Legislature(2003 - 2004)
01/29/2004 09:03 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 31(RES)
"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."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this bill would authorize the Alaska
Railroad Corporation "to delineate a transportation utility
corridor from Eielson Air Force Base" in Fairbanks to the
Alaska/Canada border. He stated that the bill's sponsor, the Alaska
Railroad Corporation, and the Department of Natural Resources would
address issues and questions that were raised during the first
hearing on this bill on May 7, 2003. In addition, he asked the
bill's sponsor, Senator John Cowdery, to share with the Committee a
synopsis of the recent railway conference he had organized. He also
noted that interest in this legislation has "heightened" due to
recent industry interest in furthering a gas pipeline.
SENATOR JOHN COWDERY, sponsor of the bill, informed the Committee
that the recent railway conference was well attended by Alaskan and
Canadian representatives and that the consensus was that a railroad
corridor would be required in both Canada and Alaska. Furthermore,
he added, agreement was that, with the assistance of the
infrastructure provided by the railroad, the gas pipeline would
boost the economics of areas. He observed that building the Panama
Canal today rather than in 1914, would cost $90 billion as compared
to the gas pipeline's projected cost of $2.7 billion.
Senator Cowdery opined that the need to build a gas pipeline is
compounded by the concern that the Panama Canal could be targeted
by terrorists, and, he continued, were that to occur, the
consequences on the transportation needs of the world could be
serious. He noted that there is strong support for the development
of this railroad corridor, and he urged the Committee to further
this bill.
Co-Chair Wilken noted that he had also attended the railroad
conference and that he was struck by the enthusiasm and energy of
those in attendance, particularly the Canadians.
Senator Cowdery concurred, and noted that interest has not waned in
the time since the conference.
SFC 04 # 3, Side B 09:50 AM
Senator Cowdery distributed a booklet compiled by his staff, titled
"Alaska-Canada Rail Connection, Information Profile on a Railroad
and Transportation and Utility Corridor to Connect Alaska with the
Rest of the North American Rail System" [copy on file]. He noted
that in addition to government attendees, private companies such as
the Canadian National (CN) Railroad are "very enthused" by the
prospect of a corridor, and he declared that "the time has come" to
develop the railroad corridor to the Canadian border.
WENDY LINDSKOOG, Director of External Affairs, Alaska Railroad
Corporations, Department of Community and Economic Development,
referred the Committee to the Alaska Railroad handout, dated
January 29, 2004 titled "Questions and Issues Explained, Subject:
SB 31 establishing a transportation corridor to Canada" [copy on
file] which, she noted, explains "in plain language" how the Senate
Resources Committee bill before the Committee addresses issues and
questions that have repeatedly surfaced over the years.
Ms. Lindskoog read the handout's Summary Statement as follows.
Summary statement: Under SB 31(RES), the Department of Natural
Resources (DNR) will not convey all rights. It will reserve
oil and gas mineral rights, the right to get people and
commerce across the railroad, and the right to authorize a gas
pipeline. DNR will have to consult with the Alaska Railroad
Corporation (ARRC) on access issues to ensure applicable
safety standards are met.
Ms. Lindskoog read the handout's first question and answer as
follows.
Gas Pipeline Application: If the Railroad and gas pipeline are
placed in the same corridor, which project is predominant? How
will tariffs and crossing issues be handled?
The gas pipeline project takes first priority. SB 31(RES)
would require ARRC to coordinate with potential gas line
developers to ensure optimal location for a pipeline. DNR will
reserve the right to authorize the gas pipeline. DNR will also
retain all tariffs and lease revenues related to the gas
pipeline. The decision to cross the railroad right-of-way
would be up to DNR but the crossing would have to comply with
federal and other applicable safety standards. The crossing
would have to maintain the integrity of the railroad and the
crossing cost would have to be borne by the pipeline
developers.
Senator Olson asked how a railroad accident in the corridor might
affect the pipeline.
Senator Cowdery clarified that the proposed gas pipeline would be
buried. He noted that safety measures would be implemented;
however, he stated that no 100-percent safety guarantee could be
assured.
Senator Olson asked whether the pipeline would be buried along the
entire route.
Senator Cowdery responded, yes.
Ms. Lindskoog read the second question and answer as follows.
Surface vs. subsurface rights: Would the Railroad receive
subsurface rights to resources under SB 31(RES)?
Under SB 31(RES) ARRC would not receive subsurface rights
other than sand and gravel. ARRC would receive these rights
only to a 200-foot right-of-way within the larger 500-foot
corridor. ARRC would also receive surface rights to additional
rail lands needed to accommodate such needs as maintenance,
yards, transfer facilities, crew housing, etc.
Ms. Lindskoog read the third question and answer as follows.
Easement vs. Fee Simple Title: Why does ARRC need fee simple
title to the land?
ARRC believes fee simple title to the lands it will receive is
necessary for the following reasons:
Safety/Control: Railroad exclusivity enhances safety to
the required federal limits. Control of the land gives
the Railroad the ability to properly establish crossings
to account for safety, to protect interstate commerce,
and to reduce risk. All these factors contribute to
increased transit time.
Revenue: Land revenue has been the key to the success of
the Alaska Railroad. The revenue from real estate allows
the Railroad to augment revenues from operations so the
ARRC can support its operation and maintenance bills
without having to seek state subsidies.
Ms. Lindskoog noted that a Fee Simple Title would allow ARRC to
generate revenue from, for instance, a fiber optic cable being
buried in the 200-foot right-of-way.
Senator Dyson commented that the ARRC has historically received
more revenue from the leasing of its lands than from the revenue
generated from transiting goods. Therefore, he asked whether ARRC
is anticipating utilizing potential revenue from the leasing of
portions of the right-of-way to fund its operations.
Ms. Lindskoog agreed that the Railroad has successfully raised
revenue through the leasing of its lands. Furthermore, she noted
that this operational model has allowed the Railroad to be self-
sufficient as attested by the fact that it has not required State
subsidies. Therefore, she stated that the Railroad would argue that
it should be provided more land than specified in this legislation.
However, she noted that the Railroad has agreed to compromise on
this issue provided that it receive Fee Simple Title to the 200-
foot right-of-way and sufficient land to address operational and
safety issues. She noted however, for the record, that, "the
Railroad would love to see a larger land package go with the bill"
so that the Railroad could generate lease revenues "to help offset
the cost of operating and maintaining the Railroad." She
communicated that $35,000 is required to maintain one mile of rail
per year.
Senator Bunde commented, in regard to the safety and control issue,
that residents in the South Central region of the state are often
ticketed for trespassing on the railroad right-of-way when trying
to access backcountry areas of the State and that, in addition,
numerous moose are killed on the railroad. Continuing, he stated
that the proposed railroad corridor would transit prime bison
hunting land and he asked how this issue would be addressed.
Ms. Lindskoog responded that, while she is unsure of the answer to
the bison question, protecting access for Alaskans is addressed in
the handout.
Senator Bunde reiterated that allowing access to hunting areas
should be considered.
Co-Chair Wilken affirmed.
BOB LOEFFLER, Director, Division of Mining, Land and Water,
Department of Natural Resources, testified via teleconference from
an offnet site to comment that the Fee Simple Title would be
granted to the Railroad once the railroad is built. However, he
assured that issues of economic importance to the State such as the
ability to get across the railroad and the ability to authorize a
gas pipeline would be reserved by the State.
Co-Chair Green asked whether title to this land would be granted to
another entity for free or whether other lease or sale options were
explored with the Railroad. She also asked whether the
Legislature's involvement in the creation of this issue entitles
the Railroad to receive the land for free.
Mr. Loeffler responded that the reason the land is being provided
free to the Railroad is because the expense of constructing "a
railroad like this is going to need all the financial help it gets
in order to be built." He stated that to charge for the land would,
in effect, "put a brake on its eventual construction."
Co-Chair Green echoed sentiments voiced by Senator Bunde that
perhaps the State should consider a Railroad Dividend or some other
form of future benefit from that corridor.
Senator B. Stevens asked whether the construction or gas pipeline
operators would be required to purchase from the Railroad the sand
and gravel that would be included in the subsurface sand and gravel
rights provided to the Railroad.
Mr. Loeffler responded that the Department of Natural Resources
would be able to sell those corridor materials until the time that
the Railroad was built. After that time, he continued, the title
and the rights to sell that sand and gravel would be conveyed to
the Railroad.
Senator B. Stevens commented that the Railroad would have the right
to choose the path of the corridor and would, due to the need to
lay track on sand and gravel, choose the appropriate land.
Mr. Loeffler replied that while the Railroad has the right to
choose the corridor, the Department of Natural Resources must
concur with the route with the best interests of the State and the
"eventual construction" of a gas pipeline in mind. However, he
"fundamentally" agreed with Senator B. Stevens's comment.
Senator Cowdery declared, "that there is not a lot of gravel" in a
200-foot corridor. He determined, therefore, that the source of
gravel for the railroad or other corridor needs would be from
"another source near the right-of-way."
Co-Chair Wilken noted that the Railroad's handout contains other
issues that are self-explanatory.
JEANNETTE JAMES, Former State Representative and Railroad Advisor
to the Governor, testified via teleconference from Fairbanks and
stated that she supports the Administration position on the
Railroad. She additionally noted that Alaska must meet the Canadian
railroad at the border in order to make this issue viable. She also
suggested that public/private partnerships might be the funding
answer to accomplishing this goal. She stated that quick action on
this legislation could take advantage of opportunities that are
currently available.
Senator Olson asked whether the trucking industry has provided
their perspective on this issue.
Co-Chair Wilken replied in the negative.
Co-Chair Wilken ordered the bill HELD in Committee.
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