HB 241-RAIL AND UTILITY CORRIDOR TO CANADA    CHAIRMAN JOHN TORGERSON called the Senate Resources Committee meeting to order at 3:43 p.m. and announced HB 241 to be up for consideration. REPRESENTATIVE JEANETTE JAMES, sponsor of HB 241, said she filed this legislation to increase the size of the transportation and utility corridor from 300 to 500 ft. wide. A corridor from Fairbanks to Seward has been identified; this bill would create a railroad connection to the North American rail system. She has had a lot of support for this idea from the Canadians, as well as from within the state. The accelerated interest is due, in part, to Senator Murkowski's effort to support a bilateral commission to do a feasibility study at the federal level. However, the Canadians will have to do the same, so while the U.S. has appropriated $6 million for this three-year process, no funds have been expended yet. HB 241 authorizes the Alaska Railroad Corporation (ARRC) to survey on the ground and monument the corridor. Right now there is great interest in building a gas pipeline along the same route and she wants to be sure that neither the gas line nor the railroad exclude the other by taking a position that doesn't leave anything for the other. In discussions with the gas producers, it has become apparent that there may be some synergies between the two. This particular legislation authorizes ARRC to investigate extension of the railroad to White Horse, Yukon Territory. She personally thought this would be a hand out to Canada. The other issue is that the White Pass Railroad could go to White Horse, but currently it only goes as far as Carcross. The Canadians have indicated to her that if the Alaska Railroad went to White Horse, they would extend their schedule to go there, too. This would open the deep-water port of Skagway to that part of Alaska and the Yukon. The part of the bill that may be more controversial provides that once ARRC has received the funds to do the surveying, the state would transfer the state land within that corridor to ARRC. REPRESENTATIVE JAMES said that many things have changed since an aerial survey was done 20 years ago and it may well be that some changes in the direction of the already delineated route would have to be made. NASA did a fly-over with a high-resolution evaluation of the whole area two years ago that is currently being mapped by the Department of Natural Resources (DNR) and will soon be finished. In 1994 a route from Fairbanks to the Seward Peninsula was authorized that excluded the requirement in Title 38 to identify the use of the lands. She reminded the committee that ARRC has eminent domain authority and that it is looking at a transportation and utility corridor wide enough to possibly include fiber optics or anything else that would need to go in the corridor in the future. CHAIRMAN TORGERSON said the first issue he wanted to discuss was on page 2, lines 18 - 22. It gives DNR the authority to transfer the land without legislative review. He has heard rumblings that [legislators] would like to see a report when it's completed and then do the final transfer. REPRESENTATIVE JAMES said that would not necessarily negatively affect the direction she is going in. CHAIRMAN TORGERSON said the committee requested a legal opinion on the reference to AS 42.40.370, which transfers all subsurface rights, including the surface materials, mineral rights, the right to use the timber, etc. to the corporation, but clearly the [legislature] is not interested in giving the oil and gas to ARRC. If they happen to build a road, they don't want to transfer it and then buy the gravel back either. So, they are working on an equal access issue to where the state would take care of a lot of the right-of-way if needed, but still achieve the purpose they want for ARRC. REPRESENTATIVE JAMES said she had no problem with that either. She never intended to include the subsurface rights with the exception of gravel, which ARRC will need. She had discussed this with ARRC and they were working on language about who would manage the gravel while giving the state access to it. CHAIRMAN TORGERSON next questioned giving ARRC the authority to own property in Canada in the last sentence in the bill, which says, "the corporation may acquire land or interest in Canada". 4:00 p.m. SENATOR TAYLOR said he was concerned that the fiber optic contract alone renders a significant income and that the state should manage those revenues. REPRESENTATIVE JAMES said she shares his concerns and she would not have sponsored this bill if she didn't believe that this is going to benefit Alaska as a whole. She noted that Alaska has a lot of stranded resources that have the potential to be developed if better connections were available. It appears to her that, for safety reasons, wherever ARRC has a right-of-way, that land should be managed by ARRC. SENATOR TAYLOR expressed concern about giving ARRC title to the 500 ft. width. He questioned, "Why don't they just have a right- of-way or easement for the use of that portion, but not an exclusive right-of-way or easement." He said that he would give ARRC the exclusive right to run the railroad on a 100 ft. corridor but cautioned, "I wouldn't give them the exclusive right to control all other uses that might be compatible with theirs." REPRESENTATIVE JAMES said currently ARRC has fee simple title to its railroad corridor and she believes it should all be the same. She assumed that the basic minimum is 100 ft. for one track and that they would need some double tracks and ancillary things along the way. She said she didn't think the existing corridor is going to work for future needs. She added: If there is an EIS to do for the Railroad down there, I was of the opinion that we could do the whole thing at once and so when it comes to putting a transmission line down, it'll be already done… She said she didn't agree with Senator Taylor that it was that much of a problem and in Fairbanks ARRC is working with federal money to make separated grade crossings over 46 different at- grade crossings. She noted, "The goal is to have separated grade crossings, not at-grade crossings." SENATOR LINCOLN commented the bill provides for "at least" a 500 ft. corridor, but that is just a minimum. She asked if there was a reason to have a minimum and no maximum. REPRESENTATIVE JAMES replied there is a reason, that being the corridor needs to be wider in some areas to allow for turning, double tracks and other things a railroad needs, but those locations can't be determined until a survey is done. SENATOR LINCOLN asked what the maximum could be. REPRESENTATIVE JAMES said she didn't think they could know that until the survey is complete. She reiterated that nothing would happen until the survey and monuments were actually done on the ground and people knew what was required and where. SENATOR ELTON said the bill proposes that ARRC can identify a corridor (page 2, lines 18 to 23) in accordance with cited statutes and convey state land within the railroad utility corridor. He asked who will negotiate if there are prior claims on that land, whether they be mineral claims or farm leases. REPRESENTATIVE JAMES replied that it is her understanding that if DNR were to transfer any land to anyone for any reason, it would have to identify the existing rights, whatever they happen to be. Generally, if a piece of property that has existing rights on it is purchased, you either make an agreement of compensation or provide satisfaction or you accept the land with the existing rights. She assumed this transfer would be handled in the same way, but it needs to be clearer in the statute. SENATOR ELTON said he understood then that it wouldn't be up to DNR. It would be up to ARRC to extinguish those previous existing rights that might conflict with ARRC's use and ARRC would incur any costs associated with extinguishing those rights. REPRESENTATIVE JAMES responded that she thought that is how it would work. SENATOR TAYLOR asked what was meant by "associated rail land" on line 17 and in several other places. REPRESENTATIVE JAMES said she understood that to mean sites and other kinds of facilities along the line, including passenger and freight stations. SENATOR TAYLOR asked if they would be outside the corridor. REPRESENTATIVE JAMES said she thought it would be part of the corridor. SENATOR TAYLOR asked if there was a definition of "associated rail land" and whether it could go beyond the intended 500 ft. He wondered if "associated rail land" meant lands beyond 500 ft. REPRESENTATIVE JAMES replied that they can't specifically describe what they need until the legislature authorizes the on- the-ground survey. CHAIRMAN TORGERSON said he thought that is the reason the legislature wants to review the findings. He said he would set the bill aside and work with the sponsor to resolve some of the issues. SENATOR LINCOLN asked if DNR would testify today. MR. BILL BRITT, Gas Pipeline Coordinator, said that a majority of DNR's concerns had already been identified. He explained: First, there is likely to be some overlap between the railroad corridor and the gas pipeline right-of-way as has been indicated. Any gas pipeline right-of-way lands transfers the railroad would stake [indisc.] authorization, construction, operation, maintenance and [indisc.] of the gas pipeline. The transfer would also reduce the lease payment and may also affect the tariff… This is not an abstract concern, given that the railroad [indisc.] about 10 times what the state does for fiber optics right-of-way. Having the contract returned for review should be considered so that other state interests can be identified. The bill should also make conveyance subject to third party interests, a concern that Senator Elton brought up. The state's mineral rights need to be protected as well and the transfer should be made subject to AS 38.05.125. The bill does not protect public use and access within and across the corridor. At a minimum, the bill should make the transfer subject to AS 38.05.127, retaining access along navigable waterways. He suggested the committee might want to do more. The bill also needs to clarify who will bear the expense associated with the conveyance and there doesn't appear to be an upper limit on the amount of land that can be conveyed. CHAIRMAN TORGERSON asked him the difference between AS 38.05.125 and AS 38.05.035. MR. DICK MYLIUS, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), answered that AS 38.05.125 is language DNR uses when conveying land out of state ownership while it retains the mineral rights. CHAIRMAN TORGERSON asked if he agreed that AS 42.43.070 transfers mineral rights. MR. MYLIUS said that is DNR's understanding of it. SENATOR ELTON noted that the only fiscal note in the packet affects DCED and was written by the staff to the Senate Transportation Committee. He thought DNR should prepare one also. SENATOR TAYLOR asked if ARRC's purpose could not be just as well provided for with an easement within a declared utility corridor that was retained and owned by the state. MR. JIM KUBITZ, Alaska Railroad Corporation, replied that depends on what you want to accomplish. ARRC hopes this business will be profitable or it may need to do other things on the land until it is. He also explained that every once in a while you have to turn a train around and that can't be done in a 500 ft. corridor. So, every fifty miles or so ARRC will need a bigger piece of land on which to do that. SENATOR TAYLOR asked if that could also be accomplished by an easement. MR. KUBITZ said it could probably be accomplished by an exclusive easement. SENATOR TAYLOR said he wanted ARRC to stay in the railroad business. He maintained, "I don't intend to give you I don't how many thousand acres of land and resources and mineral rights so you can go into the oil drilling business or go into the land selling business or the land leasing business…" MS. PHYLLIS JOHNSON, general counsel to the Alaska Railroad Corporation, added: From the Railroad's perspective, certainly we don't have to have full fee title. It's an administrative convenience to treat all the land we're involved with the same way, but we can certainly differentiate. What we would need to be especially careful about, though, is in crafting or defining the language that creates this easement interest, even if we don't say exclusive - because I know that raised a few eyebrows just a second ago when Jim said exclusive - we feel the need to be able to have a very strong say about other activities. Again, we get back to the safety sort of angle of things. So, even if we have an easement, we would need to be careful about how we define it so the Railroad can protect both itself and the public and the environment and all the interests there from those kind of peculiar railroad hazards that goes along with the kind of business we're in…You can call it an easement or a duck as long as we're able to protect those important public interests. CHAIRMAN TORGERSON asked why the legislature would want to give ARRC authority to own land or interest in Canada. He asked if it is an important provision. MR. KUBITZ replied that all ARRC is after is to be able to control its corridor and right-of-way for its own reasons. MS. JOHNSON asked them to envision the border and the interchange with other rail lines and other activities; ARRC would need a fairly spread out area to work in there. ARRC envisions buying a little additional land to make it work out right at the border. CHAIRMAN TORGERSON said they would work on language with them. SENATOR TAYLOR asked if she could draft a paragraph indicating what the essential elements are of an easement providing for a priority of use by the railroad, but not an exclusive use. MS. JOHNSON said she could take a stab at it and use the Federal Transfer Act as her guide, because that would cover the most important interests that need to be protected. CHAIRMAN TORGERSON said they would hold this bill for further work.