Legislature(2023 - 2024)BUTROVICH 205
04/04/2024 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HJR19 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 19 | TELECONFERENCED | |
HJR 19-PORT MACKENZIE & NORTHERN RAIL EXTENSIONS
1:33:40 PM
CHAIR KAUFMAN announced the consideration of HOUSE JOINT
RESOLUTION NO. 19 am "Supporting the completion of the Port
MacKenzie Rail Extension and the Northern Rail Extension;
supporting the increase in defensive capabilities at Fort
Greely, Alaska; encouraging a renewed commitment by the Alaska
Railroad to a community-minded approach to future rail
expansion; and encouraging the development of critical Arctic
infrastructure."
This is the first hearing of HJR 19.
1:34:11 PM
REPRESENTATIVE MCCABE, District 30, Alaska State Legislature,
Juneau, Alaska, introduced HJR 19 on behalf of the House
Transportation Standing Committee, reading from the following
statement:
[Original punctuation provided.]
• This Resolution emphasizes the completion of two
crucial rail extensions, the Port MacKenzie Rail
Extension and the Northern Rail Extension,
alongside efforts to bolster Alaska's
infrastructure and defense capabilities.
• Given Alaska's strategic position bordering the
Arctic Ocean and recent defense expansions at
Fort Greely, these projects are deemed
significant.
• Phase I of the Northern Rail Extension, including
crossing the Tanana River, marks a notable
milestone, positioning the rail line closer to
Delta Junction and Fort Greely.
• The Resolution stresses the importance of
seamless rail connectivity, especially for
sustaining military operations amidst expansions
in defense infrastructure.
• The commendable progress by the Mat Su Borough
and the Alaska Railroad on the Port MacKenzie
Rail Extension promises to reduce energy and
transportation costs, improve air quality, and
facilitate efficient movement of resources and
goods to and from Interior Alaska to tidewater.
• Extending the Alaska Railroad from Port MacKenzie
to Houston, Delta Junction, and Fort Greely
aligns with long-term objectives of promoting
economic integration and enhancing transportation
networks.
• These extensions offer significant economic and
resource development benefits, including road
infrastructure relief, particularly for mining
operations in Delta Junction and Tetlin, as well
as the agricultural industry in the Delta
Junction area.
• In conclusion, the resolution reaffirms the
commitment to fostering economic development,
enhancing defense readiness, and promoting
community engagement in critical infrastructure
projects vital to Alaska's long-term prosperity
and security.
1:37:17 PM
SENATOR KIEHL asked where the northern rail extension ends.
1:37:26 PM
JULIE MORRIS, Staff, Representative Kevin McCabe, Alaska State
Legislature, Juneau, Alaska, replied it is in four phases then
deferred to ARRC.
1:37:49 PM
BILL O LEARY, President and CEO, Alaska Railroad Corporation,
Anchorage, Alaska, said the northern rail extension, as
currently envisioned, would terminate at Delta Junction.
1:38:22 PM
CHAIR KAUFMAN invited Mr. O'Leary to continue testifying.
1:38:26 PM
MR. O'LEARY said Alaska Railroad Corporation (ARRC) fully
supports HJR 19, related to the Port MacKenzie Railway Extension
(PMRE) and the Northern Rail Extension. He said both are well-
developed projects that would fit well in a state that, he
opined, is bereft of basic infrastructure such as transportation
infrastructure. He referred to documents provided to the
committee, including a letter of support for HJR 19 by ARRC
management. He said there was also a recent Alaska Railroad
Corporation (ARRC) board of directors meeting during which a
resolution supporting the Port MacKenzie rail extension was
approved and is a companion to a board resolution passed last
year supporting the Northern Rail Extension. He said ARRC has
taken a leadership role in these two projects, especially over
the past 6 months. ARRC has discussed opportunities for paths
forward with numerous and diverse stakeholders, including
legislators, the governor's office, Alaska's congressional
delegation, the Mat-Su borough, the Alaska Industrial
Development and Export Authority, the military, U.S Department
of Transportation and several private industry interests.
MR. O'LEARY said ARRC is currently pursuing funding options for
the proposed rail extension projects, including a
congressionally directed spending request to Senator Murkowski's
and Representative Peltola's offices for the Northern Rail
Extension as well as grant applications through the U.S.
Department of Transportation's Mega Grant Program (the National
Infrastructure Project Assistance program) in conjunction with
the Mat-Su Borough.
1:41:06 PM
MR. O'LEARY said ARRC cannot do this alone and considers these
projects statewide development projects. He said he believed
applying for the [federal] grants would be the right thing to do
and that it will be challenging between developing a positive
benefit-cost analysis and determining the [source(s) of] the
match required. He said the required match [funds] far exceed
what ARRC can provide, and they are actively working towards
that presently. He reiterated that ARRC is in support of HJR 19
and excited to work on these projects with the various
stakeholders mentioned.
1:42:02 PM
SENATOR MYERS asked specifically what business interests exist
for the proposed rail extension projects beyond the military. He
asked if the military alone would provide enough business to pay
for the maintenance and operations [of the railroad extensions].
1:42:52 PM
MR. O'LEARY responded that Alaska Railroad Corporation (ARRC)
has been engaged with that question since the infancy of the
project in the early 2000s. He said the initial thinking behind
the rail extension project was primarily to support the
military. He noted that they are still exploring military
support and that the significant change in [military] personnel
has complicated the ability to gauge the interest of the
military for this project either in supporting the delta area or
providing access to the training grounds. He opined that a rail
extension of this magnitude would find multiple uses. He
suggested that mine developers would view it positively as well
as other development opportunities in the Interior. He said
there were no specific contracts in place or being contemplated
that would provide sufficient funds for operation and
maintenance costs.
1:44:55 PM
SENATOR MYERS noted that consideration of the ARRC Northern Rail
Extensions led to consideration of connections with Canada, and
hence, the rest of the U.S. He asked specifically about a
2019/2020 joint [U.S. and Canada] project which fell apart and
whether Mr. O'Leary could offer an update or explanation of that
effort and what caused it to fall apart.
1:45:36 PM
MR. O'LEARY said ARRC worked cooperatively with the Alaska-to-
Alberta (A2A) project to connect the Alaska rail system to
Canada beginning around 2016. The group was primarily focused on
moving tar sands or bitumen from Alberta. He recalled that there
were some issues with funding and that there were investigations
by the Canadian securities regulators into A2A and its funding
group. He said he was not aware of any work or initiatives
issuing from that group and that he thinks the group may be in
bankruptcy.
1:47:37 PM
SENATOR MYERS referred to Fort Greely as a potential customer of
the northern rail extension. He noted that Fort Greely has been
significantly supplied through the Port of Valdez. He wondered
whether extending the rail beyond Fort Greely to Valdez had been
contemplated.
1:48:09 PM
MR. O'LEARY said the A2A group had done some work on that,
though he couldn't say how developed those plans were. He said
ARRC has been looking at what rail extensions could make sense
for the state moving forward based on known development or that
could enhance development. He said most of the work done to
consider rail extension to Valdez would have been done by A2A.
1:48:58 PM
SENATOR KIEHL noting budget decisions around the state, sought
to ensure support for ARRC's greatest needs. He asked whether
ARRC had a maintenance backlog.
1:49:29 PM
MR. O'LEARY answered yes; that [railroad operation] is an
amazingly capital-intensive industry.
1:49:38 PM
Senator Wilson joined the meeting.
1:49:40 PM
MR. O'LEARY said when the state purchased the railroad from the
federal government, it was in serious disrepair. He said ARRC
has put great effort and resources toward the plant, the
infrastructure, the rolling stock and everything with it to
bring it up to modern safety standards and operational
efficiency. He said around December 1st ARRC provided to the
legislature the five-year capital investment plan. The plan
showed the funded approach of almost $500 million dollars for
capital maintenance and capital projects over the next five
years. He said even that would not be enough to get the railroad
where it needed to be.
1:50:56 PM
SENATOR KIEHL asked where the Port MacKenzie and Northern rail
extension projects fell in that plan.
1:51:10 PM
MR. O'LEARY answered that these projects were not in that 5-year
plan. He characterized the Port MacKenzie and Northern Rail
Extension projects as statewide economic development projects.
He said the five-year plan that was produced and approved by the
ARRC board applied to the existing infrastructure.
1:51:48 PM
SENATOR MYERS asked whether the rail extension at Port MacKenzie
would result in a transfer of business from the Port of Alaska
to Port MacKenzie or more overall growth.
1:52:21 PM
MR. O'LEARY pointed out that Port MacKenzie and the Port of
Alaska are very different ports, with different specialties. He
characterized Port MacKenzie as more of a natural resource
export port. He said the Port of Alaska handles more fuels and
container traffic. He deferred to Mr. Brown for more in depth
discussion about the potential change to overall traffic or
redistribution of traffic at the ports.
1:53:53 PM
MIKE BROWN, Manager, Matanuska-Susitna Borough, Palmer, Alaska,
thanked the committee and said he was there to speak in support
of HJR 19. He said the Port MacKenzie Rail Extension is designed
to open a 32-mile rail corridor from Port MacKenzie to the rail
mainline in Houston, Alaska. The project would create a more
direct rail connection from Interior Alaska to true tidewater
where Port MacKenzie is located. He said the project has
received $184 million in state legislative grant and bond
funding to date and the last funding was received in fiscal year
2015. The cost of the remaining work to complete the project is
estimated to be between $250 to $275 million, depending on the
timing of the funding. He noted the project began in 2006 with
an environmental impact study completed in March 2011 and has
remained idle for several years. The placement of rail, ties,
ballast and signals has yet to be completed except for segment
6, which is near the connection to the main line in Houston. He
said this project has been designed, permitted and is about 50
percent complete and he emphasized that there has yet to be
realized any tangible public benefit for the $184 million state
investment. He reiterated Mat-Su Borough's support for HJR 19
and for completing the project.
MR. BROWN confirmed the partnership between the Mat-Su Borough
and Alaska Railroad Corporation (ARRC) in pursuit of the Federal
grant to complete the rail project. He said that if the grant is
awarded, around $55 million in non-federal matching funds would
be required. He noted that Mat-Su and ARRC would reach to the
state legislature for funding support to finish the projects. He
emphasized that passage of HJR 19 would be helpful if it could
be included in the joint grant application, due May 6. He said
the Mat-Su Borough and ARRC would also be reaching out to
Alaska's congressional delegation for support. He said they had
already received letters of support from Senator Murkowski's
office. He stated that there had not been significant track
mileage added to the railroad since the state inherited it and
that there is an opportunity to do something historic. He noted
the discussion of transferring business versus developing new
business opportunities and stated that, in light of what has
already been accomplished toward building the Port MacKenzie
Rail Extension (PMRE), it could be completed relatively quickly
if the additional funding were made available. He expressed
strong interest in moving the rail extension project forward and
moving past the state funding pause that occurred in 2015.
1:58:45 PM
CHAIR KAUFMAN opened public testimony on HJR 19; finding none,
he closed public testimony.
1:59:19 PM
SENATOR MYERS referred to HJR 19, page 2, lines 24 and 28 and
asked, in light of:
1. the current shortage of Cook Inlet natural gas and
2. that Fairbanks is switching its natural gas source from
Cook Inlet to North Slope
Why HJR 19 would reference shipping natural gas up from Cook
Inlet when there is movement away from that source.
2:00:18 PM
MS. MORRIS answered that during the development of resolutions,
things change all the time. The problems with Cook Inlet natural
gas have become one of those things.
MS. MORRIS returned to Mr. Kiehl's question about the terminus
of the northern rail extension and said it would go to Delta
Junction.
MS. MORRIS explained that, at one point, Fairbanks Northstar
Borough, Interior Gas Utility (IGU) and the Titan natural gas
facility were going to build rail extensions to transport
natural gas to Fairbanks. Now, she said, they are trucking it
down from the North Slope. She reiterated that things do change
all the time. She opined that Port MacKenzie still offers
opportunities for importing and exporting all kinds of natural
resources. She emphasized that the ports and the rails are tied
together and that beyond military applications, there is also
agricultural, commerce and passenger transportation. She also
promoted eventually connecting to the Canadian rail system.
2:02:35 PM
SENATOR WILSON clarified that the natural gas that would be
shipped by rail to Fairbanks originates in the northern part of
the Mat-Su valley.
2:03:44 PM
CHAIR KAUFMAN held HJR 19 in committee.
#
2:04:11 PM
There being no further business to come before the committee,
Chair Kaufman adjourned the Senate Transportation Standing
Committee meeting at 2:04 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HJR19 Sponsor Statement 2.28.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR19 Summary of Changes version A to B.A 3.8.24.pdf |
STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR 19 Fiscal Note 2.26.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR19 Version B Support Letter MSB Mayor Manager 2.20.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR019.VerB.SupportLetter.NovaMinerals.2.22.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR019.VerB.SupportLetter.Senator Murkowski.2.22.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |
| HJR019.VerB.SupportLetter.AKRR.2.22.24.pdf |
HTRA 2/27/2024 1:30:00 PM STRA 4/4/2024 1:30:00 PM |
HJR 19 |