Legislature(2001 - 2002)

05/05/2001 09:14 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE CS FOR CS FOR HOUSE BILL NO. 244(RES)                                                                               
     "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."                                                                                          
REPRESENTATIVE  JEANETTE  JAMES testified  the  bill authorizes  the                                                            
Denali  Borough to identify  and survey  a right-of-way  in an  area                                                            
between  Healy  and  Denali  National  Park  for the  purpose  of  a                                                            
railroad  corridor.  She remarked  the intention  is  to expand  the                                                            
right-of-way  into the park itself.  She informed that this  project                                                            
"has been around  for a long time" and that she has  been working on                                                            
it for nine years.                                                                                                              
Representative  James  reminded of  an authorization  given  several                                                            
years prior for  the Department of Natural Resources  to convey land                                                            
across  the 90,000-acre  area  referred to  as Wolf  Townships.  She                                                            
elaborated  that within this  land, a corridor  could be  identified                                                            
under  the  provisions  of the  earlier  authorization  and  granted                                                            
through  the Alaska  Industrial  Development  and  Export  Authority                                                            
(AIDEA).  However,  she said  this process  was unsuccessful  for  a                                                            
variety of reasons  and this legislation represented  a new plan for                                                            
granting authority to the Denali Borough rather than AIDEA.                                                                     
Representative  James explained  the  process of  the Department  of                                                            
Natural  Resources working  with the  Denali Borough  to identify  a                                                            
corridor  and any  existing  rights and  uses within  that  corridor                                                            
after  which, a  survey  could be  performed.  Once  the survey  was                                                            
completed,  she continued, a maximum  amount of 3,500 acres  of land                                                            
would be  transferred from  the Department  of Natural Resources  to                                                            
the borough.                                                                                                                    
Representative  James pointed  out a  sunset date  of the year  2010                                                            
contained  in the bill. She  stated that if  the Denali Borough  has                                                            
not leased  the identified  land  to a party  for the  purpose  of a                                                            
right-of-way  into the edge  of the park,  the land would revert  to                                                            
state ownership.                                                                                                                
Representative  James surmised that approximately  1,500 acres would                                                            
actually be transferred  under this program. She stressed  this land                                                            
would  be   considered  as  part   of  the  Denali  Borough's   land                                                            
entitlement selection.  She noted that to date, the borough has only                                                            
received about half of its entitlement land.                                                                                    
Representative  James noted  several local  residents are  concerned                                                            
over this  matter and that  she has made  arrangements to visit  the                                                            
area on June 3,  2001 to "allay their fears".  She  assured a public                                                            
process would occur as one occurs with any right-of-way issue.                                                                  
Co-Chair Kelly asked about  the increased expenses in FY 05 shown on                                                            
the fiscal note.                                                                                                                
Representative  James  ascertained  this  relates  to  the  original                                                            
completion  date  of 2006  and noted  the  date has  been  extended,                                                            
through this legislation,  to the year 2010. She said it was not her                                                            
intention to set an unrealistic deadline.                                                                                       
Senator Austerman  assumed  it would be necessary  to lay new  rails                                                            
across this corridor.                                                                                                           
Representative James affirmed  and stated this project would connect                                                            
to the  Alaska  Railroad on  one end.  She informed  that  Kantishna                                                            
Holdings,  Inc.  has  been  negotiating  with  the  Alaska  Railroad                                                            
Corporation  as  to where  this  connection  would be  located.  She                                                            
indicated there  is a plan to construct a hotel in  the community of                                                            
Healy to serve passengers  traveling along this route. She estimated                                                            
the  length of  the  new route  at  approximately  40  miles to  the                                                            
boundary of the park.                                                                                                           
Senator Ward offered a motion to report the bill from Committee.                                                                
It was  noted that testimony  was not concluded  and the motion  was                                                            
WITHDRAWN without objection.                                                                                                    
BOB  LOEFFLER,  Director,  Division   of  Mining,  Land  and  Water,                                                            
Department  of Natural  Resources  testified that  access to  Denali                                                            
National  Park  could  bring  significant  benefits  to  the  state.                                                            
However,  he remarked, the  department has  concerns that this  bill                                                            
might not achieve  those benefits.  He listed four concerns  on this                                                            
Mr. Loeffler  spoke to  the first  concern that  the bill conveys  a                                                            
right-of-way  to  Kantishna  Holdings,  Inc.  for one-third  of  the                                                            
distance. He  warned that without  agreement from the United  States                                                            
National Park  Service over control  of the remaining two-thirds  of                                                            
the land,  no  right-of-way could  be established  for  this or  any                                                            
other corridor. He explained  that if the Denali Borough establishes                                                            
an "exclusive  use corridor" for a  railroad by Kantishna  Holdings,                                                            
Inc.,  other opportunities  for  access  to the  park  would not  be                                                            
considered.  He recommended agreement  between "all players"  before                                                            
the state commits  to a specific corridor  mechanism and  developer.                                                            
Mr.  Loeffler listed  the  second concern  over public  policy  that                                                            
would  essentially  provide a  legislative  land grant  to a  single                                                            
private developer.                                                                                                              
Mr. Loeffler  stated that  the bill thirdly,  "unintentionally…  may                                                            
put  the  borough  in a  poor  marketing  position  with  a  private                                                            
developer."  He referenced  language  that  stipulates  that if  the                                                            
borough does  not grant the  land to Kantishna  Holdings, Inc.  by a                                                            
certain  date,  ownership  of the  land  returns  to the  state.  He                                                            
cautioned that  this limits the criteria the borough  could place on                                                            
any agreement  with the corporation, because it is  known there is a                                                            
consequence to the borough if no agreement is reached.                                                                          
Mr.  Loeffler remarked,  the  final  concern that  the  role of  the                                                            
Department of Natural Resources  is "ambiguous" in the land transfer                                                            
process.  He noted  the  legislation  requires that  the  department                                                            
review selections  made by the borough, but exempts  the review from                                                            
standards in  municipal entitlement  law. He stressed that  the bill                                                            
however, does  not remove the department's  obligation to  determine                                                            
that disposal  of this land  to the borough  is in the state's  best                                                            
interest.  He added  that numerous  other obligations  contained  in                                                            
Title 38 of the  Alaska State Statutes governing land  disposal, are                                                            
also not exempted.                                                                                                              
Co-Chair  Kelly opined that  if the Committee  addressed these  four                                                            
concerns  raised by  the department,  the commissioner  would  still                                                            
oppose the legislation.                                                                                                         
Mr. Loeffler commented this was possible.                                                                                       
JEFF   KNUTCHNE,   resident   of  Stampede   Road,   testified   via                                                            
teleconference from Denali  and told of the many visitors to his bed                                                            
and  breakfast  and  sled  dog  tours  establishment.  He  spoke  of                                                            
concerns with  protecting the remote atmosphere of  his location and                                                            
warned  that this  project would  "ruin" his  business. He  informed                                                            
that  the   local  homeowners  association,   with  160   landowners                                                            
occupying  land within the  proposed corridor,  is in opposition  to                                                            
the development  of the railroad in  this area. He stated  that this                                                            
project has had  little input from the people affected  the most and                                                            
he questioned  the  public process  related to  this land  disposal,                                                            
referring  to  the  way  the  matter  is  listed  as  "old  township                                                            
concerns"  on  agendas  without  mention   of  the  Alaska  Railroad                                                            
Corporation.  He also  told of  the historical  use  of the area  in                                                            
BRUCE   LEE,  operator   of  dog   sled  business,   testified   via                                                            
teleconference  from Denali to oppose the bill on  three points: how                                                            
it would affect  him personally, how  it impact subsistence  and the                                                            
financial implications.  He told the Committee about  his cabin in a                                                            
remote area on  land that he obtained 26 years ago  through the open                                                            
entry  process  but  would  be  taken   away  from  him  under  this                                                            
legislation.  He stated  that  there is  little available  land  for                                                            
local residents  because the United  States Park Service  and Native                                                            
Corporations  own most of  the land in the  area. He requested  that                                                            
consideration  be given  to the  use of  this land  by caribou  as a                                                            
preferred   winter  range   and  he  stressed   the  importance   of                                                            
subsistence.  He did not  agree with public  lands being given  to a                                                            
private "non-local,  non-borough corporation" that  has demonstrated                                                            
no history of  operating such a large-scale operation.  He opined it                                                            
is  not "sound  financial  judgment"  for  the  state to  place  the                                                            
borough in this position.  He disagreed with the assessment that the                                                            
project  is favored at  a ratio  of 15 residents  to one,  asserting                                                            
that he knew of only a few residents who support the proposal.                                                                  
JOE  FIELDS, President,  Kantishna  Holdings,  Inc.,  testified  via                                                            
teleconference   from  Fairbanks   that  the  Committee   should  be                                                            
concerned  about the local  residents' issues,  but that he  thought                                                            
this  legislation  addresses  them.  He  stated  that  the  township                                                            
consists  of 100,000  acres  and that  this legislation  would  only                                                            
utilize 15,000 acres. He  countered earlier arguments asserting that                                                            
there has been a public  process on this matter for over nine years.                                                            
He noted  the newly  elected  Denali Borough  Assembly, unanimously                                                             
voted to  endorse this  legislation  on April 8,  2001. He  stressed                                                            
that while the local residents  might see trains, these would not be                                                            
freight  trains,  but rather  passenger  trains  carrying  tourists.                                                            
Also, he  said, there would  be no road  crossings and accompanying                                                             
whistles at these crossings.                                                                                                    
Mr. Fields qualified that  he did not know what impact this corridor                                                            
would have  on subsistence, but he  predicted it would not  be much.                                                            
He stated  he has tried to  learn the number  of caribou strikes  by                                                            
train and  although  he didn't have  an amount,  the amounts  seemed                                                            
different than  moose strikes and different than areas  with greater                                                            
snow levels.                                                                                                                    
Mr. Fields  stated that the intent  of this effort is for  the study                                                            
of the  corridor  to create  a northern  access  to Denali  National                                                            
Park. He  told of an endorsement  given in  1994 by a national  park                                                            
system advisory  board. He said consideration  has been given  to an                                                            
additional  access route  to the southern  portion  of the park  but                                                            
that  there   is  no   funding  in  the   Statewide  Transportation                                                             
Improvement  Program (STIP)  for actual construction  of the  entire                                                            
project for at least six years.                                                                                                 
Mr. Fields asserted that  the northern access route would create 300                                                            
to  900 jobs.  He spoke  of efforts  to  receive approval  from  the                                                            
United  States Secretary  of the Interior  for the  route, which  he                                                            
said involves  more public process. He then stated  this route would                                                            
reduce road  traffic by  1,300 vehicles annually.  He stressed  that                                                            
this is "good  sound development"  and is environmentally  sound. He                                                            
remarked  that many people  would be able  to safely experience  the                                                            
national park.                                                                                                                  
Co-Chair  Kelly commented,  "This  is, I  think,  a pretty  exciting                                                            
project." He understood  that each time such a project  is proposed,                                                            
some people's  lives are  impacted and that  there is concern  about                                                            
the extent of  these changes. He stated this is a  part of living in                                                            
a "growing state".                                                                                                              
Mr. Fields  expressed  he is willing  to meet  with those  residents                                                            
with concerns  and  to give  them a tour  of the  proposed area  and                                                            
detail  the impacts.  He  anticipated  the  actual location  of  the                                                            
corridor  would be south  of most of the  trails the residents  feel                                                            
are threatened.  He added  that it is unlikely  the tracks  could be                                                            
seen from the  areas used by the guides.  He said he wanted  to have                                                            
discussions with the community  "talking honestly about their issues                                                            
and not getting  all excited about how they are going  to lose their                                                            
rights to use the public land for free."                                                                                        
Senator Olson  spoke as a small businessman and the  need to protect                                                            
the ability  to earn a living. He  asked the previous two  witnesses                                                            
to describe how  this project would adversely affect  their business                                                            
operations. He wanted to know if they would go out of business.                                                                 
Mr. Knutchne responded  that the business would fail  without access                                                            
to the remote  cabins located across from the proposed  corridor. He                                                            
detailed the  three and five day trips  on the state-owned  land and                                                            
the areas of travel.                                                                                                            
Co-Chair  Kelly asked why  the groups could  not cross the  railroad                                                            
Mr. Knutchne asserted  that the language in this legislation  "could                                                            
possibly  eliminate"   any  competing   business  ventures   in  the                                                            
Senator  Olson  asked  Mr. Fields  if  this  is  true and  that  Mr.                                                            
Knutchne would  have no other way  to access the cabins then  across                                                            
the right-of-way.                                                                                                               
Mr. Fields did not think  this would be the case. He assumed bridges                                                            
and culverts  would be  built across  the rivers  and creeks  but no                                                            
plans were yet made to  provide for railroad crossings. He explained                                                            
that  railroad   crossings  are  possible,  but   are  done  at  the                                                            
traveler's  own risk. However,  he stressed  that there would  be no                                                            
high-speed  trains operating on these  tracks and that the  proposed                                                            
passenger  trains  are  comparatively  lightweight.  He knew  of  no                                                            
right-of-way  or corridor that does  not allow crossings.  He opined                                                            
if the intent  is to have sole access  to complete wilderness,  then                                                            
this intent is self-centered and unrealistic.                                                                                   
NANCY BALE, Board Member,  Denali Citizens Counsel, 25-year resident                                                            
and employee  of Denali Borough, testified  via teleconference  from                                                            
Anchorage to contradict  the claim that a 15 to one ratio of borough                                                            
residents are favor of  the project. She anticipated a large turnout                                                            
at  the next  borough  assembly  meeting  of residents  against  the                                                            
railroad  access. She stated  that there  is significant  opposition                                                            
largely because  the residents have no say as to whether  or not the                                                            
project would  occur. Preferable, she said, is a consultated  public                                                            
Ms. Bale began  listing specific concerns over some  of the language                                                            
in the  committee substitute,  starting  with page  2, line 4,  "The                                                            
borough, in consultation  with Kantishna Holdings,  Inc., shall also                                                            
identify  and  select  ancillary   land  necessary  to  support  the                                                            
development  and operation of a railroad  and facilities  to support                                                            
economic development  in conjunction  with the railroad development                                                             
project."  She  shared  that  this   is of  particular   concern  to                                                            
residents because, although  the right-of-way is only 300 feet wide,                                                            
there  is no stipulation  as  the size  of the  ancillary land.  She                                                            
stressed that  this provision contains, "so few controls  that rail-                                                            
only is not even guaranteed"  and that there is the possibility of a                                                            
road. She  detailed the  potential impact  on local and subsistence                                                             
use of the land.                                                                                                                
Ms. Bale next  referred to page, 2,  lines 7 and 8, "The  department                                                            
shall review the selections  within 90 days after the selections are                                                            
made." She asked if the  department in question is the Department of                                                            
Natural Resources.                                                                                                              
Co-Chair Kelly answered this is correct.                                                                                        
Ms. Bale asked if this  review process would involve a best-interest                                                            
finding,  or an  in-house  "paper review."  She remarked  that  "lip                                                            
service"  has been  given  that an  environmental  impact  statement                                                            
would be conducted,  but stressed  that it is not guaranteed  in the                                                            
bill, nor is a best interest finding.                                                                                           
Ms. Bale  continued  reading  from page  2, line  10, "…the  borough                                                            
shall survey  the land…"  and emphasized  that it  is uncertain  how                                                            
this would  be funded. She pointed  out that the borough  is already                                                            
funding most  of its school system  and she asked if money  would be                                                            
taken away  from education or if state  funds would be appropriated                                                             
for a survey.                                                                                                                   
Ms. Bale  spoke to  page 2,  line 19,  "By September,  1, 2010,  the                                                            
Denali Borough  shall lease the land received under  this section to                                                            
a person  for a railroad  development project."  She wanted  to know                                                            
how this  person  would be  selected and  whether there  would  be a                                                            
competitive bidding process at that time.                                                                                       
Ms.  Bale commented  that  a Denali  task force  has  been cited  as                                                            
supporting  a  northern  access   to  the  park,  but  stressed  she                                                            
disagreed with  this claim. To demonstrate,  she read from  a report                                                            
on the  issue generated  by the  task force, "While  all task  force                                                            
members  felt strongly  that  new opportunities  to  experience  the                                                            
national  park  should  be  provided,   a  majority  felt  that  the                                                            
recommended alternative,  primarily on the south side, would in part                                                            
meet future  demands. The north route  is also perceived  to be less                                                            
cost effective  and less consistent  with maintaining the  primitive                                                            
character  of  Kantishna.  The  approval  of north  access  in  this                                                            
document was a minority opinion."                                                                                               
Co-Chair Kelly addressed  the witness's question regarding "person",                                                            
explaining  this is a legal term that  could apply to a person  or a                                                            
corporation.  He said that when an  individual person is  referenced                                                            
in statute, the correct language is "individual."                                                                               
Ms. Bale again  asked if the bill  allows for a competitive  process                                                            
in the lease of the right-of-way land.                                                                                          
Representative  James responded  that  the process  in requesting  a                                                            
right-of-way  is by application rather  then a request by  the state                                                            
for competitive bids. She  noted that in this legislation the reason                                                            
"person"  is used  instead of  Kantishna  Holdings, Inc.  is in  the                                                            
event that the corporation  fails and another party is interested in                                                            
the project before  the deadline of 2010. She stated  there would be                                                            
a public process on this issue.                                                                                                 
Representative  James  addressed  the funding  of the  land  survey,                                                            
saying the  funds would probably come  from a source other  then the                                                            
borough if the borough  could not afford it. She noted federal funds                                                            
could   be   available,   provided   state   matching   funds   were                                                            
Senator Ward shared  his conversation with Denali  Borough mayor and                                                            
former  Alaska  Representative,  John Gonzales  and  the  assurances                                                            
given that the borough  is "capable of handling the public process."                                                            
Senator Ward shared that  the mayor asked that the legislature "have                                                            
faith" in the borough to determine its best interest.                                                                           
Co-Chair Kelly  asked Mr. Loeffler  if language is contained  in the                                                            
legislation  that protects traditional  access across the  right-of-                                                            
Mr. Loeffler  replied that  the bill "indicates"  that the  corridor                                                            
shall  protect  existing  rights.  He noted  that  a  Department  of                                                            
Natural Resources  best interest finding  would address the  matter.                                                            
Senator Hoffman asked about the cabins previously discussed.                                                                    
Mr. Loeffler qualified  that it is not guaranteed  there would be no                                                            
impact but that users of  these cabins would have access through the                                                            
Senator Ward offered  a motion to move from Committee  SCS CS HB 244                                                            
(RES)  with $16,800  fiscal  note  from the  Department  of  Natural                                                            
Without objection the bill MOVED from Committee.                                                                                
AT EASE 9:57 AM / 1:20 PM                                                                                                       

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