Legislature(2001 - 2002)
01/31/2002 01:35 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION COMMITTEE
JANUARY 31, 2002
1:35 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Jerry Ward, Vice Chair
Senator Robin Taylor
Senator Kim Elton
Senator Gary Wilken
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 241(RES)
"An Act relating to a railroad utility corridor for extension of
the Alaska Railroad to Canada and to extension of the Alaska
Railroad to Whitehorse, Yukon, Canada."
MOVED CSHB 241(RES) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 209
"An Act relating to authorizing the Alaska Railroad Corporation
to lease land within certain terminal reserves for a period of up
to 55 years."
MOVED CSSSSB 209(TRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
No previous action.
WITNESS REGISTER
Representative Jeannette James, Sponsor
State Capitol, Room 214
Juneau, AK 99801-1182
Joseph Fields
Fairbanks Chamber of Commerce Transportation Committee
P.O. Box 71047
Fairbanks, AK 99707
POSITION STATEMENT: Supports CSHB 241
Don Lowell
Alaska Transportation Consultants
P.O. Box 71114
Fairbanks, AK 99707
POSITION STATEMENT: Supports CSHB 241
William Britt
Gas Pipeline Coordinator
Office of the Commissioner
Department of Natural Resources
POSITION STATEMENT: Opposes CSHB 241
Paul Metz
University of Alaska, Fairbanks
P.O. Box 73606
Fairbanks, AK 99707
POSITION STATEMENT: Supports CSHB 241
Wendy Lindskoog
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Supports SSSB 209
Jim Kubitz
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Supports SSSB 209
Bill Hupprich
Alaska Railroad Corporation
PO Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Supports SSSB 209
ACTION NARRATIVE
TAPE 02-3, SIDE A
CHAIRMAN JOHN COWDERY called the Senate Transportation Committee
meeting to order at 1:35 p.m. Present were Senator Wilken,
Senator Elton and Chairman Cowdery. The first order of business
was CSHB 241(RES).
HB 241-RAIL AND UTILITY CORRIDOR TO CANADA
CHAIRMAN COWDERY announced that the sponsor was present. He
welcomed Representative Jeannette James and invited her to make a
presentation. He announced that Senator Ward was present.
REPRESENTATIVE JAMES thanked the committee for hearing the bill
and explained the intent:
· To make it specifically clear that the state will
authorize the Alaska Railroad to survey and identify such
a corridor not to be less than 500 feet wide.
· To list the natural things they must consider on page 2.
· To evaluate whether or not they ought to go on from the
Canadian border to Whitehorse, Yukon.
She wanted it clear that she did not select a specific corridor
or connection points because several years ago Senator
Murkowski filed in the U.S. Congress a piece of legislation
that referred to the appointment of a bilateral commission
consisting of 12 U.S. citizens and 12 Canadian citizens to do a
feasibility study of such a connection over a three-year
period. A $6 million appropriation went with that piece of
legislation. Negotiations with the federal government of Canada
to participate in the bilateral commission are underway.
People are working in Yukon, British Columbia, Alberta,
Saskatchewan and Manitoba to get this through the federal
government in Canada and she thought they would be making some
decision on that soon.
REPRESENTATIVE JAMES said she suggested the line go to
Whitehorse was because it was about half way to a North
American rail connection. That would be holding a hand out to
the Yukon and British Columbia because this corridor would
affect Alaska more positively than Canada due to Alaska being
at the end of the line. She felt Alaska ought to be willing to
go half way to Whitehorse.
She explained two possible routes:
· One route would follow the 1942 survey done by the Corps
of Engineers when they were preparing to build a railroad
connection rather than a highway during the war. That
route went down the Tintina Trench, which is a natural
place for a railroad to go and also goes past a number of
mineral interests on both sides of the border.
· The second route would be down the highway. That route
might not be quite as easy in some places. If a railroad
was to be built to implement or assist in getting a gas
pipeline down the highway and all or part of that railroad
connection was in place it would certainly improve the
opportunities and the cost of implementation of building a
gas pipeline.
REPRESENTATIVE JAMES explained HB 241 authorizes no money for the
process. When the Alaska Railroad finds the money, time or need
to go forward this would be ready and they would be able to move
in that direction. They would assume some funds from the federal
level. The Department of Defense might fund the railway from
Eielson Air Force Base to Fort Greeley for the missile defense
system. All of this would be looking into the future without any
real knowledge of what exactly would be happening.
CHAIRMAN COWDERY noted the full committee was present.
SENATOR ELTON asked if the federal review had not begun because
there was no Canadian participation at this time.
REPRESENTATIVE JAMES answered that is correct. The United States
was prepared to appoint 12 members to the bilateral commission
but they still would need 12 members from Canada. In Canada
people have been identified who meet the qualifications of the
bilateral commission design and are willing and able to go
forward. They need the federal government in Canada to agree to
participate and that is the decision being discussed in Ottawa.
Larry Bagnell, a strong supporter from the Yukon, is carrying
that message to Ottawa.
SENATOR ELTON said this bill would get them out ahead and they
did not necessarily need to do that right then. He looked through
the bill to see if there was anything that prevented the railroad
from having the ability to place a lien on properties that could
otherwise be disposed of for other purposes. He wanted to know if
they were giving them an authority they did not need now that
could interfere with transfer of state land in the future.
REPRESENTATIVE JAMES answered there was a comment in the bill
that the State of Alaska should consider that issue. It would be
difficult to be specific because the 500 foot wide right-of-way
had not been delineated at all. They did have, from the late
70's and early 80's, centerline identification on a map taken
from the air that determined where a right-of-way might be. She
said:
Of course in establishing a railroad corridor it's not
just exactly where do you want to go but where can you
go because there is geological and other topographical
issues that would determine where is the right place to
go. So actually aside from authorizing the railroad to
go forward with this issue I believe everything will be
maintaining as it is currently and if there were, as an
example, some other occupations that would be taking
place on some of these properties I would suspect it
would be subject to, if we go with the railroad, that
they would have to move out of the way.
SENATOR ELTON said the bill would be placing on the books future
authority for the railroad and part of that would be the power of
eminent domain. It would leave open a potential question for
other people that might want to do other business activities on
land in the future if there was the potential that they could
have to go away because there was a statute on the books that
gave the railroad the power of eminent domain. This would be
given for a project that hadn't been outlined specifically.
REPRESENTIVE JAMES said this actually would put people on notice
that the railroad already has the rights of eminent domain.
People could go in and make a big investment in something and the
railroad could come along with eminent domain and take them out.
Going forward with this issue would put people on notice.
She discussed the approximately 40 at-grade crossings through
Fairbanks and how separated grade crossings are much safer and a
better way to build railroads. Getting ahead might eliminate
some of those kinds of problems over the long run. This would
put people on notice of the eminent domain opportunity, which is
there without this legislation.
SENATOR ELTON said the railroad did have the power of eminent
domain but it seemed to him they would have more power with this
legislation because it specified they have first claim on a
potential route where, right now, there is no route. This would
be an extension of the power that they have.
CHAIRMAN COWDERY said he did not think there was a route specific
in this bill.
REPRESENTATIVE JAMES said the most specific route was the route
previously chosen for the railroad. That route on the map for
over 20 years goes down the highway to Tetlin, up over the hill
and down the Ladue River to Carmacks and on to Faro, Watson Lake
and Fort Nelson. Some years ago the Department of Transportation
and Public Facilities (DOTPF) decided to abandon that selected
route. Legislation had to be changed to make them put it back on
the map. She said there should be no surprise to anyone that
route was there. This legislation would widen the route and give
the railroad the authority to survey on the ground as opposed to
the centerline that was currently activated. NASA had flown the
area using high resolution to do the topography on the Department
of Natural Resources (DNR) map.
SENATOR ELTON said he was going to ask DOTPF the same questions
and they would have some time to prepare.
SENATOR WARD thanked Representative James for keeping the issue
alive and well all the years he had been in the legislature. He
intended to support the legislation. He thought the bilateral
coalition and this legislation showed that Alaska and its U. S.
Senator are very serious about the railroad going forward and
wanted to explore its feasibility. He asked if the bill showed
the effort of the State of Alaska to proceed with this and would
it encourage Canada to actually appoint the 12 members they have
identified.
REPRESENTATIVE JAMES thought it would. She felt the authorization
to go to the halfway point at Whitehorse was very important.
She explained that in the late 70's and early 80's Canada was
building the British Columbia rail towards the border with Alaska
and Alaska was planning to go to the border with Canada. They
built the rail bed all the way to Dease Lake and laid some of the
rails but Alaska didn't go forward. She didn't know if that was
the total issue but they have since pulled up the rails and
backed down to where the rail now ends at Chipmunk, out from Fort
Saint James. The rail bed to Dease Lake is still there. Alaska
and Canada were working together and then all of a sudden Alaska
was not. Now, more that 20 years later, Alaska is trying to do a
similar thing.
SENATOR WARD said it is time to show a real effort. He thanked
her for doing that.
SENATOR TAYLOR thanked her for all her work. He appreciated her
mentioning the rail bed to Dease Lake. He said east of Highway
37 a level mound parallels the road for over 100 miles.
He said British Columbia has decided the way to cut its budget is
to fire 11,700 employees out of a workforce of 38,000 and they
are in special session working on that. Senator Phillips
discussed with him how the Canadians are excited about the
potential of starting anew the process to get a railroad built
and extended. The benefits to their economy are huge so it is a
shared thing. He asked if she had discussed with the Alaska
Congressional Delegation possible funding of the project and, if
so, what they indicated.
REPRESENTATIVE JAMES said they had not discussed it. She had
been using, as a rule of thumb, something between 2 to 3 million
dollars a mile to build the railroad and that was probably
generous. Her opinion is if they got the final go ahead to build
the railroad track, it would be a partnership of public and
private money. Up until last summer there had been a kind of
nonchalant attitude from Canadian National, one of the larger
railroad companies in Canada, and now they were interested and
wanted to be at the table. She hoped there would be some kind of
methodology for having not just one train company running over
this track but would have some lease arrangement on the track
that would allow other rail companies to travel on it if they so
choose.
SENATOR TAYLOR asked if she had had discussions with the Alaskan
Congressional Delegation about federal funding that may be
available. He said when they rebuilt the Alaska Canadian Highway
the United States Government paid the full cost and the Canadians
hired the contractors and did the work. He didn't think this
project would have much of an opportunity to move forward if
there was not some sort of commitment from the Alaska
Congressional Delegation that a good portion of the cost would
come from federal funding. The Canadian economy was in trouble
because of the timber industry and the exchange rate.
REPRESENTATIVE JAMES explained when they had a conference in
Fairbanks in October they heard from Gil Carmichael, the CEO and
Chairman of the Inter-model Transportation Institute in Denver
Colorado, who had served the Federal Railroad Association under
the previous President Bush. He was a very knowledgeable person
who had been working with Congressman Don Young on Ride 21. Mr.
Carmichael had indicated there could possibly be money available
from there for this corridor. There could also possibly be money
from other transportation plans. They have the cooperation and
support of the Congressional Delegation in Washington.
SENATOR TAYLOR believed they had their strong support. He added
there also was a national defense element with the missile
defense program. He thought the defense program would go forward
under the current administration and having a railroad route
connected to the North American grid would be very important to
them considering what they would be shipping.
REPRESENTATIVE JAMES said they had been talking about the
technology opportunities of running fiber-optic cable down the
rail corridor giving more capacity in the state as well as all
along the line. Technology would be an important part of this
issue and there would probably be some funds coming from that
area as well.
SENATOR TAYLOR said it would be difficult to contemplate a major
gas line going south through Canada without looking at available
infrastructure in the area. The pipeline would involve moving
large amounts of pipe and heavy equipment therefore putting the
pipeline parallel to or in the same right-of-way as the railroad
would be efficient.
He commended Representative James for what she had done and he
supported the legislation.
CHAIRMAN COWDERY said based on the information he had on the
proposed pipeline and the pipe size there was not a truck in the
state that could legally haul one length. Also many of the
bridges could not hold the weight of the pipe while most of the
railroad facilities could handle the pipe.
JOSEPH FIELDS, Chair, Greater Fairbanks Chamber of Commerce
Transportation Committee, and President of Kantishna Holdings
Incorporated, explained it was a company designed to build
railways. That morning the Transportation Committee had passed a
resolution in support of HB 241. This was a good foundation bill
and a good way to orient the project to get the land delineated
for rail development and have the resources along it analyzed for
the development of that rail corridor. He urged the Committee to
support it and pass the bill.
DON LOWELL, Alaska Transportation Consultants, said they were a
non-profit corporation dedicated to expanding Alaska's
transportation system. This was a very fine bill and they
support it wholeheartedly.
Two members of Alaska Transportation Consultants were involved in
previous studies, one determining the route selection of the
railroad from Eielson Air Force Base to the Canadian border and
another was involved in doing the environmental assessment. He
felt those studies needed to be updated. He said the Department
of Transportation did a study in 1982 and 1983 but there had been
a lot of changes in land ownership along that route. The
Department of Interior's trustee for the Alaska Native
Corporation Land Selections had identified and transferred
ownership of many lands along the route. He said the
environmental concerns focused on sensitive species or
environments that could impact the routing or eventual
construction of the railroad needed to be reassessed. The route
needed to be reviewed and modified to comply with updated
railroad geometric standards.
Mr. Lowell noted the Department of Defense would award 150 to 250
million dollars toward a ballistic missile system at Fort
Greeley. Fort Greeley is 82 miles south of Eielson Air Force
Base and on the proposed corridor to the Canadian border. Should
the federal government decide to extend the rail to Fort Greeley,
at a cost estimated at 125 million dollars, the completion of
early studies would be vital to the rail extension.
WILLLIAM BRITT, Gas Pipeline Coordinator Department of Natural
Resources (DNR), said he would like to identify several concerns
with the bill on behalf of the Department. He made the following
six points:
· There is likely to be overlap between the railroad
corridor and the gas pipeline right-of-way. Any gas
pipeline right-of-way lands that are transferred to the
railroad from the state will reduce the state's control
over the authorization, construction, operation,
maintenance and termination of the gas pipeline. The
transfer would reduce state lease payments associated with
the right-of-way.
o It may affect the tariffs if the railroad charges more
for gas pipeline right-of-way than the state would.
This is not an abstract concern since in recent times
the railroad has charged as much as 10 times what the
state charges for fiber-optic right-of-way.
o This concern could be addressed by allowing the
Commissioner of DNR to retain portions of the corridor
where a greater state interest is involved such as the
gas pipeline or reject a proposed corridor route
especially where overlap exists. Alternatively the
bill could allow the commissioner to transfer only a
right-of-way across portions of the corridor where the
greater state interest is involved.
o The bill does not allow DNR to protect valid existing
rights on the land that would be conveyed. The bill
should make the conveyance subject to third party
interest.
· The bill does not protect the state's mineral interests in
the land. DNR might be forced to include the mineral
estate in the conveyance. This could be a violation of
the Statehood Act and could preclude future staking of
mining locations and future oil and gas leases. The bill
should make the transfer subject to AS 38.05.125 in that
regard.
· The bill does not protect public use and access within and
across the corridor. At a minimum the bill should make
the transfer subject to AS 38.05.127, which would retain
access along navigable waterways. They may wish to do
more.
· The bill does not make clear who bears the expense
associated with the conveyance. The DNR fiscal note
includes survey costs but these should be borne by the
railroad.
· There does not appear to be an upper limit on the amount
of land that could be required to be conveyed. The
corridor is described as at least 500 feet wide but no
upper limit is given.
Mr. Britt thanked them for the opportunity to provide the
testimony. He said he was with Nancy Welsh, Deputy Director of
Mining, Land and Water (DNR) and they would answer any questions
the committee might have.
CHARIMAN COWDERY said Mr. Britt had stated that the right-of-way
could be in conflict with the pipeline route. He wanted to know
if Mr. Britt knew where the pipeline route would be or where the
railroad route would be. He asked if his department had
established that.
MR. BRITT said he had a right-of-way application from Foothills
Pipeline pursuant to the Alaska Natural Gas Transportation Act.
His office was in the process of adjudicating that application so
they currently had an application for a pipeline route. There
was a commercial offering from Foothills Pipeline to the Gas
Producers pending. He said it was entirely possible based upon
the ultimate outcome of those negotiations that the route might
change and the volume might change. The outcome was far from
certain. They had maps that showed a route for a pipeline that
was in play. He had received maps from their legislative liaison
that he believed had come from Representative James office
showing a possible railroad corridor. He had no idea if that is
likely to be the corridor or not but it had been noted there are
only a limited number of places where the grade is such that a
railroad could be built.
CHAIRMAN COWDERY asked if he was saying that the Foothills route
would be the route they would be going with for the pipeline.
MR. BRITT said he was not saying that. He had an application
before him from Foothills for a route.
CHAIRMAN COWDERY asked if there was a possibility of other
applications from other entities.
MR. BRITT said there was.
SENATOR WARD asked if Mr. Britt was suggesting they don't do
anything with the railroad going to Canada until everybody has
applied for a gas line route.
MR. BRITT said he was not suggesting that. He was suggesting the
state might wish to leave the option open. Some portion of the
corridor may have a greater state interest than conveying the
land in total to the railroad, which would not preclude the
development of the railroad at all. It would preclude the
state's giving up ownership of a portion that might underlie a
gas pipeline.
SENATOR WARD asked if he had understood that it was the position
of the state that the natural gas line was a higher priority to
the state than the railroad.
MR. BRITT answered he had made no such statement.
SENATOR TAYLOR asked if Mr. Britt had communicated the points
that DNR opposed in the legislation to Representative James and
her office.
MR. BRITT said the testimony was not appreciably different than
testimony he had provided a year ago on the same bill.
SENATOR TAYLOR asked had he at any point communicated the points
to Representative James after she filed the bill or had he just
come in and testified when the hearing finally occurred.
MR. BRITT said he has had no contact with Representative James
regarding this bill.
SENATOR TAYLOR asked why that was. He asked if it was not a
fairly major thing for DNR when somebody submitted a bill to
extend a railroad several hundred miles. He thought Mr. Britt's
department which looks into mineral leasing and gravel pits and
whether or not timber is going to be harvested would have a very
strong interest in the extension of any railroad in Alaska and
would work with the people who are trying to carry out the
concept. He asked if he was misunderstanding what had gone on.
MR. BRITT asked Senator Taylor to please not misunderstand
concerns over a specific bill for non-support of extension of the
railroad.
SENATOR TAYLOR said he was not suggesting that. He was trying to
find out why these major stumbling blocks were now being thrown
in the way of this bill after it had already been through the
House and there had been a year of time involved. He thought the
department would have been working with Representative James to
assist her in making sure the bill had things in it that DNR
wanted for the development of the resources that are under their
jurisdiction.
MR. BRITT said most of the concerns they were expressing are
specific to that bill. They were expressed in substantially the
same form a year ago and they continued to exist.
SENATOR TAYLOR asked if he had amendments that he would suggest
to the bill to clear up each of these concerns.
MR. BRITT said he believed his testimony contained possible
remedies for each of the concerns that were expressed.
SENATOR TAYLOR said he didn't know it said in the bill who was
going to bear the expense. If DNR wanted to make sure the state
didn't bear any expense that would be easy to rectify.
SENATOR TAYLOR addressed the point of no upper limit on land
conveyance. He asked why it would be necessary to convey the
land and not just merely grant a state right-of-way like would be
done if a city wanted to extend a road through some state land.
He said in that case they would be given a state right-of-way,
not the land.
MR. BRITT said the bill calls for the conveyance of the land.
SENATOR WARD asked if in the lower 48 were they given every other
section and said that might work in here.
MR. BRITT said the answer would seem to fall in Section 1 of the
bill (C)(1). It says that the Department of Natural Resources
shall convey the land within the corridor. It does not indicate
that we would grant a right-of-way but convey the land without
cost.
SENATOR TAYLOR said he was concerned about that because some of
the lands that might be conveyed might very well be private
lands. He said that might very well be the only way anybody can
get land out of DNR. He had been working at it for over 10 years
and he hadn't found a way to get an inch of land out of them yet.
He thanked Mr. Britt for his comments and his patience.
SENATOR ELTON asked Chairman Cowdery what other committees this
bill would go to.
CHAIRMAN COWDERY answered Senate Resources.
SENATOR ELTON asked Mr. Britt if the bill were already on the
books, were statute, how would that effect his review of the
application by Foothills.
MR. BRITT said that would be difficult to figure out because
ultimately, if at some point along the line of his adjudication
of this application, the land was in fact conveyed he could not
grant a right-of-way across it. It would be up to the railroad
to grant a right-of-way. As long as it was state land, up until
the point of conveyance, it would be his obligation to consider
it as potentially part of the leasehold. If he granted the
right-of-way before the conveyance, this is their concern about
third party interest, it is not clear that they would be allowed
to convey the land subject to the right-of-way that they had
granted. They might be called upon to convey the land not
subject to that right-of-way which would mean that the lessee
would have to then subsequently obtain a separate right-of-way
from the railroad.
CHAIRMAN COWDERY said it was possible Foothills or the gas
pipeline or the railroad could be miles and miles apart.
PAUL METZ, Department of Geological Engineering, University of
Alaska Fairbanks (UAF), explained they have been in the process
of developing a proposal for an economic and systems analysis of
the synergistic effect of a rail link, gas pipeline, fiber-optic
cable, multi-model transportation corridor from Fairbanks through
the Yukon Territory to connect with the contiguous states. This
project is predicated on the timely construction of both the
railroad and the gas pipeline and to demonstrate the economic
benefits of having a rail system in place prior to construction
of the gas line but at the same time not constrain the timely
construction of the gas line. After a gas line is built there is
going to be a large amount of development that will be greatly
enhanced by a rail corridor. So even if the gas line is
constructed prior to the railroad there would be some tremendous
advantage from the railroad for the transport of products,
machinery, equipment and steel that will need to be put in place.
He thought that HB 241 provided a mechanism for getting this
whole process started. He said to remember that an analysis of
the corridor is going to be predicated on a final feasibility
study that would be done by the railroad or by the bilateral-
commission.
TAPE 02-3 SIDE B
PROFESSOR METZ discussed the potential conflicts between the
rail corridor that is advocated in HB 241 and the gas line. The
gas line is going to be a high-pressure gas line, 2500 pounds per
square inch (psi) and at a minimum the separation between the gas
line and the rail is going to be on the order of 1/2 mile. His
opinion was the establishment of a 500-foot corridor was not
going to impinge upon the right-of-way of the gas line. The gas
line could be built to handle grades that are substantially from
horizontal to vertical where a rail link would be predicated on a
grade of 2% or less. The rail link had a much greater constraint
in terms of the topography and the underlying geology than the
gas line. He said it was technically reasonable to expect that
both systems can accommodate one another.
PROFFESOR METZ explained when they first made this proposal they
took the drafts to the North Slope Producers and also to
Foothills. They had unequivocal support from both the North Slope
Producers as well as Foothills in an examination of the
synergisms that may be provided by this rail link. He thought
there was strong support rather than potential areas of conflict
between gas transmission and rail transmission.
JIM KUBITZ, Alaska Railroad Corporation, said he was on line and
available for questions. He said they have always been
supportive of the efforts of Representative James to move this
forward, it was visionary and something that the railroad would
like to see happen.
SENATOR WARD asked Paul Metz if he had said the railroad needed
to be 1 mile away from the natural gas line or 1/2 mile.
MR. METZ answered the exact spacing was not determined because
this will be a uniquely high-pressure gas line. It probably will
need something in the neighborhood of a 1/2-mile separation.
SENATOR WARD asked if he thought they should make the right-of-
way a little wider than 500 feet.
MR. METZ said he did not think that was necessary.
SENATOR WARD said if the railroad was going to be hauling some of
the gas pipe it might be able to actually determine a route if we
made it 1000 feet.
PROFFESOR METZ said getting the pipe into a location that is
within even a dozen miles of where it is going to be laid would
be a major step forward in terms of decreasing the logistic cost
of the gas line construction.
SENATOR WARD said he was hoping the gas line would maybe help pay
for the railroad.
PROFFESOR METZ said that it would even if it was not laid in the
same corridor. The savings on the freight and the after gas line
construction freight would be immense. He said we are going to
see the development of a gas economy in the United States in the
next 20 years and that is going to be predicated on North Slope
gas. They are going to be drilling a large number of wells and
are going to be moving a large amount of machinery northward to
those drilling fields. The gas development will be a long-term
source of revenue for the railroad.
SENATOR WARD said there were sure a lot of optimistic people up
in Fairbanks. He thanked Professor Metz.
CHAIRMAN COWDERY asked if there was anyone else to testify.
There was no one. He noted he had a zero fiscal note from last
year signed by the Commissioner of the Department of Commerce and
Economic Development. Now he had a fiscal note from DNR for
something different. It was his intention to carry forward the
zero fiscal note until such time it was proven there was going to
be a cost.
SENATOR TAYLOR said before they moved the bill he had concerns
about the conveyance to the extent that it might violate the
Public Trust Doctrine in the conveyance of land. He said every
time he had tried to do it they had stopped him saying you cannot
sell any land or convey any land in the state for less than
market value. That had always been a stumbling block. He
thought it needed to be reflected on the record:
That by the building of a railroad and they only get
the land if they build a railroad that's my assumption
that that is a sufficient value to the state that it
more than compensates for the value of the land that is
being conveyed.
CHAIRMAN COWDERY said the conveyance was from one state agency to
another one.
SENATOR TAYLOR explained that they would be conveying to a wholly
owned state entity, which was a state agency that today doesn't
comply with the Executive Budget Act it acts very autonomously;
it's run by a group of political appointees, none of who are
elected. He said if in fact they were going to enter into a
public private partnership in the ownership of that asset he
wanted it reflected on the record that they as a committee or at
least he had indicated:
That the increased value brought to the state through
the building of this rail transport system, it more
than compensates the state for the value of the land
that the state is conveying to whatever entity it is.
Whether it's a public / private, whether it's totally a
state agency or it's the Alaska Railroad as we know it
today. I feel that is good value for the land that is
being conveyed.
REPRESENTATIVE JAMES said she would like to respond with her
belief and how she saw the issue. She agreed that there was a
lot of consternation about Alaska Railroad and its organization.
She had always been the biggest supporter of the railroad and
their biggest critic. The issue is that the Alaska Railroad does
belong to the state. She said she was not opposed to selling
Alaska Railroad but she was not willing to give it away. She
wanted to put on the record:
I believe it is like taking it from one hand to the
other. If there ever is such a time when we sell the
Alaska Railroad, which I am quite sure sometime, if we
get this longer connection, will happen then we'll get
more money from that for our state coffers than we
would have if we don't go forward and try to encourage
the railroad to do the things it needs to do.
SENATOR TAYLOR said he was concerned only about the Public Trust
Doctrine and the requirements within the Constitution for fair
value, which hadn't been addressed. He agreed with
Representative James and appreciated her explanation. He said
part of his frustration, which needed to be debated or discussed,
was the autonomous and independent nature with which the railroad
had operated. They had legislation pending right now to extend
their ability to lease up to 55 years and he had no objection to
that.
He went into detail regarding rights-of-way for the fiber-optic
cables from Anchorage to Fairbanks. Some followed the pipeline
and others went up the railroad. He said the railroad as a state
agency charged 10 times or more what DNR and other state agencies
charged for the same number of feet of right-of-way. He said the
Parks Division charged an even higher rate. They had serious
discussions in the Resources Committee about what was the
appropriate measure for determining the value of a piece of
right-of-way. They ended up with a tremendous conflict between
the lands people within DNR and their Deputy Commissioner who was
directly opposed to the way the Commissioner of DNR was trying to
cut a deal with the Governor and others in a back room. He said
they eventually cut a deal.
He explained the result was a totally irrational marketing of
state lands by different agencies. They were paying pennies per
foot or yard on DNR land and State Parks charged over a dollar a
foot. The railroad charged about 4 or 5 times more. This meant
it was almost impossible to know what the cost would be to build
a fiber-optic cable. Conveying this to the railroad might be a
good idea because only one entity of the state would have to be
dealt with. He added it might be a very bad idea if they
continue to operate, much as they have in the past, to maximize
their profits and they drive the cost of a right-of-way for a
fiber-optic cable up so high they cannot connect up to the lower
48. He believed there were some public policy concerns and
questions that needed to be discussed before that actual
conveyance occurs.
REPRESENTATIVE JAMES agreed with him on that issue. They should
have some kind of a program that makes it fair overall. The
Alaska Railroad had been told when they were formed to go out and
act like a private corporation and not to come back to the state
for money. She thought what they did in that legislation set
them up to make a profit. If that needed to be changed for any
reason they should look at that.
SENATOR TAYLOR said they ought to have a standard state policy so
people did not get over charged but this wasn't necessarily the
vehicle to address that.
He stated they had a department on record indicating some very
strong conveyance concerns including subsurface rights and access
rights. He said it was a "leap of faith" to say they will just
trust the railroad to take care of all these things because he
had seen things abused in the past. He wanted to make certain
that they did have the Public Trust Doctrine taken care of and
also to raise those issues. He thanked Representative James for
bringing the bill forward.
SENATOR WARD made a motion to move CSHB 241(RES) out of committee
with individual recommendations and the accompanying zero fiscal
note.
SENATOR ELTON objected. He made the point that it was not just
the cost to do this but also the lost opportunity cost. What
would they lose in their ability to subsidize business-enhancing
developments like fiber optics by turning it over to the
railroad.
He thought it unusual to not move a fiscal note when what they
had heard was they hoped the costs are not there. He said there
were some other significant public policy issues. One was that
they had not heard a good answer as to whether this will force
business applications for permits to either cross state lands or
get state lands to go into a two permit review process; one a DNR
process and the other an Alaska Railroad process.
They had heard concerns that were raised up to a year ago. He
did not know why the lack of communication might have occurred
but clearly the issues were still extant. He had no problem with
the vision but he did have a problem with how they were
implementing it at that point and what the net effect was going
to be on other people who might want to access minerals or access
rights-of-way.
He thought that this would be an easier decision for him if they
knew what the route of the railroad would be. If they knew where
the railroad corridor was going to be they could identify the
areas where impacts would occur. He thought that made it more
difficult to make a decision.
He wanted his objection on the record. He wanted to explain why
he was voting no, not because he disliked the vision but he
thought the questions were important questions. He also wanted
to point out that he might have a potential conflict of interest
if Senator Ward's bill on a Port Authority that combines the
Marine Highway with the Railroad were to pass he might be more in
favor of this because there is a real opportunity for the
railroad to make a lot of money on this which might kick back to
the Marine Highway. Despite that potential benefit to his region
of the state he was still going to vote no. He hoped he would
have an opportunity to vote yes as they work on the bill.
SENATOR TAYLOR said the first point he wanted to address was lost
opportunity. He said it was a tragic loss of opportunity for the
State of Alaska when the Knowles, Ulmer team entered office seven
years ago. Senator Murkowski had been very strong on the issue
but not the state. "They were making certain that no railroad
got built because if you can't build a road in this state to even
access this capital through this administration you sure can't
build a railroad anyplace with this administration."
SENATOR TAYLOR said DNR came up with 5 to 7 major roadblocks and
waited until the bill was heard on the House side before those
were announced. They did not come up with one single amendment
to offer the Transportation Committee to correct those defects.
He questioned the lost opportunity to people who have mineral
claims, want to harvest timber, lay fiber-optic cable or build a
gas pipeline along the route. He agreed with Senator Elton that
there were some difficulties but felt DNR should have worked with
Representative James or worked with the Transportation Committee
to provide the way to fix the problem.
He said the major oil companies have refused to give them their
report on a designated route for a gas pipeline. That report
was due at the end of 2001 and they have announced they would not
submit that report until the end of 2002.
That to me is very frustrating even though the
questions themselves I think are very valid and these
are issues that need to be resolved. But if no one in
this administration is going to assist this
legislature, or within the agencies and departments
responsible for these things if they are not going to
step forward and assist us I am left with no
alternative today but to say go for it Jeannette and
we'll let the devil take the hindmost. We'll work out
those problems in the future I guess because obviously
people would rather kill the project than work those
projects out today.
SENATOR WARD spoke to the motion to move the bill out of
committee with individual recommendations. He agreed with
Senator Taylor's and Senator Elton's comments but suggested that
they do move it out with individual recommendations that day. He
believed that the Knowles and Ulmer Administration would be able
to come in with amendments that would satisfy them for
consideration for the next committee of referral, Resources.
SENATOR ELTON told Chairman Cowdery he appreciated the latitude
that he gave them on debate because he thought the issues were
very important. He wanted the record to reflect that he thought
they had taken some policy questions and had turned them into
personalities.
As tempting as that is and as difficult as it is
sometimes to work with any Executive Branch, I mean I
don't think that gets to the issue of, you know, what
actually happens. Now we can, we can blame a lot of
people and certainly I'm quick to criticize sometimes
and I'm sometimes too quick to criticize. In this
instance, I mean, I think that leaving on the record
the impression that the Executive Branch isn't
interested in economic development ignores a lot of
things that are going on and have been going on
including the work on the gas pipeline. So with that,
I just thought it was very, very important to let the
record reflect that not everybody, while we may agree
on the questions we don't always agree on fault.
CHAIRMAN COWDERY said they don't want to get in a box. He called
for a roll call vote.
Senator Ward, Senator Taylor, Senator Wilken, and Senator Cowdery
voted yes. Senator Elton voted no. The motion carried and CSHB
241 was moved out of committee.
SB 209-LEGISLATIVE APPROVAL OF RAILROAD LEASES
SENATOR LEMAN, sponsor of SSSB 209, said he represented District
G in the Senate, which includes the reserve area. The
legislation was precipitated by of desires to lease some railroad
property. The existing 35-year lease is insufficient to get long
term financing for larger projects. This bill extends the length
of time that the railroad can lease lands within 4 terminal
reserves at Anchorage, Fairbanks, Seward and Healy from the
current 35 years to 55 years.
He explained it would help cultivate economic development. There
are projects that are being proposed that will make commercial
and residential property more valuable. The scenario where the
railroad could step in and take away leased property after 35
years is unlikely but it is of sufficient risk that long-term
lenders are not comfortable with it.
Anchorage Neighborhood Housing is working on development of a 20-
unit senior housing complex on railroad property in Government
Hill. The legislature was involved in part of the funding of
that project and this is a continuation. Housing would be
developed using Housing Urban Development (HUD) Senior Housing
Funds but HUD requires a 50-year lease period.
This bill will promote economic development and job opportunities
with greater flexibility. He said it was supported by a number
of people and organizations and he was not aware of any
opposition. The Municipality of Anchorage supported it and he
believed there were support groups in Fairbanks and elsewhere.
He commended it to the committee and asked for their positive
action.
CHAIRMAN COWDERY asked if on page 1 line 7, the word "sell" would
restrict a buyer from coming in and buying the railroad at a
later time.
SENATOR LEMAN answered that the intent of the legislation was not
to affect any ability to sell or deal with transfer of the
railroad. It would likely enhance the value of the railroad's
sale price if it were to be sold. He said that was existing
language, which the bill did not change.
SENATOR TAYLOR asked why the legislation restricted the period
within which the railroad might lease its land to only those
terminal reserve areas found in Anchorage, Fairbanks, Seward or
Healy.
SENATOR LEMAN answered that was considered originally but they
concluded to remove some of the challenges along the way or limit
some of the possible objections to those areas where there has
been expressed interest in some major long-term finance projects.
He said someone from the railroad that had dealt with some of the
negotiations was available to speak as to why the restriction but
it was part of the compromise to get this through.
WENDY LINDSKOOG said it would be great if they could have the 55-
year lease potential on all of their reserve lands. There were
reserve lands that had not been targeted by large commercial
development but someday they might be and then the railroad would
be before the legislature asking again to extend to 55 years.
She explained that their right-of-way land is limited to an 18-
year lease due to the Federal Transfer Act.
SENATOR TAYLOR said it was a good investment policy to go from a
restriction of 35 years to a restriction of 55 years. He didn't
think anybody objected to that especially with financing modes
the way they are today. He asked her if she was aware of any
specific opposition or group that would oppose that.
MS. LINDSKOOG answered no adding that Representative Rokeberg
expressed the same opinion for including all reserve lands.
SENATOR TAYLOR moved they amend by deleting lines 13, 14 on page
1 and lines 1, 2, 3 and the word "paragraph" on line 4, page 2
and delete the numeral 3 and insert the numeral 5 on line 4, page
2. It would then read (line 5 page 1) Legislative approval
required. (line 12 page 1)(4) lease land for a period in excess
of 55 years unless the corporation reserves the right to
terminate the lease. He said it was existing law. Changing the
number 35 to 55 would grant the railroad the right to go for 55
years on all of its lands.
JIM KUBITS, Alaska Railroad Corporation, said Bill Hupprich,
their associate counselor, was listening and reviewing the
amendment. He thought Ms. Lindskoog characterized their feeling
that it would be desirable to include all the land. He thought
Senator Taylor's motion appeared to be very appropriate and
accurate.
SENATOR ELTON said he did not have a problem with what they were
trying to get to but it seemed to him they were not just changing
the term of the lease but were striking the words "terminal
reserve".
SENATOR TAYLOR said it was.
SENATOR WARD asked him to read it again.
SENATOR TAYLOR read, starting on line 12, "(4) lease land for a
period in excess of 55 years." This covered all their land both
the land inside a terminal reserve and the land that is outside a
terminal reserve.
SENATOR ELTON said they were not only extending the period of
time they were extending the land over which they can give a
lease over 55 years to all their land, corridor land also.
MS. LINDSKOOG said that within their corridor they are limited to
18 years.
SENATOR TAYLOR said that was what they called right-of-way lands.
They were limited to 18 years because of federal conveyance
language.
BILL HUPPRICH, Alaska Railroad Corporation, said the amendment
language was perfect.
SENATOR TAYLOR said the question from Senator Elton was a very
good one. Would that allow the railroad to lease right-of-way
lands for up to 55 years.
MR. HUPPRICH said their current policy was they do not lease any
of the right-of-way land. They periodically issue permit
agreements, which are license agreements. They are terminable at
will for particular types of uses within the right-of-way.
According to the Federal Transfer Act if they were not to use
their right-of-way for railroad purposes for a period in excess
of 18 years that land could revert back to the federal
government.
CHAIRMAN COWDERY called for any objection to the motion. There
being no objection, the amendment passed.
SENATOR LEMAN asked if the bill would need a title change.
SENATOR TAYLOR said he did not think so but he would have title
people check before it went to Resources. He moved the bill with
individual recommendations from committee as amended.
CHAIRMAN COWDERY asked for any objections. There being no
objection, the motion passed. The meeting was adjourned at 3:05
p.m.
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