Legislature(2025 - 2026)BUTROVICH 205
02/06/2025 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
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| Start | |
| Presentation(s): Alaska Railroad Corporation Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 6, 2025
1:33 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Jesse Kiehl
Senator Bert Stedman
Senator Mike Shower
MEMBERS ABSENT
Senator Löki Tobin, Vice Chair
COMMITTEE CALENDAR
PRESENTATION(S): OVERVIEW: ALASKA RAILROAD CORPORATION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BILL O'LEARY, President
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Co-presented Alaska Railroad Corporation
Overview.
MEGHAN CLEMENS, Director
External Affairs
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Co-presented Alaska Railroad Corporation
Overview.
CLARK HOPP, Chief Operations Officer (COO)
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions related to the
presentation, Alaska Railroad Corporation Overview.
ACTION NARRATIVE
1:33:14 PM
CHAIR BJORKMAN called the Senate Transportation Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Kiehl, Stedman and Chair Bjorkman. Senator
Shower arrived thereafter.
^PRESENTATION(S): ALASKA RAILROAD CORPORATION OVERVIEW
PRESENTATION(S): ALASKA RAILROAD CORPORATION OVERVIEW
1:33:52 PM
CHAIR BJORKMAN announced the presentation, Alaska Railroad
Corporation Overview.
1:34:27 PM
BILL O'LEARY, President, Alaska Railroad Corporation (ARRC),
Anchorage, Alaska advanced to slide 2:
[Original punctuation provided.]
Agenda
• Mission and Strategic Goals
• Safety
• Public Engagement
• Operations and Financial Performance
• Capital Investment and Grants Program
• Economic Development
• Questions
1:35:26 PM
MR. O'LEARY advanced to slide 3:
[Original punctuation provided.]
Mission Statement
Through excellent customer service and sound business
management practices, provide safe, efficient and
economical transportation and real estate services
that support and grow economic development
opportunities for the State of Alaska.
MR. O'LEARY said the mission is primarily one of safety,
service, profitability, and economic development.
1:35:59 PM
MR. O'LEARY advanced to slide 4 and gave a brief overview of
ARRC's history and current operational data and statistics:
[Original punctuation provided.]
Quick Facts
Organization (following State purchase)
• Independent corporation owned by State
• Managed by a seven-member board of directors
appointed by Governor
• Mandated to be self-sustaining, responsible for
financial and legal obligations
Operating Data
• 683 Total miles of track
• 1030 Freight cars (owned and leased)
• 45 Passenger cars
• 55 Locomotives
Operating Statistics
• Half a million+ passengers
• 3.7 million tons of freight (2024)
Employees (January 2025)
• 646 full-time year-round employees
• 15 percent registered 'Veteran' Status
• two thirds are members of 5 unions
1:37:25 PM
MR. O'LEARY provided a brief history of the Alaska Railroad,
noting that the Railroad was built by the federal government
(completed in 1923) and purchased by the State of Alaska in
1984-5. He briefly discussed the formation of the Alaska
Railroad Corporation and detailed its structure. He pointed out
that the Alaska Railroad Corporation is self-sustaining and
independent (from the State) with respect to legal and financial
liability. He briefly explained this distinction. He emphasized
the benefits of the railroad.
1:40:29 PM
MR. O'LEARY advanced to slide 5:
[Original punctuation provided.]
Strategic Goals
1. Build a Proactive Culture of Safety and
Excellence
2. Enhance Stewardship and Stakeholder Relations
3. Grow Revenue by Sustaining and Expanding Business
Opportunities
4. Improve Profitability through Operational and
Administrative
5. Efficiencies
6. Optimize Capital Program Investment and
Management
7. Enhance Economic Growth through Rail and Real
Estate Development
1:41:37 PM
MEGHAN CLEMENS, Director, External Affairs, Alaska Railroad
Corporation (ARRC), Anchorage, Alaska, advanced to slides 6 and
7 and emphasized the importance of safety:
[Original punctuation provided.]
Build a proactive culture of safety at the Railroad:
• Continued implementation of employee safety
programs
• Public safety awareness campaigns
• Participation in emergency response training
exercises with local agencies
MEGHAN CLEMENS explained that public safety includes reminding
the public that railroad tracks are active transportation
corridors and are not safe locations for photography or foot
traffic. She briefly discussed the ways this information is
disseminated.
1:42:15 PM
SENATOR SHOWER joined the meeting.
MS. CLEMENS continued to discuss slides 6 and 7, discussing the
importance of emergency response training and emphasizing ARRC's
coordination with local emergency response organizations.
1:44:12 PM
MS. CLEMENS advanced to to slides 8 and 9:
[Original punctuation provided.]
Public Engagement
• Strive to be a good neighbor to our Railbelt
communities
• Attend local Council and Assembly meetings
• Meetings with Mayors
• ARRC Board of Directors External Issues Review
Committee
• School partnership program
• Community Open Houses
• Customer events
• Partnership with U.S. Forest Service
• Participate in Transportation Fairs
• Project public engagement plans
• Charitable donations
In 1985, the State of Alaska bought the Alaska
Railroad for $22 million, becoming the railroad's
official owner, and remaining so to this day.
1:45:39 PM
MS. CLEMENS advanced to slides 10 and 11:
[Original punctuation provided.]
Financial
• Grow Revenue by Sustaining and Expanding Business
Opportunities
• Improve Profitability through Operational and
Administrative Efficiencies
Freight Service
• Largest business line for Alaska Railroad
• Provides Alaska businesses most cost-efficient
and environmentally sustainable way to move heavy
freight and bulk commodities
• ARRC operates freight docks in Seward and
Whittier, and work closely with Port of Alaska to
haul goods to Interior
• Interline barge service provides seamless
connection with Lower 48 rail network
• Supports North Slope development, Alaska's energy
sector, military bases, Port of Alaska, ADOT&PF,
construction industry
• Partnerships with trucking industry relieve
trucks on highways and spare drivers for other
routes
MS. CLEMENS noted that freight transport brings the bulk of the
railroad's revenue.
1:48:44 PM
MS. CLEMENS advanced to slide 12, Freight Operations. Slide 12
includes a bar graph displaying the types of rail-hauled cargo
by volume (in thousands of tons). Cargo listed includes
interline, gravel, coal (export and local), and bulk petroleum.
She noted that the amounts fluctuate by year and emphasized that
the railroad works to be responsive to customer needs.
1:49:04 PM
MS. CLEMENS moved to slide 13:
[Original punctuation provided.]
Passenger Service
• ARRC 0perates year-round, regularly scheduled
passenger rail service
• Ambassador for Alaska through passenger sales,
marketing and media outreach
• Partners with tour operators, local hotels and
excursion vendors to bring passengers to Railbelt
communities and provide access to public lands
• Connects thousands of visitors between Anchorage
Airport Depot and cruise ports
• Operates the nation's last Flagstop train as
vital service to Alaskans living off-grid
• Keeps an estimated 8,000+ buses off Alaskan
highways each summer
1:51:03 PM
CHAIR BJORKMAN noted that Senator Shower joined the meeting at
1:41 p.m.
1:51:13 PM
MS. CLEMENS advanced to slide 14, Passenger Operations. Slide 14
includes a bar graph displaying annual ridership amounts for
2015-2024. This data is further broken down into two categories:
Cruise and Contract Railcars and Alaska Railroad Ridership. She
pointed out that the railroad rebounded quickly after the Covid-
19 pandemic. In addition, 2023-24 saw a slight dip in visitors.
She attributed this to the Riley fire in Denali, which occurred
at the peak of the summer season.
1:51:53 PM
MS. CLEMENS moved to slide 15:
[Original punctuation provided.]
Real Estate
• ARRC's leasable land is a key asset in generating
revenue for ARRC to meet its statutory obligation
of maintaining equipment and infrastructure
without State operating funds: while typically a
relatively small portion of overall revenue, the
impact to net income is substantial
• Areas with exciting mixed development
opportunities at present include: Anchorage's
Ship Creek; Fairbanks' Chena Landings; the Seward
waterfront; and land adjacent to the Seward
Airport
• ARRC seeks to attract the kind of developers and
business partners that will continue to improve
our economy, our visitor industry and our
communities' quality of life
MS. CLEMENS stated that the State of Alaska purchased the
railroad and all associated assets. This included the
infrastructure, equipment, and 36 thousand acres of land. Half
of the land is considered "operating land" (e.g. right-of-way,
terminals, and rail yards). The remaining land is leasable land.
She explained that this land is leased at fair-market value and
in ways that benefit the community.
1:54:23 PM
SENATOR KIEHL asked about the concentration of lease revenues
for the top five leases.
1:54:47 PM
MR. O'LEARY answered that it is concentrated in the metropolitan
areas (Anchorage, Fairbanks, and Seward). He said that the top
five could be provided. He noted that there is a fiberoptic
permit that runs the length of the line. He shared his
understanding that this is the top lease from a revenue
perspective. There are also significant holdings around the Port
of Alaska (second and third largest).
1:55:55 PM
SENATOR KIEHL clarified that he would like to understand what
percent of the railroad's lease revenue is made up of the top
five leases.
1:56:11 PM
MR. O'LEARY said that the lease revenue is well-diversified. He
explained that the top lease (under $2 million) is roughly twice
the size of the second largest, and the total lease revenue is
roughly $12 million.
1:56:33 PM
MS. CLEMENS advanced to slide 16, Real Estate Revenue. Slide 16
contains a bar graph detailing real estate revenue (in millions
of dollars) for 2015-2024. The data is further broken down into
lease and permits, Seward freight dock, Seward passenger dock,
and Whittier freight dock. She noted that leases and permits
make up the bulk of the real estate revenue. Docks also bring in
revenue.
1:57:03 PM
MS. CLEMENS advanced to slide 17, Net Income and Revenue
Sources, which states that all ARRC income is invested in
capital program to maintain and improve infrastructure and
operations. Slide 17 contains a bar graph displaying ARRC net
income for the past decade (in millions of dollars). She pointed
out the decline in 2024 and explained that this was due to a
timing issue with a preventative maintenance grant; the revenues
for this grant will be captured in 2025. In addition, there is a
pie chart displaying 2024 revenue sources (in millions of
dollars), preliminary and unaudited. This includes data for
freight (47 percent), passenger (21 percent), grants (16
percent), real estate (15 percent), and other (1 percent).
1:58:44 PM
SENATOR KIEHL asked for clarification about whether the Federal
Transit Authority (FTA) is included in the chart on slide 17.
1:58:55 PM
MS. CLEMENS answered that these are capital funds and are
included under grant funding. She said that this would be
covered in another slide.
1:59:23 PM
MS. CLEMENS advanced to slides 18 and 19:
[Original punctuation provided.]
Capital Investments
Optimize Capital Program Investment and Management
5-Year Capital Investment Plan
• Supported by ARRC internal funds generated by
business activities, federal formula funds and
federal competitive grants
• Supports railroad facilities, infrastructure and
equipment
• Will use internal forces, along with contractors
and suppliers
• Over $160 million for 2025; $86.9 million funded
by competitive federal grant awards
• Over half-billion dollars invested over 5 years
• May add funding sources as competitive federal
grants, partnerships, and other financial
opportunities become available for large projects
• Numbers in below table do not include Seward
investments discussed later (previously approved)
[Slide 19 also contains a table of funding sources and
totals for the years 2025-2029.]
MS. CLEMENS directed attention to the table on slide 19, which
includes FTA formula funds.
2:00:43 PM
SENATOR KIEHL pointed out that FTA grants seem to be reliably
within the $38 - $40 million range; however, slide 16 shows $34
million in total grant revenue. He asked for clarification on
the reasons for this.
2:01:05 PM
MR. O'LEARY answered that grant funding is not recognized until
there is a corresponding grant expenditure. He said that a
timing issue with a major grantor in 2024 caused $18 million
disconnect (between the timing of the grant versus the fund
recognition). He explained that the grant amounts listed on
slide 18 can be considered appropriated amounts. These funds
could be spent over the course of multiple years.
SENATOR KIEHL asked if, in this case, the grantor is FTA.
MR. O'LEARY answered yes and added that these are formula funds.
He offered examples of other grantors and noted that most are
through FTA.
2:02:26 PM
SENATOR KIEHL directed attention to the five-year capital
investment plan and indicated that some funds are not included.
He wondered if one or two large amounts are included later in
the presentation.
2:02:42 PM
MS. CLEMENS wondered if this was related to Seward investments,
which are indicated on the final bullet point on slide 19.
SENATOR KIEHL indicated that this is correct.
MS. CLEMENS confirmed that this would be covered later in the
presentation.
2:03:04 PM
MS. CLEMENS advanced to slide 20, Competitive Grants: 2018-2024.
Slide 20 includes charts of total grants awarded and grants
pending for the timeframe indicated. Both charts include
federal, match, and total funding amounts for each grant. She
noted that the Railroad has been competitive in the federal
funding arena, with federal grants totaling over $115 million.
She stated that these funds allow for repair or replacement of
bridges and expanding dock infrastructure. The match
requirements are covered with AR internal funds.
2:04:00 PM
MS. CLEMENS advanced to slide 21:
[Original punctuation provided.]
Capital Investments: Bridge and Track
Bridge Rehab Plan
• Replace or rehab 60+ bridges over next decade
• Roughly $106 million budget in 2025
• Recently awarded competitive grants: Federal-
State
• Partnership (Bridge 190.5, Willow), INFRA (Bridge
G3.3, Fairbanks), CRISI (Bridge 417.3, Nenana)
Track Rehab Program
• 51,000 ties replaced in 2024
• 28,000 linear feet of CWR installed
• 190 track miles of ballast surfacing
• Shoulder and embankment fortification
• $28 million budget in 2025
Funding Sources
• FTA formula funds
• CRISI STC grants
• Competitive grants
• ARRC internal funds
MS. CLEMENS stated that infrastructure maintenance can be
challenging, and replacement and/or rehabilitation is a top
priority.
2:06:03 PM
MS. CLEMENS advanced to slide 22:
[Original punctuation provided.]
Locomotives and Flat Cars
January 2024, the ARRC Board authorized a $9.9 million
loan to purchase:
• Four used SD70Mac locomotives: Without additional
locomotives, ARRC is at capacity for summer
operations and cannot sustain 6-day-a-week
freight service, accommodate new train starts, or
provide contingency in event of locomotive
issues.
• Thirty rail flat cars (approximately): A
significant portion of ARRC's fleet of 60-foot
flat cars is aging out. Ordering new flat cars
now will allow ARRC to better accommodate the
surge in North Slope demand; by the time the pipe
shipments are predicted to subside, the old cars
will be retired and ARRC's fleet will be renewed.
2:07:13 PM
MS. CLEMENS moved to slide 23
[Original punctuation provided.]
ARRC Whittier Terminal Master Planning
Previous master plan is 15 years old
• Update / re-develop terminal master plan to
prepare for future and ensure state of good
repair
• Purpose:
A. Identify terminal rehab projects
B. Configure upland and yard track to support
maintenance and ops
C. Determine efficiency, reliability,
resiliency and sustainability improvements
terminal-wide
• Funding: $1.17 million: 80 percent by MARAD (US
DOT - Maritime Administration) and 20 percent by
ARRC
• Timeline: Currently underway; expected complete
summer 2025
2:08:26 PM
MR. O'LEARY advanced to slides 24 and 25:
[Original punctuation provided.]
Economic Development
PLANNED INVESTMENTS IN SEWARD MARINE INFRASTRUCTURE
• $25 million Freight Dock expansion (funded by
MARAD grant and ARRC match)
• $137 million Passenger Dock and terminal
replacement (seeking ARRC bond authorization)
MR. O'LEARY said that Seward is significant to the Alaska
Railroad. He noted that the passenger dock is a cruise facility.
2:09:28 PM
MR. O'LEARY advanced to slide 26 and discussed the history of
the Seward Freight Dock and the dock expansion project:
[Original punctuation provided.]
Seward Freight Dock Expansion
• Estimated $25+ million investment; 80 percent
funded by Maritime Administration (MARAD) grant
• Freight Dock Expansion Project Scope: Extend to
1,000 feet and widen to 300 feet along entire
length by 2027
• Improve upland transportation corridor by linking
Port and Airport avenues
• Purpose: A) accommodate cargo growth; B) promote
region's key industries; C) serve rural
communities
2017 Seward Terminal Master Plan: recommends freight
dock expansion and transportation corridor
connectivity
2:10:49 PM
MR. O'LEARY advanced to slide 27:
[Original punctuation provided.]
Seward Passenger Dock Project
Critical to replace aging passenger dock and terminal
by 2026 cruise season
Funded by ARRC bonds pending legislative approval:
• $60 million bond authorization in 2022,
additional $75 million sought in 2025 (SB72 and
HB65)
• ARRC bonds are not a liability of the state and
no state dollars will be used to repay them
• Security for bonds provided by long-term user
agreement with Royal Caribbean Group
MR. O'LEARY stated that the Seward Passenger Dock is a key asset
to the statewide visitor industry. He added that in 2024 over
200,000 passengers utilized this dock. The dock was built in the
1960s and, while it remains safe, it will soon need replacement.
He briefly explained the plan for the replacement dock.
2:13:02 PM
MR. O'LEARY advanced to slide 28 and continued to discuss the
Seward passenger dock project:
[Original punctuation provided.]
Wide Deck: Seward Float is 100 Feet Wide
Accommodating: The port sports 40 bollards; functional
for all vessels
Longer Floats: Seward float is 748 feet long; Alaska's
longest cruise float
• Double berth pier with floating barge dock will
be able to accommodate wide range of vessels,
including side-loading marine highway vessels
• ARRC invested additional $1.8 million to enhance
transfer span for light freight
2:14:04 PM
MR. O'LEARY advanced to slide 29 and continued discussing the
Seward passenger dock project:
[Original punctuation provided.]
• 30-year Pier Usage Agreement with Royal Caribbean
Group secures bond debt and includes preferential
berthing agreement
• ARRC will own and operate new facility as open
dock (as currently operated)
[Slide 29 includes an artist's rendering of the Seward
passenger Dock project.]
MR. O'LEARY said that the bonds require legislative approval;
the Alaska Railroad is currently seeking the necessary approval
for the bond authorization. He emphasized that these bonds are
not state liabilities, and no state funds would be used to repay
those bonds.
2:15:39 PM
SENATOR STEDMAN noted that a previous request for this project
met with concerns and raised constitutional questions. He asked
for more information about this.
2:15:54 PM
MR. O'LEARY confirmed that in 2024, the Alaska Railroad
requested the $75 million incremental bond authorization. (This
bond authorization is again before the legislature.) He said
that, while the legislature did approve the bond request, it was
outside of the legislative session's time limit and was
therefore void. He explained that the situation is time-
sensitive; therefore, the Alaska Railroad sought additional
funding sources in the form of bank loans. He said that, while
bank loans have been used many times, concerns related to this
practice resulted in a return to the original plan (i.e. to
request the incremental bond authorization from the
legislature).
2:18:16 PM
SENATOR STEDMAN commented that 20 percent cost increase is a
standard increase for transportation-related projects. He asked
how the project delays have impacted the project cost. He asked
what the path to funding would be, if the legislature does not
approve the incremental bond authorization.
2:18:55 PM
MR. O'LEARY answered that at this time, the project is not
delayed. He said that if the bond authorization is approved
during the current legislative session, the fixed price contract
will not be impacted.
2:19:43 PM
MR. O'LEARY advanced to slide 30:
[Original punctuation provided.]
Port MacKenzie Rail Extension
• 32 miles to link ARRC main line from Houston to
Port MacKenzie
• Completed extension offers benefits to state
resource development, military logistics, and
infrastructure resiliency
Project History:
• As project sponsor, Mat-Su Borough secured $184M
in state appropriations between 2008-2015
• ARRC served as project manager
• Environmental work complete
• Much of the foundational infrastructure (track
bed and bridges) is complete
MR. O'LEARY said that the project stalled due to a lack of
funding.
2:21:23 PM
MR. O'LEARY advanced to slide 31 and continued to discuss the
Port MacKenzie Rail Extension:
[Original punctuation provided.]
Port MacKenzie Rail Extension
Remaining construction estimated 3 years to complete:
• Segment 2 civil construction (approx. 8 miles)
• Roadbed preparation and Subballast placement
• Telecom and signal construction
• Facility construction
• Track construction
Further funding is needed to continue construction:
• ARRC exploring options with partners in private
industry, as well as local, state and federal
government to advance project
• ARRC to submit CRISI grant application summer
2025
MR. O'LEARY said that the estimated cost to complete the project
is $275-300 million. He emphasized that the Alaska Railroad
supports rail extensions. However, he acknowledged that rail is
expensive to build, particularly without customer commitments or
an external funding source. The Alaska Railroad is working to
find potential customers and to seek additional funding sources.
He briefly explained the Consolidated Rail Infrastructure and
Safety Improvements (CRISI) grant application process and noted
the need for a 20 percent match. He stated that this match would
fall in the $55-60 million range. The Alaska Railroad is not
able to take this on and is seeking outside funding sources.
2:25:11 PM
SENATOR STEDMAN asked to return to slide 30. He asked to walk
through each segment of the Port MacKenzie rail extension
project.
2:25:40 PM
MR. O'LEARY deferred the question.
2:26:04 PM
CLARK HOPP, Chief Operations Officer (COO), Alaska Railroad
Corporation (ARRC), Anchorage, Alaska, noted that there are six
segments for the Port MacKenzie rail extension project. He
indicated that it is easier to identify the incomplete segments.
He said that the civil work is incomplete in segment 5 (Port
MacKenzie agricultural district). He explained that "civil work"
refers to bridges, roadbeds, etc. He clarified that civil work
has been completed in five of the six segments, making them
ready for rail construction. He acknowledged that these segments
likely need reconditioning due to the passage of time. He
briefly explained the specific work that is needed for segment
five. All six segments need rail construction.
2:27:58 PM
SENATOR STEDMAN asked for confirmation of his understanding that
all six segments lack tracks and are essentially gravel paths,
with segment five requiring additional work before rails can be
constructed. He asked for additional confirmation that the
estimated cost to complete this work is roughly $300 million.
MR. HOPP confirmed that this is correct.
2:28:26 PM
SENATOR STEDMAN asked for more detailed information from ARRC
outlining the work required for each segment. He noted that this
is a substantial project and having a detailed outline would aid
future discussions. He commented that the railroad carries the
potential for income production and the Port MacKenzie rail
project is an investment of $400-500 million. He shared his
understanding that the $184 million grant does not require
repayment and asked if this is correct. He directed attention to
the railroad balance sheet and shared his understanding that
there would be a $50 million expense; however, the project would
result in a $500 million asset. He asked whether the concern is
that the project would not generate sufficient revenue to
compensate a return on the $50 million expenditure.
2:30:09 PM
MR. O'LEARY affirmed that this is correct. He explained that the
customer base has not been identified.
2:30:23 PM
SENATOR STEDMAN gave several examples of projects with a clear
customer base with guaranteed revenue strams. He asked who
controls the mechanics of the Port MacKenzie project. He
indicated that whoever controls the project mechanics is
responsible for securing commitments from those who would rely
on the dock as a means to access the railroad.
2:31:18 PM
MR. O'LEARY said the MatSu Borough owns the port. ARRC is
working with the MatSu Borough to identify potential customers.
2:31:38 PM
SENATOR STEDMAN asked whether any potential customers have been
identified. He noted that there is a similar challenge with the
gas line, where potential customers have been identified but
linking the customers with the product has proven difficult.
2:32:01 PM
MR. O'LEARY acknowledged that a business case is necessary to
justify the investment. He noted more interest around 2015 from
potential customers and the current work is to rekindle this
interest. He indicated that a consistent, high volume is
necessary to cover the cost.
2:33:53 PM
SENATOR STEDMAN directed attention to Manh Choh mine, where
there is a high volume of production. He pointed out that trucks
moving resources have caused degradation and accidents on the
highway. He opined that a rail extension in this area would make
sense. He wondered how this issue could be addressed.
2:35:01 PM
MR. O'LEARY replied that, while ARRC has been in conversation
with Kinross Gold Corporation (Kinross), Kinross made the
decision to utilize trucks for transport. He explained that ARRC
is working to understand the potential market in that area - and
in what ways railroads would benefit that market. He stated that
installing rail is costly and requires incredibly high volumes
in the short term or significant volumes over a longer period.
He shared his understanding that Manh Choh is expected to have a
5-year mine life; therefore, building rail at this time is not
feasible (given the mine life and the amount of time it takes to
put the rail in place).
2:36:29 PM
SENATOR STEDMAN expressed disbelief and opined that the Mahn-Cho
mine would likely be in production for 15-20 years.
2:37:02 PM
SENATOR SHOWER directed attention to a publication from
Representative MacCabe. He indicated that there is a need for
rail in his district and offered examples. He emphasized that a
lack or railroad access will have a detrimental impact on
economic activity in the state and the nation.
2:39:22 PM
SENATOR STEDMAN noted the need for an anchor tenant for the Port
MacKenzie rail extension. He agreed that it is a big opportunity
for the region.
2:40:23 PM
SENATOR KIEHL asked about current restraints.
2:40:57 PM
MR. O'LEARY said infrastructure is one restraint. He explained
that the railroad was in poor condition when acquired by the
state. He indicated that some replacement projects are underway
and detailed additional needs (both current and upcoming). He
said the short season length is also a restraint.
2:43:39 PM
MR. O'LEARY advanced to slide 32:
[Original punctuation provided.]
Northern Rail Extension (NRE)
• 80+ miles North Pole to Delta Junction
• 4-phase project
• Phase 1, completed in 2014: Bridge over
Tanana River, road and levee near Salcha
(pictured)
• Phase 2: 13 miles of rail, from Moose Creek
/ Eielson AFB to Tanana River Crossing
• Phase 3: 30 miles of rail from Tanana River
Crossing to Donnelly Training Area
• Phase 4: 38 miles of rail, Donnelly to Delta
Junction
• NRE Cost and Funding:
• Original cost estimate was about $1 billion.
Estimate now $1.7 billion
• DOD was main funding source for initial
planning, environmental and Phase 1
• Public-private partnership explored as
future funding option
MR. O'LEARY indicated that funding has dried up and the project
has stalled. He stated that a team approach is required to move
these large projects forward.
2:47:32 PM
SENATOR STEDMAN asked for clarification on the timing of this
project from the original estimate of $1 billion to the current
estimate of $1.7 billion.
2:47:50 PM
MR. O'LEARY deferred the question.
2:48:04 PM
MR. HOPP estimated that the most recent evaluation of the cost
estimate was 2012-2013. He said the original estimate was
adjusted for inflation, resulting in the current estimate of
$1.7 billion.
2:48:37 PM
SENATOR STEDMAN noted that while some projects do not have
escalating costs, most DOTPF projects do. He opined that most
ARRC projects would likely have escalating costs (despite the
presentation indicating steady costs). He turned his attention
to Canada and asked about connecting Fort McMurray to the rail
extension.
2:49:38 PM
MR. O'LEARY said that ARRC had one recent conversation with a
representative from Alberta. He explained that the Alaska to
Alberta (A2A) Railway project stalled in 2021-2022. He surmised
that there may be renewed interest under the current federal
administration. He suggested that revisiting this could be very
beneficial.
2:51:29 PM
SENATOR STEDMAN noted past interest and changing political
priorities. He shared his understanding that A2A would be on the
agenda for the upcoming Energy Council meeting.
2:53:37 PM
SENATOR KIEHL asked whether a reasonable cost estimate would be
$21 million per mile.
2:54:04 PM
MR. O'LEARY said the most recent estimate was $10-12 million per
mile, which does not account for topography, the number of
bridges, or other issues that impact the ability to build the
rail.
2:54:53 PM
SENATOR KIEHL noted the rough calculation. He surmised that
federal government interest may be necessary to reach the level
of funding required.
2:55:19 PM
SENATOR SHOWER said that he recently heard $17 billion. He
briefly commented on A2A and emergency supplies.
2:56:15 PM
CHAIR BJORKMAN asked to return to slide 26. He noted
conversations related to meeting freight needs in the event of
issues at the Port of Alaska. He asked if there is a target
timeline to move the Seward dock expansion through phase 4,
which would allow large Orca-class ships to dock and provide
food security to the area.
2:57:13 PM
MS. CLEMENS said ARRC has a $25 million extension project for
the Seward freight dock. She offered a brief history of the
project and associated funding. She said that this would allow
Orca-class ships to dock in Seward, should something happen to
the port of Alaska. She explained that the grant execution was
slowed due to the Covid-19 pandemic. Construction inflation has
also been an issue. A business case is required. The grant would
not cover the width expansion required to facilitate the
operations of larger ships. She added that ARRC has identified
the delta required to bridge current funds with the full scope
needed. This amount is roughly $10 million. She indicated that
ARRC is working with stakeholders to identify what is possible -
and is seeking grants.
3:00:26 PM
MR. O'LEARY advanced to slide 33:
[Original punctuation provided.]
Economic Development through Partnership
These projects exceed to Alaska Railroad's ability to
accomplish alone: many partners may have a role to
play, including Congressional Delegation, State
Government, USDOT, AIDEA, Private Industry, Military,
Canada and more.
3:00:57 PM
MR. O'LEARY thanked the committee and said the railroad is a
tremendous asset that will continue to adapt and change as
needed.
3:01:42 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Transportation Standing
Committee meeting at 3:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 20250206_AKRR to STRA.pdf |
STRA 2/6/2025 1:30:00 PM |
Alaska Railroad Corporation Overview |
| ARRC Overview - Senate Transportation Response.pdf |
STRA 2/6/2025 1:30:00 PM |
Alaska Railroad Corporation Overview |