Legislature(1995 - 1996)
04/03/1996 02:22 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 136 - MANDATE SALE OF ALASKA RAILROAD Number 1853 CHAIRMAN GARY DAVIS announced the next item on the agenda, HB 136, an act mandating the sale of the Alaska Railroad; and providing for an effective date. TOM ANDERSON, Legislative Aide for Representative Martin, referred to a work draft which changes the proposed dates within the legislation. He said HB 136 attempts to privatize the Alaska Railroad by asking the Governor to request proposals to purchase the Alaska Railroad and its assets, asks the Governor to evaluate the proposals over a certain amount of time, and then asks the Governor to contract for an appraisal and the amounts of the appraisals shall be presented to the legislature. He said HB 136 requests that the progress be updated, and upon completion of sale of the railroad, it asks the Governor to dissolve the Alaska Railroad Corporation. Number 1929 MR. ANDERSON referred to fiscal notes located in the committee packet. He said the affected departments have not give any indication of a cost and failed to provide a fiscal note. Number 1963 CHAIRMAN GARY DAVIS requested a copy of the committee substitute which changes the dates, included in CSHB 136, one year forward. Number 2097 FRANK DILLON, Executive Director, Alaska Trucking Association, was next to testify. He said he supported CSHB 136 and that the trucking industry would like to see the Alaska Railroad privatized. He said the trucking industry does not often, directly, compete with the railroad. He said the trucking industry is the third largest user, or customer, of the railroad services. He said there is a lot of freight in Alaska and that makes sense to transport by railroad. Number 2137 MR. DILLON said there are occasions when it is impossible or awkward for the trucking industry to use the railroad because it is a quasi-public entity. He cited an example where the Alaska railroad trucks are going around the municipality of Anchorage and pulling trailers, which belong to private vendors, with state exempt license plates. He said that although this is a small example and the railroad does not have a lot of tractors in their fleet, this appears to be an example where the Alaska Railroad works "both sides of the street." Number 2155 MR. DILLON said, if the component from real estate is taken out of the Alaska Railroad, his organization is not sure that there is much of value to sell. He said the transportation features that the Alaska Railroad provides is bulk hauling of fuel and coal hauling. He said there are questions about what will happen with the fuel haul and the efficacy of the coal haul. He said, other than that, the general freight, with the exception of a few heavy items, could be picked up by less than 200 more trucks. He encouraged information on whether or not the Alaska Railroad is sellable and questioned that if it is too expensive to sell there might not be any value in doing so. He said, in conclusion, he supported CSHB 136. Number 2201 BOB HATFIELD, Chief Executive Officer, Alaska Railroad Corporation, said he was available for questions, but had no prepared testimony to give. Number 2207 CHAIRMAN GARY DAVIS asked if the state had a legal obligation to offer the Alaska Railroad up for sale. Number 2221 MR. HATFIELD said he was not aware that there was a legal obligation to offer the Alaska Railroad up for sale. He said the statute contemplates the sale of the railroad, but there is no longer a requirement that the state or the railroad offer itself up for sale. Number 2249 CHAIRMAN GARY DAVIS clarified that CSHB 136 has the legislature asking the Governor to attempt to sell the Alaska Railroad in a time specific manner. He asked what the criteria was to determine whether the offer was being made by a viable company and whether the offer was of an adequate amount. Number 2282 MR. ANDERSON said Representative Martin's intention was to have the Governor direct this determination to either the Department of Administration or the Department of Commerce and Economic Development to establish the criteria. He said Representative Martin felt that it would be premature to establish the criteria at this point without departmental input. Number 2301 CHAIRMAN GARY DAVIS referred to page one, line ten, and read, "by January 1, 1999, the Governor shall enter into an agreement to sell the Alaska Railroad to the most responsive offer." Number 2308 MR. ANDERSON said this statement was with the assumption that a viable offer comes in and added that this language could be changed. CHAIRMAN GARY DAVIS said this would be an area that he would question and said there are two other committees of referral. Number 2322 REPRESENTATIVE JAMES said she supported a sale of the Alaska Railroad, but expressed concern as to how this sale is accomplished. She referred to testimony by Montana Rail Link heard in the Joint Senate and House Transportation Committee meeting in March of 1996. She said Montana Rail Link was a viable purchaser for the Alaska Railroad and was interested in buying the Alaska Railroad, but said they might not be interested with the limited amount of track. REPRESENTATIVE JAMES said she sympathized with the concerns of Mr. Dillon. She said to have a successful railroad operating in this state it must be private. She said, for the areas where the Alaska Railroad operates, it could provide a big tax base if it was privatized. She said her biggest concern is that whoever buys the railroad should really want to run the railroad and not just sell it off. She questioned whether having a mandate that the railroad be sold by a certain time was something that should be changed. Number 2392 REPRESENTATIVE JAMES said the employees of the Alaska Railroad might be prospective buyers and cited their merits. She said the Alaska Railroad has been doing quite well despite the restrictions they were given such as a broken rails and ties, fixed amount of money to use for operations with a limited ability to receive funding to improve the trains such as buying lighter cars to haul more coal. She said, despite all these issues, the Alaska Railroad has done quite well and yet she felt the state has been waiting for an opportune time to sell the railroad. Number 2449 REPRESENTATIVE JAMES said she believes that the Alaska Railroad can access the resources throughout the state. TAPE 96-15, SIDE B Number 0000 REPRESENTATIVE JAMES said with a railroad you don't have to worry about conflicts, providing emergency services, having services along the road for people or police protection. She said the railroad, in this state, has great potential. She said the buyer of the Alaska Railroad needs to be someone who is interested in making the railroad more than what it is today. She said Montana Rail Link is interested in connecting railroads around the nation and are interested in connecting Alaska's rail to Canada. She said Montana Rail Link indicated that if they were given any indication that they could buy the Alaska Railroad, they would come up with their own appraisal and determination as to whether or not this was a good investment. She indicated that she is not convinced that the state needs to spend the money to do an appraisal. Number 0060 REPRESENTATIVE JAMES said whatever is put into statute needs to be thought about very carefully and the Governor must be told that there is an obligation of what needs to be done. She said the reason why no one responded to Montana Rail Link was that the Governor is not interested in selling the railroad. She said it is the Governor's responsibility to put that railroad system into private ownership if at all possible and any inquiries ought to be seriously considered. Number 0102 REPRESENTATIVE JAMES said Montana Rail Link is a company that is allowing people in the areas that they serve to have cheaper transportation. She said they are a company operating all over the lower 48 states and in other countries. She concluded that she is not pleased with CSHB 136 and said she was not willing to move this bill out of committee until she had an opportunity to change things in this bill. Number 0126 CHAIRMAN GARY DAVIS said he agreed with most things that she said. He said he was surprised that Representative Martin, in his legislation, gives the Governor complete control to sell the Alaska Railroad without legislative oversight. He said if someone is interested in buying the railroad, then they will do the appraisal of the lands. He said if an offer is given, the company should know that their offer will be given the greatest amount of consideration and said CSHB 136 can be strengthened in this regard. He said this is an issue currently under debate because of Montana Rail Link and said he agreed with Representative James as to what the procedure was in existence if a company wants to make an offer to buy the railroad. Number 0192 MR. ANDERSON said Representative Martin is willing to work with anyone to change CSHB 136. He said CSHB 136 is a chance to push this issue forward. He said, upon talking with the Federal Railroad Administration, the present trend is for Class A or Class 1 Railroads, which would have a revenue of over $100 million, to purchase smaller railroads. He said there are 12 of these types of Class A railroads, but added that Montana Rail Link is not one of those. He said that now is the time to sell the Alaska Railroad and said that perhaps the Administration is not the entity to dictate or put the parameters around this sale. Number 0224 REPRESENTATIVE JAMES said, in her support of rail as a means of future surface transportation, that trucking and rail transportation are not in an adverse competition with each other. She said the more rail activity, the more truck activity you have. She expressed concern for the future when you put more trucks on the highway system as it becomes dangerous and expensive. Number 0286 REPRESENTATIVE BRICE said there is language in CSHB 136 which says that the buyers of the Alaska Railroad will continue to operate, but there is nothing in CSHB 136 to prevent the buyers from pulling rail or taking the rolling stock out of the state and this is of concern to him. He said nothing is specified where the state will receive the amount of money it has spent in connection with the railroad and asked when the "state" is defined whether it included the Railroad Corporation or whether it was state general funds. He asked that the state get a fair market price for the railroad as well as protecting employees of the Alaska Railroad. Number 0354 MR. ANDERSON said, "that is in statute, Mr. Chairman." The statute says that the Governor may provide for the sale or lease and that it can be assured that the railroad will continue to operate after the sale or lease and that under the terms of the sale or lease a proper amount of money will be received in connection for the whole railroad. CHAIRMAN GARY DAVIS said the committee will work as a whole to bring about changes in the language of CSHB 136, rather than putting this issue into a subcommittee.
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