Legislature(2007 - 2008)BUTROVICH 205

02/20/2007 01:30 PM Senate TRANSPORTATION


Download Mp3. <- Right click and save file as

Audio Topic
01:42:08 PM Start
01:46:19 PM Overview: Alaska State Railroad
02:52:47 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Overview of the Alaska Railroad
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                       February 20, 2007                                                                                        
                           1:42 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Albert Kookesh, Chair                                                                                                   
Senator John Cowdery, Vice Chair                                                                                                
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator Gary Wilken                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                              
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Overview: Alaska State Railroad                                                                                                 
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
Pat Gambell, President and Chief Executive Officer                                                                              
Alaska Railroad Corporation                                                                                                     
PO Box 107500                                                                                                                   
Anchorage, AK 99510-7500                                                                                                        
POSITION STATEMENT: Presented overview                                                                                        
                                                                                                                              
Bill O'Leary, Chief Financial Officer                                                                                           
Alaska Railroad Corporation                                                                                                     
PO Box 107500                                                                                                                   
Anchorage, AK 99510-7500                                                                                                        
POSITION STATEMENT: Participated in overview                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR ALBERT  KOOKESH called  the Senate  Transportation Standing                                                             
Committee meeting to order at 1:42:08  PM. Present at the call to                                                             
order  were Senators  Wielechowski, Cowdery,  Wilken, Olson,  and                                                               
Chair Kookesh.                                                                                                                  
                                                                                                                                
                                                                                                                                
                ^OVERVIEW: ALASKA STATE RAILROAD                                                                            
                                                                                                                                
CHAIR KOOKESH announced  the committee would hear  an overview of                                                               
the Alaska Railroad.                                                                                                            
                                                                                                                                
PAT  GAMBELL,  President  and Chief  Executive  Officer  for  the                                                               
Alaska Railroad  Corporation (ARC),  introduced himself  and Bill                                                               
O'Leary, Chief  Financial Officer for  the ARC. He said  he would                                                               
be giving  a briefing on  the ARC's economic development  and the                                                               
transportation systems,  using a  PowerPoint packet given  to the                                                               
committee.                                                                                                                      
                                                                                                                                
He  referred to  different pages  for  a written  history of  the                                                               
Alaskan Railroad, and  an explanation of how the  ARC operates as                                                               
a semi-private, independent organization.  The board of directors                                                               
operates as a management board,  and employee retirement pensions                                                               
are paid  through the ARC's  earnings, which are kept  within the                                                               
corporation itself.  The ARC  is the  last remaining  railroad in                                                               
the US that offers year-round passenger and freight service.                                                                    
                                                                                                                                
1:46:19 PM                                                                                                                    
                                                                                                                                
SENATOR COWDERY  asked if any  federal funds are received  by the                                                               
ARC.                                                                                                                            
                                                                                                                                
BILL O'LEARY said  that in 2007 the ARC will  receive $45 million                                                               
in federal funds.                                                                                                               
                                                                                                                                
MR. GAMBELL  said that the  ARC's yearly operating budget  is $36                                                               
million, before upgrades and investments.                                                                                       
                                                                                                                                
SENATOR COWDERY  asked if the  ARC has retirement  issues similar                                                               
to the State's.                                                                                                                 
                                                                                                                                
MR. GAMBELL  said no.  He talked about  the ARC's  board members,                                                               
and said  that they  are compensated  $400 for  each full  day of                                                               
work, which is the same fee that was instated in 1985.                                                                          
                                                                                                                                
He  said  the ARC  emphasizes  a  balance between  passenger  and                                                               
freight traffic, which  means a lower margin of  profit. There is                                                               
also a large  interface with railroad docks  in Whittier, Seward,                                                               
Anchorage, and Seattle.                                                                                                         
                                                                                                                                
1:51:03 PM                                                                                                                    
                                                                                                                                
SENATOR  COWDERY   asked  if  the   percentage  of   ARC  revenue                                                               
originating  from  real estate  holdings  has  changed in  recent                                                               
years.                                                                                                                          
                                                                                                                                
MR. GAMBELL said the percentage has remained the same.                                                                          
                                                                                                                                
1:51:49 PM                                                                                                                    
                                                                                                                                
MR. GAMBELL  referenced a page  to explain the  operational tempo                                                               
of the  ARC, and said that  it has received awards  for passenger                                                               
service.                                                                                                                        
                                                                                                                                
He said that the freight  operation uses flat cars, trailers, and                                                               
containers atop flat cars.                                                                                                      
                                                                                                                                
SENATOR COWDERY asked if a profit is made from coal shipping.                                                                   
                                                                                                                                
MR. GAMBELL said that there is a slight profit.                                                                                 
                                                                                                                                
SENATOR COWDERY asked for the per-ton cost.                                                                                     
                                                                                                                                
MR. GAMBELL said he would rather not say for the record.                                                                        
                                                                                                                                
He  explained that  the real  estate section  of ARC  revenue has                                                               
been   growing,  including   dock   development  and   facilities                                                               
organization.  The ARC  has just  completed a  five-year progress                                                               
plan,  and in  2007  will  be creating  new  five-year plan.  The                                                               
previous plan  outlined work on equipment,  bridges, and improved                                                               
technology and  facilities. The safety  record was also  poor but                                                               
has since been improved.                                                                                                        
                                                                                                                                
1:59:30 PM                                                                                                                    
                                                                                                                                
SENATOR COWDERY asked if the ARC owns its passenger coaches.                                                                    
                                                                                                                                
MR. GAMBELL said that it does.                                                                                                  
                                                                                                                                
SENATOR  OLSON  asked   if  previous  ARC  issues   were  due  to                                                               
incompetence.                                                                                                                   
                                                                                                                                
MR. GAMBELL  said that  the problems were  a leftover  issue from                                                               
days when the railroad was under federal administration.                                                                        
                                                                                                                                
2:01:36 PM                                                                                                                    
                                                                                                                                
SENATOR OLSON  said that as a  business, the ARC would  have been                                                               
considered incompetent.                                                                                                         
                                                                                                                                
MR. GAMBELL  agreed that  accountability is  necessary.   He then                                                               
showed a chart detailing the 2002 assessment findings.                                                                          
                                                                                                                                
He  explained that  the ARC  uses a  balanced plan  of operation,                                                               
funding  all  needs  across  the  operation,  with  a  particular                                                               
emphasis  on safety.  In  2006 the  legislature  granted the  ARC                                                               
approval to  sell tax-free bonds for  main-line railroad funding;                                                               
$165  million  worth  of  bonds were  purchased,  and  the  first                                                               
increment was sold  and the rebuilding program  executed with the                                                               
profits in 2006.                                                                                                                
                                                                                                                                
He explained  that the  ARC pension fund  totaled $66  million in                                                               
2006.  Currently  the  funding  exceeds  its  liability  by  $9.5                                                               
million.                                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI  asked if  there is  a federal  pension plan                                                               
for the ARC.                                                                                                                    
                                                                                                                                
MR. O'LEARY said that there is no federal pension plan.                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI   asked  where   the  ARC  stands   in  the                                                               
collective bargaining process.                                                                                                  
                                                                                                                                
MR. GAMBELL said that the ARC negotiates with five unions.                                                                      
                                                                                                                                
SENATOR WIELECHOWSKI  said that  his constituents  were concerned                                                               
about the negotiating process.                                                                                                  
                                                                                                                                
MR. GAMBELL said  that the ARC's track laborers  are currently in                                                               
negotiation, and  they are happy  with their wages but  the union                                                               
leadership is frustrated.                                                                                                       
                                                                                                                                
SENATOR  COWDERY  asked from  where  the  ARC's wooden  ties  are                                                               
procured.                                                                                                                       
                                                                                                                                
MR. GAMBELL replied that the ties came from the lower 48.                                                                       
                                                                                                                                
SENATOR  COWDERY remarked  that  many countries  use curved  all-                                                               
concrete ties and asked if they are used in Alaska.                                                                             
                                                                                                                                
MR.  GAMBELL said  that two  manufacturers in  the lower  48 make                                                               
such ties, and that concrete  ties, with a 100-year lifetime, are                                                               
used on the turns on ARC  tracks.  Wooden ties are recycled every                                                               
35-40 years.                                                                                                                    
                                                                                                                                
2:12:20 PM                                                                                                                    
                                                                                                                                
SENATOR  COWDERY asked  if wooden  tie attachments  are different                                                               
from concrete tie attachments.                                                                                                  
                                                                                                                                
MR. GAMBELL replied they are.                                                                                                   
                                                                                                                                
2:13:16 PM                                                                                                                    
                                                                                                                                
MR.  GAMBELL said  that ARC  post-retirement  medical funding  is                                                               
historically unfunded,  and so since  2006 significant  money has                                                               
been put aside for such.                                                                                                        
                                                                                                                                
He said  that 2006 was historically  the best year for  the ARC's                                                               
safety record, and it keeps improving.                                                                                          
                                                                                                                                
SENATOR WIELECHOWSKI  asked if there  have been  any occupational                                                               
health problems reported.                                                                                                       
                                                                                                                                
MR.  GAMBELL said  that  such problems  have  not been  reported,                                                               
though that doesn't  necessarily mean they don't  happen. The ARC                                                               
is  pro-active  about  hearing protection  and  smoke  inhalation                                                               
prevention.                                                                                                                     
                                                                                                                                
He  said that  the  ARC  is investing  in  a collision  avoidance                                                               
system  utilizing   satellite  and  GPS  information,   to  track                                                               
vehicles   and   switch   positions   and   automatically   avoid                                                               
collisions. Operation is expected to begin in 2009.                                                                             
                                                                                                                                
2:18:57 PM                                                                                                                    
                                                                                                                                
SENATOR WILKEN asked how much the system will have cost by 2009.                                                                
                                                                                                                                
MR. GAMBELL said it will be around $20 million.                                                                                 
                                                                                                                                
SENATOR  OLSON  asked  if  collisions   are  a  problem  for  the                                                               
railroad.                                                                                                                       
                                                                                                                                
MR. GAMBELL  said that many  such accidents have happened  in the                                                               
lower 48, and  explained how they can  have serious consequences.                                                               
Alaska has had several close calls in recent years.                                                                             
                                                                                                                                
2:22:27 PM                                                                                                                    
                                                                                                                                
SENATOR WILKEN asked how many gallons  of fuel are hauled per day                                                               
from North Pole to Anchorage by the railroad.                                                                                   
                                                                                                                                
MR.  GAMBELL said  700 million  gallons are  hauled per  year, or                                                               
around 1.6 million per day, on one  train a day in the winter. Up                                                               
to a billion gallons a year can be transported.                                                                                 
                                                                                                                                
SENATOR WILKEN said that there  is a big liability connected with                                                               
fuel transport.                                                                                                                 
                                                                                                                                
MR.  GAMBEL  said that  he  agreed,  and the  collision-avoidance                                                               
system is important for preventing accidents.                                                                                   
                                                                                                                                
2:25:05 PM                                                                                                                    
                                                                                                                                
MR. GAMBELL said that the ARC  2006 season was the best on record                                                               
for  passenger  service  revenue.  There was  a  new  first-class                                                               
carriage  service  that  year,  and   the  ARC  is  developing  a                                                               
partnership with Princess Cruises.                                                                                              
                                                                                                                                
He   explained  that   the  ARC   mission  statement   encourages                                                               
partnership     in     community     and     economic     growth.                                                               
                                                                                                                                
SENATOR WIELECHOWSKI asked  for the number of  yearly moose kills                                                               
on the rail system.                                                                                                             
                                                                                                                                
MR.  GAMBELL said  that 37  moose have  been killed  so far  this                                                               
year, far less than on state roads.                                                                                             
                                                                                                                                
SENATOR  WIELECHOWSKI  asked if  the  ARC  is doing  anything  to                                                               
reduce the number.                                                                                                              
                                                                                                                                
MR.  GAMBELL said  that  brush  and snow  clearing  are the  most                                                               
effective techniques.                                                                                                           
                                                                                                                                
2:28:43 PM                                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI asked if the  ARC has problems with ATVs and                                                               
snowmachines on the tracks.                                                                                                     
                                                                                                                                
MR. GAMBELL  said that it  does, and  the main problem  is bridge                                                               
use. Emergency braking by trains to  avoid ATVs on the tracks can                                                               
cause derailment and other problems.                                                                                            
                                                                                                                                
2:30:47 PM                                                                                                                    
                                                                                                                                
MR. GAMBELL  explained that Diesel  Multiple Units (DMU)  are new                                                               
engines being  used by the ARC  in a partnership with  the Forest                                                               
Service.                                                                                                                        
                                                                                                                                
2:32:26 PM                                                                                                                    
                                                                                                                                
MR. GAMBELL said that the  ARC is interested in starting commuter                                                               
service, and  has ordered  a car for  wintertime use  between the                                                               
Anchorage airport  and depot, with  the possibility  of ski-train                                                               
service to Girdwood.                                                                                                            
                                                                                                                                
2:33:45 PM                                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI  said that he  thinks commuter trains  are a                                                               
great idea, and said that public opinion should be solicited.                                                                   
                                                                                                                                
SENATOR  COWDERY  asked  if the  Anchorage  airport  facility  is                                                               
profitable.                                                                                                                     
                                                                                                                                
MR. GAMBELL  said that the  depot is not a  money-making venture.                                                               
The  ARC   does  do  business  with   smaller  leaseholders  like                                                               
restaurants.                                                                                                                    
                                                                                                                                
2:37:49 PM                                                                                                                    
                                                                                                                                
SENATOR  COWDERY asked  if ARC  bridges are  sufficient to  carry                                                               
heavy loads like pipes for a gas pipeline.                                                                                      
                                                                                                                                
MR. GAMBELL  said that existing  bridges are sufficient  but that                                                               
they are being upgraded anyway.                                                                                                 
                                                                                                                                
He  explained a  slide  showing the  results of  a  study on  ARC                                                               
economic  impact which  showed  support of  3,000  jobs and  $150                                                               
million  in  payroll  across  the  state  beside  the  ARC's  own                                                               
workers.  The  ARC  is also  increasing  its  capital  investment                                                               
program, which  is already at  $350 million. He then  showed some                                                               
slides  of ARC  projects in  progress and  development, but  said                                                               
that all of them are not fully funded yet.                                                                                      
                                                                                                                                
2:41:54 PM                                                                                                                    
                                                                                                                                
MR. GAMBELL said  that the ARC works with  the federal government                                                               
on conveyance transfer, between trucks  and trains and barges. He                                                               
said  that  the  ARC  is  in  talks  with  Anchorage  and  Mat-Su                                                               
governments about a ferry system.                                                                                               
                                                                                                                                
He then showed a slide  explaining day-to-day issues faced by the                                                               
railroad, and  explained that the  right of imminent domain  is a                                                               
policy upheld  by the  railroad, but it  is very  contentious and                                                               
rarely used.                                                                                                                    
                                                                                                                                
2:45:09 PM                                                                                                                    
                                                                                                                                
MR.   GAMBELL   said   that  the   railroad   is   eligible   for                                                               
classification  as a  historical district,  but such  designation                                                               
would mean that  every action made on the railroad  would have to                                                               
be approved by the state Historical Preservation Office.                                                                        
                                                                                                                                
He said  that the Transportation Security  Administration visited                                                               
the ARC and gave it high marks for security.                                                                                    
                                                                                                                                
2:47:20 PM                                                                                                                    
                                                                                                                                
SENATOR  WIELECHOWSKI  asked  for  the ARC's  current  status  on                                                               
pesticides.                                                                                                                     
                                                                                                                                
MR. GAMBELL explained that the  process for a pesticide permit is                                                               
a very  involved process, including  public input  and scientific                                                               
studies, and must be renewed yearly.                                                                                            
                                                                                                                                
2:48:50 PM                                                                                                                    
                                                                                                                                
SENATOR WILKEN asked  if the ARC participates in  the Alaska Land                                                               
Mobile Radio Program.                                                                                                           
                                                                                                                                
MR. GAMBELL said that it does.                                                                                                  
                                                                                                                                
2:49:57 PM                                                                                                                    
                                                                                                                                
CHAIR KOOKESH  asked for the  ARC's status in relation  to future                                                               
federal funding.                                                                                                                
                                                                                                                                
MR. GAMBELL said that in 2001  the ARC got entitlement to federal                                                               
formula  funds,  and  that  they   decided  to  transfer  to  the                                                               
equivalent amount of  earmarked formula funds. He  said that such                                                               
earmark  days  are  over,  but  the ARC  is  still  eligible  for                                                               
Department of Defense fund appropriations.                                                                                      
                                                                                                                                
2:51:46 PM                                                                                                                    
                                                                                                                                
CHAIR KOOKESH asked  how train cars manufactured  in Colorado are                                                               
delivered to Alaska.                                                                                                            
                                                                                                                                
MR. GAMBELL said  that the cars are shipped to  Seattle by train,                                                               
and then barged to Whittier where  they are put back on the train                                                               
for further shipping.                                                                                                           
                                                                                                                                
CHAIR KOOKESH, seeing no further business to come before the                                                                    
committee, adjourned the meeting at 2:52:47 PM.                                                                               
                                                                                                                                

Document Name Date/Time Subjects