Legislature(2023 - 2024)ANCH LIO DENALI Rm

11/20/2023 01:00 PM House TRANSPORTATION

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Audio Topic
01:01:27 PM Start
01:02:39 PM Presentation(s): Port Mackenzie and Port Mackenzie Rail Extension, Past, Present and Future
01:53:36 PM Presentation(s): Exploring the Future of Rail Development: Vision, Plans, Federal Funding, and Efficient Freight Transportation – an In-depth Discussion
03:40:34 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: Port MacKenzie and Port MacKenzie TELECONFERENCED
Rail Extension, Past, Present and Future by
Mike Brown, Borough Manager; Nick Spiropoulos,
Borough Attorney; and Dave Griffin, Port
Operations Manager, Matanuska Sustina Borough
-- Public Testimony <Time Limit May Be Set> --
+ Presentation: Exploring the Future of Rail TELECONFERENCED
Development: Vision, Plans, Federal Funding,
and Efficient Freight Transportation – An
In-Depth Discussion by Bill O’Leary, President
and CEO; Brian Lindamood, Vice President and
Chief Engineer; and Meghan Clemens, External
Affairs Director, Alaska Railroad
-- Public Testimony <Time Limit May Be Set> --
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                       Anchorage, Alaska                                                                                        
                       November 20, 2023                                                                                        
                           1:01 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin McCabe, Chair                                                                                              
Representative Sarah Vance, Vice Chair                                                                                          
Representative Tom McKay                                                                                                        
Representative Craig Johnson                                                                                                    
Representative Jesse Sumner                                                                                                     
Representative Louise Stutes (via teleconference)                                                                               
Representative Genevieve Mina                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
REPRESENTATIVE COULOMBE (via teleconference)                                                                                    
REPRESENTATIVE TILTON (via teleconference)                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S): PORT MACKENZIE AND PORT MACKENZIE RAIL                                                                         
EXTENSION~ PAST~ PRESENT AND FUTURE                                                                                             
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION(S): EXPLORING THE FUTURE OF RAIL DEVELOPMENT:                                                                      
VISION~   PLANS~   FEDERAL   FUNDING~   AND   EFFICIENT   FREIGHT                                                               
TRANSPORTATION  AN IN-DEPTH DISCUSSION                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MIKE BROWN, Manager                                                                                                             
Matanuska-Susitna Borough                                                                                                       
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:   Provided a PowerPoint  presentation, titled                                                             
"Port MacKenzie: A Small Industrial Port in Upper Cook Inlet."                                                                  
                                                                                                                                
DAVE GRIFFIN, Manager                                                                                                           
Port Operations                                                                                                                 
Port MacKenzie                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Provided   a  video  overview   of  Port                                                             
MacKenzie.                                                                                                                      
                                                                                                                                
BILL O'LEARY, President and CEO                                                                                                 
Alaska Railroad Corporation                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Co-presented  a PowerPoint  on the  Alaska                                                             
Railroad.                                                                                                                       
                                                                                                                                
BRIAN LINDAMOOD, Vice President and Chief Engineer                                                                              
Alaska Railroad Corporation                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Co-presented  a PowerPoint  on the  Alaska                                                             
Railroad.                                                                                                                       
                                                                                                                                
MEGHAN CLEMENS, Director                                                                                                        
External Affairs                                                                                                                
Alaska Railroad Corporation                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Co-presented  a PowerPoint  on the  Alaska                                                             
Railroad.                                                                                                                       
                                                                                                                                
ROBERT HALL, President                                                                                                          
Houston Chamber of Commerce                                                                                                     
Houston, Alaska                                                                                                                 
POSITION   STATEMENT:     Provided   public   testimony  on   the                                                             
presentations.                                                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:01:27 PM                                                                                                                    
                                                                                                                                
CHAIR  KEVIN  MCCABE  called the  House  Transportation  Standing                                                             
Committee meeting  to order at  1:01 p.m.   Representatives Mina,                                                               
Sumner,  Cronk, McKay,  and McCabe  were present  at the  call to                                                               
order.   Representatives  C.  Johnson and  Vance  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
^PRESENTATION(S):   PORT  MACKENZIE   AND  PORT   MACKENZIE  RAIL                                                               
EXTENSION, PAST, PRESENT AND FUTURE                                                                                             
    PRESENTATION(S): PORT MACKENZIE AND PORT MACKENZIE RAIL                                                                 
              EXTENSION, PAST, PRESENT AND FUTURE                                                                           
                                                                                                                              
1:02:39 PM                                                                                                                    
                                                                                                                                
CHAIR MCCABE announced that the  first order of business would be                                                               
a presentation on Port MacKenzie  and the Port MacKenzie railroad                                                               
extension.                                                                                                                      
                                                                                                                                
1:04:34 PM                                                                                                                    
                                                                                                                                
MIKE  BROWN,  Manager,   Matanuska-Susitna  Borough,  provided  a                                                               
PowerPoint   presentation,  titled   "Port  MacKenzie:   A  Small                                                               
Industrial Port in Upper Cook  Inlet," [hard copy included in the                                                               
committee packet."                                                                                                              
                                                                                                                                
1:04:45 PM                                                                                                                    
                                                                                                                                
DAVE GRIFFIN, Manager, Port  Operations, Port MacKenzie, provided                                                               
a video overview of Port MacKenzie.                                                                                             
                                                                                                                                
1:05:01 PM                                                                                                                    
                                                                                                                                
MR. BROWN stated that the  presentation would provide an overview                                                               
of Port MacKenzie  and the Port MacKenzie  Rail Extension (PMRE).                                                               
He  provided a  short video  on  the overview  that featured  Mr.                                                               
Brown.   He moved  to slide 3  and showed a  map of  the proposed                                                               
access  to  the port.    He  discussed  this in  further  detail,                                                               
indicating  the locations  of PMRE  and the  West Susitna  access                                                               
road.  He moved to slide 4  and discussed the deep draft dock and                                                               
barge dock.   He stated that of the 9,000  acres of land adjacent                                                               
to the  port, 7,000  are available for  development.   He pointed                                                               
out  the port's  equipment and  services, which  include a  7,000                                                               
square-foot  terminal  building that  could  be  used for  office                                                               
space.                                                                                                                          
                                                                                                                                
1:13:50 PM                                                                                                                    
                                                                                                                                
MR. BROWN, in  response to a committee question,  stated that the                                                               
9,000 acres of  land in the Port District is  publicly owned.  He                                                               
said  that  there   are  some  state  components,   such  as  the                                                               
University of  Alaska land.   He added that the  private property                                                               
around the area is small.                                                                                                       
                                                                                                                                
1:15:24 PM                                                                                                                    
                                                                                                                                
MR.  BROWN moved  to slides  5  through 7  and displayed  several                                                               
pictures  of Port  MacKenzie.   He  stated that  one  of the  key                                                               
features  of the  port is  the  land available  beyond the  9,000                                                               
acres, as seen in the photos.   He noted the 370-foot face of the                                                               
barge dock  and the deep  draft dock at  1,200 feet.   He pointed                                                               
out the  amount of space  available for  moving cargo on  and off                                                               
the vessels and the paved access to the uplands.                                                                                
                                                                                                                                
1:17:50 PM                                                                                                                    
                                                                                                                                
MR.  BROWN, in  response  to a  committee  question, stated  that                                                               
there is a slide to explain the plans for the barge ramp.                                                                       
                                                                                                                                
MR. BROWN,  in response  to a  committee question,  explained how                                                               
the conveyor  belt, which  was originally  built for  wood chips,                                                               
was used in this capacity.   In response to a follow-up question,                                                               
he stated  that concerning the  idea of exporting  woodchips, the                                                               
timber would have come from the  borough.  He suggested that this                                                               
was not successful because of the spruce bark beetle problem.                                                                   
                                                                                                                                
MR. BROWN, in  response to a committee question,  stated that the                                                               
conveyor belt had  been used for a coal test  shipment, but there                                                               
were challenges with this.                                                                                                      
                                                                                                                                
1:21:04 PM                                                                                                                    
                                                                                                                                
MR.  BROWN moved  to slides  8 through  10 and  displayed several                                                               
images of  the port's usage.   He moved  to slide 11  and pointed                                                               
out the plans for future work on  the port.  He stated that there                                                               
are several  federal grants for  this, including a grant  for the                                                               
deep draft dock  pile sleeves, as these would extend  the life of                                                               
the dock.  He noted the  addition of a 300-foot by 200-foot barge                                                               
ramp, as this would add  barge-maintenance capability to the port                                                               
and give  barges an extended-stay  capability.  He  discussed the                                                               
purchase of  a 75-ton mobile  harbor crane using  another federal                                                               
grant.                                                                                                                          
                                                                                                                                
MR. BROWN,  in response  to a  committee question  concerning how                                                               
the  Alaska Marine  Highway System  (AMHS) would  work with  Port                                                               
MacKenzie,  stated  that the  borough  is  a  sponsor of  a  AMHS                                                               
smaller  route to  Port MacKenzie.   Because  of this,  he stated                                                               
that  the borough  pursued  a federal  grant  for marine  highway                                                               
systems.   He added that the  grant program is meant  for smaller                                                               
projects.                                                                                                                       
                                                                                                                                
1:26:43 PM                                                                                                                    
                                                                                                                                
MR. BROWN  continued to  slide 12  and gave  a brief  overview of                                                               
PMRE.   He pointed  out the  project highlights,  as seen  on the                                                               
slide.   He  noted that  the  next presentation  would cover  the                                                               
funding needed for the project.   He pointed out the 32-mile rail                                                               
extension  project  to  Houston, which  already  has  embankments                                                               
constructed for  segments 1,3,4, and 5.   He stated that  all the                                                               
segments  except  segment  6  would  require  tracks,  ties,  and                                                               
ballasts.   Concerning the  challenges, he  pointed out  that the                                                               
funding  for  PMRE had  stalled  in  2015,  adding that  all  the                                                               
funding had come  from the state.  He noted  that [because of the                                                               
lack of  funding] the project  has been  stalled for a  number of                                                               
years, and  now there  is a focus  of working  toward completion.                                                               
He  advised that  using federal  funding  would "federalize"  the                                                               
project, as a  new Environmental Impact Statement  (EIS) would be                                                               
required.                                                                                                                       
                                                                                                                                
1:30:09 PM                                                                                                                    
                                                                                                                                
MR. BROWN, in  response to a committee question,  stated that the                                                               
right of  way for  segment 2  has been  completed, but  there are                                                               
further issues that would have to  be addressed in 2025 due to an                                                               
easement on  Native lands.   He stated  that other than  this all                                                               
the rights of way have been acquired, along with permits.                                                                       
                                                                                                                                
MR.  BROWN,  in  response  to  a  committee  question  concerning                                                               
maintaining the railroad  once it is complete,  stated that there                                                               
have been  discussions about  transferring the  rights of  way to                                                               
the  Alaska Railroad  Corporation  upon  completion; however,  at                                                               
this  point the  borough has  retained it.   He  stated that  the                                                               
borough's  retention   would  allow  conversations   on  multiuse                                                               
corridors, but since the funding  has stalled these conversations                                                               
have stalled.   In response  to a  follow-up, he stated  that the                                                               
railroad would  go as far as  Houston, where it would  connect to                                                               
the mainline railroad.   From this point the  railroad goes north                                                               
to Fairbanks  and south to  Anchorage.  In response,  he asserted                                                               
that from the port, cargo could be moved through these routes.                                                                  
                                                                                                                                
1:33:58 PM                                                                                                                    
                                                                                                                                
MR. BROWN moved to slides 13 and  14 and gave a brief overview of                                                               
land ownership in the Port  MacKenzie and the West Susitna areas.                                                               
He  noted that  the Port  District  is zoned  for industrial  and                                                               
commercial  usage,  so the  permitting  is  different than  other                                                               
areas  of the  borough.    He discussed  that  west  of the  Port                                                               
district  is  700,000  acres, with  90  percent  publicly  owned,                                                               
predominately by the state.  He  argued that this is the one port                                                               
in Upper Cook  Inlet that has access to both  land and tidewater;                                                               
therefore, it holds potential and opportunity for the state.                                                                    
                                                                                                                                
MR. BROWN  concluded on slide  15 and gave  a summary of  the key                                                               
takeaways, including Port Mackenzie's  land and tidewater access,                                                               
community support,  proximity to a workforce  and infrastructure,                                                               
and location  that is  a transportation  crossroads.   He pointed                                                               
out  that  the port  is  set  up  for industrial  and  commercial                                                               
purposes.   He discussed energy  grants and tax credits  from the                                                               
federal   government,   along   with  expressed   interest   from                                                               
international sources.                                                                                                          
                                                                                                                                
1:40:35 PM                                                                                                                    
                                                                                                                                
MR. BROWN,  in response  to a  committee question  concerning the                                                               
advantages that  Port MacKenzie has  over the Port  of Anchorage,                                                               
stated  that this  is not  about competition.   He  expressed the                                                               
understanding that the  goals for Port MacKenzie and  the Port of                                                               
Anchorage  are different,  as Port  MacKenzie  is about  creating                                                               
industrial and  commercial resiliency.   He reiterated  that Port                                                               
MacKenzie is different because of its access to land.                                                                           
                                                                                                                                
MR. BROWN,  in response to  a committee question  concerning EIS,                                                               
stated that he did not have  this job when the EIS was completed;                                                               
however,   he  expressed   the  understanding   that  there   was                                                               
mitigation done  for the wetlands and  retention for recreational                                                               
uses in  the area.  He  stated that any disturbances  were offset                                                               
with credits  and procured as part  of the project.   In response                                                               
to a  follow-up question concerning federalizing  the project, he                                                               
expressed the  understanding that  the borough wants  the project                                                               
completed, as  the investment from  the state has been  large and                                                               
unrealized up  to this point.   He suggested that the  project is                                                               
"not that far away" from being  completed.  He continued that the                                                               
borough is not opposed to  the federal route, but the differences                                                               
would need to be made clear.                                                                                                    
                                                                                                                                
MR. BROWN,  in response  to a  committee question  concerning the                                                               
corridor that would  be created by the project,  pointed out that                                                               
natural  gas  transportation  stops  in  the  Houston  area,  and                                                               
currently  there  is  not  the  capacity  to  extend  this.    He                                                               
suggested that  the PMRE corridor could  be used for a  gas line.                                                               
He  discussed  how  the  corridor could  be  a  multiuse  utility                                                               
corridor with internet fiber, power, and natural gas.                                                                           
                                                                                                                                
CHAIR MCCABE  commented that  these corridors  have been  used in                                                               
other countries as multimodal corridors.   He suggested that this                                                               
usage would be a way to create acceptance and funding.                                                                          
                                                                                                                                
1:48:15 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:48 p.m. to 1:53 p.m.                                                                       
                                                                                                                                
^PRESENTATION(S):  EXPLORING  THE  FUTURE  OF  RAIL  DEVELOPMENT:                                                               
VISION,   PLANS,   FEDERAL   FUNDING,   AND   EFFICIENT   FREIGHT                                                               
TRANSPORTATION  AN IN-DEPTH DISCUSSION                                                                                          
   PRESENTATION(S): EXPLORING THE FUTURE OF RAIL DEVELOPMENT:                                                               
     VISION, PLANS, FEDERAL FUNDING, AND EFFICIENT FREIGHT                                                                  
             TRANSPORTATION  AN IN-DEPTH DISCUSSION                                                                         
                                                                                                                              
1:53:36 PM                                                                                                                    
                                                                                                                                
CHAIR MCCABE announced that the  final order of business would be                                                               
a presentation by the Alaska Railroad Corporation.                                                                              
                                                                                                                                
1:54:26 PM                                                                                                                    
                                                                                                                                
BILL  O'LEARY, President  and  CEO,  Alaska Railroad  Corporation                                                               
(ARRC), co-presented  a PowerPoint  on the Alaska  Railroad [hard                                                               
copy included  in the committee  packet].   On slide 2,  he began                                                               
the  presentation  by  stating  that   ARRC  looks  at  the  Port                                                               
MacKenzie Rail  Extension (PMRE) and the  Northern Rail Extension                                                               
(NRE) as  critical economic development  projects for  the state.                                                               
He pointed  out that Alaska  is lacking in  basic infrastructure,                                                               
especially concerning bringing stranded  resources to market.  He                                                               
expressed the  understanding that ARRC  is supportive of  both of                                                               
these projects,  as these support  the mission of ARRC,  which is                                                               
being  an agent  for  economic  development for  the  state.   He                                                               
pointed out  that both  projects have laid  fallow for  10 years.                                                               
From   discussions   with    stakeholders,   he   expressed   the                                                               
understanding  that  this is  the  time  to move  these  projects                                                               
forward again.   He stated that  ARRC cannot do this  on its own;                                                               
therefore, partnerships need to be discussed.                                                                                   
                                                                                                                                
MR. O'LEARY moved  to slide 3 and discussed railroad  safety.  On                                                               
slide 4,  he pointed out  the railroad's mission  statement, with                                                               
the three  priorities being  safety, service,  and profitability.                                                               
He  moved  to  slide  5  and gave  a  brief  overview  of  ARRC's                                                               
organization,   operating   statistics,   operating   data,   and                                                               
employees.   He discussed  the federal  government's role  in the                                                               
beginning of  the railroad.   He remarked  that the  state bought                                                               
the  railroad in  1985 from  the federal  government, and  it was                                                               
setup as a state corporation.   He stressed that ARRC's debts are                                                               
its own, and  not debts of the  state.  He added  that no general                                                               
funds go to  the railroad, but there are  still some requirements                                                               
by the state, such as reports.                                                                                                  
                                                                                                                                
2:06:05 PM                                                                                                                    
                                                                                                                                
MR. O'LEARY, in response to  a committee question, stated that no                                                               
tracks have been added to the  railroad since the state took over                                                               
from the federal government.                                                                                                    
                                                                                                                                
MR.  O'LEARY  discussed  the  infrastructure  that  the  railroad                                                               
provides to the  state, which includes the  freight and passenger                                                               
service  and the  rail freight  link with  barges.   He moved  to                                                               
slide 6  and pointed  out the breakdown  in its  revenue sources,                                                               
and  he pointed  out that  freight is  the largest  portion.   He                                                               
discussed  how  the operating  expenses  are  the basis  for  its                                                               
capital budget,  as this  is the  one statistic  which represents                                                               
how well the railroad is doing.                                                                                                 
                                                                                                                                
MR. O'LEARY, in  response to a committee  question concerning the                                                               
investment ARRC  makes into its  freight operations,  stated that                                                               
the Federal Transit Administration  (FTA) formula monies can only                                                               
be applied  to passenger services;  therefore, internal  funds go                                                               
to items  that are not  eligible for  FTA funds, such  as freight                                                               
and real  estate.  He added  that because there is  only a single                                                               
track,  passenger   tracks  are   maintained  with   FTA  monies;                                                               
therefore,  the freight  services would  indirectly benefit  from                                                               
this.   He  expressed  uncertainty concerning  the split  between                                                               
real  estate and  freight internal  funding.   In  response to  a                                                               
follow-up question concerning ARRC  charging other state agencies                                                               
for land use,  he stated that the  model is for ARRC  to be self-                                                               
sustaining.   He stated that  about half of  its land is  used in                                                               
its  operations, while  the  other half  would  be available  for                                                               
other uses,  and this involves  leases.  He noted  the difficulty                                                               
in running  the railroad in  the state,  and having the  land for                                                               
lease has  been consistent  revenue for ARRC,  and this  is often                                                               
used as a reinvestment into the  railroad.  He stated that due to                                                               
hard work,  the railroad  is now making  money, unlike  the past.                                                               
He reminded  the committee that most  other state-owned railroads                                                               
in the country receive state subsidies, while ARRC does not.                                                                    
                                                                                                                                
2:14:01 PM                                                                                                                    
                                                                                                                                
BRIAN  LINDAMOOD,  Vice  President  and  Chief  Engineer,  Alaska                                                               
Railroad  Corporation,  in  further  response  to  the  committee                                                               
question,  stated that  currently ARRC  is not  directly charging                                                               
the Department  of Transportation and Public  Facilities (DOT&PF)                                                               
for land usage  outside of the rights of way.   He explained that                                                               
there is a  substantial amount of money that goes  back and forth                                                               
between  the agencies,  but some  of this  is because  of federal                                                               
requirements.  In some projects,  facilities are shared, and ARRC                                                               
is paid to do some of the work,  but this could go both ways.  He                                                               
added  that  DOT&PF  has  responsibility for  some  of  the  rail                                                               
crossings, and it pays ARRC to maintain these.                                                                                  
                                                                                                                                
CHAIR MCCABE  commented that the  biggest complaint he  has heard                                                               
about the railroad  concerns the rights of way on  state land and                                                               
the safety of some of these.                                                                                                    
                                                                                                                                
2:17:29 PM                                                                                                                    
                                                                                                                                
MEGHAN  CLEMENS,  Director,  External  Affairs,  Alaska  Railroad                                                               
Corporation, co-presented the PowerPoint  on the Alaska Railroad.                                                               
She moved  to slide 8  through slide 10  and gave an  overview of                                                               
the five-year capital investment plan.   She stated that the plan                                                               
mostly   consists  of   the  maintenance   and  support   of  the                                                               
infrastructure.   She focused on  the bridge and  track programs,                                                               
as these make  up a large amount  of the budget.   She noted that                                                               
with  the  100-year anniversary  of  the  railroad, much  of  the                                                               
infrastructure is  old, such as  100-year-old bridges.   She said                                                               
that a  $10 million plan  will replace  over 50 bridges  over the                                                               
next 10 years.  She  noted the toll that environmental challenges                                                               
take on tracks.  She noted  that there are some grants that would                                                               
fund this maintenance.                                                                                                          
                                                                                                                                
MS. CLEMENS  discussed the plans  for the Whittier  Terminal, the                                                               
Seward  Freight Terminal,  and the  Seward Passenger  Dock.   She                                                               
pointed  out that  a grant  has  been designated  for the  Seward                                                               
Freight project.  For the passenger  dock, she noted that ARRC is                                                               
looking for additional funding to support this.                                                                                 
                                                                                                                                
2:22:21 PM                                                                                                                    
                                                                                                                                
MS. CLEMENS, in  response to a committee  question, affirmed that                                                               
ARRC owns the Seward Passenger Dock  and there has already been a                                                               
$30 million bond passed for this.                                                                                               
                                                                                                                                
MR. O'LEARY, in  response, stated that two years  ago ARRC sought                                                               
legislature authority to issue public  debt, so at that point the                                                               
project was  around $60 million;  however, since this  time there                                                               
has been a change of  scope, and an additional bond authorization                                                               
would  be required.   In  response  to a  follow-up question,  he                                                               
stated that  bonds would  be used  for very  large projects.   He                                                               
pointed out that no customers  have been identified for the [Port                                                               
MacKenzie Rail  Extension], so ARRC  cannot justify  building the                                                               
project.                                                                                                                        
                                                                                                                                
MS. CLEMENS,  in response  to a  committee question,  stated that                                                               
PIDP  stands for  "Port Infrastructure  Development Project"  and                                                               
MARAD  stands  for "Maritime  Administration."    She added  that                                                               
MARAD  is federal.   In  response  to a  follow-up question,  she                                                               
confirmed  that ARRC  can do  MARAD funding  because it  owns the                                                               
Seward Passenger Dock.                                                                                                          
                                                                                                                                
2:26:50 PM                                                                                                                    
                                                                                                                                
MS.  CLEMENS   continued  to  slide   11  and   discussed  ARRC's                                                               
competitive grant strategy.  She  reiterated that there are needs                                                               
associated  with bridges,  tracks,  and  facilities.   Concerning                                                               
pursuing these  projects, she stated  that ARRC would  first have                                                               
to ask  whether it has  the resources  to pursue grants  and meet                                                               
federal  and nonfederal  requirements.   She addressed  the cost-                                                               
benefit analysis when pursuing grants.                                                                                          
                                                                                                                                
MS. CLEMENS continued  to slide 12 which displayed  a snapshot of                                                               
ARRC's  activities concerning  competitive  grants  for the  last                                                               
five years.   She pointed out  that ARRC has been  successful, as                                                               
it has  secured over $46  million in federal funding  during this                                                               
time  frame.   She  pointed  out the  grants  that  had not  been                                                               
awarded, which totaled around $41 million.                                                                                      
                                                                                                                                
2:30:51 PM                                                                                                                    
                                                                                                                                
MS. CLEMENS,  in response  to a  committee question,  stated that                                                               
all awarded  grants must  meet the  benefits-cost analysis.   She                                                               
noted that one  benefit in this analysis includes  the removal of                                                               
large-truck  traffic  from highways.    The  benefits would  also                                                               
include emissions reduction, decreased  wear on the roadways, and                                                               
increased quality of  life in communities.  She  stated that this                                                               
is all part of the analysis.                                                                                                    
                                                                                                                                
MR.  LINDAMOOD, in  response to  a committee  question concerning                                                               
the  federal  government's  metric,  stated that  ARRC  uses  the                                                               
return-on-investment metric like any  business, while the federal                                                               
government uses the  benefits-cost analysis.  He  stated that the                                                               
federal government would be looking  at greater things other than                                                               
just  return,  such  as  impacts  to  economically  disadvantaged                                                               
areas.                                                                                                                          
                                                                                                                                
MR. O'LEARY, in  response to a committee  question concerning the                                                               
railroad  being a  monopoly, stated  that the  railroad does  not                                                               
focus on maximizing profitability, but  it focuses on being self-                                                               
sustaining.  He expressed uncertainty  about any areas where ARRC                                                               
would be  a monopoly.   He  expressed the  opinion that  ARRC has                                                               
competition concerning freight, passengers,  and real estate, and                                                               
this is considered in all its dealings.                                                                                         
                                                                                                                                
MR.  LINDAMOOD, in  response to  a committee  question concerning                                                               
grants  for  PMRE,  stated  ARRC has  been  involved  with  this.                                                               
Concerning partnerships, he pointed out that the Matanuska-                                                                     
Susitna  Borough had  put  the grants  together,  while ARRC  did                                                               
support work.                                                                                                                   
                                                                                                                                
MR.  O'LEARY stated  that ARRC  is ready  to take  the leadership                                                               
role  and  partnership  role  in working  with  the  borough  and                                                               
stakeholders to bring PMRE "across the finish line."                                                                            
                                                                                                                                
2:38:35 PM                                                                                                                    
                                                                                                                                
MR. LINDAMOOD  continued to slide  13, which addresses PMRE.   He                                                               
stated  that the  Federal Surface  Transportation Board  has sole                                                               
discretion  over  rail  extensions,   and  the  borough  has  the                                                               
permits.  He  explained that the grants would go  to the borough,                                                               
which would use ARRC  as a contractor.  He moved  to slide 14 and                                                               
discussed  PMRE project  accounting.   He moved  to slide  15 and                                                               
discussed  the  project  status, including  roadbed  preparation,                                                               
signal   construction,    facility   construction,    and   track                                                               
construction.    He  discussed the  funding  needed  to  continue                                                               
construction, which includes the pursuit of the Build-Back-                                                                     
Better Grant and legislative requests.                                                                                          
                                                                                                                                
2:43:52 PM                                                                                                                    
                                                                                                                                
MR. O'LEARY, in response to  a committee question concerning PMRE                                                               
and  the   U.S.  Department  of   Defense  and   other  potential                                                               
customers,  stated that  in 2014  there  was more  interest.   He                                                               
stated that  now there  is more interest  from the  energy sector                                                               
concerning liquified  natural gas  (LNG).   He stated  that there                                                               
has  been a  recent discussion  with the  military, but  this was                                                               
related to the NRE project.                                                                                                     
                                                                                                                                
MR.  LINDAMOOD, in  response to  a committee  question concerning                                                               
steel to make rail, stated that this is relatively available.                                                                   
                                                                                                                                
MR.  LINDAMOOD, in  response to  a committee  question concerning                                                               
the  progress of  the  project and  how to  explain  the cost  to                                                               
constituents, stated  that the cost  from 2012 to  2020 increased                                                               
around 30 percent, with another  30 percent increase from 2020 to                                                               
2023.                                                                                                                           
                                                                                                                                
MR. O'LEARY, in  response to a committee  question, expressed the                                                               
opinion that  the railroad  does not have  a monopoly  because it                                                               
faces competition  in every  aspect of its  business.   He argued                                                               
that the  vast majority  of the  customer interaction  is through                                                               
contracts, and  he expressed the  understanding that  the pricing                                                               
in these contracts reflect the model ARRC is working under.                                                                     
                                                                                                                                
MR.  LINDAMOOD, in  response to  a committee  question concerning                                                               
what  recourse  a  municipality would  have  concerning  crossing                                                               
contracts, stated  that crossings are there  for convenience, and                                                               
the crossing is maintained by the  railroad.  He stated that this                                                               
is billed per the cost incurred,  and per any extra charges there                                                               
would be an  advance notice.  He discussed the  safety issues and                                                               
costs incurred for this and the cost for upgrading parts.                                                                       
                                                                                                                                
MR. O'LEARY, in  response to a committee  question, expressed the                                                               
understanding  that  there  have  not been  any  studies  on  the                                                               
economic liability for PMRE.                                                                                                    
                                                                                                                                
CHAIR MCCABE commented that there  are only four salt water ports                                                               
in the country  that are not connected to a  railroad.  He argued                                                               
that if  PMRE is  built, more resources  would be  available, and                                                               
this would attract the customers.                                                                                               
                                                                                                                                
MR. O'LEARY,  in response to  a previous question  concerning who                                                               
the customers  and partnerships  are, stated  that ARRC  needs to                                                               
have partnerships with  the borough and other  businesses to have                                                               
a chance at "penciling out  the benefit-cost analysis."  He added                                                               
that this analysis would help  procure the federal grant and this                                                               
would help provide the customers.                                                                                               
                                                                                                                                
MR. LINDAMOOD,  in response  to a  committee question  on whether                                                               
the  benefit-cost analysis  is subjective,  stated  that for  the                                                               
federal competitive grants, the  federal government dictates what                                                               
is  included in  the benefit-cost  analysis.   He  stated that  a                                                               
contractor that  is familiar with  the requirements  is generally                                                               
used.                                                                                                                           
                                                                                                                                
MR.  O'LEARY,  in response  to  a  committee question,  expressed                                                               
uncertainty concerning  how much of  the freight revenue  is from                                                               
military money.   He stated that the military is  a good customer                                                               
for ARRC.                                                                                                                       
                                                                                                                                
3:02:00 PM                                                                                                                    
                                                                                                                                
MR.  LINDAMOOD,  co-presenting  the   PowerPoint  on  the  Alaska                                                               
Railroad, moved to slide 16  and slide 17, titled "Estimated Cost                                                               
to  Complete."   He  stated  that  a  third  party was  hired  to                                                               
estimate the cost  to finish the PMRE project.   He discussed the                                                               
detailed list of  costs, with the total of  these costs resulting                                                               
in around $231 million.   He pointed out that this  cost is as of                                                               
today, but  considering inflation and other  factors, the project                                                               
would cost over $100 million more.                                                                                              
                                                                                                                                
MR. LINDAMOOD, in  response to a committee  question, stated that                                                               
if the project  takes three years to complete,  the funding would                                                               
be divided by three, with each year needing funding.                                                                            
                                                                                                                                
MR. LINDAMOOD  continued to slide  18 and discussed  the Northern                                                               
Rail Extension  (NRE) project.   He  explained that  this project                                                               
was envisioned  to expand military  access.  He went  through the                                                               
timeline, as seen  on slide 19.  He pointed  out that the project                                                               
was broken  into phases  as it grew.   He moved  to slide  20 and                                                               
discussed  phase  one,  or  the   Tanana  Bridge  project,  which                                                               
resulted in the longest bridge in  the state.  He stated that the                                                               
bridge  was funded  through the  U.S. Department  of Defense  and                                                               
from state  appropriations.   The bridge  was completed  in 2014,                                                               
and it is used by the military.                                                                                                 
                                                                                                                                
MR.  LINDAMOOD  continued to  slide  21  and discussed  the  next                                                               
phases after the  Tanana Bridge.  He stated that  phase two would                                                               
entail  moving the  rail  up  to North  Pole,  phase three  would                                                               
extend the  rail to  the Donnelly Training  Area, and  phase four                                                               
would  go from  Donnelly to  Delta  Junction.   He discussed  the                                                               
difference  with PMRE  and NRE,  noting that  PMRE does  not need                                                               
additional  federal evaluation,  unless there  are any  potential                                                               
federal grants.   However, he  stated that NRE would  likely need                                                               
multiple reevaluations  from different agencies.   He pointed out                                                               
that federal land  ownership in the NRE project  areas would need                                                               
to  be addressed,  and this  could  cause further  delays.   Once                                                               
challenges are  addressed, he estimated  that it would  take five                                                               
years to build the NRE project.                                                                                                 
                                                                                                                                
MR.  LINDAMOOD continued  to slide  23  and stated  that the  NRE                                                               
budgetary estimate  is around  $1.7 billion.   He noted  that the                                                               
actual plans for  the project are not complete,  so these numbers                                                               
could vary.                                                                                                                     
                                                                                                                                
3:13:11 PM                                                                                                                    
                                                                                                                                
MS.  CLEMENS continued  to  slide 24  and  discussed the  funding                                                               
strategies for  PMRE.  She noted  that there has been  no federal                                                               
funding for this project up  to date, as federalizing the project                                                               
could bring some  risks, such as time delays  from reviewing EIS.                                                               
However, she pointed out that  federal funds also bring benefits.                                                               
She gave details on the  three potential funding sources for both                                                               
PMRE and  NRE, as  seen on  the slide.   She  noted that  each of                                                               
these have a 20 percent funding match.                                                                                          
                                                                                                                                
3:17:03 PM                                                                                                                    
                                                                                                                                
MS. CLEMENS, in  response to a committee  question concerning the                                                               
total grant  amount possible,  stated that  to compare  the total                                                               
amount with the  total costs of the project,  the timeframe would                                                               
need to be  considered.  She expressed the opinion  that the idea                                                               
of receiving a lumpsum would be  ambitious.  She stated that this                                                               
is all in the discussion of  what is available and supported with                                                               
nonfederal  matches, as  the  larger the  grant,  the larger  the                                                               
match would be.                                                                                                                 
                                                                                                                                
MS. CLEMENS  moved to slide  25 and discussed  funding strategies                                                               
for NRE.  She reiterated  that the three grant opportunities seen                                                               
on the previous  slide could be relevant for NRE.   She suggested                                                               
that  with the  history of  the military  in this  project, there                                                               
would be  military grants available;  however, she  expressed the                                                               
opinion that there would not be a  big ear mark like the one that                                                               
had come in the beginning of the project.                                                                                       
                                                                                                                                
MR. O'LEARY, in response to  a committee question concerning toll                                                               
roads,  stated that  ARRC  is  open to  any  funding  ideas.   He                                                               
discussed  the  needs  for partnerships  because  ARRC's  balance                                                               
sheet does  not show any additional  funding.  He stated  that at                                                               
this  point  ARRC is  talking  to  "anybody and  everybody  about                                                               
this,"  as the  commercial opportunities  need to  be understood.                                                               
He  discussed the  funding  matches,  reiterating the  difference                                                               
between PMRE and NRE concerning federal funding.                                                                                
                                                                                                                                
MR.  O'LEARY,  in response  to  a  committee question  concerning                                                               
other aspects of the benefit-cost  analysis, expressed support on                                                               
behalf  of  ARRC  for  the  projects and  the  idea  of  building                                                               
infrastructure in the state.  He  pointed to the second bullet on                                                               
slide  27, which  addresses balancing  growth with  the essential                                                               
maintenance  of existing  assets.   He  argued that  much of  the                                                               
economy  in   Alaska  is   stranded  because   of  the   lack  of                                                               
infrastructure.                                                                                                                 
                                                                                                                                
3:27:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRONK  commented on  the undeveloped  resources in                                                               
the state, arguing that the state needs a vision.                                                                               
                                                                                                                                
MR.  O'LEARY,  in response  to  a  committee question  concerning                                                               
statutory requirements, stated that in  the past there had been a                                                               
line on  the very back  page of  the annual report  outlining any                                                               
entities  interested in  purchasing the  railroad.   He expressed                                                               
the understanding that over the past  10 years there has not been                                                               
any discussion of this.                                                                                                         
                                                                                                                                
CHAIR MCCABE  expressed the opinion that  the unfinished railroad                                                               
projects are hurting Alaskans.                                                                                                  
                                                                                                                                
MR. LINDAMOOD, in  response to a committee  question, stated that                                                               
the military training grounds are all on federal lands.                                                                         
                                                                                                                                
3:36:18 PM                                                                                                                    
                                                                                                                                
CHAIR MCCABE opened public testimony.                                                                                           
                                                                                                                                
3:36:52 PM                                                                                                                    
                                                                                                                                
ROBERT HALL, President, Houston  Chamber of Commerce, gave public                                                               
testimony  on the  presentations.   He expressed  support of  the                                                               
railroad projects on  behalf of the Houston  Chamber of Commerce.                                                               
He expressed the opinion that the  key to economic success in the                                                               
state would  be the ability  to move goods and  natural resources                                                               
to market.   He stated  that PMRE should  be part of  the state's                                                               
development  for  the next  100  years.    He discussed  the  LNG                                                               
savings the  extended rail to  Fairbanks would create.   He noted                                                               
that  no industrial  customers are  coming  forward; however,  he                                                               
argued  that  currently  there  are many  combined  uses  of  the                                                               
railroad  to  justify  the  completion of  these  projects.    He                                                               
expressed  the importance  of the  committee meeting  and pointed                                                               
out that the Alyeska pipeline was not built overnight.                                                                          
                                                                                                                                
3:39:56 PM                                                                                                                    
                                                                                                                                
CHAIR MCCABE closed public testimony.                                                                                           
                                                                                                                                
3:40:34 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Transportation Standing Committee meeting was adjourned at 3:40                                                                 
p.m.                                                                                                                            

Document Name Date/Time Subjects
MSB.Port MacKenzie Rail Construction Status-Map-October 2023.Nov 20, 2023.pdf HTRA 11/20/2023 1:00:00 PM
MSB.PMRE.ConstructionStatus
MSB.PortMacKenzie_AreaAccess.Nov 20, 2023.pdf HTRA 11/20/2023 1:00:00 PM
PtMacAreaAccess.11.20.23
MSB.Port MacKenzie Presentation.v1.Nov 20, 2023.1.pdf HTRA 11/20/2023 1:00:00 PM
MSB.PtMacPresentation.11.20.23
MSB.Port_Mac_LandOwnership.Nov 20, 2023.pdf HTRA 11/20/2023 1:00:00 PM
MSB.PtMac.LandOwnership.11.20.23
AKRR.HouseTransportation.Nov20, 2023..pdf HTRA 11/20/2023 1:00:00 PM
AKRR.Presentation.11.20.23
Western Canada Rail Expansion Options.11.20.23.pdf HTRA 11/20/2023 1:00:00 PM
W.Canada.Rail.Expansion.Options
Sen.Murkowski.IIJA.PR.11.20.23.pdf HTRA 11/20/2023 1:00:00 PM
Sen.Murkowski.IIJA.PR.11.20.23
Sen.MurkowskiOp.Ed.11.20.23.pdf HTRA 11/20/2023 1:00:00 PM
Sen.Murkowski.Op.Ed.11.20.23
FRA.GrantProgramSheetandDeadlines.11.20.23.pdf HTRA 11/20/2023 1:00:00 PM
FRA.Grants.11.20.23
SupportingDocs.11.18.23.pdf HTRA 11/20/2023 1:00:00 PM
Supporting.Docs.11.20.23