05/04/2004 01:45 PM House TRA

SB  31-RAILROAD UTILITY CORRIDOR TO & IN CANADA                                                                               
                                                                                                                                
CHAIR HOLM  announced that the  first order of business  would be                                                               
CS  FOR  SENATE BILL  NO.  31(RES)  am,  "An  Act relating  to  a                                                               
transportation corridor  for extension of the  Alaska Railroad to                                                               
Canada and  to extension of  the Alaska Railroad to  connect with                                                               
the North American railroad system."                                                                                            
                                                                                                                                
Number 0084                                                                                                                     
                                                                                                                                
RICHARD  SCHMITZ, Staff  to Senator  John  Cowdery, Alaska  State                                                               
Legislature, explained that  SB 31 establishes a  series of steps                                                               
toward  the  ultimate goal  of  opening  the  way to  complete  a                                                               
railroad connection  between Alaska  and the North  American rail                                                               
system.   The  legislation  doesn't  require any  appropriations,                                                               
although it allows the Alaska  Railroad Corporation (ARRC) to use                                                               
funds it can  obtain to go into Canada and  possibly connect with                                                               
the  railroad in  British Columbia.   He  informed the  committee                                                               
that  in  the  Senate  Resources  Standing  Committee  there  was                                                               
concern  with  what   would  happen  if  once   the  corridor  is                                                               
established,  the pipeline  comes  along.   The Senate  Resources                                                               
Standing  Committee  and  the  Department  of  Natural  Resources                                                               
developed language  specifying what  would happen as  the process                                                               
progresses.   [With that goal],  SB 31 authorizes ARRC  to obtain                                                               
ownership  or right-of-way  through any  of the  land "where  the                                                               
federal  private".   The  legislation  also  mandates a  500-foot                                                               
corridor  for  other  uses,  such as  fiber  optic  cable,  power                                                               
transmission lines, et cetera.   Additionally, the corridor would                                                               
allow specific  railroad-related uses,  such as  depots, material                                                               
storage, gravel pits, et cetera.                                                                                                
                                                                                                                                
Number 0362                                                                                                                     
                                                                                                                                
BOB  LOEFFLER, Director,  Mining, Land  and Water,  Department of                                                               
Natural Resources  (DNR), turned  to how DNR  deals with  the gas                                                               
line.   Mr.  Loeffler explained  that  SB 31  requests that  ARRC                                                               
designate a corridor,  which is really managed by DNR.   Before a                                                               
railroad is  built, DNR  retains the right  to authorize  the gas                                                               
line  through a  lease after  consulting  with ARRC  in order  to                                                               
review possibilities for accommodating  future railroads.  If the                                                               
railroad  is constructed  before  a gas  line,  DNR reserves  the                                                               
right to  cross the  railroad, authorize a  gas line,  and retain                                                               
the revenues.   He pointed  out that the aforementioned  is found                                                               
in subsections (f)  and (g) on pages 4 and  5 of the legislation.                                                               
Mr.  Loeffler  opined  that  the   language  places  DNR  in  the                                                               
"driver's seat"  in order  to ensure that  the [railroad  and the                                                               
gas  line]  are compatible.    In  response  to Chair  Holm,  Mr.                                                               
Loeffler  confirmed  that  the  legislation  doesn't  forego  the                                                               
authority of the State of Alaska by giving it to ARRC.                                                                          
                                                                                                                                
MR. SCHMITZ acknowledged the possibility  that the railroad could                                                               
be built at the same time as the  gas line or even before the gas                                                               
line.   However, the reality  is that a railroad,  unlike trucks,                                                               
can  carry  the  80-foot  sections  of pipe  for  the  gas  line.                                                               
Therefore,  the   railroad  has  an  opportunity   to  lower  the                                                               
construction costs of  a gas line.  In fact,  if a railroad could                                                               
save 25 percent of the actual  building costs of a gas line, then                                                               
that would  "sort of" pay for  building the railroad.   For those                                                               
reasons, throughout  the world  a number  of railroads  have been                                                               
built  the  same  time  as  a  pipeline.    To  have  a  railroad                                                               
connection  with  rest  of  North  America  is  a  real  economic                                                               
development opportunity and  would be a tremendous  boost for the                                                               
oil and gas sector.                                                                                                             
                                                                                                                                
CHAIR HOLM asked if the right-of-way is fee simple.                                                                             
                                                                                                                                
MR. SCHMITZ answered that it's fee simple for state land.                                                                       
                                                                                                                                
MR. LOEFFLER explained that DNR  would retain the land until ARRC                                                               
has  the financing  and is  ready  to build  a segment.   Once  a                                                               
segment  is built,  an as-built  survey  is performed.   At  that                                                               
point,  ARRC would  retain 100  feet plus  the necessary  sidings                                                               
while DNR  would retain the  remainder of the  500-foot corridor.                                                               
In further  response to Chair  Holm, Mr. Loeffler  explained that                                                               
although ARRC  would obtain  a patent from  the state,  DNR would                                                               
reserve a couple  of things from that patent.   He specified that                                                               
DNR  would  reserve  the  ability   to  transport  people.    For                                                               
instance, if a village needed  access to good recreation grounds,                                                               
it's DNR's  responsibility.   Mr. Loeffler  noted that  DNR would                                                               
also reserve the subsurface estate.                                                                                             
                                                                                                                                
Number 0820                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK  moved  to  report CSSB  31(RES)am  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.  There being no objection, it was so ordered.