Legislature(2001 - 2002)
04/25/2001 01:48 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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  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.