CS FOR SENATE BILL NO. 123(TRA) "An Act relating to legislative approval for the design and construction of facilities of the Alaska Railroad Corporation and railroad line realignment and railroad corridor projects of the Alaska Railroad Corporation." SENATOR DRUE PEARCE, sponsor of SB 123, indicated that they had a work draft before them. Senator Leman moved to adopt the committee substitute (CS) for SB 123, 22-LS0522\P, Utermohle, 04/10/01, as a work draft. Co-Chair Kelly asked if there were any objections. There were no objections and Version P was adopted. Senator Pearce indicated that Version P changed dramatically the direction that she was going in terms of approval of projects on the facilities that the railroad would be building. She explained that the CS would require the railroad corporation to obtain legislative approval for the program of projects, which were the lists of federally funded projects required by the federal transit administration and the federal highway administration. The CS represented the collaborative effort between herself and the railroad, which would require approval for major construction projects while excluding regular maintenance projects, minor construction and realignment project and projects outside of communities that were entirely on federal lands. She pointed out that the bill required the railroad board of directors to present their program to the legislature on the first day of each regular session; that program would be referred formerly to the House and Senate Finance Committees for review. She indicated that the legislature would be able to disapprove, by law, the expenditure of federal funds for a project during the first 60 days of session. She noted that failure of the legislature to disapprove would be recognized as approval for the expenditure of funds. She commented that the process was very much like that of the Local Boundary Commission. Senator Pearce further stated that the bill was introduced in response to the Alaska Railroad Corporation's multi-million dollar rail station project at the Ted Stevens International Airport in Anchorage. She pointed out that the railroad received direct federal appropriations for that project. She indicated that there was no input or coordination with the legislature prior to the project and, more importantly, there was no public review process in Alaska at any level before the project was begun. She noted that the project would impact a large number of Anchorage residents. She said that there were also concerns with the feasibility and economic practicality of the project; the original appropriation for the terminal was $28 million and the realignment project was expected to cost $18 million. She pointed out that the market analysis did not support spending $46 million on the project. She believed, in response to the concerns with the Anchorage rail station, that they should require the railroad to obtain legislative approval for future projects. [Note: Microphones inoperable for Co-Chair Kelly, Senator Leman, Co-Chair Donley, Senator Green and Senator Austerman] Co-Chair Kelly referred to the CS with a question [exact statement inaudible]. Senator Pearce pointed out that on page 2 of the CS there were exceptions that did not apply to the subsection; those being that the facility construction cost be less than $5 million and the track realignment construction cost be less than $10 million. Therefore, there were exemptions for the smaller projects. Senator Olson understood where the concerns were toward the current projects, but if they looked at the long-term effects of the increased traffic through the Anchorage international airport how were they going to accommodate for the increase in the amount of people traveling nowadays without a rail facility. Senator Pearce pointed out that the Anchorage airport terminal project was going to go forward. She noted that Europe did have a much better rail system. Unfortunately, in Anchorage they would be held back because the track would only go north and south. She maintained that in the United States while the market analysis spoke about cities where there was a lot of commuter traffic to and from airports every city where it had been successful was a city with millions of people. She noted that a city the size of Anchorage would not have the population to support constant commuter service. Senator Wilken wondered what Senator Pearce's intent was if the project construction costs were larger than $10 million and the legislature were to disprove it. Senator Pearce indicated that the railroad would have to readdress the project and the concerns. She did not believe that the legislature would turn down a project unless there was an outcry by the people in the locality of where the project would take place. She stressed that it would be very difficult to ask the legislature to act within 60 days and reminded the Committee that the Governor could always veto the bill. Therefore, they would have to have two-thirds of the legislature fighting against a project before one would actually be turned down. She believed that it was important for the railroad to be required to come before an elected body, like the legislature, for the purpose of bringing the people into the process and assist the railroad in being more cognizant of the issues. Senator Wilken voiced his appreciation for the changes that were th made. He wondered if on the 58 day the legislature were to turn down a major project whether the railroad would have to wait until the next session to move forward on the project. Senator Pearce replied, "Yes. For construction." Senator Wilken clarified that they would not have another look at it until the next session. Senator Pearce explained that the legislature would authorize the use of federal funds exactly like they did with the Department of Transportation and Public Facilities on building roads. She predicated that the minute the railroad saw enough concern with a project they would be working with the legislature. Co-Chair Kelly [indiscernible]. Senator Pearce agreed with Senator Kelly. She added that in seeing the ideas of the railroad for the future and their opportunity to receive money from the federal government it would not surprise her to see the railroad come to the legislature for help with matching funds, because most of the federal programs do require matching funds. She pointed out that the railroad had matched dollars over the years, but if they were handed $100 million for a huge realignment she did not see how they would come up with a 20 percent match. She believed that the legislature would become more active in railroad expansion. Senator Green wondered if the language on page 2, line 4 would apply to the Mat-Su Borough. Senator Pearce understood that boroughs count as communities. She clarified that if they allocated state funds for a federal match than that would be considered approval. Senator Green indicated that she was not sure what the language stated exactly, but that the money was appropriated as leverage for federal money. She wondered if they would have to wait an entire session for that approval. Senator Pearce referred to page one of the bill on the bottom of the page and indicated that if a project were substantially changed then the railroad would have to come back to the legislature for approval. Senator Green requested clarification that the project would not have been approved. She pointed out that there were miles of railroad to interconnect and wondered if those projects would fall under the requirement for additional legislative approval. Senator Pearce answered probably, because in order to get on the federal list for projects they would have to come back to the legislature. She assumed that the project would have to go through the process at the federal level already. She further clarified that if a project wanted to receive federal funds then it would have to appear on the program at some point and the first time it appeared there with construction money would be the year for legislative approval. Senator Leman seemed to him that if the legislature were to disapprove, by law, then the legislature could also approve, by law, if there were a change in the project sometime after the disapproval. He clarified that it could be during the rest of the regular session or even during a special session rather than on the first day of the next session and the legislature would not be in violation. Senator Pearce agreed, but believed that it could not be through the capital budget process, rather there would have to be an actual law passed. Senator Leman agreed. Senator Pearce reiterated that they could not get to it through the Legislative Budget and Audit process. Senator Leman interpreted it the same way. Senator Pearce noted that when they ran into problems at the legislative level there would be enough scurrying about that some accommodation would be found before the end of session. Senator Leman agreed. He questioned whether the definition of "substantial" with regards to the pipeline ride-of-way would concern them or the railroad. Senator Pearce stated that she was comfortable with the definition of "substantial" provided by Mr. Utermohle. She explained that if the railroad had funds to build to Point Mackenzie and they decided to build to Skwentna instead that would be considered a "substantial" change. On the other hand, she noted that if the railroad had to change a route a little bit to accommodate a wolf den then that would not be considered a "substantial" change. She reminded the Committee that in federal law if those projects change then there would need to be a reauthorization process. Senator Leman clarified that in federal regulation there would probably be a definition of "substantial." Senator Pearce said that she was not sure if it was defined or not in the federal regulations. She did not expect the railroad to go outside of what they intended. She noted that the railroad did have a lot of land and it was hard to say what they might come up with in terms of development. Senator Ward commented that the Alaska railroad was an interesting entity. He wondered why they would pass this legislation rather than putting the railroad under the executive budget act. Senator Pearce parlayed that this would be a "slap on the hand" whereas that would be a "sledgehammer." Senator Ward questioned the specifics of it and wondered if this legislation would impede the railroad's ability to do what they felt was best. Senator Pearce answered that sure it would impede their ability to some extent, but not much. She believed that it was something that the railroad should do and she worked with the railroad to come up with something that they were willing to do. She pointed out that the railroad was an asset of the state and all Alaskans were shareholders of the railroad. She indicated that if they want the railroad to be able to act like a business than putting them under the executive budget act would not be the way to go. She said that she did not feel that the government acted well as a business. JOHN BINKLEY, Chairman of the Board, Alaska Railroad Corporation, testified via teleconference from Fairbanks, thanked Senator Pearce for the CS, Version P, and indicated that it was a tremendous improvement to the CS that came out of the Senate Transportation Committee. He pointed out that it was an effort on Senator Pearce's part out of frustration that she had felt with the construction of the project at the Ted Stevens International Airport in Anchorage. He gave some background from the railroad's point of view on that project. He explained that the Department of Transportation and Public Facilities approached them when the department began the reconstruction of the terminal at the airport. The airport had dictated that if the railroad wanted to maintain their existing line than they had to be apart of the project. He said that the intent of the railroad was to preserve that corridor. He urged that they tried to communicate with the legislature on their projects and never did get a huge reaction or negative reaction. He noted that they did as much as they could to inform the public about the project. He referred to the additional cost of the rails going into the airport and noted that it was being looked at for future projects if there was a tremendous amount of use of those rails. He thought that if they got to the point to spend additional money to realign the rail it would be a tremendous success. He said that they hoped there would be acceptance of commuter rail in the Anchorage area and that they would increase the number of trains going in and out of the airport. He commented that he would see that as a success if it indeed were to happen. Mr. Binkley continued that two of the key pieces in the legislation were that it forced a close working relationship between the railroad and the Department of Transportation and Public Facilities and secondly, that the railroad would have autonomy. He noted that the number one consideration was safety and number two was the customer. He expressed that where there was concern with the original CS from the Senate Transportation Committee with regards to it crossing the line with regards to the legislature becoming an integral part of the decisions of the railroad. He again thanked Senator Pearce for her work on the legislation. Senator Leman moved to report CS SB 123, 22-LS0522\P, Utermohle, 4/10/01, from the Committee. There was no objection and the bill was reported from Committee. AT EASE 9:49 AM/9:51 AM