Legislature(2001 - 2002)
04/25/2001 01:48 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE BILL NO. 244
"An Act relating to a grant of state land to the Denali
Borough for a railroad and utility corridor and a
railroad development project; repealing provisions
relating to a grant of a right-of-way of land for a
railroad and utility corridor to the Alaska Industrial
Development and Export Authority; and providing for an
effective date."
Co-Chair Williams provided members with a proposed committee
substitute, work draft 22-LS0850\) Cook, 4/23/01 (copy on
file).
REPRESENTATIVE JEANETTE JAMES, SPONSOR testified in support
of the legislation. She observed that the legislation would
implement a northern [rail] access into Denali National
Park. It would go approximately 40 miles from Healy to the
edge of the park. The access would be through state lands.
The proposal has been around for approximately nine years.
Legislation was passed in 1998 to allow Alaska Industrial
Development and Export Authority (AIDEA) to bond for the
project. The bonding did not occur. The 1998 legislation
would have transferred 40,000 acres within a 90,000-acre
corridor to the Denali Borough to be used in the lands
selection. The lands remaining after selection would have
been returned to the state. The land transfer did not occur.
She concluded that it makes more sense to determine the
location of the right-of-way prior to the land transfer and
to assure that there are no existing interests in the
corridor. Under the proposed committee substitute a survey
would occur prior to the land transfer. After the route is
determined approximately 3,500 acres would be transferred to
the Denali Borough and would become part of their borough
entitlement from the state. She acknowledged objections to
the legislation. She noted that there are concerns that
additional access is not needed or that a southern route
could be used.
TAPE HFC 01 - 96, Side A
In response to a question by Representative Davies,
Representative James clarified that the lands would be
disposed under the same proposal as entitlements. She
pointed out that an environmental impact statement would be
needed before a railroad could be built. Land would be
disposed as part of the Denali Borough's state entitlement.
The borough has 45,000 acres in entitlements, of which
approximately 20,000 have been received.
MARY KAYE HESSION, DEPARTMENT OF NATURAL RESOURCES.
ANCHORAGE, testified via teleconference. She noted that the
bill requires the Department of Natural Resources to
transfer up to 3,500 acres of state land to the Denali
Borough for a future railroad towards Kantishna. In order to
reach Kantishna, the railroad will need to continue west
across National Park lands. The Borough and the private
Kantishna Holdings Inc. would work to identify and survey a
railroad route across this land.
The proposed committee substitute takes care of many of
department's concerns regarding the original bill, and is a
more efficient approach than the original bill. In
particular, the department supports inclusion of the land as
part of the Borough's existing municipal land entitlement.
Ms. Hession observed that Department of Natural Resources
believes that more effort is needed to determine the best
access route into the North Side of Denali National Park,
and a railroad in this corridor may or may not be the best
approach. The Department of Natural Resources is aware of
two other planning efforts that should be coordinated with
the railroad project. The Department of Transportation and
Public Facilities is slated to receive $1.5 million in
federal funding for an Environmental Assessment of the North
Side access. This effort is the subject of an appropriation
for the state matching funds, which is contained in Senate
Bill 3. The National Park Service has also invited the state
to participate in a study of North side access issues and
alternatives. The proposed railroad route would cross
National Park Service land and cannot be built without
National Park Service concurrence. The Department of Natural
Resources believes that it is essential to work with the
National Park service to achieve an agreed upon access plan
for Denali National Park. She emphasized that no unilateral
state or borough effort can achieve access into the park,
unless the National Park Service is a participant in the
process.
Ms. Hession noted that the department's second concern
regards what rights the bill grants to Kantishna Holdings,
Inc. Once the corridor is identified, the implication is
that Kantishna Holdings, Inc., would have the exclusive
right to build a railroad in the corridor. The department
believes that the land should be conveyed to the Borough so
that other uses or developers could make use of the land as
well, not only for the purpose of enabling Kantishna
Holdings, Inc. to develop a railroad and related facilities,
as stated in Section 1(a).
Ms. Hession discussed the Department of Natural Resources'
fiscal note. The department would need to provide land
status information, identify valid existing rights, and
participate in the corridor selection process. Costs
associated with the actual land transfer were included for
FY 2006.
Representative John Davies questioned if the conveyance
would involve a best interest finding. Ms. Hession explained
that the conveyance for land entitlements is basically the
same as the normal state land disposal process. A draft
decision would receive public review and comment before a
final decision is made. The most significant difference
would be in regards to the transfer of the deed, which would
not occur before changes to the Tanana Basin Area Plan were
made. The public comment process is nearly identical.
Representative Croft referred to subsection (d) on page 2,
line 14. He noted that other provisions of AS 29.65 do not
apply. He questioned what public process would apply. Ms.
Hession responded that the public process is primarily
contained AS 38. Under subsection (d) the Department of
Natural Resources would not have to check the classification
of the land for the grant program. She did not know what
other provisions of Title 29 would be exempted by the
language. There are no exemptions on Title 38, which governs
public notice and comment.
Representative Croft noted that the legislation provides the
grant for the purpose of supporting economic development by
Kantishna Holdings, Inc. He asked what would occur if the
legislation were passed and the Denali Borough decided that
they wanted to deal with another entity. Ms. Hession
acknowledged that the department is concerned that the
Boroughs' hands might be tied and its ability to deal with a
competitor or use the land for other purposes would be
limited. The department's hope was that the Borough
government would have as much freedom as possible to use
their municipal land entitlement.
Representative James noted that the Kantishna Holdings, Inc.
is a private rural corporation that was developed
specifically for the project. They would provide the money
and own and operate the project.
DAVID BRAUN, HEALY, testified via teleconference in
opposition to HB 244. He maintained that the Borough is
trying to pull a "fast one." He maintained that the bill has
very little to do with a railroad. It is only a vehicle for
the Denali Borough to bypass state government, and acquire
real estate that has previously been denied them. "This
railroad will likely not get built for economic and
political reasons, but the Borough Assembly will still get
land in the wolf townships that they have coveted for many
years."
Mr. Braun questioned why the land is being handled
differently from other entitlements. He pointed out that the
first draft of HB 244 was not available until the Borough
Assembly meeting of April 7, 2001. He maintained that the
bill has moved at an accelerating pace. He asserted that the
spirit of the 24-hour rule has been violated. He disagreed
with statements that only those who live in the area are
opposed to the plan. "The State of Alaska itself has kept
development out of these townships for decades. There have
been no public hearings on the matter; Representative James
has said that she will meet with the public in the summer to
reassure us - after it is all done. I would ask you to
remember your own response when the Federal Government
imposes its will on the State of Alaska."
Mr. Braun argued that it is not clear that developing the
wolf townships is in the best economic interests of the
state. He stated that many residents and tourists have no
interest in the national park experience and felt that many
more people visit the Wolf Townships than are turned away by
the parks bus system.
Co-Chair Williams stated that he did not think that the
legislation would pass during the first session of the 22nd
Legislature.
Representative Croft summarized that the Borough has request
the land in the past and that requirements on land
entitlements have prevented them from getting it. He asked
what were the Borough's prior attempts to get the land and
what prevented them from receiving the land. Mr. Healy
recalled statements at Borough meetings that the borough had
been blocked from applying for selection of the lands.
Representative Croft summarized that the Denali Borough had
asked for the land as an entitlement in the past and that
some section of the law regarding entitlements prohibited
them from getting it. Mr. Braun stated that it was suggested
that the land was off limits to the Borough selection
process. Representative James acknowledged that politics
were involved.
LINDA PAGANELLI, HEALY, testified via teleconference in
opposition to the legislation. She stated that she supported
efforts to address solutions to park access, she does not
support the North Access contained in HB 244. She stressed
that the North Access proposal speculates that the route
will continue through the National Park to Kantishna and
that the demand will exist for year around operation, that
350-900 permanent jobs will be created and that the present
40 mile rail route, which would provide minimum opportunity
for mountain or wildlife view will provide visitors with a
satisfactory experience. She maintained that a demonstrated
need for the north access should be clearly defined and a
route that best serves the state's interest should be
identified. The Department of Natural Resources, National
Park Service and the United States Congress recognize that
the area in question serves as an important habitat for
wildlife. She asserted that the lands should remain in
public ownership and not be transferred to the Borough for
purposes of economic development. Changes to the Tanana
Basin Area Plan should follow procedures as outlined in
statute. She expressed concern that the legislation grants
sole rights for project development to one company. She
questioned where the state of Alaska's interest is in
bestowing this "sweetheart deal" and a legislatively
mandated seat at the planning table to Kantishna Holdings,
Inc. There are safeguards in the Alaska State Constitution
to protect citizens from individuals that may be serving
their own self-interest by providing a legislative guarantee
to a specified contractor. The Denali Borough government has
no planning experience. Local government officials would be
relying on a private consulting firm and developer with
their own undisclosed agendas. She questioned if Kantishna
Holdings, Inc. would be able to make good on their claim
that zero public funds would be needed. She asked what would
occur if the company abandons the project. She recommended
that the legislation contain a sunset date as discussed in
the House Transportation Committee hearing on April 17,
2001, which would allow the land to revert back to the state
if no development occurs by a specific date.
In response to a question by Vice-Chair Bunde,
Representative James noted that the Borough has a bed tax
and a severance tax on the Usibelli Coal Mine.
NANCY BALE, ANCHORAGE, testified via teleconference in
opposition to the legislation. She pointed out that the
legislation does not provide a safeguard against the
building of roads as a consequence of railroad construction
and subsequent development. The land grant of 3,500 acres
would be in violation of the Tanana Basin Area Plan
recommendation is accompanied by no covenants prohibiting
the building of roads associated with economic development.
There is no guarantee of a best interest finding. She
maintained that development would be inevitable once the
corridor is open.
Ms. Bale referred to the North Access Feasibility Study of
1997. The cost of building a railroad according to the
document is staggering. She maintained that a more cost
effective hotel/development scheme along the Parks Highway
would involve less potential resource damage, more control
and less expenditure of state funds. She urged legislators
to evaluate the Parks Highway corridor first. The State of
Alaska is at this time embarking on a study of this
corridor. "Let us step back and have a look at what already
needs fixing and comprehensive planning, with public
involvement, before we fund a private contractor with a
giveaway of sensitive lands."
In response to a question by Vice-Chair Bunde, Ms. Bale
explained that the land in question is a feedlot for the
park caribou and their predators. There are no controls on
the legislation.
JOE FIELDS, PRESIDENT, KANTISHNA HOLDINGS INC., ANCHORAGE
testified in support. He stated that it is still their
intent not to use public money on the construction site.
Government has proposed bringing money to the project. He
stressed that they are trying to create a public/private
relationship and provide environmental access to the
community. The public process would be fully utilized. The
proposal would generate new economic development. He
stressed that the intent is to create new economic
development in a region that was bypassed by the pipeline
and missile defense proposals.
In response to a question by Vice-Chair Bunde, Mr. Fields
noted that the Denali Borough Assembly expressed support
through a resolution passed in 1993. On April 18 [2001] the
Assembly expressed unanimous support for the proposal. He
added that the current road is a corridor between two
wilderness areas of the Park. The park road serves
approximately 4,000 of 6.4 million acres. The south side
development proposal would not provide any access into the
Park.
Representative James pointed out that there was a $1.32
million dollar federal appropriation available for an EIS
study. The Senate has included funding in the operating
budget to provide the state match.
Representative Foster MOVED to ADOPT proposed committee
substitute, work draft 22-LS0850\) Cook, 4/23/01. There
being NO OBJECTION, it was so ordered.
Representative Hudson MOVED to ADOPT Amendment 1 provided by
Representative James (copy on file.) Amendment 1 would
Eliminate "By September 1 2002" on page 1, line 14; insert
"except where needed for construction or for environmental
considerations or for required ancillary facility
development" on page 2, line 2 and replace " September 1
2002" with "upon the submission of the survey" There being
NO OBJECTION, it was so ordered.
Representative Croft expressed concern with the language
"purpose of supporting economic development in the borough
by enabling Kantishna Holdings, Inc. and its successors and
assigns in interest." He felt that the language would allow
litigation based on a challenge to the purpose and would
provide difficulties if a further partnership were engaged.
Representative James understood Representative Croft's
concerns but did not share them.
Representative Croft spoke in support of the deletion. He
stressed that it would provide a broader authority and make
it less susceptible to challenge. Representative Croft MOVED
to Adopt Amendment 2: delete "for the purpose of supporting
economic development in the borough by enabling Kantishna
Holdings, Inc. and its successors and assigns in interest"
on page 1, lines 9 - 11.
Representative John Davies questioned why would state land
be provided for the purpose of design. Representative
Whitaker noted that there are significant costs associated
with the design aspect of the project and suggested that the
land should be available as assurance.
Representative Foster OBJECTED to Amendment 2.
Representative James did not think that the amendment would
kill the bill, but stated that she would prefer to leave the
language in the legislation.
Representative Croft WITHDREW Amendment 2.
TAPE HFC 01 - 96, Side B
Representative Foster MOVED to report CS out of Committee
with the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 244 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
impact (#1) note by the Department of Natural Resources.
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