Legislature(2005 - 2006)SENATE FINANCE 532

03/21/2006 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 261(FIN) Out of Committee
Heard & Held
Moved SB 308 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    SENATE FINANCE COMMITTEE                                                                                  
                         March 21, 2006                                                                                       
                           9:06 a.m.                                                                                          
CALL TO ORDER                                                                                                               
Co-Chair  Lyda  Green  convened   the  meeting  at  approximately                                                               
9:06:44 AM.                                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Bert Stedman                                                                                                            
Senator Donny Olson                                                                                                             
Also Attending:  JOHN MACKINNON, Deputy Commissioner  of Highways                                                             
and Public  Facilities, Department  of Transportation  and Public                                                               
Facilities; CINDY  CASHEN, Administrator, Highway  Safety Office,                                                               
Department  of Transportation  and Public  Facilities; LIEUTENANT                                                               
JAMES  HELGOE,  Alaska  State   Troopers,  Department  of  Public                                                               
Safety;  KURT  SMITH,  State   Traffic  Engineer,  Department  of                                                               
Transportation and  Public Facilities; PATRICK  GAMBLE, President                                                               
and  Chief   Executive  Officer,  Alaska   Railroad  Corporation,                                                               
Department of Commerce, Community and Economic Development                                                                      
Attending  via  Teleconference:   There  were  no  teleconference                                                             
SUMMARY INFORMATION                                                                                                         
SB 261-REGULATION OF HWYS; TRAFFIC OFFENSES                                                                                     
The  Committee heard  from the  Department of  Transportation and                                                               
Public  Facilities.  One  amendment  was adopted,  and  the  bill                                                               
reported from Committee.                                                                                                        
SB 271-AUTHORIZE HWY PROGRAM PARTICIPATION                                                                                      
The  Committee heard  from the  Department of  Transportation and                                                               
Public Facilities  and the Alaska  State Troopers,  Department of                                                               
Public Safety. The bill was held in Committee.                                                                                  
SB 308-ALASKA RAILROAD REVENUE BONDS                                                                                            
The  Committee heard  from the  Alaska  Railroad Corporation  and                                                               
reported the bill from Committee.                                                                                               
9:07:11 AM                                                                                                                    
     CS FOR SENATE BILL NO. 261(TRA)                                                                                            
     "An  Act  relating  to the  designation  of  traffic  safety                                                               
     corridors;  relating to  the  bail or  fine  for an  offense                                                               
     committed  in a  traffic safety  corridor and  to separately                                                               
     accounting for  such fines; and  providing for  an effective                                                               
This was  the first hearing for  this bill in the  Senate Finance                                                               
JOHN  MACKINNON,  Deputy  Commissioner  of  Highways  and  Public                                                               
Facilities,  Department of  Transportation and  Public Facilities                                                               
informed  the Committee  that this  legislation  would allow  the                                                               
Department  to establish  "Traffic  Safety  Corridors" (TSC)  and                                                               
double   the  traffic   fines   within   those  Corridors.   This                                                               
legislation is the result of  repeated tragic accidents occurring                                                               
on  certain roadways,  including  the  Seward Highway.  Typically                                                               
when  a  road  is  experiencing  a  large  number  of  accidents,                                                               
"structural  improvements"  such   as  changing  its  "geometry",                                                               
widening  the  road,  and  adding passing  lanes  are  made.  The                                                               
Department  is furthering  the TSC  designation because  it would                                                               
produce "more immediate results".                                                                                               
Mr. MacKinnon  stated that the  six states that  have established                                                               
TSCs in areas  experiencing "a higher than average  rate of fatal                                                               
and very serious accidents" have deemed the endeavor a success.                                                                 
Mr.  MacKinnon   informed  the  Committee   that,  when   it  was                                                               
considering  establishing TSCs,  the Department  analyzed certain                                                               
road segments,  primarily "in the  Central region of  the State".                                                               
Contrary to  the Department's assumption that  the Seward Highway                                                               
would be  ranked the most  dangerous, the accident rate  on other                                                               
road segments, specifically those  in the Matanuska Susitna (Mat-                                                               
Su) Valley  "were every bit if  not more dangerous as  the Seward                                                               
Mr.  MacKinnon   remarked  that  "more  immediate   results"  are                                                               
experienced  by  addressing  drivers'  behavior,  as  opposed  to                                                               
making  road improvements.  Research  indicates  that "high  risk                                                               
drivers, drivers  that are  not driving  safely, respond  to only                                                               
one  message.  That  message   is  increased  enforcement."  This                                                               
legislation  would  couple   increased  enforcement  with  double                                                               
traffic fines.                                                                                                                  
Mr.  MacKinnon continued  that the  passage  of a  TSC law  would                                                               
allow the  Commissioner of the  Department of  Transportation and                                                               
Public Facilities,  upon "consultation" with the  Commissioner of                                                               
the  Department  of Public  Safety,  "to  designate corridors  of                                                               
roads as Traffic Safety Corridors."                                                                                             
9:10:21 AM                                                                                                                    
Mr. MacKinnon reiterated the fact  that the TSC designation would                                                               
be accompanied by increased law  enforcement efforts, which would                                                               
be  supported  by the  Department  of  Transportation and  Public                                                               
Facilities  using  federal  highway  aid  Safety  Sanction  Funds                                                               
(SSF)". The State must utilize  SSF to address road safety issues                                                               
such  as "road  improvements  on the  geometry  side of  things",                                                               
education programs such as the  State's "Click It or Ticket" seat                                                               
belt  message, or  increased Driving  Under  the Influence  (DUI)                                                               
Mr. MacKinnon specified that this  bill would allow the increased                                                               
revenue resulting from the double  traffic fines collected in the                                                               
TSC "to  be returned to  the Department". Those funds  would then                                                               
be funneled  to the  Department of Public  Safety to  provide for                                                               
the expense of the increased enforcement on the TSCs.                                                                           
9:11:39 AM                                                                                                                    
Mr.  MacKinnon  informed the  Committee  that  the Department  of                                                               
Transportation and  Public Facilities worked with  the Department                                                               
of Public Safety "in crafting" this legislation.                                                                                
Mr.  MacKinnon referred  the Committee  to four  maps [copies  on                                                               
file] "that  illustrate the  point that we  are trying  to make".                                                               
The  maps depict  a 13-mile  segment  on the  Parks Highway  from                                                               
Lucus Road to  the Alaska Railroad-Houston Crossing;  a 9.94 mile                                                               
segment  on  the Palmer/Wasilla  Highway  from  Glenn Highway  to                                                               
Parks Highway;  a 17.25 mile  segment on the Knik/Goose  Bay Road                                                               
from  Parks Highway  to Point  McKenzie  Road; and  a 26.94  mile                                                               
segment on the Seward Highway from Potter Marsh to Girdwood.                                                                    
Mr. MacKinnon  explained that  each map  depicts the  location of                                                               
each  fatal  accident  that occurred  on  that  specific  highway                                                               
segment  during  the  years  1977   to  2005.  Each  fatality  is                                                               
portrayed in  either a blue or  yellow box. A blue  box indicates                                                               
that alcohol  and drugs were  the driver behavior  issue involved                                                               
in  the fatality;  a yellow  box  indicates that  such things  as                                                               
inattention,  unsafe  speed,  and   improper  lane  changes  were                                                               
involved. The  increased enforcement proposed in  this bill would                                                               
have a tremendous "affect on controlling driver behavior".                                                                      
9:13:08 AM                                                                                                                    
Senator  Stedman asked  whether the  increased traffic  penalties                                                               
proposed in  this bill  would include  points against  a person's                                                               
driver's license or additional penalties  for drug and/or alcohol                                                               
use offenses.                                                                                                                   
Mr.  MacKinnon  responded  that  the bill  would  be  limited  to                                                               
increased  fine  penalties.  Points  against  a  driver  for  the                                                               
offense would not be doubled in the TSCs.                                                                                       
Co-Chair  Green declared  that the  penalty would  address excess                                                               
Mr. MacKinnon affirmed.  This legislation would "hit  them in the                                                               
Co-Chair Green  clarified that the  penalty would not  affect the                                                               
point scenario.                                                                                                                 
Senator Stedman,  while agreeing  that doubling fines  "would get                                                               
people's  attention," opined  that increasing  the point  penalty                                                               
would further  the effort to  modify drivers' behavior.  Thus, he                                                               
asked whether a discussion on the point issue had occurred.                                                                     
Co-Chair  Green pointed  out that  the point  issue had  not been                                                               
addressed  when  separate  legislation  increasing  penalties  in                                                               
construction zones had been discussed.                                                                                          
9:15:24 AM                                                                                                                    
CINDY  CASHEN, Administrator,  Highway Safety  Office, Department                                                               
of Transportation and Public  Facilities viewed Senator Stedman's                                                               
increased point  query as  "a good"  question. Noting  that Duane                                                               
Bannock,  Director, Division  of  Motor  Vehicles, Department  of                                                               
Administration,   could  more   appropriately   respond  to   the                                                               
question, she  remarked, "that when there's  excessive speeding",                                                               
a  separate charge  referred  to as  "racing"  could be  applied.                                                               
Points would  accompany that charge. Continuing,  she noted that,                                                               
"the  majority of  high risk  drivers tend  to already  have lost                                                               
their license. That's  not effective in making  them change their                                                               
behavior.  What's effective  with  them is  hitting  them in  the                                                               
9:16:19 AM                                                                                                                    
Co-Chair Wilken suggested that the  word "may" in Section 1, page                                                               
one line  13 of  the bill  be changed to  "shall", as  that would                                                               
ensure that the Commissioner of  the Department of Transportation                                                               
and Public Facilities would consult  with the Commissioner of the                                                               
Department  of  Public Safety  and  other  pertinent people  when                                                               
making the TSC determination.                                                                                                   
Mr.  MacKinnon  stated  that TSCs  would  "primarily  be  rural,"                                                               
outside  of urban  areas. Urban  area traffic  accidents tend  to                                                               
occur due to  intersection issues rather than  "long stretches of                                                               
road".  It   should  be  mandatory   that  the   Commissioner  of                                                               
Department of  Transportation and Public Facilities  consult with                                                               
the Department of  Public Safety. However, "there might  not be a                                                               
local  entity to  consult with.  We will  consult with  any local                                                               
entity there is, State, local, or federal."                                                                                     
In response  to a  question from  Co-Chair Wilken,  Mr. MacKinnon                                                               
voiced no objection to changing the word "may" to "shall".                                                                      
Amendment  #1:  This  amendment  replaces  the  word  "may"  with                                                               
"shall" in Section 1, page 1 line 13 of the bill.                                                                               
Co-Chair Wilken moved to adopt Amendment #1.                                                                                    
Co-Chair Green objected for discussion.                                                                                         
Co-Chair  Green  asked whether  the  majority  of TSCs  would  be                                                               
located on State and federal highways.                                                                                          
Mr. MacKinnon affirmed they would.                                                                                              
Senator Bunde inquired  as to whether changing  the language from                                                               
"may consult with  other local, state, and  federal agencies…" to                                                               
"shall consult  with other local, state,  and federal agencies…""                                                               
would require the  State to consult with  numerous entities prior                                                               
to moving  forward or whether  the consultation would  be limited                                                               
to entities responsible with activities within that local area.                                                                 
Co-Chair Green observed that  the Department utilized statistical                                                               
information to  identify the primary "trouble  spots" rather than                                                               
consulting  "with  downtown  Wasilla,  Mat-Su, or  the  City  and                                                               
Borough of  Anchorage" officials.  Continuing, she  asked whether                                                               
the  Department consulted  with local  entities when  considering                                                               
changing the speed limit on State highways.                                                                                     
Mr.  MacKinnon  responded  the   Department,  while  it  "is  not                                                               
required"  to consult  with local  entities  when changing  speed                                                               
limits on State highways, does so "as a matter of courtesy".                                                                    
Co-Chair  Wilken opined  the term  "'consult' is  a pretty  loose                                                               
word." The  Department should endeavor to  provide local entities                                                               
with at  least, "a  minimal level of  consultation. …  It doesn't                                                               
speak to  being approved  or passed  by any  sort of  assembly or                                                               
anything, it'll just  let them know;" particularly  in regards to                                                               
any impending "traffic restrictions".                                                                                           
Mr. MacKinnon understood  the intent to be for  the Department to                                                               
"consult  with  other local,  State,  and  federal agencies  with                                                               
responsibility  for  traffic safety  in  that  area". This  would                                                               
include the local police department.                                                                                            
Co-Chair  Wilken  pointed  out  that  the  sentence  in  question                                                               
"speaks to 'a traffic safety corridor'".                                                                                        
LIEUTENANT  JAMES HELGOE,  Alaska  State  Troopers, informed  the                                                               
Committee  that  the  Department  of Public  Safety  "does  share                                                               
information  with   all  local  and  municipal   law  enforcement                                                               
agencies  for statistical  gathering  for  grant statistics  that                                                               
come through Highway Safety."                                                                                                   
9:20:56 AM                                                                                                                    
Lieutenant  Helgoe shared  that the  Department of  Public Safety                                                               
has  "good   working  relationships   with  the   Wasilla  Police                                                               
Department,  the   Palmer  Police  Department,  and   all  police                                                               
departments  in  the State."  The  Department  would continue  to                                                               
share statistical information.                                                                                                  
Co-Chair Green withdrew her objection to the amendment.                                                                         
There being no further objection, Amendment #1 was ADOPTED.                                                                     
Co-Chair Wilken  asked for an  explanation of the  Alaska Traffic                                                               
Manual handout  titled "Draft" [copy  on file] the  Department of                                                               
Transportation and Public Facilities had distributed.                                                                           
Mr. MacKinnon explained that the  Highway Traffic Manual dictates                                                               
to the  Department "when and where  signs should be used  and how                                                               
they should  be placed."  The regulations  proposed in  the Draft                                                               
would  be specific  to traffic  safety corridors.  Including this                                                               
language  in the  Traffic Manual  would allow  adjustments to  be                                                               
make quickly "were it found that,  "for some reason the target we                                                               
picked  was not  correct.  Were the  language  included in  State                                                               
Statute, the process  of changing it would  be more "cumbersome".                                                               
If we  put it into regulation,  it is a much  more time consuming                                                               
process to change  it." "The Traffic Manual's  what governs where                                                               
we put signs, how  we put'em, why we put'em as  well as the kinds                                                               
of signs" that are placed.                                                                                                      
9:22:33 AM                                                                                                                    
Co-Chair Wilken understood therefore  that the language reflected                                                               
in  the "Draft"  document  "would be  inserted  into the  Traffic                                                               
Manual", were this bill adopted.                                                                                                
Mr. MacKinnon  affirmed. Continuing,  he noted  that in  order to                                                               
establish   a  TSC,   certain  "thresholds   must  be   reached";                                                               
specifically  the  Department  must  have "a  three  year  record                                                               
looking  back  …  and  show  that the  fatal  plus  major  injury                                                               
accident  rate per  mile  exceeds 110  percent  of the  Statewide                                                               
average".  After   three  years,  a  TSC   designation  could  be                                                               
disestablished  were the  statistics  to  reflect "a  significant                                                               
improvement" in the accident rate.                                                                                              
9:23:30 AM                                                                                                                    
Mr. MacKinnon  stated that  the establishment of  a TSC  would be                                                               
accompanied by publicity and public  information. This would also                                                               
occur were a TSC dis-established,  as that would substantiate the                                                               
program's success.                                                                                                              
Senator  Bunde  agreed  with  the concept  of  the  program.  The                                                               
"unfortunate" aspect  of the  situation is  that people  must die                                                               
before  the program  could be  established. Continuing,  he asked                                                               
whether a local  group or government could  identity a particular                                                               
road  as dangerous  "and appeal  to  the Department"  to have  it                                                               
designated as a TSC prior to fatalities occurring.                                                                              
Mr. MacKinnon responded  that "there is always  the potential" to                                                               
do that; however,  he questioned whether the  anticipation that a                                                               
particular  road segment  might be  dangerous without  statistics                                                               
would suffice.  Continuing, he  cautioned that  establishing "too                                                               
many" TSCs could  reduce their "effectiveness". He  agreed "it is                                                               
a sad  thing" that  lives must  be lost in  order to  establish a                                                               
safety corridor.                                                                                                                
9:25:23 AM                                                                                                                    
Senator  Stedman asked  regarding  "the  interaction" that  might                                                               
occur between the  Department and a small  community desiring "to                                                               
take a pro-active approach" to reduce  speed limits on one of its                                                               
roads  in order  to curtail  fatalities. He  understood that  the                                                               
Department  "has  been  fairly  responsive"  to  these  types  of                                                               
Mr. MacKinnon affirmed that the  Department is responsive to such                                                               
situations when "enough people"  are concerned about a particular                                                               
road.  While the  Department also  receives requests  to increase                                                               
the speed limit on certain  roads, "there's a lot more resistance                                                               
to increasing speed limits."                                                                                                    
Mr. MacKinnon pointed  out that on certain  road segments, simply                                                               
reducing  the speed  limit  would "not  necessarily  result in  a                                                               
decrease in accidents because it's  the speeders that are causing                                                               
the problems  and not  the people obeying  the speed  limit." The                                                               
Department  would   not  post  a   speed  limit   exceeding  "the                                                               
geometries" of  the road.  The goal of  establishing TSCs  "is to                                                               
direct this effort toward driver behavior."                                                                                     
Co-Chair Green noted  that language in Section 1, page  1 lines 9                                                               
through  12 might  address Senator  Bunde  and Senator  Stedman's                                                               
concerns about whether  people could request certain  roads to be                                                               
designated as TSCs. This information reads as follows.                                                                          
     In establishing the criteria,  the commissioner may consider                                                               
     accident  data   and  reports,  the  types   and  volume  of                                                               
     vehicular  traffic,  engineering  and  traffic  studies  and                                                               
     other relevant factors.                                                                                                    
Co-Chair  Green  believed  that this  language  would  provide  a                                                               
manner through which citizen concerns could be addressed.                                                                       
Mr. MacKinnon agreed that the language would allow "non-                                                                        
technical reasons"  to be  considered in  the establishment  of a                                                               
TSC. Again,  the Department's concern would  be that establishing                                                               
too  many TSCs  would  be counterproductive.  The Department  has                                                               
proposed in  the Draft regulations  that "no more than  ten" TSCs                                                               
be  established Statewide.  Establishing  too  many would  reduce                                                               
their  effectiveness.  "There  would  also  be  the  question  of                                                               
whether  the  Alaska State  Troopers  or  the local  PDs  (police                                                               
departments) would be able to adequately increase enforcement."                                                                 
Co-Chair   Green  remarked   that   that  would   be  a   "major"                                                               
Senator Olson stated that increasing the  level of fines in a TSC                                                               
could  be  characterized  as "counterintuitive",  as  the  people                                                               
guilty of the offenses might be dead.                                                                                           
Mr. MacKinnon responded that the  "sad part" is that "quite often                                                               
the fatalities" are  innocent victims rather than  the person who                                                               
was driving offensively.                                                                                                        
Senator Olson asked regarding the collection rate on such fines.                                                                
Mr. MacKinnon  responded that he  would endeavor to  provide this                                                               
Senator  Olson remarked  that such  information  would assist  in                                                               
determining the effectiveness of the program.                                                                                   
9:29:47 AM                                                                                                                    
Senator  Stedman  pointed  out  that  the  $5,000  fiscal  impact                                                               
depicted  on   the  Department   of  Transportation   and  Public                                                               
Facilities  fiscal  note  #1  should   be  $5,000  per  corridor.                                                               
Consideration might  be given  to increasing  the fiscal  note in                                                               
order  to more  accurately reflect  the expense  of seven  to ten                                                               
corridors. The cost for seven corridors would be $35,000.                                                                       
Mr.  MacKinnon affirmed  the fiscal  impact would  be $5,000  per                                                               
corridor. A "significant  amount of signage" would  be erected in                                                               
each corridor  to alert drivers  they were  in a TSC  with double                                                               
traffic fines. Signs  would be placed to  designate the beginning                                                               
and end of a TSC as well as throughout its length.                                                                              
9:31:17 AM                                                                                                                    
Co-Chair   Wilken   thought    the   aforementioned   maps   were                                                               
interesting.  To that  point, he  suggested that  the map  legend                                                               
should identity the significance of the blue and yellow boxes.                                                                  
Mr.  MacKinnon  qualified  that  each box  depicted  on  the  map                                                               
indicates a  fatality. Blue boxes  indicate that alcohol  or drug                                                               
abuse was a  factor in the fatality. Yellow  boxes indicate other                                                               
factors as being involved.                                                                                                      
Mr. MacKinnon  agreed that this information  should be specified.                                                               
Continuing  he noted  that the  Department of  Public Safety  was                                                               
interested in getting  copies of the maps to  distribute to their                                                               
staff, as the information would  assist the Alaska State Troopers                                                               
in  determining   where  they  should  focus   their  enforcement                                                               
efforts. The red  dots on the map indicate  where major accidents                                                               
and  fatalities   have  occurred  after  a   significant  highway                                                               
improvement.  The   white  dots  indicate  where   accidents  and                                                               
fatalities occurred before major highway improvements.                                                                          
9:33:15 AM                                                                                                                    
Co-Chair  Green   asked  whether  the  double   fine  signage  at                                                               
construction sites  has made a  "notable difference"  in driver's                                                               
9:33:41 AM                                                                                                                    
KURT  SMITH,  State  Highway   Traffic  Engineer,  Department  of                                                               
Transportation and Public Facilities  informed the Committee that                                                               
no data  is available  in this  regard as such  data "is  hard to                                                               
collect  in construction  zones". The  overall feeling  of people                                                               
working  at   construction  projects  is  that   the  signs  "are                                                               
generally effective".                                                                                                           
Co-Chair Green remarked  that the signs catch  her attention when                                                               
she is driving in a construction zone.                                                                                          
9:34:53 AM                                                                                                                    
Senator  Bunde  moved to  report  the  bill from  Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
There  being  no objection,  CS  SB  261(FIN) was  REPORTED  from                                                               
Committee with previous  $5,000 fiscal note #1  dated January 30,                                                               
2006   from  the   Department   of   Transportation  and   Public                                                               
Facilities; previous zero  fiscal note #2 dated  January 27, 2006                                                               
from the  Department of Public  Safety; and new zero  fiscal note                                                               
dated March 17, 2006 from the Alaska Court System.                                                                              
9:35:39 AM                                                                                                                    
     SENATE BILL NO. 271                                                                                                        
     "An Act  authorizing the commissioner of  transportation and                                                               
     public facilities to participate  in certain federal highway                                                               
     programs  and relating  to that  authorization; relating  to                                                               
     powers of the  attorney general to waive  immunity from suit                                                               
     in federal  court related to  those programs;  and providing                                                               
     for an effective date."                                                                                                    
This was  the first hearing for  this bill in the  Senate Finance                                                               
JOHN  MACKINNON,   Deputy  Commissioner  of  Highways   &  Public                                                               
Facilities,  Department of  Transportation and  Public Facilities                                                               
explained  that  a  National   Environmental  Policy  Act  (NEPA)                                                               
delegation  six-year pilot  program was  included in  the federal                                                               
highway  Safe,  Accountable, Flexible,  Efficient  Transportation                                                               
Equity  Act:  A  Legacy  for  Users  (SAFETEA-LU),  when  it  was                                                               
reauthorized  by  Congress in  the  summer  of  2005. He  read  a                                                               
segment of  a handout titled  "NEPA Delegation Pilot  Fact Sheet"                                                               
[copy on file] as follows.                                                                                                      
     SAFETEA-LU  includes a  NEPA  delegation  pilot program  for                                                               
     five  states  -  Alaska,  California,  Oklahoma,  Ohio,  and                                                               
     Texas. Under  the program, the  five states are  eligible to                                                               
     apply for  delegation of  the Secretary  of Transportation's                                                               
     (Secretary) NEPA  responsibilities for  one or  more highway                                                               
     projects  within the  state. The  state may  also apply  for                                                               
     delegation  of some  or all  of the  Secretary's review  and                                                               
     consultation    responsibilities    under   other    Federal                                                               
     environmental  laws.   The  scope  of  delegation   will  be                                                               
     determined   through  application   to  the   Secretary  and                                                               
     execution of a Memorandum of Understanding (MOU).                                                                          
     Time Frame:                                                                                                                
        · Duration of the pilot program is six years from                                                                       
          enactment of SAFETEA-LU. Unless extended by statute,                                                                  
          the pilot terminates on August 10, 2011.                                                                              
        · The Secretary is required to promulgate regulations to                                                                
          establish    delegation    application    requirements.                                                               
          Rulemaking is required to be complete within 270 days                                                                 
          of the Act. Rulemaking is behind schedule.                                                                            
        · The State may not submit its application until                                                                        
          * Rulemaking is complete and                                                                                          
          * The State must advertise the application and solicit                                                                
             public comment.                                                                                                    
        · After its application is accepted, the State and                                                                      
          Secretary will enter into an MOU.                                                                                     
     Once the MOU is executed, delegation may proceed.                                                                          
Mr. MacKinnon pointed  out that this program  would transfer "the                                                               
decision   making  process   on  what   level  of   environmental                                                               
documentation  is  required  out  of the  hands  of  the  federal                                                               
Highway  Administration  and  puts  in the  hands  of  the  State                                                               
Department  of  Transportation".  The   State  would  have  "more                                                               
control of the process and  the rate at which these environmental                                                               
reviews  proceed". This  program would  not reduce  environmental                                                               
protections or environmental reviews,  as the State must continue                                                               
to follow  federal Environmental  Protection Act  guidelines. The                                                               
benefit  would be  that  the  State could  control  "the pace  at                                                               
which" the process proceeds.                                                                                                    
Mr.  MacKinnon qualified  that the  program would  be limited  to                                                               
highway   projects   administered    by   the   Federal   Highway                                                               
Administration (FHWA). Furthermore, the  program would be limited                                                               
"to environmental decision making"  and would exclude engineering                                                               
issues.  Airport aviation  projects  and  other federal  projects                                                               
occurring in the State would be unaffected.                                                                                     
Senator Bunde  ascertained therefore that, even  though the State                                                               
might  have more  control,  it could  strengthen  but not  reduce                                                               
restrictions, as it must "abide by federal standards".                                                                          
Mr. MacKinnon affirmed that the  State would be required to abide                                                               
by  federal   regulations  and  could   not  establish   its  own                                                               
environmental policy.                                                                                                           
Senator  Bunde questioned,  therefore,  the  benefit the  program                                                               
would provide  to the  State. To  that point,  were the  State to                                                               
participate in this  program and a lawsuit  regarding its actions                                                               
presented "as  there often  is", the State  would be  required to                                                               
defend its action.                                                                                                              
Mr. MacKinnon affirmed.                                                                                                         
Senator  Bunde   suggested  therefore   that  the   fiscal  notes                                                               
accompanying the bill  must "be adjusted" to  address that issue.                                                               
In   conclusion,  he   asked   what   "advantages"  the   State's                                                               
participation  in this  program  would provide,  since the  State                                                               
would be required to follow the same rules.                                                                                     
Co-Chair Green understood one benefit  to be that the State would                                                               
be "in more  of a position" to improve  project timeframes rather                                                               
than being dependent on federal decision timeframes.                                                                            
Mr. MacKinnon affirmed. The State  has no control over the timing                                                               
of the federal decision making  process. "It would not be unusual                                                               
for work  to sit  on a  desk for a  significant period  of time."                                                               
"There is  a greater  chance" that documents  "sitting on  one of                                                               
our desks" could be processed faster.                                                                                           
Mr. MacKinnon mentioned that the  bill would also pertain to "the                                                               
level   of   documentation   required.  The   majority   of   the                                                               
environmental    documentation"    consists    of    "categorical                                                               
exclusions"   (Cat-Ex's),  which   are  the   simplest  form   of                                                               
documentation. The NEPA process is  required for projects such as                                                               
road repavings  or the  construction of  an overpass.  Under this                                                               
program,  the  State  would   assume  responsibility  for  Cat-Ex                                                               
documentation.  When the  federal government  is involved,  "they                                                               
make the  decision on what  level of documentation  is required".                                                               
At  times,  the federal  government  required  projects that  had                                                               
historically been  subject to Cat-Ex documentation  to be subject                                                               
to   an   environmental   assessment  or   the   more   extensive                                                               
environmental  impact statement.  Were the  State to  assume "the                                                               
NEPA  delegation, those  decisions  would be  made  at the  State                                                               
level and not at the federal level".                                                                                            
Mr.  MacKinnon   affirmed  that  with  the   assumption  of  this                                                               
responsibility,  the  State  would  be  required  to  defend  its                                                               
decisions in  Court. Language that  "waived the  State's immunity                                                               
from suit  in federal  court" is  specified in  Section 1  page 1                                                               
lines 9  and 10 of  the bill. Since  "NEPA is procedural  law", a                                                               
basis for  a Court  case "would  be that  the Department  for one                                                               
reason  or another  did not  follow the  correct procedure."  The                                                               
Court's  decision could  require the  Department to  go back  and                                                               
redo    something,   "following    the   procedure    correctly".                                                               
Historically in  such FHWA  cases, the judgments  as well  as the                                                               
defense costs have been small.  Nevertheless, some of the federal                                                               
cases have been lengthy and expensive.                                                                                          
Mr.  MacKinnon  stated  that,  were   the  State  to  assume  the                                                               
responsibilities of  the program, the  expectation would  be that                                                               
the  cost  of defending  such  a  case  would be  considered  "an                                                               
eligible"  individual project  cost, rather  than a  general fund                                                               
9:43:25 AM                                                                                                                    
Senator Bunde voiced  concern as to whether what  the State would                                                               
"be gaining is worth the price."                                                                                                
Co-Chair Wilken deemed "this is just  a little tiny piece" of the                                                               
answer  to  peoples'  question  as  to  "why  government  grows".                                                               
Referring  to   the  Analysis  section   of  the   Department  of                                                               
Transportation and  Public Facilities  fiscal note #1,  he voiced                                                               
disbelief that  the work required  by the State for  assuming the                                                               
responsibilities  of  this program  "would  require  160 hours  a                                                               
week". This would  be something he would be unable  to explain to                                                               
constituents.  Were this  program enacted,  he predicted  that in                                                               
five years, "we're  going to sit here and just  think the world's                                                               
coming  to an  end  because  this program's  going  to go  away".                                                               
Continuing, he asked  whether the State would be  able to conduct                                                               
the program  using $647,000 in Capital  Improvement Project (CIP)                                                               
receipts and only hire two people.                                                                                              
9:44:54 AM                                                                                                                    
Mr. MacKinnon  responded that the  Department based  its staffing                                                               
determinations on  the number  of people  currently administering                                                               
the federal program  and on the Department's  own internal review                                                               
of the program. "It's not a simple thing to assume."                                                                            
Co-Chair Wilken  announced that the  question needed to  be asked                                                               
even though the response provided no relief.                                                                                    
Senator  Bunde  understood  therefore   that  the  project  would                                                               
require four or five new positions.                                                                                             
Senator Stedman, observing that  the expenses associated with the                                                               
project  and the  new staffing  positions would  be approximately                                                               
$650,000  per year,  remarked that  "we're  certainly not  paying                                                               
these  people  by  the  road   mile  built,"  as  the  State  has                                                               
historically conducted  a tremendous amount of  planning, but has                                                               
built few new roads. He  voiced concern regarding the sovereignty                                                               
of  the State  as  well  as the  hiring  of  people "without  any                                                               
parameters  on production".  He  was  disinterested in  compiling                                                               
office hours  without accompanying road  construction. Therefore,                                                               
even  though "the  intent is  good",  he was  hesitant to  expand                                                               
planning activities.  The cost  of planning  per road  mile built                                                               
"is alarming".                                                                                                                  
Mr. MacKinnon advised that the goal  of the Department was not to                                                               
assume NEPA responsibilities  "and proceed at the  same pace. The                                                               
status quo  isn't good enough  for us." The Department,  like the                                                               
Legislature  and the  public, is  also frustrated  with the  time                                                               
that  is required  to  develop  a project.  NEPA  is  one of  the                                                               
factors affecting  the time  it takes to  develop a  project. The                                                               
money   the   Department   has  spent   on   developing   certain                                                               
Environmental  Impact  Studies   (EIS)  or  Environmental  Impact                                                               
Assessments (EIA)  would "astound" the Committee.  In addition to                                                               
the   time  spent   on  developing   a  project,   $8,000,000  to                                                               
$15,000,000 is  typically spent on  developing a  major project's                                                               
EIS.  One factor  that increases  the  amount of  time and  money                                                               
spent on  an EIS is  the amount of  time spent "dealing  with the                                                               
various   resource  agencies   when   they  say   we  need   this                                                               
information,  we   need  that  information,  and   we  need  this                                                               
information in order to do  a complete environmental assessment".                                                               
The State is not currently in  a position to say, "we don't think                                                               
you need that  information. The information that's  there on this                                                               
particular  issue   is  adequate,   it's  more   than  adequate".                                                               
Currently "the  federal government makes those  decisions because                                                               
they have the NEPA assumption".                                                                                                 
Mr. MacKinnon  stressed that the  State is willing to  assume the                                                               
risk  of making  those decisions.  "We're a  lot less  adverse to                                                               
risk  than  the  federal  government  is  in  these  issues.  The                                                               
likelihood  of a  serious mistake  in carrying  out one  of these                                                               
documents because  you didn't  gather sufficient  information is,                                                               
the  judge would  say, well  you need  to go  back and  count the                                                               
caribou there  one more time. We're  willing to take that  risk …                                                               
The benefits far outweigh the potential costs in that."                                                                         
9:49:35 AM                                                                                                                    
Senator Dyson  asked what  would be  included in  the Contractual                                                               
Services  $154,700   expense  depicted   on  the   Department  of                                                               
Transportation and Public Facilities fiscal note #1.                                                                            
Mr. MacKinnon  understood the  expense would  provide for  a NEPA                                                               
"expert"  attorney  in  the Department  of  Law.  A  Reimbursable                                                               
Services    Agreement   (RSA)    between   the    Department   of                                                               
Transportation and  Public Facilities  and the Department  of Law                                                               
would address that expense.                                                                                                     
Senator Dyson  concluded therefore  that adding this  position to                                                               
the Department of  Law would be preferred to  contracting out for                                                               
that service.                                                                                                                   
Mr. MacKinnon affirmed. He noted  that a legal sufficiency review                                                               
must be conducted on each NEPA document before it is finalized.                                                                 
Senator Dyson asked  whether this would be a new  position in the                                                               
Department  of Law  or whether  the Department  of Transportation                                                               
and  Public  Facilities  would be  contracting  for  an  existing                                                               
employee's services.                                                                                                            
Mr.  MacKinnon responded  that while  there  is a  person in  the                                                               
Department of Law who is "very  well versed in NEPA", that person                                                               
oversees a  number of attorneys.  The person being  referenced in                                                               
the  fiscal note  would be  required to  have "a  fairly specific                                                               
education and orientation towards NEPA".                                                                                        
Senator Stedman requested that the  issue of cost of planning per                                                               
road mile built  be set aside; else wise, upon  review, the costs                                                               
"would be  alarming". Continuing,  he was  curious of  the reason                                                               
that Alaska was  one of a select group of  states chosen for this                                                               
pilot program; specifically whether  Alaska was chosen because it                                                               
"has  a harder  time than  other states  in getting  its projects                                                               
through the NEPA process.                                                                                                       
Co-Chair  Green  remarked  that   Alaska  Congressman  Don  Young                                                               
included the State in this project.  She attested to the time and                                                               
effort that the State conducts in regards to the NEPA process.                                                                  
9:52:13 AM                                                                                                                    
Co-Chair Green stated  that, in her opinion, the  majority of the                                                               
"projects that are  very important to us are  very small potatoes                                                               
in Washington DC as far as  their importance on the NEPA interest                                                               
level",  particularly  in  comparison to  larger  projects  being                                                               
conducted in other states.                                                                                                      
Mr.   MacKinnon  characterized   Co-Chair  Green's   comments  as                                                               
"accurate".  He  noted  that  half   of  the  other  four  states                                                               
designated  for  this  program  "have  ranking  members"  on  the                                                               
federal Transportation  Committee. They  want their states  to be                                                               
included in  the five and a  half year pilot program.  This is an                                                               
opportunity that the Department would not want "to lose".                                                                       
Senator Stedman  asked the Department to  provide the Legislature                                                               
a report  comparing the  program expenditures  to the  road miles                                                               
constructed  at the  conclusion  of the  pilot  program, were  it                                                               
Mr.  MacKinnon  trusted that  the  Department  would be  able  to                                                               
provide "a  metric that will  hopefully show an  improvement over                                                               
the status quo".                                                                                                                
Senator  Bunde shared  that he  had "serious  reservations" about                                                               
what  Co-Chair Wilken  coined as  "growing government:  four more                                                               
fulltime State employees and the  risk of lawsuits." The net gain                                                               
is questionable. He would vote no on the bill.                                                                                  
Co-Chair  Wilken moved  to report  the bill  from Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
Senator Bunde objected.                                                                                                         
Senator Stedman  preferred the bill  to be held in  Committee for                                                               
further consideration.                                                                                                          
Co-Chair  Wilken moved  and asked  unanimous consent  to withdraw                                                               
the motion.                                                                                                                     
Without objection, the  motion to report the  bill from Committee                                                               
was WITHDRAWN.                                                                                                                  
Co-Chair Green ordered the bill HELD in Committee.                                                                              
9:55:28 AM                                                                                                                    
     SENATE BILL NO. 308                                                                                                        
     "An  Act  authorizing  the Alaska  Railroad  Corporation  to                                                               
     issue revenue bonds to  finance rail transportation projects                                                               
     that  qualify  for   federal  financial  participation;  and                                                               
     providing for an effective date."                                                                                          
This was  the first hearing for  this bill in the  Senate Finance                                                               
PAT  GAMBLE,  President  and   Chief  Executive  Officer,  Alaska                                                               
Railroad  Corporation (ARRC),  Department of  Commerce, Community                                                               
and  Economic Development  noted  that a  handout titled  "Alaska                                                               
Railroad  Corporation Legislative  Request for  Bonding Approval"                                                               
and  "a series  of maps"  depicting  the ARRC's  "work plan"  for                                                               
proposed tract  improvements during  the years 2006  through 2015                                                               
[copies on file] have been provided.                                                                                            
Mr. Gamble reviewed the handout as follows.                                                                                     
     Page 2                                                                                                                     
     Request Legislative Approval                                                                                               
     ARRC desires to issue one or more series of capital grant                                                                  
     receipts revenue bonds or notes, in aggregate not to exceed                                                                
     $165 million.                                                                                                              
Mr.  Gamble  remarked  that  this  bill  would  seek  Legislative                                                               
approval  allowing  AARC  to  issue a  series  of  capital  grant                                                               
receipt  (CGR) revenue  bonds  not to  exceed  $165 million.  The                                                               
"sourcing  [of] these  bonds" would  be as  prescribed by  Alaska                                                               
State Railroad Transfer Statutes.                                                                                               
     Page 3                                                                                                                     
     Rehabilitate Mainline Substandard or                                                                                       
     Potentially Unsafe Track                                                                                                   
        · Single most important purpose for the use of federal                                                                  
        · Top capital investment effort and #1 priority since                                                                   
          1996 … $220 million already invested.                                                                                 
Mr.  Gamble  informed that  in  1996,  ARRC  began an  effort  to                                                               
"rehabilitate" or  rebuild its main rail  tracks. This continuing                                                               
effort   has   been   primarily    funded   by   annual   federal                                                               
appropriations,  provided through  efforts by  Alaska Congressman                                                               
Ted Stevens  who recognized that no  regular deferred maintenance                                                               
had been conducted on the  Alaska Railroad's (Railroad) main line                                                               
since it was rebuilt in the 1950s following World War 11.                                                                       
Mr.  Gamble  stated  that the  deferred  maintenance  effort  was                                                               
further  compounded by  the fact  that train  mainline derailment                                                               
occurrences  were increasing  and incurring  additional expenses.                                                               
That  risk  of  derailments  exacerbated the  need  for  deferred                                                               
maintenance since  the Railroad's  passenger count  and hazardous                                                               
cargo loads  were increasing. Actual track  improvements began in                                                               
Mr. Gamble  noted that the  revenues generated from  this bonding                                                               
would be  used to  rapidly accelerate  and complete  the deferred                                                               
maintenance  plan  on  upgrading  the mainline  track.  ARRC  has                                                               
continued to request Federal  funding through Congressman Stevens                                                               
since it  ranked the mainline  track upgrade a priority  in 1996.                                                               
That federal money  has been and would continue to  be limited to                                                               
funding  work  on the  mainline  rather  than being  utilized  to                                                               
support  facilities and  equipment.  The money  generated by  the                                                               
revenue bonds requested in this  bill would also be limited, with                                                               
a few "minor exceptions", to the mainline rehabilitation work.                                                                  
9:59:09 AM                                                                                                                    
Mr.  Gamble  conveyed  that the  "Derailments,  1996-2005"  graph                                                               
depicted on  page 4 was  included to  provide an example  of what                                                               
has happened  on the mainline  since the improvements  began. The                                                               
blue line on  the graph indicates a downward trend  in the number                                                               
of derailments with reportable damage.  The "Train Accident Rate"                                                               
graph depicted  on page 5  compares the Alaska  Railroad accident                                                               
trend  to national  railroad  statistics.  These graphs  "provide                                                               
strong  evidence"  that  the  deferred  maintenance  efforts  are                                                               
"having  the desired  payoff".  This fact  is  what prompted  the                                                               
notion  amongst Railroad  staff that  "accelerating" the  work on                                                               
the main line would provide "a  safer railroad faster … The State                                                               
and our customers would expect  that from us." This prompted this                                                               
     Page 6                                                                                                                     
     Project Information                                                                                                        
       · 100% CWR from Anchorage to Fairbanks (355 miles)                                                                       
        · 85,000 concrete ties on curves less than 6 degrees (32                                                                
        · Wooden ties all upgraded to 35-year cycle                                                                             
        · All ballast reset                                                                                                     
        · Complimented by ARRC Bridge Program … $30 million                                                                     
        · Complimented by ARRC Collision Avoidance Program … $13                                                                
Mr. Gamble reviewed the benefits  the Railroad would receive from                                                               
this endeavor. While  it was once thought  that Continuous Welded                                                               
Rail  (CWR) would  not  work  in the  cold  climates and  extreme                                                               
temperatures changes experienced  in the State, such  as the high                                                               
ninety-degree summer  time temperatures and  the sixty-below-zero                                                               
ambient temperatures  experienced in Fairbanks.  Railroad experts                                                               
from other parts  of the country "proved" that to  be wrong. Thus                                                               
ARRC is "vigorously"  conducting a CWR program.  CWR is important                                                               
because it  welds segments of track  together thereby eliminating                                                               
joints, which are  often the cause of  derailments. "The exchange                                                               
of energy" between the rail joints  and the train wheels "is hard                                                               
on  the  metals of  both  and  quite  often  is the  single  most                                                               
prominent source  of failures on  track and damage to  wheels. In                                                               
addition to improved safety, CWR  tracks are quieter as the noise                                                               
generated by the wheels hitting joints is eliminated.                                                                           
Mr. Gamble noted that while  concrete ties provide no substantial                                                               
benefit  over   wooden  ties  on  straight   stretches  of  rail,                                                               
utilizing them on curves increases  the stability of the rail and                                                               
better absorbs  the energy transfer  between the track  and train                                                               
wheels. In  addition, concrete ties  are easier to place  at "the                                                               
right degree" to meet the  angle calculated for a specific curve.                                                               
85,000  concrete ties  would be  utilized  between Anchorage  and                                                               
Fairbanks  on curves  exceeding six  degrees. This  would further                                                               
improve rail safety, as curves are susceptible to track failure.                                                                
Mr. Gamble  also noted that  the project would specify  a 35-year                                                               
tie upgrade  cycle. Depending  on how much  water is  absorbed by                                                               
the  tie  and  other  circumstances, a  tie  typically  does  not                                                               
undergo "serious breakdowns"  until about 40 years of  use. A 35-                                                               
year cycle would  provide a "safety margin" and  would align with                                                               
what "good railroads" in the contiguous United States are doing.                                                                
Mr.  Gamble  noted   that  in  conjunction  with   tie  and  rail                                                               
replacement,  rock ballast  under the  railways, including  river                                                               
rock,  would be  replaced  "with solid  granite which  interlocks                                                               
very  tightly and  provides a  solid bed".  169 bridges  would be                                                               
upgraded in conjunction with track improvements.                                                                                
Mr. Gamble  pointed out  that while the  majority of  his remarks                                                               
have addressed  "mitigating the physical risks  of track failure,                                                               
collision  avoidance   is  a  technology"  that   is  also  being                                                               
addressed by ARRC. This effort  would address "human mistakes and                                                               
errors  in  judgment".  Thus,  the  Railroad  is  "simultaneously                                                               
reducing  physical risk  as  well  as human  error  risks to  the                                                               
degree affordable and possible with  the current technology." The                                                               
effort would  be to provide "one  of the safest railroads  in the                                                               
United States within the next seven or eight years".                                                                            
     Page 7                                                                                                                     
        · Consistent with #1 priority                                                                                           
        · Faster "take" of safety benefits and risk reduction of                                                                
          non-human factors                                                                                                     
        · Continued mitigation effort                                                                                           
           -  More than 600 passenger trains per year                                                                           
           - 800 million gal. Refined product/hazardous                                                                         
               materials      (30,000 carloads)                                                                                 
           - 60% = hazardous cargo proportion                                                                                   
        · Builds clarity and budget discipline into capital                                                                     
           - Debt service schedule drives yearly capital                                                                        
Mr.  Gamble  reiterated  that this  endeavor  would  fulfill  the                                                               
number  one priority  of ARRC.  The fact  that this  effort could                                                               
reduce  "by as  much  as ten  years" the  work  that the  current                                                               
program would  otherwise allow would  be "worth the  premium that                                                               
we   would  pay   through  the   bonding".  The   Railroad  moves                                                               
approximately  600  passenger  trains   a  year  and  800,000,000                                                               
gallons  of hazardous  material on  its mainline.  The amount  of                                                               
hazardous material moved  by the Railroad is one  of the "highest                                                               
proportions of hazardous  material cargo" run on  any railroad in                                                               
the country.  Any effort to  increase the Railroad safety  is "an                                                               
obligation" owed to the State.                                                                                                  
10:05:31 AM                                                                                                                   
Mr.  Gamble  communicated  that  one  of  the  "advantages"  this                                                               
legislation  would provide  "internally" would  be that  "locking                                                               
these  dollars  in on  an  annual  basis through  bonding"  would                                                               
assist  ARRC in  determining the  level of  capital funding  that                                                               
would be available for other programs.                                                                                          
     Page 8                                                                                                                     
     Why Now                                                                                                                    
        · SAFETEA-LU makes it possible                                                                                          
        · Formula Funds increased 6-fold                                                                                        
        · No undue risk to railroad or state                                                                                    
        · Consistent with corporate priority                                                                                    
        · Materials costs escalating annually                                                                                   
        · Growing passenger train demand required nothing less                                                                  
        · Desire to get pre-pipeline work done ASAP                                                                             
        · No impact to previous capital plan                                                                                    
Mr.  Gamble  stated  that  after a  five-year  effort  to  secure                                                               
Federal Transit  Administration (FTA) Formula Funds  on an annual                                                               
basis, ARRC  is now  entitled to receive  a predictable  level of                                                               
funds from year to year. The  level is based on a formula relying                                                               
on such things as "passenger miles  and the number of total miles                                                               
on the railroad".  The formula is also subject  to an approximate                                                               
two percent growth  rate each year. The FTA  funding has provided                                                               
ARRC a "new  tool in the tool kit"; this  funding source could be                                                               
used "to pay off the debt service".                                                                                             
Mr. Gamble stated  that two other positive  events occurred three                                                               
years  prior:  the ARRC  match  required  for federal  funds  was                                                               
reduced from  20 percent  to nine percent  and the  federal Safe,                                                               
Accountable,  Flexible, Efficient  Transportation  Equity Act:  A                                                               
Legacy for Users (SAFETEA-LU) "formula  for attributable miles to                                                               
the Alaska  Railroad has increased from  ten percent attributable                                                               
miles to 60 percent attributable  miles". This meant that the FTA                                                               
formula  dollars   increased  from  approximately   five  million                                                               
dollars a  year to approximately  $30,000,000 a  year. Therefore,                                                               
were the ARRC able to provide  its "low" nine percent match, ARRC                                                               
could   depend  on   receiving   total   funds  ranging   between                                                               
$30,000,000  to   $36,000,000  into  the  future.   These  events                                                               
provided  ARRC the  opportunity  to consider  a bonding  proposal                                                               
similar to the one presented in this bill.                                                                                      
Mr. Gamble declared that this  proposal is consistent with ARRC's                                                               
priorities. It  would also  provide ARRC  the ability  to improve                                                               
materials management; particularly as  ARRC could make bulk steel                                                               
purchases and store the steel  in order to avoid continuing price                                                               
increases.  Furthermore, the  increasing passenger  train traffic                                                               
would benefit from safer tracks.                                                                                                
Mr.  Gamble  also  noted  that this  proposal  would  allow  pre-                                                               
pipeline   work  to   be  conducted   in   anticipation  of   the                                                               
construction  of  the State  gas  pipeline.  Railroad tracks  and                                                               
bridges must  be ready to  handle the load capacities  that would                                                               
be required.                                                                                                                    
10:08:20 AM                                                                                                                   
Mr.  Gamble  stated that  these  improvements  would provide  the                                                               
Railroad the "ability  to flow" the demands of  the pipeline into                                                               
"our current customer load without cutting other customers off."                                                                
Mr. Gamble  reiterated that  the bond  proposal would  not impact                                                               
the Railroad's capital program.                                                                                                 
     Page 9                                                                                                                     
     Proposed Financing                                                                                                         
        · $165 million authorization requested                                                                                  
        · Currently planning three bond sales over next six                                                                     
           - Maximum annual debt service: $19.1 million or 49%                                                                  
               of available FTA/match for year                                                                                  
        · ARRC Board approval required for each project and bond                                                                
Mr. Gamble reviewed the proposed financing plans.                                                                               
Mr. Gamble noted  that the "Debt Service as a  Percent of Formula                                                               
Funds/Match" graph on page 10  depicts the program's debt service                                                               
percentages from  the year 2007  through 2024. The  maximum level                                                               
of 49  percent would be  anticipated in  the year 2014,  with the                                                               
debt dramatically  decreasing toward zero  from the year  2017 to                                                               
Mr.  Gamble reminded  the  Committee that  this  debt service  is                                                               
"just one  element" of  the Railroad's  debt. Some  other smaller                                                               
Railroad "borrowings"  would also be  retiring at that  time. The                                                               
Railroad's  "debt position"  would  remain  "very healthy  during                                                               
this whole process".                                                                                                            
Mr.  Gamble   concluded  his   presentation.  He   could  provide                                                               
additional financial details or  review the remaining information                                                               
in  the handout  if so  desired by  the Committee.  The remaining                                                               
information  in  the  handout would  provide  "additional  detail                                                               
about some of  the methodology and considerations  that have gone                                                               
into this proposal".                                                                                                            
10:10:43 AM                                                                                                                   
Senator Dyson, being "visually  oriented", appreciated the charts                                                               
and  maps provided.  Continuing, he  asked the  location of  Wish                                                               
Bone Hill, as that is the prospective site of a new coal plant.                                                                 
Mr.  Gamble  replied  that  Wish  Bone Hill  is  located  in  the                                                               
vicinity of Palmer, which is not on the Railroad's mainline.                                                                    
Senator Dyson observed  that each of the maps from  the year 2007                                                               
to 2015,  depict two views  of the Railroad's mainline.  The view                                                               
on  the left  of the  page  depicts the  projects occurring  that                                                               
specific year and  the view on the right  depicts "the cumulative                                                               
status of the track" to date.                                                                                                   
Mr. Gamble affirmed.  He apologized for not  fully explaining the                                                               
maps earlier.                                                                                                                   
Senator Dyson, referencing  the map for the year  2015, asked for                                                               
clarification  as to  whether the  track  at Hurricane,  milepost                                                               
281.4, was CWT on wooden ties.                                                                                                  
Mr. Gamble stated that was correct.                                                                                             
Senator  Dyson  understood  that  concrete ties  usage  would  be                                                               
limited to the  areas highlighted in yellow  with orange borders,                                                               
as specified in the map's legend.                                                                                               
Mr. Gamble  acknowledged that due to  the small map scale,  it is                                                               
difficult  to   show  much  detail  about   individual  projects.                                                               
Concrete  ties  would be  utilized  at  any  point of  the  track                                                               
containing a curve over six  degrees. For example, he pointed out                                                               
that, as  highlighted by  the yellow and  orange coloring  on the                                                               
map, concrete ties would be used on a curve near Broad Pass.                                                                    
Senator  Dyson ascertained  therefore, that  concrete ties  would                                                               
also be used  between Potter, milepost 100.6,  and Bird, milepost                                                               
Mr. Gamble affirmed. There is a lot "of curvature" in that area.                                                                
Senator Dyson  ascertained that the  narrow red line  depicted on                                                               
the map would indicate areas  with regular un-welded line on wood                                                               
Mr.  Gamble affirmed.  For  example, the  line  near Eielson  Air                                                               
Force  Base  near Fairbanks,  milepost  G24,  is reflected  as  a                                                               
narrow red line  because that line "carries far  far less tonnage                                                               
than the main line". That  segment was constructed after the main                                                               
line  and would  not require  upgrading. He  reiterated that  the                                                               
view  on  the right  side  of  the  map reflects  the  cumulative                                                               
project status and the view on  the left side is that year's work                                                               
Senator Dyson deemed the maps "very helpful".                                                                                   
Senator  Olson,  noting that  80,000  joints  would be  upgraded,                                                               
questioned the total number of joints on the track.                                                                             
10:14:57 AM                                                                                                                   
Mr.  Gamble stated  that this  information would  be provided.  A                                                               
simple calculation  involving the  length of  the track  would be                                                               
Senator  Olson understood  that rails  were made  with joints  to                                                               
accommodate expansion and contraction.  Further information as to                                                               
how CWR would accommodate these occurrences is desired.                                                                         
Mr. Gamble likened  this to the question about  "which came first                                                               
…  the chicken  or  the egg?"  for there  is  disagreement as  to                                                               
whether  train  track  joints  were the  result  of  rail  length                                                               
capabilities  or temperature  related  characteristics. The  rail                                                               
length used today has been constant since the 1860s.                                                                            
Mr.  Gamble explained  that specifically  trained personnel  must                                                               
conduct the CWR forced weld  under exact circumstances. Expansion                                                               
and contraction can  be accommodated with a  CWR; however extreme                                                               
"vigilance" of the  track for signs of wiggling  or buckling must                                                               
occur. The experience is that  the CWR "could handle" the State's                                                               
temperature  conditions. A  few  instances  have occurred  during                                                               
times of "extremely hot weather  for several days" in which rails                                                               
have experienced "heat  soak" and have expanded  and attempted to                                                               
wiggle. However,  the rail ties  have securely held the  rails in                                                               
place.  Such   experiences  are   minor  in  comparison   to  the                                                               
maintenance cost  savings that  the CWR  provide. In  summary, he                                                               
concluded that "there  is a science" to the CWRs  and the process                                                               
must be done correctly.                                                                                                         
Senator  Dyson inquired  to  the  number of  track  miles on  the                                                               
Mr. Gamble advised that the  Railroad's mainline is approximately                                                               
500 miles long.                                                                                                                 
Senator Dyson asked the length of a traditional rail segment.                                                                   
Mr.  Gamble noted  that  the  CWR rail  could  be  welded into  a                                                               
continuous segment  of "up to half  a mile". That piece  could be                                                               
loaded  onto a  work  train and  "fed" onto  the  track from  the                                                               
train. A regular piece of rail is 80-feet in length.                                                                            
10:18:58 AM                                                                                                                   
Senator Bunde  asked for confirmation  that these bonds  would be                                                               
used to maintain existing track rather than to expand the line.                                                                 
Mr. Gamble affirmed.                                                                                                            
Co-Chair  Green noted  that Members'  packets  contain a  letter,                                                               
dated  March  14,  2006 from  Tom  Boutin,  Deputy  Commissioner,                                                               
Department  of Revenue  to Bill  O'Leary, Vice  President Finance                                                               
and Chief  Financial Officer,  Alaska Railroad  Corporation [copy                                                               
on file] that addresses the  debt liability that would be assumed                                                               
by the ARRC with the issuance of these bonds.                                                                                   
Senator Bunde stated  that his concern was in regards  "to an on-                                                               
going  systemic   problem",  as,   since  "the  Railroad   is  an                                                               
instrument of  the State when  Railroad earnings are used  to pay                                                               
this, or  if there should be  a problem, it's really  State money                                                               
its just not general fund money."                                                                                               
Based on  two rails, a  total mainline  length of 500  miles, and                                                               
rail lengths  of 80  feet, Senator Dyson  calculated there  to be                                                               
66,000 joints on the mainline of the Railroad.                                                                                  
Senator  Stedman moved  to report  the bill  from Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
There  being no  objection, SB  308 was  REPORTED from  Committee                                                               
with  previous  zero  fiscal  note  #1  from  the  Department  of                                                               
Commerce, Community and Economic Development.                                                                                   
Co-Chair Lyda Green adjourned the meeting at 10:20:40 AM.                                                                     

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