Legislature(2013 - 2014)BARNES 124
01/28/2014 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Tanana, Positive Train Control by the Alaska Railroad Corporation | |
| Status Update on the Port Mackenzie Rail Extension | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE TRANSPORTATION STANDING COMMITTEE
SENATE TRANSPORTATION STANDING COMMITTEE
January 28, 2014
1:05 p.m.
MEMBERS PRESENT
HOUSE TRANSPORTATION
Representative Peggy Wilson, Chair
Representative Doug Isaacson, Vice Chair
Representative Eric Feige
Representative Lynn Gattis
Representative Craig Johnson
Representative Bob Lynn
Representative Jonathan Kreiss-Tomkins
SENATE TRANSPORTATION
Senator Dennis Egan, Chair
Senator Fred Dyson, Vice Chair
Senator Anna Fairclough
Senator Hollis French
MEMBERS ABSENT
HOUSE TRANSPORTATION
All members present
SENATE TRANSPORTATION
Senator Click Bishop
COMMITTEE CALENDAR
PRESENTATION: TANANA~ POSITIVE TRAIN CONTROL BY THE ALASKA
RAILROAD CORPORATION
- HEARD
STATUS UPDATE ON THE PORT MACKENZIE RAIL EXTENSION BY THE
MATANUSKA-SUSITNA BOROUGH
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BILL O'LEARY, President & CEO
Alaska Railroad Corporation (ARRC)
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented an Update on the Alaska Railroad
Corporation.
CLARK HOPP, Vice-President
Engineering
Alaska Railroad Corporation (ARRC)
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented an Alaska Railroad Update on the
Northern Rail Extension.
EILEEN REILLY, Vice-President
Engineering
Advanced Train Control Systems & Technology
Alaska Railroad Corporation (ARRC)
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented an Overview on the Alaska
Railroad Corporation's Positive Train Control (PTC) project.
JOHN MOOSEY, Manager
Matanuska-Susitna Borough (MSB)
Palmer, Alaska
POSITION STATEMENT: Provided a status update on the Port
MacKenzie Rail Extension.
JOE PERKINS, Project Manager
Port MacKenzie Rail Extension
Matanuska-Susitna Borough
Juneau, Alaska
POSITION STATEMENT: Provided a status update on the Port
MacKenzie Rail Extension.
ACTION NARRATIVE
1:05 00 PM
1:05:29 PM
CHAIR PEGGY WILSON called the joint meeting of the House and
Senate Transportation Standing Committees to order at 1:05 p.m.
Representatives Kreiss-Tomkins, Feige, Isaacson, Gattis, P.
Wilson and Senators Dyson, Fairclough, and Egan were present at
the call to order. Senator French and Representatives Lynn and
Johnson arrived as the meeting was in progress.
^Presentation: Tanana, Positive Train Control by the Alaska
Railroad Corporation
Presentation: Tanana, Positive Train Control by the Alaska
Railroad Corporation
1:06:44 PM
CHAIR P. WILSON announced that the first order of business would
be a Presentation: Tanana, Positive Train Control by the Alaska
Railroad Corporation.
1:08:04 PM
BILL O'LEARY, President & CEO, Alaska Railroad Corporation
(ARRC), Department of Commerce, Community & Economic Development
(DCCED) introduced himself and his staff, Eileen Reilly, Vice-
President of Advanced Train Control Systems Technology, and
Clark Hopp, Vice-President of Engineering. He related that the
Matanuska-Susitna Borough will provide an overview on the Port
MacKenzie Rail Extension Project.
1:09:00 PM
MR. O'LEARY reviewed some quick facts entitled, "Alaska Railroad
Quick Facts," noting the ARRC management structure has stayed
the same [slide 2]. He reviewed operating statistics and
employees, including that number of passengers traveling on the
Alaska railroad increased to approximately 500,000 and the
railroad hauled about 5.11 million tons of freight, which is
down from approximately 7 million tons. The ARRC employs
approximately 600 year-round employees, reduced significantly
from its peak in 2007-2008. Approximately 75 percent of its
employees are members of one of the ARRC's five unions.
1:10:27 PM
MR. O'LEARY turned to slide 3, entitled, "ARRC Freight,", which
speaks to the financial health of the ARRC. He said the "ARRC
Freight" graph shows during 2008-2013 the consistent year to
year drop in million tons of freight. Additionally, the bulk
petroleum figures have fallen markedly - dropping nearly 75
percent since 2003. Typically, transport of bulk petroleum has
provided the ARRC year round steady business. While the export
coal figures - the greenish color in the middle of the slide -
experienced significant growth in 2010-2011, the overall
transport is about half of the 2011 amount. Additionally, the
railroad experienced significant drops in gravel hauls from the
Matanuska-Susitna valley to Anchorage, also down from an earlier
high. He highlighted that this slide captures the financial
issues the railroad has faced, in particular, since freight
represents 70 percent of the ARRC's revenue stream.
MR. O'LEARY turned to slide 4 entitled, "ARRC Passenger
Service," and reported that in 2013, the ARRC enjoyed a
significant increase in the number of passengers served, with
roughly half of its passengers occupying cruise partner coaches
- coaches pulled on the same train but owned by the cruise
industry. While passenger service dropped in 2008 due to the
recession, it has been slowly climbing since then.
1:13:21 PM
MR. O'LEARY mentioned three areas of concern. First, the
aforementioned drop in commercial freight activity; second, the
Federal Transit Administration's (FTA) formula funds, based on
the number of passengers and mileage, have also been reduced.
He reported the ARRC is eligible for these funds by virtue of
providing year-round passenger service. The funds are not
insignificant, having peaked at over $35 million; however, not
everyone in the Congress understands the fund's eligibility
requirements. In fact, the ARRC "looks different than other
recipients" such as the Chicago Transit Authority or the Long
Island Railroad, so the ARRC has experienced significant
difficulties in obtaining its reauthorization. For example, in
2012, the ARRC survived, although the railroad experienced
significant funding cuts. More specifically, federal funding
was reduced from $35 million to $28 million, while the federal
matching fund requirement doubled - now set at 20 percent -
which has the effect of reducing the ARRC's monies available for
projects. The program is due for reauthorization in 2014 and
once again the ARRC anticipates difficulties in Washington D.C.
in obtaining reauthorization.
1:15:38 PM
MR. O'LEARY recapped that the ARRC has experienced reductions in
commercial activity, with less federal formula funds available.
Third, the federal laws changed for positive train control
(PTC), which will be discussed later. As commercial activity
declined and federal funds diminished - noting 50 percent of the
ARRC's operating expenses related to personnel - the ARRC was
forced to undergo another round of personnel cost reductions.
In fact, these reductions represent the ARRC's third round of
personnel cuts since 2009, which has cumulatively led to a
reduction of 300 positions. Although the ARRC used attrition
for some reductions, 30 people were ultimately laid off.
Overall management positions represented about 37 percent of the
reduction. The ARRC also restructured its organization and
streamlined its operations during this time. While the ARRC
maintained its overall "outward" appearance, the machinations
happened internally inside the organization.
1:18:19 PM
MR. O'LEARY turned to slide 8 entitled, "Net Income," which
provides an overview of the financial history, noting the ARRC
was able to reduce costs and remain steady despite reduced
revenue. He estimated the current net income in the $14 million
range.
1:19:47 PM
REPRESENTATIVE KREISS-TOMKINS asked for more information on the
unexpected revenue "bumps" and whether positive passenger trends
will continue. He further asked whether Mr. O'Leary anticipated
any new large freight customers for the ARRC.
MR. O'LEARY explained the unexpected revenue in 2013. First,
the petroleum refinery in North Pole shuttered up the second of
its three crude towers and while the ARRC was unsure of the
impact, ultimately the petroleum impacts were less than the ARRC
anticipated. Second, the ARRC successfully transported
generators for the Matanuska-Susitna Electric plant, which also
represented unexpected freight. Finally, the ARRC had
unexpected strength in the ARRC's interline barge service, which
supports oil field activities. For example, an oil company can
order pipe in Houston and the freight can be seamlessly
transported to the North Slope by being: loaded on rail cars,
transported to Seattle, rolled off/rolled on via ARRC's rail
barge to Whittier, rolled off at Whittier and transferred via
rail to Fairbanks, and finally, be transported by truck to the
North Slope.
1:22:21 PM
MR. O'LEARY remarked that the ARRC is "bullish" on the passenger
side. He characterized the rail as a fabulous way to showcase
Alaska. He anticipated passenger service will continue to grow,
noting the ARRC had not anticipated the positive growth trends
that occurred this year.
MR. O'LEARY, in response to a question on freight, answered yes;
the ARRC is hopeful about additional freight hauls. One primary
focus the management team has embraced has been to grow the
ARRC's revenue. He reported that the ARRC has cut an inordinate
amount of operational costs, has reached the point of
diminishing returns, so any additional cuts will be more
difficult. Right now the organization must focus on growth. He
said he is fond of the phrase, "We're going to try to grow our
way out of this." He reported the ARRC aggressively seeks
revenue, with an eye on assisting any significant projects in
the state. Since the state has limited infrastructure, the ARRC
represents a key piece, so any major project that will occur -
outside Southeast Alaska - will need the ARRC.
1:23:53 PM
SENATOR DYSON understood the ARRC obtains a significant portion
of its income from real estate holdings. He asked for further
clarification.
MR. O'LEARY gave a brief history of railroad lands. In 1985,
when the railroad was purchased by the state, it received 36,000
acres of land along with the rail infrastructure. Approximately
half its land is used for rail operations, but the other half is
available for other commercial uses. The advantages of the
ARRC's real estate holdings is that it can as a buffer for the
inevitable business cycles since the land can be leased, permits
can be issued, plus the railroad has significant dock holdings
in Whittier & Seward. He reported that the ARRC's real estate
is significant and represented $17 to $18 million in 2013.
SENATOR DYSON expressed some disappointment that Mr. O'Leary had
not previously mentioned the income stream from the leases. He
recalled that a significant amount of the freight the railroad
hauls is dependent on jet fuel and coal for export. He inquired
about any trends for the aforementioned freight commodities. He
further asked whether the railroad anticipated hauling more
freight and coal for exports.
MR. O'LEARY responded that the ARRC works closely with its
customers. For example, he advised that recently spent a day
meeting with Usibelli Coal Mine, Inc.; however, the coal market
currently is suffering from oversupply in the world market.
While coal needs still exist, additional coal producers and
subsequent production has kept the prices depressed to the point
that Alaska coal isn't moving. The ARRC does not anticipate
this changing in the next year or so, the railroad hopes coal
freight will increase thereafter. With respect to jet fuel, the
ARRC works closely with Flint Hills Resources, Inc. and
typically meets with senior management once a year. He related
numerous aspects exist for that market, depending on the demand
from AIAS, but also on supplies barged in from external sources.
He recalled that the demand level has been steady, similar to
last year's level, but certainly demand has not been spiking
upward.
1:27:32 PM
SENATOR DYSON said several members are encouraged by the
potential natural gas development in Cook Inlet. He remarked
that the state hopes to supply natural gas to Fairbanks via one
of several methods, for example, by transporting liquefied
natural gas (LNG) or compressed natural gas (CNG). He asked for
the preliminary economics of potential rail transport.
MR. O'LEARY responded that he has held discussions with various
parties, for example, the ARRC presented options and
qualifications to the Alaska Industrial Development and Export
Authority's board several weeks ago regarding the railroad's
capabilities. He characterized the railroad as being a "rolling
pipeline." He offered his belief that the railroad can provide
an interim or long-range solution with respect to natural gas.
1:28:35 PM
SENATOR DYSON asked how long it would take the ARRC to and build
or buy rail cars, if needed to respond to industry's needs.
MR. O'LEARY responded that he held preliminary discussions with
car builders for either tankers or International Standards
Organization (ISO) containers - noting a significant cost
differential between the two - and the backlog and subsequent
delay would range from 12 months to 18 months. He concluded
that the ARRC is ready to go. In further response to a
question, he answered that he was unsure of a source of current
available cars, but none are available in Alaska.
1:29:37 PM
REPRESENTATIVE ISAACSON recognized the President/CEO of the ARRC
hails from Fairbanks. He said he introduced HB 271, which would
provide $2 million for a feasibility study via the University of
Alaska to construct a railroad between Fairbanks and Deadhorse.
He asked for further clarification on any of ARRC's marketing
efforts, for example, whether the ARRC has traveled to Asia with
customers, such as Usibelli Coal Mine, Inc. to solicit freight
customers.
MR. O'LEARY answered that the ARRC is interested in expanding
its marketing. He recalled that the ARRC has previously
traveled with its customers or potential customers to detail the
ARRC's capabilities; however, it has not recently done so.
However, the ARRC has had a renewed emphasis on growing
revenues, in particular, freight. He advised Senator Dyson that
he had not intended to be disingenuous about real estate leasing
revenues but omitted them in this update, since leasing has been
a consistent revenue performer. He assured members that the
ARRC takes its customer service very seriously. He highlighted
that ne way the railroad can grow its business is to provide
superlative service to existing customers and he hoped the
railroad can generate new customers, including shipping
liquefied natural gas (LNG) to serving other big projects with
transportation needs. For example, the railroad has discussed
the potential Susitna-Watana Hydroelectric project and the
Alaska Gasline Development Corporation (AGDC) about the gasline
activities with AIDEA and Alaska Energy Authority (AEA).
REPRESENTATIVE ISAACSON expressed gratitude that the ARRC is
interested in growing freight in Alaska. For example, North
Pole has a second refinery seeking rail access, especially since
the refinery would like to expand its operation. He expressed
hope that the ARRC will keep the refinery in mind as a means of
potential growth.
1:33:50 PM
SENATOR FRENCH asked for the economic advantage of transporting
by rail versus by truck. For example, he asked for a cost
comparison between rail and trucking costs to transport 1,000
widgets.
MR. O'LEARY responded that the ARRC has a distinct competitive
advantage in transporting heavy or awkward freight, for example,
transporting large quantities of coal since it would take an
unfathomable number of trucks to transport the coal the railroad
currently transports and it would also place considerable stress
on the highway system.
MR. O'LEARY, after consulting with Ms. Reilly, responded it
would take 2.5 trucks per rail car of freight. He reported that
if the ARRC operated three trains of export coal a week from
Anchorage to Seward with 70 to 80 cars per train, it would take
about 600 trucks to transport the coal.
1:36:08 PM
SENATOR DYSON suggested it could be up to a 10-to-1 cost ratio.
MR. O'LEARY added it would also create congestion and safety
issues, not to mention the sheer volume of trucks necessary to
transport the coal.
1:36:24 PM
CLARK HOPP, Vice-President, Engineering, Alaska Railroad
Corporation (ARRC), Department of Commerce, Community & Economic
Development (DCCED) drew attention to slide 8 entitled,
"Northern Rail Extension," depicting a photo of the Tanana River
crossing that shows the "grand scale" of the project. The
bridge is nearly complete and it clearly shows the temporary
structure to the right of the bridge that allows the
construction to occur.
1:37:31 PM
MR. HOPP turned to slide 9 entitled the "Northern Rail Extension
4 Phase Project," and related the project's scope as an 80-mile
rail extension from North Pole to Delta Junction. He
characterized the project as a mega project, with Phase 1
consisting of building the bridge across the Tanana River, as
well as providing support development for the bridge. Phase 2
would connect the railroad from North Pole to the bridge at
Tanana River and Phase 3 would construct 30 miles of rail and
connect the Tanana River Crossing training area to the Donnelly
training area. Phase 4 would construct 38 miles of rail from
the Donnelly Training Area to Delta Junction.
1:38:44 PM
MR. HOPP turned to slide 10 entitled the "Northern Rail
Extension Project Benefits," and outlined the primary project
benefits, which includes increased passenger and freight service
opportunities, redundancy in the transportation system, and rail
connections between joint bases - Elmendorf/Richardson, Fort
Greely, Fort Wainwright, and Eielson AFB. Additionally, the
rail would connect to three major Alaska ports and provide a
strategic benefit to the military to the Port of Anchorage, Port
of Whittier, and the Port of Seward. Further, the project could
enhance potential regional tourism by expanding its passenger
service, as well as provide infrastructure for regional resource
development potential. Finally, the Northern Rail Extension
project offers the first piece to connect Alaska's railroad to
the Lower 48 via Canada.
1:40:21 PM
REPRESENTATIVE FEIGE noted the Salcha Bridge Tanana River
Crossing project. He said the company responsible for this is
Kiewit [Corporation], who has been bringing this project in on
time and on budget.
MR. HOPP agreed. He highlighted the Salcha Bridge project as
the longest bridge in Alaska, at 3,300 feet, which also includes
a 10,000-foot levee system. As a byproduct, one major benefit
would be the flood annenuation to Salcha as well as flood
relief. The project estimated cost at $188.2 million, includes
an $84 million in state appropriations and $104.2 from the U.S.
Department of Defense (DOD). As previously mentioned, the
project is on budget, on schedule, and is due to wrap up this
summer. Finally, he emphasized that the project provides
critical infrastructure for the U.S. military presence in Alaska
by providing year-round vehicle access to the Joint Pacific Area
Range Complex - a very strategic complex for the military. He
related his understanding that this area provides the largest
unencumbered airspace for ground training, which he
characterized as a potentially world-class facility. This
bridge will help provide the first piece to helping the U.S.
military achieve that goal.
1:42:59 PM
MR. HOPP turned to slide 12, entitled "Port MacKenzie Rail
Extension." He related that the ARRC is partnering with the
Matanuska-Susitna Borough (MSB) on the Port MacKenzie Rail
Extension. He lauded the partnership and teamwork experienced
with the MSB/ARRC partnership.
MR. HOPP referred to slide 13 entitled the "Fairbanks North Pole
Realignment" project and reported that the Environmental Impact
Statement (EIS) analysis has been completed for Phase 1. He
detailed the scope that includes realignment of the railroad at
downtown North Pole - the Eielson branch - which will eliminate
as many as nine at-grade crossings. The Richardson Highway at-
grade crossing would become a grade-separated crossing with
tremendous benefits to North Pole. He said the environmental
impact finding of "no significant impact" means the project is
shovel-ready, although some additional right-of-way procurement
will be needed.
1:44:49 PM
SENATOR DYSON remarked he is a great fan of the railroad. He
related his understanding that historically the ARRC was built
first and roads followed, but often the railroad is expected to
solve the at-grade issues. He appreciated the ARRC's concern
for safety and asked for comments.
MR. HOPP agreed with the characterization; however, the railroad
understands that as an asset of the state it must cooperate with
other transportation entities, such as the DOT&PF &
municipalities and it attempts to find ways to work with them.
He reported that the railroad continues to work with communities
and DOT&PF on opportunities and funding to separate crossings.
He pointed out successes along the Parks Highway corridor, with
removal of many at-grade crossings, although many more still
need to be separated. Currently, the railroad has been holding
discussions with the DOT&PF on construction crossings for next
summer on the Parks Highway corridor and in the North Pole area.
1:46:42 PM
SENATOR DYSON asked for any local government fund participation.
MR. HOPP answered that he cannot recall any local funds. In
response to a question, he answered that he did not believe the
levee is depicted in the photograph on slide 11.
1:47:45 PM
REPRESENTATIVE ISAACSON referred to the state land at North
Pole, which will receive another overpass and asked if the
railroad has coordinated its effort with DOT&PF to avoid
additional cost when funding is available for the road
realignment.
MR. HOPP answered yes; the aforementioned overpass work at Moose
Creek continues and will maintain the existing access to the air
force base but it does not preclude the new alignment to the
Tanana River Bridge. He reiterated the point of the overpass
represents a divergence of a new alignment to the bridge, but it
does not adversely impact the future road alignment.
REPRESENTATIVE ISAACSON remarked that he was reassured.
1:48:58 PM
REPRESENTATIVE KREISS-TOMKINS asked for any increased freight
tonnage the ARRC anticipates once all four phases of the
Northern Rail Extension project has been completed.
MR. HOPP explained that the Northern Rail Extension Project
began with the question of whether a better mode of
transportation could serve Central Alaska and if Fort Greely
should be served. The University of Alaska Fairbanks considered
these questions, keeping in mind the hazards of the
transportation corridor. Additionally, associated economic
studies have been undertaken to identify any freight
opportunities. Although he did not recall the specific freight
tonnage figures, he offered to research the matter and report to
the committee. The ARRC identified the military as a primary
business opportunity, particularly since the project will
address one concern the military has had on mobility, which is
to provide rapid transportation from the training grounds to the
Port of Anchorage to meet the military deadline of reporting for
duty within 72 hours after orders are issued.
1:51:12 PM
MR. O'LEARY asked to move to the Positive Train Control (PTC),
which he referred to as the ultimate unfunded federal project.
He explained that this project consists of approximately $153
million of development work and approximately $64 million in
railroad expenditures to date from federal funds or internal
funds. An additional $19.1 million was appropriated by the
legislature last year to keep the project moving, although the
ARRC still lacks $70 million. He advised that the ARRC is
requesting $40.8 million this legislative session for two years
of funding for the PTC.
1:52:52 PM
EILEEN REILLY, Vice-President, Engineering, Advanced Train
Control Systems & Technology, Alaska Railroad Corporation (ARRC)
introduced herself and offered to initially play a short video
to describe the project.
1:58:04 PM
MS. REILLY turned to slide 14 entitled "Positive Train Control,"
and stated inter-operations were mentioned in the video,
primarily because 39 railway companies are instituting PTC.
Under the federal Rail Safety Improvement Act of 2008, the ARRC
must purchase and integrate its equipment to implement the
mandatory PTC. Some larger rail companies have subsequently
developed their own equipment; however, the ARRC is small and
unable to do so.
1:59:52 PM
MS. REILLY turned to slide 16 entitled, "Why Mandatory PTC
Regulations?" She explained that PTC is required as a result of
train collisions, such as the one that occurred on September 12,
2008, when a Chatsworth, California Metrolink train passed a
"red" signal while the engineer was texting and collided with a
freight train, resulting in 25 fatalities, 130 serious injuries,
and $200 million in costs. She reported that a week later the
Rail Safety Improvement Act of 2008 mandated PTC. The Act
requires any entity providing regularly scheduled inter-city or
commuter rail must comply. Since Alaska transports
approximately 500,000 passengers annually, it must implement
PTC, she said, noting some of the ARRC's large trains carry up
to 1,200 passengers.
2:01:02 PM
MS. REILLY turned to slide 19 entitled "2010 PTC Regulation
Requirements." The 2010 regulations require PTC systems to
prevent train-to-train collisions by enforcing authority limits,
collisions caused by over speed derailments, incursions into
established work zone limits, and train movement through a main
line in an improper position. She turned to slide 20 entitled,
"December 1, 2013 Accident" noting a collision occurred in the
Bronx, New York City, resulting in 4 fatalities and 63 injuries
when a passenger train derailed. She reported that the
aforementioned video showed people working on other rails,
noting that in October 2013, the rail industry experienced the
highest ever number of maintenance fatalities. She emphasized
the importance of protecting workers. She stated that the
project costs to implement the system to stop trains and prevent
train-to-train collisions are extremely high. It takes
considerable time for an engineer/conductor to stop a train,
often taking up to 10,000 feet of rail. The ARRC had considered
limiting the upgrade to only the switches most often used, but
under the federal mandate all railroad switches must be upgrade.
2:03:14 PM
MS. REILLY, referring to the photograph on slide 20, noted the
National Transportation Safety Board added PTC to its "most
wanted list" in 2012 due to the number of train accidents. While
the Bronx accident investigation hasn't been finalized, the
likely outcome is that the engineer "nodded off," which the NTSB
considers to be a human error. She offered her belief that the
PTC won't address every incident, but it can help with human
factors; however, it's essential to keep the ARRC in good
repair. Under PTC, if an engineer/conductor does not react
timely to whistle-blowing requirements, the engineer/conductor
is warned, and subsequently the PTC system stops the train
automatically if the engineer/conductor still does not comply.
She reported that federal funds have helped repair the rail, and
improve safety, although the PTC system will not prevent all
accidents.
2:05:36 PM
MS. REILLY brought up ramifications under slide 22 entitled,
"What if ARRC does not comply?" She explained that the federal
law imposes penalties for non-compliance with the maximum FRA
fine at $16,000 per day per violation for each "willful"
violation. Additionally, she reported that the FRA rail safety
pertains to "persons" so both the corporation and the individual
will be subject to penalties. In response to Chair P. Wilson's
question on the percentage of revenue derived, Mr. O'Leary
answered in 2013, $25 million of the $145 million in gross
revenue was for passenger service.
2:07:56 PM
MR. O'LEARY addressed the implications for loss of passenger
service outlined on slides 23-24], stating the slides assess the
impacts of a loss of passenger service if the ARRC no longer
provided service. Since the ARRC couldn't assess the impacts on
partner entities, such as the cruise companies, the McDowell
Group conducted a study for the ARRC. It turned out to be
significant, such that the McDowell Group identified 2,000 jobs
connected to the railroad's passenger services, with the
multiplier effect bringing it to approximately $50 million in
labor income, which includes year-round and seasonal jobs at the
railroad, as well as seasonal passenger service jobs and non-
resident passengers.
2:09:27 PM
MR. O'LEARY emphasized that discontinuation of passenger
services would result in a significant impact, in particular,
since job income and spending would be severely curtailed. He
highlighted other concerns. The ARRC receives FTA funds for
providing year-round scheduled passenger service and these
federal funds would be at risk or eliminated if service was
discontinued. If the same number of passengers could no longer
be transported by rail, it would take 3,600 motor coaches
traveling on the Parks and Seward highways to provide alternate
transportation.
2:10:59 PM
MS. REILLY turned to slide 26 entitled, "ARRC Facts," noting
that under PTC, 525 miles, 54 locomotives and cab cars, 36
signal control points, and 108 switches must be upgraded. She
reported that 72 miles of tracks are operated by signals
although 64 switches are currently in the "dark area." She
explained the safety process trains use to obtain authority from
the dispatcher to travel between railway points, such as between
certain milepost signs, and how that differs under the PTC. She
noted some difficulties the railroad must contend with due to
Alaska's harsh climate, as well as the limits of Global
Positioning Systems (GPS), and the high cost to upgrade and
integrate the new system. The ARRC continues to seek ways to
reduce costs in low-density areas to implement the PTC, while
still protecting the trains, she said.
2:15:28 PM
MS. REILLY turned to slides 27-28 entitled, "Origin of PTC at
ARRC" and current PTC Implementation Status." She explained
more details about the tracking system, which is designed to
ensure train position and safety is integrated into the new
system. She characterized the PTC system as being one of the
largest research and development projects for integration of
equipment. She pointed out the aforementioned 64 switches are
difficult to equip. She reported that the ARRC has been working
with the Federal Railway Administration (FRA) for an exemption
on manual switch monitoring on its low-passenger density track
during the approval process for the PTC Implementation plan.
She highlighted that could cost $14.7 million to upgrade the
system if the ARRC is unsuccessful in its efforts, but the
exemption was "looking pretty good" as of a week ago.
2:17:01 PM
MS. REILLY turned to the slide entitled, "PTC Implementation
Schedule: and PTC Deadline Extension Status," and pointed to
the green line that depicts the schedule. The ARRC does not
anticipate receiving the final funding until 2018. Until then
the railroad will operate in a revenue demonstration mode. The
current deadline for implementation of upgrades is December 31,
2015; however, the ARRC and other Lower 48 railroads have been
working on extensions. She related her understanding that the
FRA will not fine railroads that demonstrate a "good faith
effort" to implement PTC, but if not, the ARRC and other
railways will be subject to fines.
2:18:37 PM
MR. O'LEARY turned to slide 31 entitled "Positive Train Control
Funding 1997-2018" which highlighted funding for the project.
The largest pie segment represents the ARRC's internally-
generated funds and federal funding received during the 1997-
2013 timeframe totaling approximately $64 million. The
legislature appropriated $19.1 million in FY 2014 and the ARRC's
FY 2015 is $40.8 million. The two-year budget request for 2015-
2016 is necessary to provide for long-lead-time items and to
obtain efficiencies in procurement activities. He estimated an
additional $28.9 million will be needed in 2017-2018 to complete
the project. He emphasized that besides the implementation
funds, an additional $5-6 million is not included in the chart,
but will be necessary to provide PTC operation and maintenance
(M&O) funds. The ARRC has not requested the additional
aforementioned funding since the railroad hopes to continue to
grow and generate funds to be able absorb the M&O costs.
MR. O'LEARY related that the final slides provide the same
information in different ways - by highlighting expenditures and
commitments - and include a breakout of anticipated expenditures
for the $70 million budget request for 2015-2018.
2:22:20 PM
MR. O'LEARY reported another matter, that the ARRC has its own
reality show developed in conjunction with Destination America
entitled, "Railroad Alaska." Six television shows have been
produced and began airing in November. He emphasized that the
program became the highest rated show on the Destination
Channel. The program showcases the difficulty of operating a
railroad under the extreme conditions in Alaska, although a
considerable portion of the program is devoted to the more
colorful "off-grid" characters. He reported that the ARRC has
been holding internal discussions on whether to produce a second
season.
2:23:49 PM
SENATOR FAIRCLOUGH asked a series of financial questions. She
emphasized one ongoing concern is that the PTC system lacks a
human being override of the automated controls. Her major
concern stems from situations that could arise, such as
avalanche or seismic events. She has been assured that the
system allows the engineer/conductor to move into reverse or
move forward. While she understands the desire to prevent human
error, she concluded that sometimes it's preferable to have
human beings assess the situation, since they can see situations
differently than computers.
SENATOR FAIRCLOUGH described an incident she experienced when
driving her car equipped with an automatic braking system. The
system misread the conditions and began automatically braking.
She discovered she was not able to override the system and
accelerate to stop her skid, but luckily she was able to control
her vehicle. Her own experience with automated safety devices
has led her to the aforementioned concerns, particularly in
instances in which an engineer/conductor knows the solution is
either to accelerate or reverse the train, but must fight the
system to do so. She suggested the [Transportation Committee]
chairs may wish to write a letter to the federal agencies
addressing the necessity for human override capabilities in PTC
systems.
2:26:46 PM
MS. REILLY clarified that the PTC's computer system is limited.
It can warn the engineer/conductor and then stop the train for
non-response. She reiterated that PTC does not drive the train,
but it will keep the train out of some situations, such as going
too fast or going past an "authority" and thereby encounter a
work crew or another train. She offered to provide additional
information to provide assurances that the dispatcher will not
issue an "authority" that ends in a slide zone, as well as
offering to identify other PTC system protections. She pointed
out the limitations trains have that are different from cars or
trucks, such that trains cannot pick up speed or stop quickly
due to the overall weight and length of trains. She concluded
that the automated technology is quite different for trains and
cars.
2:28:26 PM
REPRESENTATIVE KREISS-TOMKINS said he has followed PTC at the
federal level; however, after viewing today's presentation, he
is amazed one accident could create $8 billion in regulatory
costs as well as the substantially increase operating liability
for railroads across America.
MS. REILLY cautioned that her presentation only lists the final
accident prior to the PTC mandate; however, she has a list of
accidents and the reasons that led to the PTC being the number
one priority of the National Transportation Safety Board (NTSB).
She acknowledged the railroad industry is relatively safe
compared to any other mode of transportation. Still, she
recalled the 2005 Graniteville, South Carolina rail disaster
resulting in a chlorine spill, that killed 9 people, injured 250
people and required evacuation of approximately [5,400] people
for several weeks. In that situation, the crash resulted from a
train going through a switch aligned in the incorrect position.
She identified the overarching goal as being improved rail
safety.
REPRESENTATIVE JOHNSON wondered if the $100 million in film tax
credits could be appropriated to the railroad for safety.
^Status update on the Port MacKenzie Rail Extension
Status update on the Port MacKenzie Rail Extension
2:30:36 PM
CHAIR P. WILSON announced the next order of business would be a
status update on the Port MacKenzie Rail Extension.
2:31:26 PM
JOHN MOOSEY, Manager, Matanuska-Susitna Borough (MSB),
introduced himself and Joe Perkins, the project engineer. He
reported that the Port MacKenzie Rail Extension project is
three-fifths completed. The first slide of his presentation
shows a photograph taken in November 2012 that depicts the first
cargo ship leaving Port MacKenzie- loaded with 800 tons of scrap
metal, which subsequently traveled directly from Alaska to South
Korea. He reported that this route will save 10 transportation
days over the typical route from Alaska to Seattle, which
results in significant savings. He turned to the slide entitled
"Only port in Alaska with large (14 sq. mile) staging, storage
and industrial area," and informed members that Port MacKenzie
is the largest port in the state encompassing 14 square miles or
9,000 acres. The port is absent any conflicts with other uses
or residential areas, he said.
2:33:19 PM
MR. MOOSEY turned to the slide entitled, "Upland lease lots,"
noting that the port has the capability to unload pipe, along
with an area to coat it and reload it to ship north by rail for
use in the proposed gas pipeline. He then referred to the slide
entitled "Bulk Resources," and advised that the port has an
opportunity to work with timber companies for transporting
timber. The next slide shows the 100 industrial railcar loop -
the largest in the state - which allows for staging
infrastructure for quick delivery to support coal resource
development.
2:34:28 PM
MR. MOOSEY reiterated that exports can travel from Port
MacKenzie to Asia representing considerable time savings.
Referring to the slide entitled, "A project cargo Port," he
explained that the port would reduce transportation costs for
project cargo for Alaska's largest projects, such as the
proposed natural gas pipeline or the proposed Susitna-Watana
dam. He emphasized the importance of the port's strategic
location on the water with rail access. The slide entitled,
"Imports," highlights the route from Port MacKenzie through
Houston to Fairbanks, which is especially important to Interior
Alaska, he said.
MR. MOOSEY referred to the next slide entitled, "Fuel
shipments," and highlighted this as the Port MacKenzie's biggest
success. The Central Alaska Energy (CAE) has been working on a
6.9 million gallon fuel tank farm - a $15 million construction
project funded by AIDEA. He reported that to date, the bids
have been let and the project is scheduled to begin construction
in May 2014. Additionally, the project right-of-way has been
completed. He emphasized that the MSB has been working with CAE
on a tank farm for the past two years and as the Port MacKenzie
Rail Extension project progresses, that investors have expressed
strong interest since they recognize the rail project is
imminent.
2:36:32 PM
MR. MOOSEY, referring to the slide entitled, "project cargo,"
pointed out the MSB has been working on several areas, including
projects to transport timber to Alaska mills as well as to
transport timber to foreign countries. Additionally, the MSB is
working on staging for the potential the proposed gas pipeline
will have on the rail and port. Further, with infrastructure
for the proposed Susitna-Watana dam the MSB believes that Port
Makenzie represents the key to future development in Alaska.
MR. MOOSEY turned to the slide entitled, "Project Forwarding
Lessee," and indicated that WestPac Terminals LLC has been
reconfigured with new partners. The company has been providing
service deliveries on a monthly basis during the summer and has
contracted with a major oil company to bring in cargo and
provide logistics. The next slide entitled, "Mineral
Development," emphasizes that the port is set to be an asset for
Ambler mining.
MR. MOOSEY, referring to the next two slides [untitled]. He
offered his belief that resource development opportunities exist
along the rail line, and while not all the mines will come under
development. He said that Port MacKenzie will have a
significant impact on balancing the state revenue as projects
come on line. He listed groups that have sent in letters of
support for the project. The next slide entitled, "Companies &
Freight on Port Makenzie Rail," lists eight companies that have
expressed an interest in using the services once the Port
MacKenzie Rail Extension project is completed, including WestPac
Logistics, and Great Bear Petroleum.
2:39:07 PM
JOE PERKINS, Project Manager, Port MacKenzie Rail Extension,
Matanuska-Susitna Borough (MSB), provided a status report on
construction and appropriation expenditures for the past seven
years. He referred to a map that depicts the 30-plus miles of
the Port MacKenzie Rail Extension Project, beginning at Port
MacKenzie. The project is broken up into eight segments, with
the first six segments encompassing the embankment necessary for
the rail, and Segments 7 and 8 placing material under the
railroad ties, installing ties, laying rail, and finishing the
project. He offered to expand on Segment 6 in more detail later
in the presentation.
2:40:32 PM
MR. PERKINS turned to Segment 1, which contains the rail loop,
with the fuel storage on right hand side of the loop [located on
the lower right hand side of the map. He reported that the fuel
storage area has been constructed, which will be used this
summer. The Segment 1 embankment construction and the loop is
approximately 80 percent complete, consisting of one bridge, and
an underpass. Segment 2 has not been started and the MSB will
request additional funding for embankment construction.
2:41:39 PM
MR. PERKINS turned to Segment 3, which encompasses nearly 80
miles is approximately 80 percent complete and encompasses three
bridges. He reported that Segment 4 work has just begun
consisting of clearing and applying the first layer of fill. He
estimated Segment 4 as being 10 percent complete, but
substantial work will occur this summer. He offered to discuss
Segment 5 and the funding request later. He described Segment
6, which will tie in to the main line of the Alaska railroad
creates a "Y" split to allow travel both directions.
Additionally, a new siding will be constructed to allow the
railroad the ability to park a train. The Alaska railroad will
lay Segment 6 track this winter, which is about 15 percent
completed. He highlighted that this is being done to allow
track and ties to be available for the contractor for Segments 7
and 8. He recapped by saying that provides an overview and
construction is well underway.
2:43:54 PM
MR. PERKINS highlighted that the duplicate aerial photo of the
project shows the proximity to the fuel storage area.
Significant work has happened such that approximately 500
million yards have been moved to date. Referring to the map he
pointed out various details, including the "Y", the main Alaska
railroad line, and the adjacent siding. He emphasized the new
bridge that will cross the Little Susitna River, which is
approximately 95 percent completed allowing the Alaska railroad
will repurpose the old bridge for the siding.
2:46:05 PM
MR. PERKINS, referring to the slide entitled "JOBS," said that
the project created nearly 200 jobs at peak of last season, with
the vast majority consisted of operating engineers. Referring
to the appropriations, he indicated that $171 million has been
appropriated by the state in addition to a general obligation
bond [for $30 million].
MR. PERKINS detailed the six separate appropriations listed on
the slide entitled "Project funding over time." In 2013, a
general obligation bond was issued for $30 million; in 2014, the
state appropriated $25 million; and in FY 2015, the MSB
requested $60 million to complete Segment 2, Segment 5, and to
purchase track - by taking advantage of current lower market
prices for rail. An additional appropriation request in FY 2016
would result in completion by 2018. He emphasized that the
project completion is dependent on funding.
MR. PERKINS showed a series of aerial photographs of the full
length of the proposed Port MacKenzie Rail Extension that were
color coded to depict the segments and portions currently
funded, funded by the GO bond, and ones still requiring
appropriations totaling $101.5 million necessary to complete the
project. He related that some members attended a ground-
breaking ceremony on June 4, 2013. Finally, he reported that
commitments have been made for the funds appropriated thus far
and request $60 million this year.
2:48:51 PM
MR. MOOSEY added that noted the project has faced four separate
challenges in the 9th Circuit Court of Appeals. Thus far, the
Port MacKenzie Rail Extension project has prevailed each time.
He related the court agreed with the environmental protections,
consisting of 8 bridges, over 100 culverts and numerous wildlife
and recreational passages. He reported that although one
challenge remains, the focus will be likely center on additional
protection of wildlife or setting aside additional property,
which the MSB is prepared to do. He lauded the efforts taken
from the beginning on the project to provide protections for
resources and pursue resource and economic development.
2:50:46 PM
SENATOR FAIRCLOUGH, referring to Mr. Perkins initial slide,
asked about the ownership of the extension. She further asked
whether PTC train controls have been appropriately placed or if
it will result in new expenses.
MR. PERKINS responded that he also had inquired as to whether
the PTC's will be implemented and he understood the ARRC to
respond that project would not be subject to PTC since there are
not any passengers being transported.
SENATOR FAIRCLOUGH related her understanding that the federal
agency views the ARRC as a system, although she was unsure
whether any pieces could be excluded. She pointed out that the
rail would also affect any passengers or pedestrians on the
tracks.
2:52:18 PM
MS. REILLY explained that the project is considered part of the
"dark" portion, except for the portion at the "Y" so one radio
will initialize the PTC at the loop. She clarified the PTC will
be run on it, but the costs will be low since it will not
require any switches.
MR. PERKINS understood the PTC portion is not in this project,
but falls under the PTC.
SENATOR FAIRCLOUGH wondered if the PTC costs will be on top of
the $101 million request, the $70 million request, and the $60
million for the two combined projects.
2:53:47 PM
MR. MOOSEY, in answer to the first portion of Senator
Fairclough's question, reported that prior to full completion
the Port MacKenzie Rail Extension project will be turned over to
the control of the Alaska Railroad Corporation.
2:53:58 PM
MR. PERKINS advised the Matanuska-Susitna Borough (MSB) is
acquiring all of the right-of-way for the project. The portion
of the project needed for railroad's operational use will be
transferred to the Alaska Railroad Corporation via a Memorandum
of Understanding (MOU). Any excess property not needed by the
railroad needs to operate will remain property of the Matanuska-
Susitna Borough (MSB).
2:54:52 PM
REPRESENTATIVE FEIGE said he looks forward to project. He said
he would characterize many of the potential customers on the
aforementioned list as being "dreams" at this stage - not to say
that the projects couldn't happen. He offered his belief that
this construction project is based on a matter of faith.
However, the organization needs to be careful when touting its
success in transporting scrap steel; since, what the project
will need to become cost effective will be "day after day" and
"year after year" operations with a continuous stream of revenue
to justify the total project expense. He asked for the
additional costs as a result of the court challenges: the total
cost and subsequent defense costs for the Environmental Impact
Statement (EIS).
MR. PERKINS was uncertain of the total cost of any court
challenges. He reported that the state's district court case is
anticipated to go to trial in August or September. He estimated
the total would fall in the ballpark of $10-15 million for total
legal fees, given the stop work order by 9th Circuit Court of
Appeals, although the project had to pay its contractors. He
reiterated an estimated $10-15 million in costs will be
associated with the court cases.
2:57:21 PM
REPRESENTATIVE FEIGE, with respect to the specifications at
port, noted that "bigger is better" when moving cargo. He asked
for the largest size container vessel, in terms of length and
draft that the port can accommodate.
MR. MOOSEY was unsure, but he responded that about three years
ago a vessel transported coal. The low mean tide is 45 feet,
and the port is a self-scouring port, except for a rocky area
will need to be scraped. Currently the port has a $50,000 study
to explore the aforementioned scraping. In closing, he said
that Port MacKenzie is in a good location and can transport
goods economically. Certainly, he agreed that bigger ships make
sense due to the additional volume.
2:59:19 PM
REPRESENTATIVE GATTIS said she was lucky enough to take a tour
of the Panamax ship. She recalled it is the maximum size that
can travel via the Panama Canal. She spoke favorably about the
staff and the Port MacKenzie Rail Extension project.
3:01:05 PM
ADJOURNMENT
There being no further business before the committees, the joint
meeting of the House and Senate Transportation Standing
Committees was adjourned at 3:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Pt. MacKenzie Rail Trans Comm..pdf |
HTRA 1/28/2014 1:00:00 PM |
|
| 2014 House Senate Trans Comm Railroad- Final.pdf |
HTRA 1/28/2014 1:00:00 PM |
|
| ARRC Mega Project Report 1-20-14.pdf |
HTRA 1/28/2014 1:00:00 PM |
|
| ARRC 1-15-2014 NRE Quarterly Report - Final.pdf |
HTRA 1/28/2014 1:00:00 PM |
|
| ARRC PTC Quarterly Report - Jan 2014 - Final.pdf |
HTRA 1/28/2014 1:00:00 PM |