
car rental  company to disclose  any charges to  enable consumers                                                               
the ability to  compare the car rental fees  to another company's                                                               
fees.  Thus,  the consumer would have the information  to make an                                                               
informed decision on the rental vehicle's cost.                                                                                 
                                                                                                                                
REPRESENTATIVE  PETERSEN offered  his  belief that  this bill  is                                                               
good idea for  consumers.  He related an  anecdotal experience he                                                               
had trying to  figure out the car rental costs.   He offered that                                                               
Alaska has  a tourism industry and  his desire that it  should be                                                               
easy for consumers to decipher the taxes and fees charged.                                                                      
                                                                                                                                
2:40:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG referred  to page  2, line  22, to  the                                                               
term  "inspection" and  he asked  whether that  term referred  to                                                               
annual emission  inspections, brake inspections, or  what type of                                                               
inspection this would encompass.                                                                                                
                                                                                                                                
MR. SKINNER  related that the  language in  this bill or  a close                                                               
variation  of it  was  passed in  18 states.    Some states  have                                                               
initial inspection  costs to put a  vehicle on the road  and that                                                               
is the intent of this provision.                                                                                                
                                                                                                                                
MR. SKINNER,  in response to Representative  Gruenberg, clarified                                                               
that  all fees  are limited  to what  is paid  to the  government                                                               
authority.  Thus, the consumer can  go on-line to see the extreme                                                               
variations and  this bill would  disclose fees so  the variations                                                               
in fees are not profit centers for companies.                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG  clarified that the inspection  does not                                                               
refer to lubrication or brake inspections.                                                                                      
                                                                                                                                
MR. SKINNER  explained that this provision  refers to government-                                                               
mandated inspections.   Thus, the  provision would allow  the car                                                               
rental company to recoup fees and taxes it pays the government.                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  suggested the language be  clarified to                                                               
refer to government mandated inspections.                                                                                       
                                                                                                                                
MS.  MORLEDGE referred  to page  2, line  22, and  explained that                                                               
"inspection" refers  to the "licensing  cost" listed in  line 21.                                                               
She referred to  AS 45.45.460, which is the  section that defines                                                               
vehicle licensing costs.                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG  related  his understanding  that  some                                                               
types  of  inspections  are  required  in  the  business  by  the                                                               
government  and that  is what  is meant  by licensing  cost.   He                                                               
stated that provision is clearer to him.                                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG  suggested that at least  one definition                                                               
could  be eliminated  from  the bill.   He  offered  that if  the                                                               
agreements  were called  rental  motor  vehicle agreements,  that                                                               
"car"  would not  need  to be  defined as  "motor  vehicle."   He                                                               
pointed out that consumers may rent trucks.                                                                                     
                                                                                                                                
MS. MORLEDGE offered  her belief that the reason  the "car rental                                                               
fees" was  used is because it  is the most common  term and would                                                               
apply to  the broader  term, that  car would  apply to  all motor                                                               
vehicles.                                                                                                                       
                                                                                                                                
2:46:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG offered  that this bill will  be read as                                                               
a  "consumer protection"  bill.   The current  language could  be                                                               
confusing for consumers and he  hoped to make it "user friendly."                                                               
He suggested  that someone renting  a motorcycle  could interpret                                                               
the  language   and  may  not   think  he/she  was   gaining  the                                                               
protections in the  bill.  He asked if "car"  could be changed to                                                               
"motor vehicle."                                                                                                                
                                                                                                                                
MS. MORLEDGE  answered that she  did not think the  sponsor would                                                               
object to the  type of improvements and "clean  up" language that                                                               
Representative Gruenberg  is suggesting.  She  offered her belief                                                               
that the  sponsor would like to  move the bill along,  noting the                                                               
bill has another committee of referral.                                                                                         
                                                                                                                                
2:47:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked   whether  Representative  Gruenberg                                                               
would work with the sponsor if the bill moved from committee.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG agreed to do so.                                                                                       
                                                                                                                                
2:48:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON offered work  to improve the bill in the                                                               
next  committee  of referral  in  the  House Labor  and  Commerce                                                               
Standing Committee.                                                                                                             
                                                                                                                                
2:48:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ, after first  determining no one else wished                                                               
to testify, closed public testimony on SB 272.                                                                                  
                                                                                                                                
REPRESENTATIVE T. WILSON moved to  report SB 272 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG objected.                                                                                              
                                                                                                                                
2:49:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   explained  that  the   statutes  have                                                               
percentages, perhaps ceilings, but the  bill does not contain any                                                               
ceiling or guidance  for consumers.  He wondered if  some kind of                                                               
ceiling,  perhaps geographic,  could  be added.   Otherwise,  the                                                               
marketplace is allowed to freely roam, he stated.                                                                               
                                                                                                                                
MS. MORLEDGE  answered that a ceiling  is not listed on  the cost                                                               
recovery fees  since those  fees are  mandated by  the government                                                               
and  varies between  governments.   Some  of the  fees are  under                                                               
local control so they are not state-mandated fees.                                                                              
                                                                                                                                
REPRESENTATIVE GRUENBERG  suggested that Arizona is  allowing for                                                               
reimbursement  of the  licensing fees.   He  surmised that  other                                                               
states are going beyond just disclosure.                                                                                        
                                                                                                                                
2:52:44 PM                                                                                                                    
                                                                                                                                
MS.  MORLEDGE referred  to Hawaii  and reported  that car  rental                                                               
companies do  not charge the  licensing fees.   The fees  are not                                                               
capped because  the bill  contains a  good faith  estimate clause                                                               
under AS 45.45.460.  That section  explains how those fees are to                                                               
be  calculated.    She  commented   that  Ed  Sniffen,  DOL,  was                                                               
"comfortable with that."   She explained that if  an issue arose,                                                               
Mr. Sniffen  believes that this  bill would give him  "the teeth"                                                               
to deal with the issue.                                                                                                         
                                                                                                                                
2:53:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG stated  he was  satisfied.   He removed                                                               
his  objection.   There being  no further  objection, SB  272 was                                                               
reported from the House Transportation Standing Committee.                                                                      
                                                                                                                                
                                                                                                                                
2:54:14 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Transportation Standing Committee meeting was adjourned at 2:54                                                                 
p.m.                                                                                                                            

Document Name Date/Time Subjects