Legislature(2003 - 2004)
04/14/2003 03:32 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 31-RAILROAD UTILITY CORRIDOR TO & IN CANADA
MR. RICHARD SCHMITZ, staff to Senator Cowdery, gave the
following explanation of SB 31.
SB 31 allows the Alaska Railroad Corporation (ARRC) to extend
its tracks from Eielsen Air Force Base to the Canadian border.
It also allows ARRC to explore the possibility of extending its
tracks as far as the North American rail system to connect at
Fort Nelson, British Columbia. The bill does not provide any
funding for this project but it allows ARRC to pursue financing
wherever possible. The state land for the railroad corridor
would be granted to ARRC, fee simple title, after a specific
process is underway.
Former Representative Jeanette James introduced SB 31 last year.
It was not enacted because of concerns about the corridor and
the natural gas pipeline. Senator Cowdery reintroduced the
identical bill this year and, during a Senate Transportation
Committee hearing, a discussion took place with Administration
officials and ARRC officials about the work Governor Murkowski
did on the Rails to Resources Act when he was a member of the
U.S. Senate. The goal [of the discussion] was to find language
that everyone could agree to that addressed the circumstances
under which ARRC would get land. Some of that language was
incorporated into a Senate Transportation Committee substitute
(CS) beginning on page 2, line 4. That language contains a list
of parameters. He deferred to ARRC staff to explain why those
parameters were chosen.
MR. SCHMITZ told members he provided background material for
members that contains tourism and engineering reports,
geological information, and maps showing the route from Eielson
Air Force Base to the Canadian border and to British Columbia.
The actual gap to be covered equals about 1,000 miles. Governor
Murkowski and Senator Cowdery believe in order for Alaska's
economy to grow, better transportation is necessary. Railroads
can carry heavy, bulk items over long distances very cheaply.
Senator Cowdery also believes it is important to build the rail
connection because of the gas pipeline. Trucks will be unable to
ship the steel pipe but rail could. In addition, it might be
possible to build the railroad and pipeline simultaneously.
MR. SCHMITZ told members the railroad corridor covers some of
the richest mineral land in Alaska and the Yukon Territory. A
geological formation, the Tintina Trench, is particularly rich
in the platinum group of metals and gold.
CHAIR OGAN informed members that Phyllis Johnson, Wendy
Lindskoog, Pat Gamble and James Blasingame of the Alaska
Railroad Corporation were available via teleconference to answer
questions. He then announced that Senators Dyson, Lincoln and
Stevens joined the committee a while ago. He asked Mr. Schmitz
to review the changes made in the Senate Transportation
Committee substitute for members.
MR. SCHMITZ said the original bill would have given ARRC the
state land via fee simple title. ARRC wanted a 500-foot corridor
for safety reasons; DNR was concerned about locking up that much
land unnecessarily. Also, some practical issues arose about a
500-foot corridor in communities such as Delta. The CS provides
DNR with more flexibility when the corridor is delineated. ARRC
will have to follow a process to obtain state land that requires
it to be in a position to begin construction. Therefore, no land
would be transferred unless project financing was obtained.
CHAIR OGAN asked the width of the current right-of-way on the
existing railroad corridor.
MR. SCHMITZ said he believes it varies from 100 to 500 feet.
MR. PAT GAMBLE, President of the Alaska Railroad Corporation,
informed members that Phyllis Johnson, Bob Loeffler and Joe
Joiner were also present to answer questions. He told Chair Ogan
the current average right-of-way is 200 feet.
CHAIR OGAN asked why ARRC wants so much land.
MR. GAMBLE said that was the nature of the compromise when ARRC
talked to DNR. The state wanted a corridor for transportation,
communications and a possible pipeline. ARRC wanted an exclusive
right-of-way for control of the rail line, as it has on its
existing rail line. The compromise was to survey a 500-foot
corridor for the state and within it embed a 200-foot right-of-
way for the railroad.
CHAIR OGAN commented that SB 31 will give ARRC a 500-foot right-
of-way, the rights of eminent domain, and subsurface rights,
which will have a big impact on private landowners. He asked if
any private landowners have voiced an opinion on this change.
MR. GAMBLE clarified that ARRC will not have subsurface rights.
CHAIR OGAN referred to a provision in SB 31 on page 3, line 26,
that says the state shall convey the state's entire interest in
the land. He assumed that would include subsurface rights.
3:42 p.m.
MR. BOB LOEFFLER, Director of the Division of Mining, Land and
Water, DNR, explained that DNR would convey the state's entire
interest except "(a) the interest required by AS 38.05.125",
which is the subsurface interest. So, in fact, DNR would reserve
oil and gas rights and the other things associated with a
mineral estate.
SENATOR ELTON referred to the draft sectional analysis, which
says that DNR will retain any revenues arising from use of the
land. He assumed any revenues would also include revenues from
fiber optic cable rights-of-way or other things that generate
revenue for ARRC.
MR. LOEFFLER explained that before the railroad is ready to
construct, DNR will remain as the land manager and retain the
revenues. Once the railroad is ready to construct a portion of
the rail line, ARRC will get those revenues within its right-of-
way on that portion. Therefore, DNR will retain the revenues
while it manages the land and, when it transfers the management
authority for each portion, the revenue for that portion will be
transferred with it.
SENATOR ELTON asked if that includes the subsurface rights.
MR. LOEFFLER said DNR will retain the subsurface rights.
SENATOR SEEKINS asked what safety issues might be involved in
putting a 54-inch high-pressure gas pipeline within 300 feet of
a railroad.
MR. GAMBLE said he is not an expert on the safety radius from
the pipeline but that is one reason a 500-foot corridor was
attractive. He said more work needs to be done as the entire
route is reviewed to maintain that safety buffer. That might
require special engineering solutions depending on the
topography.
CHAIR OGAN pointed out that language on page 4 reads:
If the [Alaska Railroad] corporation provides a survey
alignment to the department, the department may not
authorize construction of the natural gas pipeline
within a 200-foot-wide corridor centered on the survey
alignment unless the department does not find a
feasible and prudent alternative for the route of the
pipeline.
He assumed that language refers to safety issues. He asked how
much of an area a typical train wreck covers and whether it is
more than 200 feet.
MR. GAMBLE said the wreckage can cover more than 200 feet if the
train is moving fast. He said it depends on several factors such
as speed, topography, train length and others.
CHAIR OGAN commented that on a visit to Florida two years ago,
he was amazed to see how fast the trains travel through towns.
SENATOR SEEKINS said he assumes the 200-foot railroad corridor
would be on one side or the other of the 500-foot corridor
rather than down the middle. He asked if that is addressed in
the bill.
MR. LOEFFLER said a 500-foot corridor was chosen for several
reasons, one to allow ARRC to move the railroad base around a
little bit when it is ready to begin construction and another to
allow DNR to retain additional land as a transportation corridor
for other complementary uses. After the construction is done,
DNR could adjust the corridor. Any unusable remnants would
probably be turned back to general domain state land.
SENATOR SEEKINS said his concern is that a transportation
corridor that includes a natural gas pipeline will need a safety
buffer.
MR. LOEFFLER said he believes the natural gas pipeline will have
a separate right-of-way. The 500-foot corridor is not expected
to be the only right-of-way for both, but it doesn't rule that
possibility out.
SENATOR LINCOLN referred to the provision about subsurface
rights in the last paragraph of page 3, which says, "subject to
the existing valid rights." She asked whether the state or the
railroad will reserve the valid existing subsurface rights if
private lands are bought.
MR. LOEFFLER replied DNR cannot convey what it does not own so
the state's conveyance to the railroad will not include any
rights it does not own. DNR will reserve the subsurface rights.
Where the subsurface is owned by the state and a corporation
might have a surface right, one would assume they would buy the
surface right. He cannot imagine [the railroad] having a reason
to acquire the subsurface rights unless it is to buy out a
placer miner to get that person out of the way.
SENATOR LINCOLN said she is specifically thinking of the Native
corporations that own surface and subsurface rights. She asked
Mr. Loeffler if the state or railroad will have no need for the
subsurface rights so would only purchase the surface rights and
leave the subsurface rights with the private owner.
MR. LOEFFLER said that is his expectation but he deferred to
ARRC representatives to answer for the railroad.
CHAIR OGAN suggested the legislature does not want ARRC to do
any open pit mining underneath the railroad. He then clarified
that the bill is silent on the issue of private property.
SENATOR LINCOLN said that is because it applies to the valid
existing rights.
CHAIR OGAN pointed out the subsurface rights were conveyed with
the Native lands. He asked Mr. Loeffler whether eminent domain
could be used to claim only the surface rights. He commented
that if he were a private landowner, he would favor a railroad
crossing his land as it would provide access to that land.
SENATOR ELTON said a couple of phrases, beginning on page 4,
line 20, suggest to him the bill's first priority is a railroad
and the second priority is a gas pipeline. That language reads:
If the corporation provides a survey alignment to the
department, the department may not authorize
construction of the natural gas pipeline within the
200-foot wide corridor centered on the survey
alignment.... The department shall consult with the
corporation before authorizing construction of a
natural gas pipeline in order to minimize effects on
the potential rail route....
He said that language could be problematic if the pipeline is
prioritized above a railroad extension, which he favors.
MR. LOEFFLER said [DNR] has not prioritized a railroad above a
gas pipeline and that was not the intent. He hopes that is not
how this section operates. DNR tried to include language to
ensure complementary action and avoid a conflict. The bill is
not about the pipeline; it's about the railroad so all language
modifies [activities of] the railroad.
MR. LOEFFLER explained:
Here's how we think it works. If there is an existing
application or right-of-way, that is a valid existing
right that gets dropped from - it doesn't get conveyed
to the railroad. If we've already identified a 500-
foot corridor and a pipeline says, gee, we're really
ready to go through there, then what we say is, well
the pipeline typically - railroads are more
topographically limited. They have trouble going up
hills and things like that than in fact a pipeline. So
what we do is we say, look railroad, we're going to
give you a chance to stake the centerline. You know
where it's most important for you and then we'll make
that decision. And we make that decision in the best
interest of the state and if we can find a feasible
and prudent alternative, and that is reasonably
general language, which gives us the flexibility to
take economics and the best interest of the state into
account. Our expectation is not to give a priority to
the railroad, but it does require consultation with
the railroad. And, of course, the consultation would
go the other way as well with any applicants but this
language was really directed to the railroad. I hope
that answers the question.
SENATOR ELTON said it does. He is hearing that is not DNR's
expectation. He asked if DNR attorneys have looked at that
language.
MR. LOEFFLER said they have, but not with that specific question
in mind. He offered to do that and get back to Senator Elton
with a specific answer.
CHAIR OGAN said he shares that concern and plans to hold the
bill in committee today.
SENATOR WAGONER said a primary reason given for the need to
build the railroad is that a gas pipeline will be built with 80-
foot sections of pipe. He said he has talked to several of the
major companies that would be involved in the construction of a
pipeline who say they would use 40-foot sections. They asked
whether a railroad will be built to the North Slope to handle
80-foot sections there. He would like to see a company that will
build this pipeline verify what length of pipe it will use. He
surmised if the pipe can be transported via truck, transporting
the pipe should not be used as justification to build this
railroad.
MR. SCHMITZ replied there is no guarantee that 80-foot joints
will be used but, when the pipeline is built, it will be
competing with other natural gas around the world. Using 80-foot
sections will require half the number of welds than 40-foot
sections. That cost savings could make the difference in the
project's feasibility.
SENATOR WAGONER said he is not aware of any company that can
roll an 80-foot length of pipe right now.
SENATOR SEEKINS said he was in the Interior when the oil
pipeline was built. At that time, 40-foot joints were brought
into Fairbanks by truck in 80-foot lengths. A tremendous
additional cost was associated with the double jointing process,
which also caused safety concerns. He said he would imagine a
company hired to build 2,000 miles of pipe could find the
technology. He favors a railroad extension for a number of
reasons, one being commerce. Alaska should do its best to try to
connect to the Lower 48 states by railroad for commerce,
national defense, and resource development. Building an instate
railroad will help but it will not provide the flexibility the
state needs.
CHAIR OGAN commented that the state cannot wait until a railroad
is built to build a gas line.
SENATOR SEEKINS agreed but said the state needs to move forward
with the right-of-way and work with the Canadians to do
likewise. He said he supports SB 31 regardless of the
rationalizations.
SENATOR LINCOLN asked if the Canadian government has officially
supported the railroad extension.
MR. SCHMITZ said that some of the Yukon communities have passed
resolutions in support.
SENATOR DYSON said he visited the Yukon a week ago and found the
Yukoners to be actively in favor. That is one reason language
was added to the bill to make sure the Canadian and Alaskan
routes come together. The huge mineral rich trench extends
across the Yukon and British Columbia borders. If necessary, he
could get resolutions from both governments.
CHAIR OGAN referred to a sentence on page 6, lines 9 through 12:
A corporation may acquire land or interests in land in
Canada as the corporation considers appropriate for
the development, construction and operation of an
extension of the Alaska Railroad to connect with the
North American railroad system.
He questioned why ARRC would want to acquire interest in land in
Canada.
MR. SCHMITZ said when the bill was introduced last year, it
would have allowed the extension of the railroad to the Canadian
border and stopped there. After discussing the issue,
Representative James decided to authorize the railroad to look
into a further extension using bonds or an appropriation to
purchase land to connect to an existing rail line. He pointed
out the White Pass Railroad obtained a right-of-way into the
United States.
CHAIR OGAN asked if Canadian railways own rights-of-way in the
United States and vice versa.
MR. SCHMITZ said he would imagine so. He said the private
corporations do.
CHAIR OGAN asked Mr. Gamble if he supports that language and
anticipates acquiring land and interests in Canada to expand the
railroad.
MR. GAMBLE said he understood that language to offer flexibility
to address the eventuality of having to deal with the other side
of the border in unforeseen ways. However, at this time, ARRC
has no concrete plans to acquire land in Canada. Representative
James talked to ARRC about the flexibility that language would
provide and ARRC acknowledges the purpose of that language.
SENATOR SEEKINS said he could envision many reasons the railroad
might want to acquire land or interest in land in Canada simply
in terms of support. ARRC may need to have office space for the
administration of the railroad between Alaska and the Lower 48
states or for housing and warehouse space. He thinks it is wise
to include that language in the bill even though the legislature
may have to address how ARRC will get funds to acquire that land
later.
CHAIR OGAN asked Mr. Loeffler if he wished to testify.
MR. LOEFFLER said DNR supports the bill.
MR. GAMBLE said, from a strategic point of view, ARRC's
perspective on the extension from Fairbanks to the Delta area
differs from its perspective on the extension from Delta to the
border. The first leg of that extension could provide an
opportunity to look at how to fund the operations and
maintenance of the railroad by hooking up to the requirement to
move goods and services back and forth from Fairbanks to Delta.
Beyond that, this bill offers the potential to get at the kind
of plan the current administration wants to pursue, in terms of
development. Development is within ARRC's mission so it stands
ready, when the time and conditions are right, to make this
project work.
CHAIR OGAN asked Senator Lincoln if she is aware of the position
of the Native corporations.
SENATOR LINCOLN said she spoke with several individuals who felt
it was a little premature to comment on this bill until the
project has progressed further - maybe when the actual corridor
route is discussed.
SENATOR ELTON asked if ARRC pays property taxes to the organized
boroughs through which it passes.
CHAIR OGAN said ARRC is on government property.
SENATOR ELTON said he asked because it has been suggested that a
portion of that area join an organized borough.
MR. SCHMITZ commented the Army surveyed a right-of-way in the
1940s for a rail route and a rail corridor from the border to
Fairbanks is in statute. Therefore, regarding questions of
eminent domain and private property, an undefined railroad
right-of-way does exist.
CHAIR OGAN assumed an environmental impact statement (EIS) would
have to be done. He then announced he would await an answer from
DNR to Senator Elton's question and planned to move the bill
from committee on Wednesday. He announced a brief at-ease.
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