Legislature(2003 - 2004)

05/04/2004 09:07 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 395(TRA)                                                                                            
     "An  Act  relating  to  application  of  municipal   ordinances                                                            
     providing  for planning, platting,  and land use regulation  to                                                            
     interests  in land owned  by the Alaska  Railroad Corporation;                                                             
     authorizing the Alaska  Railroad Corporation to extend its rail                                                            
     line to  Fort Greely, Alaska;  authorizing the Alaska  Railroad                                                            
     Corporation   to  issue  bonds  to  finance  the  cost  of  the                                                            
     extension   and  necessary   facilities   and  equipment;   and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken pointed out  that this bill  has two sections:  one                                                            
would authorize  the Alaska Railroad Corporation (ARRC)  to issue up                                                            
to $500  million in tax-free  revenue bonds  to pay for a rail  line                                                            
extension to Delta and  Fort Greely; and the other would exempt land                                                            
owned  by the  Railroad  from  municipal  land use  regulations.  He                                                            
pointed  out that  CS  SB 395(TRA),  Version  23-LS1965\H,  and  its                                                            
accompanying fiscal note were before the Committee.                                                                             
                                                                                                                                
Senator Therriault, the  bill's sponsor, explained that the original                                                            
bill  was developed  in response  to a  recent State  Supreme  Court                                                            
ruling, Native  Village of Eklutna  v. Alaska Railroad Corporation,                                                             
regarding  the Railroad's  right to  continue to  operate a  granite                                                            
quarry  in the  Eklutna  area.  Section 1,  he  continued,  contains                                                            
language that  would ensure that Railroad operations  could continue                                                            
and not be  subject to differing planning  and zoning ordinances  as                                                            
rail lines flowed from one community to another.                                                                                
                                                                                                                                
Senator Therriault  recounted that the bill was expanded  to include                                                            
bond package  language that  would fund extending  the rail  line to                                                            
Fort Greely  with the possibility  of connecting with Canadian  rail                                                            
lines and  continental lines  in the Lower  48. He assured  that the                                                            
bonding language  would not jeopardize Railroad or  State assets, as                                                            
long-term federal contracts  would support the bond requirements. He                                                            
reviewed  the planned route  of the rail line  as well as the  goods                                                            
that could  be transported on the  line. He concluded that  numerous                                                            
economic benefits would result were this rail line extended.                                                                    
                                                                                                                                
Co-Chair Wilken,  noting that the bill sections were  very "distinct                                                            
from  each  other,"  specified   that  the  two  sections  would  be                                                            
addressed separately.                                                                                                           
                                                                                                                                
PATRICK  GAMBLE,  President  &  CEO,  Alaska Railroad  Corporation,                                                             
Department  of Revenue, communicated  that  there has been  positive                                                            
response  to the  bonding  proposal,  as defined  in  Section 2,  to                                                            
finance the rail line extension  to Delta and Fort Greely. He stated                                                            
that  the federal  Department  of  the  Army  is interested  in  the                                                            
railroad extension  as it would provide  the Army greater  access to                                                            
training areas  as well as to land  in the Fort Greeley area  slated                                                            
for  an expanded  federal  missile  program  to  be staffed  by  the                                                            
National Guard.  He conceptualized  that the rail line "would  serve                                                            
as a two-lane  road" that could transport military  personnel, their                                                            
families, and  contractors, on a year-round basis.  He declared that                                                            
this rail line extension is "very attractive" to the military.                                                                  
                                                                                                                                
Mr.  Gamble explained  that  in order  to  fund the  extension,  the                                                            
Railroad  would  act as  the bond  fiduciary  and use  its  tax-free                                                            
bonding authority,  which  has never been  utilized before,  for the                                                            
$500 million  project.  He stated that  a portion  of the bond  debt                                                            
would conceptually  be paid by usage contracts between  the Railroad                                                            
and  two separate  federal  military  entities:  the  Department  of                                                            
Defense Army  and Missile  Command, as, he  explained, the  contract                                                            
would  be  less  expensive   to  the  military  than   their  annual                                                            
operations and  maintenance (O&M) expense budgets  would be were the                                                            
rail line extension not in place.                                                                                               
                                                                                                                                
Mr.  Gamble  stated that  while  discussions  have  transpired  with                                                            
military  personnel within  the State, they  have not occurred  with                                                            
the Department  of the  Army. He  also noted  that discussions  with                                                            
affected Alaskan communities are scheduled in the near future.                                                                  
                                                                                                                                
Senator Bunde referenced  comments indicating that the bond issuance                                                            
would not  incur any expense  to the State.  However, he  questioned                                                            
whether the fact that "the  Railroad is an instrument of the State,"                                                            
would not make  the State "the ultimate  guarantor of these  bonds."                                                            
                                                                                                                                
Senator Therriault responded  that due to the fact that "this is not                                                            
conduit funding,"  Senator  Bunde is correct  in that, were  there a                                                            
default  on the part  of a State  owned entity,  the State would  be                                                            
responsible. However, he  declared that a default would be unlikely,                                                            
were a contract  in place with the  federal government.   He pointed                                                            
out that  language addressing  the federal  government agreement  is                                                            
located in Section 4, Subsection  (b) beginning on page two, line 30                                                            
and  continuing  through  page  three,  line seven  which  reads  as                                                            
follows.                                                                                                                        
                                                                                                                                
     (b) Before issuing  bonds to provide the financing described in                                                            
     this section, the  Alaska Railroad Corporation shall enter into                                                            
     an agreement  with the United  States government that  will, in                                                            
     the   judgment   of   the  corporation,    provide   sufficient                                                            
     consideration to                                                                                                           
           (1) pay the principal of and interest on the bonds as                                                                
     they become due;                                                                                                           
           (2) create and maintain the reserves for the bond                                                                    
     payments   than   the  corporation   considers   necessary   or                                                            
     desirable; and                                                                                                             
           (3) pay all costs necessary to service or additionally                                                               
     secure the  bonds, including trustee's fees and  bond insurance                                                            
     premiums,  unless those costs  are to be paid by a party  other                                                            
     than the corporation.                                                                                                      
                                                                                                                                
Senator Bunde continued  to voice concern, as he argued, the federal                                                            
government  could change its  position in  regards to the  contract.                                                            
Therefore,  he asked, that were this  a consideration, whether  this                                                            
bond package could affect the State's bond rating ability.                                                                      
                                                                                                                                
Senator Therriault deferred  to Mr. Gamble to address the affect the                                                            
bond package might have  on the State's bonding ability. However, he                                                            
exampled  that  while  one  Legislature   "could  not  bind"  future                                                            
Legislators,  the State  would  be obligated  to  fulfill any  legal                                                            
contracts  entered into.  Similarly,  he argued,  that were  federal                                                            
military  plans to change  and were the missile  base dismantled,  a                                                            
signed federal/State  contractual  arrangement would continue  to be                                                            
honored.                                                                                                                        
                                                                                                                                
AT EASE 9:27 AM / 9:27 AM                                                                                                       
                                                                                                                                
Senator  Bunde voiced  a wildlife  resource concern  as he  reminded                                                            
that the  Railroad currently  has  problems with  moose on the  rail                                                            
line.  He questioned  whether  bison could  pose  a similar  problem                                                            
along the proposed Delta area rail line route.                                                                                  
                                                                                                                                
Mr. Gamble responded  that the "good news" is that  the geography of                                                            
this route  is relatively flat and  as such, would allow  animals to                                                            
move  out of  the  way  of a  train  as opposed  to  the  difficulty                                                            
presented to them by "the  deep channels" that the train tracks have                                                            
in other areas of the State.  He acknowledged that this concern must                                                            
be adequately addressed  and the federal government must approve the                                                            
plan before contract negotiations are finalized.                                                                                
                                                                                                                                
Co-Chair  Wilken,  being  "very  familiar   with  the  terrain"  the                                                            
proposed  rail line  would transit,  asked regarding  the  "physical                                                            
scope" of the  project as described in Section 4,  subsection (a) on                                                            
page two, lines  23 and 24 as he perceived the costs  to be high. In                                                            
addition,  he asked  whether the  project might  extend beyond  Fort                                                            
Greely.                                                                                                                         
                                                                                                                                
Mr. Gamble specified that  the $500 million project cost estimate is                                                            
all-inclusive  in that it would sufficiently fund  any required land                                                            
acquisition,   existing   rail   line  improvements,   maintenance,                                                             
equipment, sidings, small  depots, and the terminus of the rail line                                                            
at  Fort Greely  amongst  other  things.  He  pointed out  that  the                                                            
proposal  also contains  a "healthy  contingency  piece in the  cost                                                            
estimate  for  engineering  and construction."   He noted  that  the                                                            
project  cost  also includes  $45  million  that  would be  used  to                                                            
construct a  bridge across the Tanana  River to assist the  military                                                            
in accessing  their land. In summary,  he concluded that,  including                                                            
contingencies,  the  $500 million  estimate  is not  a conservative                                                             
number.                                                                                                                         
                                                                                                                                
Co-Chair  Wilken asked whether  the aforementioned  bridge  would be                                                            
located at Flag Hill Bridge.                                                                                                    
                                                                                                                                
Mr. Gamble concurred.                                                                                                           
                                                                                                                                
Co-Chair Wilken asked whether  the bridge construction project would                                                            
additionally  include a  rail line  extension into  the Blair  Lakes                                                            
area.                                                                                                                           
                                                                                                                                
Mr. Gamble  stated that,  in addition  to the  main rail line  being                                                            
extended toward  Delta Junction, an 11-mile rail extension  into the                                                            
Blair  Lakes  area would  also  be  constructed  in order  to  allow                                                            
military  vehicles  to be  offloaded within  the  parameters of  the                                                            
military training  range rather than  being offloaded and  hampering                                                            
transit on the main rail line.                                                                                                  
                                                                                                                                
Co-Chair   Wilken   asked   regarding  the   terminus   slated   for                                                            
construction in Fairbanks.                                                                                                      
                                                                                                                                
Mr. Gamble  responded  that in addition  to a  terminal at the  Fort                                                            
Wainwright   military   base   to   accommodate   military   freight                                                            
operations, a passenger  terminus would be constructed in Fairbanks.                                                            
                                                                                                                                
Co-Chair  Wilken   requested  that  a  complete  project   scope  be                                                            
developed to accompany the bill.                                                                                                
                                                                                                                                
Senator  Therriault, referencing  Co-Chair  Wilken's question  about                                                            
whether the  rail line would be extended  beyond Fort Greely,  noted                                                            
that language  in Section  4, subsection (b)  on page two,  lines 30                                                            
and  31,  specifies  that  before  the bonds  could  be  issued,  an                                                            
agreement between  the federal government  and the State  must be in                                                            
place.  Continuing, he  noted that  extending the  line beyond  Fort                                                            
Greely would  not benefit the federal  government and therefore,  it                                                            
would not  be expected  that their contract  would include  anything                                                            
beyond that point.                                                                                                              
                                                                                                                                
Co-Chair  Wilken  noted  that in  previous  years,  discussions  had                                                            
included  building  a  rail  line  that would  bypass  the  City  of                                                            
Fairbanks.  Therefore,  he  voiced  concern,  for the  record,  that                                                            
constructing  an 11-mile spur line  into the Blair Lakes  area might                                                            
rekindle that  discussion, which, he attested, "would  not be in the                                                            
best interest of Fairbanks."                                                                                                    
                                                                                                                                
Co-Chair  Wilken asked  whether  the selling  of  these bonds  would                                                            
negatively affect the State's  ability to bond for the gas pipeline.                                                            
                                                                                                                                
Mr. Gamble  responded  no, as  he reminded  the  Committee that  the                                                            
Railroad's  tax-free bonding ability  is not subject to the  bonding                                                            
limit of the State.  In addition, he stated that this  bond issuance                                                            
would not  affect the  Legislature's previous  year's [unspecified]                                                             
authorization  to allow  the Railroad  to  issue bonds  up to a  17-                                                            
billion dollar limit.                                                                                                           
                                                                                                                                
Co-Chair  Wilken  stated that  the  discussion  would  now shift  to                                                            
Section  1, which  pertains to  local municipality  regulations  and                                                            
their applicability to the Railroad.                                                                                            
                                                                                                                                
Mr. Gamble  commented  that the core  issue of  Section 1 might  "be                                                            
misunderstood."  He  quoted from  the Supreme  Court  ruling on  the                                                            
aforementioned  case  that  prompted this  legislation  as  follows:                                                            
"because  the Legislature  did  not clearly  express  its intent  to                                                            
exempt the Railroad from  local zoning laws, we reverse and remand."                                                            
Therefore,  he communicated, the intent  of this legislation  is "to                                                            
request  the Legislature  to  clarify  itself for  the  good of  the                                                            
Court" and thereby "reinstate  the status quo" that the Railroad has                                                            
operated under  since the original  legislation was implemented  18-                                                            
years prior.                                                                                                                    
                                                                                                                                
Mr.  Gamble  declared   that  the  original  bill   enacted  by  the                                                            
Legislature  was  approved  with  the  knowledge  that  federal  law                                                            
exempts  railroads   conducting  interstate   commerce  from   local                                                            
planning  and  zoning  regulations.  He  stated that  that  law  "is                                                            
codified in  federal law and remains  "intact and exists  today." He                                                            
argued that the State's  Supreme Court determination that the intent                                                            
of the Legislature  was unclear is  wrong, as he submitted  that the                                                            
Legislators  "knew what  they were  doing" as attested  by the  fact                                                            
that the bill  has been in effect for 18-years. With  respect to the                                                            
Court,  he  stated that  he  agreed  with "the  three-to  two  hotly                                                            
contested"  minority  decision  of  the  Court,  and  that  the  two                                                            
minority  Court members "were  very pointed"  in their remarks  that                                                            
the federal exemption "as  mirrored by the State" should prevail for                                                            
economic development purposes,"  and that the Railroad, as an entity                                                            
of the State,  should be controlled  by the State rather  than by an                                                            
array  of   differing  local   municipality   planning  and   zoning                                                            
regulations.  Were the Court  ruling to be  upheld, he argued,  this                                                            
kind of local  zoning "control over a State entity"  would result in                                                            
economic  chaos,  as  approval  would be  required  for  each  local                                                            
municipality  case.  The  Court ruling,  he  continued,  would  have                                                            
severe  impact  on  commerce.  He  therefore,   requested  that  the                                                            
Legislature  clarify that  the status quo  mode of operation  should                                                            
continue.                                                                                                                       
                                                                                                                                
Senator  Therriault  supported   the  Railroad's  request  that  the                                                            
Legislature  clarify the intent of  the 18-year old legislation.  He                                                            
voiced  support  for  the  continuance   of the  Railroad's   zoning                                                            
exemption, as  he declared that requiring the Railroad  to adhere to                                                            
13 different  jurisdictional zoning  and planning regulations  would                                                            
create problems. He noted,  however, that Section 1 could be amended                                                            
to address municipalities' concerns.                                                                                            
                                                                                                                                
Senator  Bunde understood  the range  of problems  that might  occur                                                            
were  each municipality's   regulations  a consideration.  He  asked                                                            
regarding  the comment  that  "the Railroad  is a  State agency  and                                                            
should be under State control."                                                                                                 
                                                                                                                                
Mr. Gamble clarified  that the Railroad is a State  instrumentality.                                                            
He voiced that  the Railroad's position is that any  control over an                                                            
instrumentality of the State should be limited to the State.                                                                    
                                                                                                                                
Senator  Olson   pointed  out  that  the  reason  for   the  Court's                                                            
involvement  was due to the  fact that numerous  citizens feel  that                                                            
the Railroad  has been abusing its  authority" in laying  down track                                                            
and acquiring land for  500-foot right of ways without consideration                                                            
for those affected. He  asked how these concerns would be addressed.                                                            
                                                                                                                                
Mr. Gamble  clarified that  a 200-foot  right-of-way is authorized,                                                             
and that most construction  occurs on Railroad property. He informed                                                            
the Committee  that the Railroad  was awarded  36,000 acres  of fee-                                                            
simple property when the  ownership of the Railroad transferred from                                                            
the federal government  to the State. He declared that 80-percent of                                                            
all Railroad  construction  projects encompass  federal funding  and                                                            
therefore,  before  any  work  on those  projects  could  occur,  an                                                            
audited  "extensive community  out-reach"  process  is required  per                                                            
federal  law.  Therefore  he  attested   that  these  projects  have                                                            
"considerable public input."                                                                                                    
                                                                                                                                
Mr. Gamble  noted that  the majority  of the  20-percent balance  of                                                            
Railroad projects, not  supported by federal funding, involves minor                                                            
things  such  as  roof  repair  and  "other  nuts  and  bolts"  non-                                                            
construction  projects.  He  stated that  he  would be  willing  "to                                                            
address specific  cases" in  this regard;  however, he voiced  being                                                            
unaware of any  situation in which the Railroad did  not take public                                                            
concern into consideration.                                                                                                     
                                                                                                                                
Mr. Gamble  acknowledged that public  concern and speculation  could                                                            
occur in regard  to future Railroad  operations such as whether  the                                                            
Railroad  might develop  a gravel  pit in  a suburb  or construct  a                                                            
hotel that would  compete with a another hotel. However,  he assured                                                            
that, were  federal funds  involved in the  development of  a gravel                                                            
pit, it would not be located  near a suburb. He also stated that the                                                            
Alaska  Railroad Board  serves as  one component  of the  Railroad's                                                            
"check and balance  system," and he noted that the  Board's position                                                            
is that  the Railroad  is in  the Railroad  business. Therefore,  he                                                            
noted that  such things as the Railroad  constructing a hotel  would                                                            
not occur,  as it would be outside  of scope of things permitted  by                                                            
the Board. In summary,  he opined that these concerns are addressed.                                                            
                                                                                                                                
Senator Olson  shared that the primary concern he  hears pertains to                                                            
the Railroad track leading  to the Ted Stevens International Airport                                                            
in  Anchorage.  He  stated  that  Railroad  land  in  this  area  is                                                            
"sizable"  and that  it could  be  more appropriately  utilized  for                                                            
other transportation purposes.                                                                                                  
                                                                                                                                
[NOTE: Senator Bunde chaired  the following portion of the meeting.]                                                            
                                                                                                                                
Co-Chair  Green recalled  that the federal  government, rather  than                                                            
the Railroad,  specified the  land around  the Anchorage airport  as                                                            
Railroad  holdings in  order to  address national  airport  security                                                            
concerns.   She   understood   that   the   Alaska   Department   of                                                            
Transportation  and Public Facilities was involved  in this process.                                                            
                                                                                                                                
Senator Olson  voiced appreciate  for this  information as  he could                                                            
now more adequately respond to public concerns.                                                                                 
                                                                                                                                
Amendment  #1: This amendment  deletes the  word "an" in Section  4,                                                            
subsection  (b)  on  page two,  line  31  and replaces  it  with  "a                                                            
binding". Continuing in  subsection (b) on page three, line one, the                                                            
word "will" is  deleted and replaced with "shall";  and on that same                                                            
line, "in the judgment  of the corporation" is deleted. Also on that                                                            
same line, "consideration"  is deleted and replaced  with "revenue".                                                            
The amended language would read as follows.                                                                                     
                                                                                                                                
     (b) Before issuing  bonds to provide the financing described in                                                            
     this section, the  Alaska Railroad Corporation shall enter into                                                            
     a  binding agreement  with the  United States  government  that                                                            
     shall provide sufficient revenue to…                                                                                       
                                                                                                                                
Senator  B. Stevens  moved to adopt  Amendment #1  and objected  for                                                            
explanation.                                                                                                                    
                                                                                                                                
Senator B. Stevens  stated that this amendment would  eliminate some                                                            
ambiguity in the language  and would clarify the intent of the bill.                                                            
                                                                                                                                
Mr.  Gamble  stated  that  the  Railroad  does  not  object  to  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator  Therriault  stated  that  this  amendment  would  serve  to                                                            
alleviate some concerns.                                                                                                        
                                                                                                                                
Senator B. Stevens removed his objection.                                                                                       
                                                                                                                                
There being no further objection, Amendment #1 was ADOPTED.                                                                     
                                                                                                                                
SARA HEIDEMAN, Attorney  representing the Native Village of Eklutna,                                                            
testified  via  teleconference   from  Anchorage  in  opposition  to                                                            
Section 1 of the bill.  She noted that the Village takes no position                                                            
on Section 2.                                                                                                                   
                                                                                                                                
Ms.  Heideman   informed  the  Committee   that  another   component                                                            
incorporated in  the aforementioned State Supreme  Court case is the                                                            
"balancing of interest  test," which is a test that has been adopted                                                            
by  the  majority  of national  courts  "to  address  the  issue  of                                                            
governmental immunity from  zoning in the last 30 years." She stated                                                            
that this test  has enhanced the public input process  in regards to                                                            
zoning. She respectfully  disagreed with Mr. Gamble  that the intent                                                            
of Alaska Statute  AS 42.40 is clear  as she argued that  sufficient                                                            
testimony regarding  the adoption  of this Statute did not  indicate                                                            
that all Railroad land  would be exempt from local zoning authority.                                                            
Continuing, she  noted that the Legislature could  have specifically                                                            
included exemption  language in the  Statute at the time,  but chose                                                            
not to.                                                                                                                         
                                                                                                                                
Ms.  Heideman   stated   that  the  federal   "Interstate   Commerce                                                            
Commission  Termination Act" referred  to by Mr. Gamble "abolished"                                                             
the Interstate  Commerce Commission  (ICC), "placed restrictions  on                                                            
State  and local regulation  of  railroads and  created the  Surface                                                            
Transportation  Board." She stated that this federal  law specifies,                                                            
"that   State   and   local   economic   regulations   which   would                                                            
significantly  interfere with core  rail operations is prohibited."                                                             
The meaning  of this law,  she continued, is  that any attempt  by a                                                            
State or local  government to prevent  the operation, construction,                                                             
or the discontinuance of  a rail line would be prohibited by federal                                                            
law. Therefore,  she explained that no local entity  could block the                                                            
construction of a rail  line to Fort Greely or regulate the track as                                                            
it  transits   from  jurisdiction   to  jurisdiction.  She   stated,                                                            
therefore, that the Railroad  is protected by federal law as well as                                                            
by the balancing  test that was utilized  by the Supreme  Court. She                                                            
reiterated  that  an extension  of  a  line,  placement of  a  line,                                                            
whether to  discontinue a line, the  location of a train  depot, and                                                            
other  core things  would be  protected  by federal  law, and  would                                                            
therefore not require the balancing test to be put into place.                                                                  
                                                                                                                                
Ms.  Heideman stressed  therefore,  that,  "there is  a very  finite                                                            
field within  which local governments  could regulate in  regards to                                                            
the Railroad." This narrow  field, she attested is that to which the                                                            
balancing  test could  be applicable.  She stated  that the  Court's                                                            
implementation  of this test "is very fair to everyone,"  in that it                                                            
would  require  the  Railroad  "to comply  with  local  zoning  when                                                            
compliance would not create a hardship for it…"                                                                                 
                                                                                                                                
                                                                                                                                
SFC 04 # 105, Side B 09:54 AM                                                                                                   
                                                                                                                                
                                                                                                                                
Ms. Heideman  reminded the  Committee that  Alaska Statute  Title 35                                                            
mandates that,  in a similar fashion  to the federal ruling  for the                                                            
railroad,  the  Alaska  Department  of  Transportation   and  Public                                                            
Facilities  must comply with  local zoning  ordinances but  would be                                                            
immune from local zoning ordinances "in appropriate cases."                                                                     
                                                                                                                                
Ms. Heideman  stressed  that under  the balancing  test guidelines,                                                             
public and local officials  are able to have input, in limited areas                                                            
that "are not pre-empted  by federal law" in regard to the essential                                                            
operation of the Railroad.                                                                                                      
                                                                                                                                
Ms. Heideman  declared that were Section  1 adopted, it would  serve                                                            
to "eliminate  all public input, all  input from local governments,                                                             
and eliminate  any  need for Railroads  to consider  any  legitimate                                                            
public  or  local  interest."  In addition,  she  pointed  out  that                                                            
immunity from  local government zoning  is not required in  order to                                                            
operate  a railroad.  She  noted that  nationally,  the majority  of                                                            
railroad  ownership   is  private,  and  she  stressed   that  these                                                            
companies are  not immune from local zoning ordinances  and continue                                                            
to operate within and across multiple state lines.                                                                              
                                                                                                                                
Ms. Heideman declared that  Section 1 would change "a system that is                                                            
not  broken"  and  would  deny  public  and  local  government  from                                                            
infusing legitimate input. She urged that Section 1 be deleted.                                                                 
                                                                                                                                
Co-Chair Green  asked for further  clarification of language  on the                                                            
testifier's  handout titled "Historical  Statement by Sara  Heideman                                                            
(Hedland,  Brennan, &  Heideman) [copy  on file];  specifically  the                                                            
language located in the last paragraph that reads as follows.                                                                   
                                                                                                                                
     It requires  the railroad to  comply with local zoning  when it                                                            
     can do so  without hardship. It permits the railroad  to obtain                                                            
     immunity  from local zoning when  local zoning would  interfere                                                            
     with its operations.                                                                                                       
                                                                                                                                
Ms. Heideman  commented  that the  balancing test  would be  applied                                                            
were the Railroad to seek  immunity from a local zoning requirement,                                                            
after the Railroad  made an attempt  to comply with local  zoning by                                                            
going to the local  planning and zoning commission  and applying for                                                            
a conditional  use permit. Were this the case, the  Court, she noted                                                            
would  seek to  balance the  public's  and Railroad's  interest  and                                                            
determine whether  any local interference  with Railroad  operations                                                            
might  incur.  She stated  that  were the  Railroad's  interests  to                                                            
outweigh  the others, it  would prevail in  being immune from  local                                                            
zoning. She  shared that the balancing  test evolved from  a case in                                                            
New Jersey  in which a  state university  attempted to place  multi-                                                            
family housing in a community  in which that zoning was not allowed.                                                            
She stated  that, in that  case, it was  determined that abiding  by                                                            
local ordinance  would hinder  the function  of the university,  and                                                            
the university was granted  immunity. Therefore, she continued, were                                                            
the Railroad to  prove that abiding by local ordinance  would hinder                                                            
its ability  to perform  an essential  State function,  it would  be                                                            
granted immunity.                                                                                                               
                                                                                                                                
Co-Chair Green  understood that the balancing test  would be applied                                                            
by the  Superior Court, and  therefore, she  asked whether  the non-                                                            
prevailing  party could  appeal the  immunity  determination to  the                                                            
Supreme Court.                                                                                                                  
                                                                                                                                
Ms.  Heideman  stated that  either  side  could appeal  the  ruling.                                                            
Continuing,  she  noted  that  in a  situation  where  the  Railroad                                                            
prevailed, "it would not  likely be hindered in its operation unless                                                            
the opposing  party could, during  the appeal process, show  that it                                                            
could  likely prevail  on the  appeal or"  the opposing  side  could                                                            
prove it had the economic means with which to post a bond.                                                                      
                                                                                                                                
[NOTE: Co-Chair Wilken resumed chair of the Committee.]                                                                         
                                                                                                                                
RON  LONG  testified  via teleconference   from Seward  on  his  own                                                            
behalf. He voiced support  for Section 2, as it is, he declared, "an                                                            
exciting project."  In addressing  Section 1, he stated that,  while                                                            
"the  need for  consistency  across  jurisdictional  boundaries  for                                                            
rights of way"  might supersede those  of local planning  and zoning                                                            
commissions,   it  is   important   to  recognize   the  rights   of                                                            
municipalities   pertaining   to  planning   and  zoning   ordinance                                                            
variances  as outlined in  Title 29. This  direction, he  continued,                                                            
would  allow the  Railroad's  essential services  to  be weighed  in                                                            
relation to municipality  interests. He stated that a process should                                                            
be  developed  that  would consider  the  Railroad's  right  of  way                                                            
interests as  opposed to its real  estate development interests.  He                                                            
pointed out  that a recent Department  of Transportation  and Public                                                            
Facilities  (DOTPF) right-of-way  model  exemption  would be a  good                                                            
model as it  addresses federal, State,  and local discrepancies  and                                                            
incongruities.                                                                                                                  
                                                                                                                                
Co-Chair   Wilken  stated   that,  in  his   view,  Section   1  "is                                                            
problematic." Therefore,  he noted that the Committee has the option                                                            
of adopting the  original version of the bill that  does not include                                                            
Section 1 with  the understanding  that legislation addressing  that                                                            
issue could be considered early in the next Legislative session.                                                                
                                                                                                                                
Mr.  Gamble stated  that,  as per  the recent  Court  ruling in  the                                                            
Eklutna  case,   the  Railroad  would  be  required   to  acquire  a                                                            
conditional use  permit for each forthcoming project  that affects a                                                            
municipality  and, were the  local planning  and zoning commissions                                                             
conditions  not deemed to be in the  best interest of the  Railroad,                                                            
would  be required  to litigate  each case utilizing  the  balancing                                                            
test. This,  he shared, would serve  to delay the process  on a case                                                            
to case basis on "the entirety  of the line." Continuing he attested                                                            
that, in addition  to requiring municipalities  and the Railroad  to                                                            
agree on a project, the  Court ruling has "opened the door" to allow                                                            
private individuals or  private group to challenge a permit. He also                                                            
commented that  "tying up a case"  via challenges and appeals  "is a                                                            
tactic" utilized  by various groups. He reiterated  that in addition                                                            
to the length  of time required to  conduct the permit process,  the                                                            
litigation process would  serve to further delay a project. He noted                                                            
that the Court ruling is not retroactive.                                                                                       
                                                                                                                                
Co-Chair Wilken, while  being sympathetic to the Railroad's concerns                                                            
as he recalled  the delay  experienced by  the Pogo Mine  operations                                                            
due to "tactics;"  voiced concern regarding balancing  "the needs of                                                            
the Railroad against the  responsibilities of our assemblies to have                                                            
planning" in today's environment and in the future.                                                                             
                                                                                                                                
Co-Chair Wilken referenced  a suggestion of the Fairbanks North Star                                                            
Borough Mayor,  Jim Whitaker,  in his letter  [copy on file]  to Co-                                                            
Chair Wilken,  dated May 3, 2004 in which he proposed  language that                                                            
would read as follows.                                                                                                          
                                                                                                                                
     (c) By January  10 if each year, the corporation  shall provide                                                            
     notice to municipalities  of any new land use proposed for that                                                            
     year  by  the  corporation  within  municipal  boundaries.  The                                                            
     corporation  shall provide  amended notice  if a proposed  land                                                            
     use  is changed or an  additional land  use is proposed  during                                                            
     the course  of the year. Except  in the event of an  emergency,                                                            
     an affected municipality  shall have at least 30 days after its                                                            
     receipt  of  the notice  to  provide  advisory comment  to  the                                                            
     corporation.  In the  event of  an emergency,  the corporation                                                             
     will provide notice  to an affected municipality promptly after                                                            
     the event.                                                                                                                 
                                                                                                                                
Co-Chair  Wilken opined that  the suggestion  that a community  task                                                            
force  be involved  in the  process might  indicate  that more  time                                                            
should be required  to address this  situation. He noted  that other                                                            
communities such  as the Matanuska-Susitna Borough  have also voiced                                                            
concern regarding Section  1. Therefore, he reiterated that in order                                                            
to provide  communities  and the  railroad proper  consideration  in                                                            
this matter, Section 1  should be addressed separately the following                                                            
Legislative session.                                                                                                            
                                                                                                                                
Co-Chair  Green  suggested  that  the  incorporation  of  precedent-                                                            
setting  litigation  rulings  that could  not  be reversed  and  the                                                            
establishment  of a more  rigorous permitting  process might  assist                                                            
this matter.  She asked whether there  is any "logical distinction"                                                             
between  Railroad operations  and  its real  estate  holding as  she                                                            
opined  that the real  estate holding  usage,  rather than  railroad                                                            
operation projects, are the underlying issue.                                                                                   
                                                                                                                                
Mr. Gamble responded that  determining the boundary lines in regards                                                            
to  these  two issues  "is  a  real  interesting  question,"  as  he                                                            
continued  that since  the  recent Court  ruling,  the Railroad  has                                                            
noticed that  the vast majority of  the issues pertain to  land use.                                                            
He stated that  the determination regarding separation  between land                                                            
use and operations could  be very controversial and subjective. This                                                            
he  continued  is  exampled  by  the  controversy   surrounding  the                                                            
Anchorage  Ship Creek  railroad  land  wherein the  Municipality  of                                                            
Anchorage's  planning  and zoning  commission  requirements  specify                                                            
that a certain  type of landscaping  scheme, including the  planting                                                            
of trees, must  be in place. In this regard, he explained  that were                                                            
trees planted  per commission's instructions, they  would negatively                                                            
impact  the operational  ability  of  the  crew manning  the  line's                                                            
observation  tower. Furthermore,  he shared  that when the  Railroad                                                            
requested  a waiver regarding  this issue,  the municipality  denied                                                            
one. He stated  that were every project  required to address  things                                                            
of this nature,  it would be very time consuming.  He concluded that                                                            
this situation signifies the intent of the original exemption.                                                                  
                                                                                                                                
Senator  Therriault pointed  out that  this example  applies to  the                                                            
development  of a  piece of  Railroad land  that would  be used  for                                                            
operational purposes.                                                                                                           
                                                                                                                                
Senator Therriault pointed  out that language in Section 1, lines 11                                                            
and 12  specifies that any  Railroad land  leased to another  entity                                                            
would not be  provided the Railroad  exemption and would  be subject                                                            
to local planning and zoning  requirements. He noted that leasing of                                                            
Railroad land is a revenue generating mechanism.                                                                                
                                                                                                                                
Mr. Gamble clarified that  land leased in this fashion today, is not                                                            
subject to the Railroad exemption.                                                                                              
                                                                                                                                
Senator  Therriault   stated  that   the  aforementioned   amendment                                                            
suggested by the  Mayor of Fairbanks is acceptable  to the Railroad,                                                            
even thought the  Mayor's letter states that the Railroad  disagrees                                                            
with it.                                                                                                                        
                                                                                                                                
Mr. Gamble voiced  that the Railroad's comments in  this regard were                                                            
taken out on context.                                                                                                           
                                                                                                                                
Co-Chair Wilken stated that this would be clarified.                                                                            
                                                                                                                                
Senator Olson  asked the number of  Railroad projects that  would be                                                            
negatively impacted were Section 1 removed from the bill.                                                                       
                                                                                                                                
Mr. Gamble  responded that  a borough-by-borough  analysis  would be                                                            
required to answer  that question; however, he noted  that there are                                                            
approximately 113 projects  under consideration. He stated that this                                                            
information would be forthcoming.                                                                                               
                                                                                                                                
Co-Chair  Wilken  stated   that  the  struggle  with  Section  1  is                                                            
acerbated  by the  upcoming Legislative  Session  adjournment  date,                                                            
which, he declared,  does not provide  significant time to  properly                                                            
address the issue. He noted  that the Mat-Su and Kenai Boroughs have                                                            
evening  meetings planned  to  discuss this  issue,  and that  their                                                            
feedback would be helpful.  He suggested that a committee substitute                                                            
be developed  that might eliminate  Section 1 from consideration  at                                                            
this time.                                                                                                                      
                                                                                                                                
Senator  Dyson encouraged  the  Committee  to consider  a  committee                                                            
substitute that  would, rather than omitting Section  1, limit it to                                                            
specific "high priority" projects.                                                                                              
                                                                                                                                
Co-Chair  Wilken stated  that  the intent  would be  to protect  the                                                            
Railroad until  due consideration could be provided.  He opined that                                                            
perhaps a termination date  or other measure would be appropriate at                                                            
this time.                                                                                                                      
                                                                                                                                
Senator  Therriault stated  that the  adoption  of Mayor  Whitakers'                                                            
language suggestion or  a termination date in this legislation might                                                            
increase  the  Committee's  "comfort level"  without  hindering  the                                                            
Railroad's ability to operate.  This action, he continued would also                                                            
provide time to develop  alternate language that could be considered                                                            
during the next Legislation Session.                                                                                            
                                                                                                                                
Co-Chair  Wilken ordered  the  bill HELD  in Committee  in order  to                                                            
develop a committee substitute  that could serve as "a bridge during                                                            
this press of  time." He reiterated his concern about  the long-term                                                            
affects  of  any   action  taken  because  the  language   "is  very                                                            
explicit." He noted that  the Railroad's position as stated in Mayor                                                            
Whitaker's would be further clarified.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects