Legislature(2025 - 2026)BARNES 124
02/27/2025 01:00 PM House TRANSPORTATION
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| Audio | Topic |
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| Start | |
| Presentation: Alaska Railroad Corporation Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
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ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 27, 2025
1:07 p.m.
DRAFT
MEMBERS PRESENT
Representative Ashley Carrick, Co-Chair
Representative Ted Eischeid, Co-Chair
Representative Genevieve Mina
Representative Louise Stutes
Representative Elexie Moore
MEMBERS ABSENT
Representative Kevin McCabe
Representative Cathy Tilton
COMMITTEE CALENDAR
PRESENTATION: ALASKA RAILROAD CORPORATION OVERVIEW
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BILL O'LEARY, President, CEO
Alaska Railroad Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint on the Alaska
Railroad Corporation.
MEGHAN CLEMENS, Director
External Affairs
Alaska Railroad Corporation
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint on the Alaska
Railroad Corporation.
ACTION NARRATIVE
1:07:09 PM
CO-CHAIR CARRICK called the House Transportation Standing
Committee meeting to order at 1:07 p.m. Representatives Moore,
Mina, Eischeid, and Carrick were present at the call to order.
Representative Stutes arrived as the meeting was in progress.
^PRESENTATION: Alaska Railroad Corporation Overview
PRESENTATION: Alaska Railroad Corporation Overview
1:07:49 PM
CO-CHAIR CARRICK announced that the only order of business would
be a presentation by the Alaska Railroad Corporation.
1:08:33 PM
BILL O'LEARY, President, CEO, Alaska Railroad Corporation
(ARRC), co-presented the PowerPoint on the Alaska Railroad
Corporation [hard copy included in the committee packet]. On
slide 2, he pointed out the agenda for the presentation. He
noted ARRC's mission statement, as seen on slide 3, which read
as follows [original punctuation provided]:
Through excellent customer service and sound business
management practices, provide safe, efficient and
economical transportation and real estate services
that support and grow economic development
opportunities for the State of Alaska.
MR. O'LEARY overviewed important facts about the Alaska
Railroad, as seen on slide 4. He stated that the federal
government had originally owned the railroad, but in 1984, it
was sold to the state. He expressed the understanding that this
sale happened because the railroad was in disrepair, and the
federal government "was looking to unload the asset." He stated
that after the sell, the railroad was set up as an independent
state corporation. He explained that this is unique because the
employees would be managed independently, while the governor
would appoint ARRC's seven-member board of directors. He
continued that ARRC is a self-sustaining corporation that does
not rely on the state for funding and legal obligations. He
pointed out that profits would be used in its capital budget to
sustain the railroad. He discussed the railroad's
infrastructure and employees, as seen on the slide.
MR. O'LEARY listed ARRC's strategic goals, as seen on slide 5,
which read as follows [original punctuation provided]:
1. Build a Proactive Culture of Safety and Excellence
2. Enhance Stewardship and Stakeholder Relations
3. Grow Revenue by Sustaining and Expanding Business
Opportunities
4. Improve Profitability through Operational and
Administrative Efficiencies
5. Optimize Capital Program Investment and Management
6. Enhance Economic Growth through Rail and Real
Estate Development
1:17:43 PM
MEGHAN CLEMENS, Director, External Affairs, Alaska Railroad
Corporation, co-presented the PowerPoint on the Alaska Railroad
Corporation. She explained several of the strategic goals,
beginning with safety, as seen on slide 7 and slide 8. She
explained that safety is the railroad's top priority, and ARRC
looks at this from several different angles. She discussed
ARRC's employee safety program, its public safety awareness
campaign, and its emergency training program that is coordinated
with local agencies. She moved to slide 9 and stated that the
Alaska Railroad is working to be a "good neighbor" by engaging
with the public. She listed different events, partnerships, and
projects concerning AARC's efforts toward community engagement.
MS. CLEMENS moved to slide 10 and discussed ARRC's financial
plan, which is to grow revenue by sustaining and expanding
business opportunities and improving profitability through
efficiencies. She did a breakdown of this plan into ARRC's
different business and service lines, as seen on slide 11
through slide 17. She began by addressing freight services,
stating that this creates the majority of ARRC's revenue. For
moving heavy freight and bulk commodities in the state, she
asserted that using the railroad would be the most cost-
efficient method. She noted that ARRC owns freight docks in
Seward and Whittier, and it has tracks to the port in Anchorage.
She discussed the rail-barge service, which connects Alaska with
the Lower 48.
1:24:17 PM
MR. O'LEARY, in response to a question from Co-Chair Eischeid,
said that ARRC has not analyzed any potential financial impacts
from trade tariffs, as the tariffs have not yet been realized.
MS. CLEMENS, in response to a question from Representative
Moore, stated that ARRC owns three docks in Seward. She stated
that the export coal dock still exists, but the conveyor belt is
being removed. She noted that the Usibelli Coal Mine had been
this dock's anchor tenant when it was in operation. In response
to a follow-up question, she stated that an upcoming slide would
address the railroad's revenue from its freight operations.
MS. CLEMENS continued discussing the railroad's freight
operations. She moved to slide 12, which graphed the volume of
the cargo hauled by the railway by year. She moved to slide 13
and slide 14, pointing out that the Alaska Railroad is best
known for its passenger services. She stated that ARRC operates
year-round regular passenger service, and it also partners with
the tourist industry, providing access across the state to
visitors. She added that the railroad connects visitors between
the airport in Anchorage and cruise ship ports. She pointed out
that the railroad offers flag stop service, which is the last
type of this service in the country. She explained that this
provides service to Alaskans living off the road system.
MS. CLEMENS, in response to a question from Representative Mina,
noted that ARRC has done a commuter rail study for the
Matanuska-Susitna Valley. She discussed the financial aspect of
providing this service, pointing out that it would need to be
heavily subsidized because it would be expensive.
MS. CLEMENS, in response to a question from Co-Chair Carrick,
clarified that the train flag stops would be north of Talkeetna
to Hurricane Gulch. She pointed out that in this area the
highway and the rail tracks have diverged, and individuals with
properties off the road are able to flag down a train.
MS. CLEMENS, in response to a question from Representative
Moore, stated that there has been no breakdown of the different
cargo revenues into percentages; however, an upcoming slide
would show the overall freight revenue.
1:32:29 PM
MS. CLEMENS pointed out the railroad's passenger ridership
graphed by year on slide 14. She explained that the bars in the
graph have been divided between Alaska Railroad ridership and
cruise and contract ridership. She pointed out on the graph the
effect of the COVID-19 pandemic in 2020, noting that ridership
has since rebounded. On slide 15 and slide 16, she spoke to
ARRC's real estate element of its revenue. She explained that
when the federal government sold the Alaska Railroad to the
state, the ownership of 36,000 acres of land came with the sell.
She stated that around half of this acreage is available for
leasing. She noted that while this is a small portion of the
railroad's revenue, it is one of the most consistent. She
displayed the graph on slide 16 of real estate revenue by year.
MS. CLEMENS moved to slide 17 and reviewed ARRC's net income and
revenue sources. She stated that the graph shows a yearly
breakdown of each source. She noted that the dip in revenue in
2024 had been the result of a delay in awarded federal funds.
She pointed out that the pie chart shows a breakdown by business
line of the railroad's revenue sources. She indicated that
freight would make up just under half of ARRC's total revenue.
She added that all income would be invested in the railroad's
capital program to maintain and improve infrastructure and
operations.
MR. O'LEARY, in response to a question from Representative
Moore, explained that the "other" category on the pie chart is
variable, as it represents things such as interest earnings and
gains from sold assets.
1:38:35 PM
MS. CLEMENS discussed ARRC's capital investment plan, which was
covered on slide 18 to slide 23. She pointed out that for 2025,
the railroad's capital budget would be just over $160 million,
as seen on slide 19. She added that federal grant awards have
funded $90 million of this. She projected that over the next
five years over $600 million would be invested in railroad
infrastructure and equipment.
MS. CLEMENS, in response to a question from Co-Chair Carrick,
stated that an Alaska to Alberta rail line would require a large
investment from both the U.S. and Canada. She stated that the
Northern Rail Extension would be discussed on a future slide.
1:40:57 PM
MS. CLEMENS moved to slide 20 and pointed out the chart of
competitive federal grants received by AARC, and the match rates
AARC paid. Concerning the projects associated with the grants,
she noted that many are infrastructure grants, such as the $25
million grant to rehabilitate the Hurricane Gulch Bridge. On
slide 21, she further discussed the railroad's capital
investments. She stated that its biggest line items are bridges
and tracks, and the plan is to replace 60 bridges over the next
decade. She stated that a significant portion of the railroad's
infrastructure is over 100 years old. She added that the goal
is to replace around 50,000 railroad ties every summer. She
noted that federal funding would go towards these infrastructure
projects. On slide 22, she stated that the board has authorized
just under $10 million to buy new locomotives and flat cars, as
both the passenger and freight businesses are growing. She
noted that the freight business supports the North Slope. On
slide 23, she discussed the Whittier Terminal Master Plan. She
stated that this would update and redevelop the terminal, with a
projected completion date in the summer of 2025.
1:46:56 PM
MR. O'LEARY discussed ARRC's economic development plans, as seen
on slide 25 to slide 33. He noted that expanding the railway's
existing infrastructure would be seen as economic development.
He said ensuring that the rail system is safe would also be seen
as economic development. Concerning infrastructure investments,
he pointed out the plan to expand the freight dock and build a
new cruise ship dock in Seward. On slide 26, he gave the
details on the freight dock expansion project in Seward, noting
that this expansion would accommodate growth. On slide 27 to
slide 29, he spoke about the Seward cruise ship dock rebuild, as
the current dock is aging and failing. He noted the current
high cost of maintaining the dock for safety. He stated that
the plan would create accessibility for the largest cruise ships
serving the state. He discussed the funding and revenue bonds
for this project, noting that the Royal Caribbean Group would
secure these bonds, as it would be the anchor tenant with a 30-
year contract. He noted that this is one of the key gateways
for passengers coming to Southcentral Alaska.
MR. O'LEARY discussed the Port MacKenzie Rail Extension project,
as seen on slide 28 to slide 32. He explained that this is a
Matanuska-Susitna Borough project, with the railroad acting as
the project manager. He pointed out that state appropriations
had been obtained to build the 32-mile link from the port to
Houston; however, after infrastructure work began, costs have
increased, and now additional funding is needed for the
completion of the project. He added that ARRC is working on a
funding packet; however, he said, "There's not going to be one
silver bullet that gets this done." On behalf of ARRC, he
expressed support for the rail extension project. He noted the
work ARRC is doing with partners for economic development.
These partners include private industry, the state government,
and the federal government. He noted that ARRC would submit a
Consolidated Rail Infrastructure and Safety Improvements (CRISI)
grant application in the summer of 2025. He discussed the
future funding that would be needed for this expansion project.
MR. O'LEARY moved to slide 31 and discussed the Northern Rail
Extension project. He noted that this project has had some
funding over the last two decades; however, it also has not been
completed. He noted that this rail extension would take
passengers within 200 miles of the Canadian border. He stated
that this project had coincided with a private project to
develop a rail extension from Alaska to Alberta; however, this
project has also stalled. He explained the current investment
and construction for the Northern Rail Extension project, noting
that around $184 million has already been invested. He noted
that this funding came from both the state and the U.S.
Department of Defense, as the railway would provide
transportation to military training grounds. He stated that
this project has also stalled because of the rise in
construction costs. He noted that there are several phases
remaining for this project; however, ARRC has not worked through
the estimate for completion. He suggested that $1.7 billion
would be needed to reach the goal of a railway to Delta
Junction.
MR. O'LEARY discussed economic development through partnerships,
explaining that the Alaska Railroad would not be able to
accomplish the rail extension projects on its own. He noted its
partnerships include the Alaska Congressional Delegation, the
state government, the U.S. Department of Transportation, the
Alaska Industrial Development and Export Authority (AIDEA),
private industry, the military, Canada, and others.
2:04:22 PM
MR. O'LEARY, in response to a question from Co-Chair Eischeid,
stated that ARRC has a "solid working relationship" with AIDEA,
and they have ongoing conversations on intersecting
developmental projects. He noted that the Port Mackenzie
project would be a "great" example; however, nothing has been
agreed upon.
REPRESENTATIVE STUTES pointed out the conflict concerning
easements between the Alaska Railroad and its neighbors. She
questioned whether there has been a resolution.
MR. O'LEARY, in response, stated that the railroad bisects the
state with 700 miles of track; therefore, neighbors could be
impacted. Concerning the Flying Crown Subdivision, he stated
that this group has been vocal about land ownership issues,
which were created when the ownership of the railroad was
transferred from the federal government to the state. He
discussed the details of the conflict, expressing the opinion
that the situation had been ongoing and difficult; therefore,
ARRC went to the courts to obtain clarity. He stated that a
quiet title action was filed in federal court, which resulted in
a ruling in favor of ARRC. He noted that the decision had been
appealed, and it eventually went to the Supreme Court of the
United States, where the original court decision was upheld. He
explained that this was not a punitive action by ARRC, and it
was renegotiated so that the Flying Crown Subdivision would have
a no-fee renewable permit. He expressed the opinion that a
level of understanding has been reached.
REPRESENTATIVE STUTES expressed appreciation that there has been
some resolution.
CO-CHAIR CARRICK questioned whether AARC's challenges with pre-
statehood homesteaders have been resolved.
MR. O'LEARY, in response, stated that there have been issues
with homesteaders on the rail line from Fairbanks to North Pole.
He stated that he understands their position; however, he
asserted that the railroad's position is valid, and there has
been no revenue sharing in result. In response to a follow-up
question, he stated that the rail lines around the homesteaders
have not changed since before statehood ownership.
MR. O'LEARY concluded the presentation on slide 34. He
expressed the opinion that Alaska has been "fortunate" to have
purchased the railroad, as it is an asset beneficial to the
residents of the state. He noted that the railroad does not
receive funding from the general fund. He indicated that there
have been challenges, but the railroad has proven to be
resilient. He asserted that the employees of the railroad are
committed to the organization and its mission. He expressed
appreciation to Representative Stutes for her work on the Seward
bond bill. He encouraged outreach concerning any issues with
ARRC.
2:16:41 PM
CO-CHAIR CARRICK pointed out that the resident passenger rate is
the same as the tourist passenger rate for the railroad. She
questioned why this could not be changed.
MR. O'LEARY, in response, stated that a resident rate was
offered in the past; however, now the railroad receives federal
funding, and this funding does not allow for a geographical cost
differential for the same services. He pointed out that the
Alaska Railroad has some trains geared towards residents.
REPRESENTATIVE MOORE questioned the percentage of freight that
goes northbound, and she questioned how this would take away
from projects in Seward and Whittier.
MR. O'LEARY, in response, referred to slide 12. He stated that
most of the freight volume goes between Anchorage and Fairbanks.
He asserted that ARRC is working to make Port MacKenzie a viable
option.
MS. CLEMENS added the opinion that the Seward passenger dock
model should be replicated, as this model has an anchor tenant
with a 30-year contract to support the infrastructure. She
stated that ARRC has been working with representatives from the
Matanuska-Susitna Borough, and other stakeholders, to determine
which businesses could benefit from the rail extensions. She
expressed the understanding that businesses would be interested,
but only after tracks are laid. She noted that these potential
businesses would only represent half of the business volume
needed to support the rail extensions. She added that problems
include timing and regulatory issues. For these large projects
with large price tags, she stated that businesses would need to
know their potential benefits, and they would need to know that
ARRC has been able to secure federal competitive grants in the
past.
MS. CLEMENS, in response to a follow-up question concerning the
CRISI Program, stated that AIDEA has provided a support letter
for this grant. She explained that part of the outreach on the
rail extension projects would involve requesting businesses to
submit letters of support for the grant. She expressed the
understanding that many businesses have shown interest in
submitting a letter. She stated that these letters would
represent a "strong case" of support for transportation
infrastructure in Alaska.
REPRESENTATIVE STUTES expressed appreciation that the Seward
project is going forward. She added that this would accommodate
the Alaska Marine Highway System, which is "good for the whole
state."
2:25:32 PM
CO-CHAIR CARRICK thanked the presenters and made closing
comments.
2:26:08 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:26
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 02.27.25 AK Railroad Presentation.pdf |
HTRA 2/27/2025 1:00:00 PM |