HOUSE RESOURCES STANDING COMMITTEE February 8, 1999 1:05 p.m. MEMBERS PRESENT Representative Jerry Sanders, Co-Chair Representative Scott Ogan, Co-Chair Representative Beverly Masek, Vice Chair Representative John Harris Representative Carl Morgan Representative Ramona Barnes Representative Jim Whitaker Representative Reggie Joule Representative Mary Kapsner MEMBERS ABSENT All members present COMMITTEE CALENDAR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 12 "An Act relating to a utility corridor and railroad right-of-way between the Alaska Railroad and the Alaska-Canada border." - MOVED SSHB 12 OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 12 SHORT TITLE: RAIL/UTILITY EASEMENT TO AK-CANADA BORDER SPONSOR(S): REPRESENTATIVES(S) JAMES, Therriault, Dyson, Harris Jrn-Date Jrn-Page Action 1/19/99 20 (H) PREFILE RELEASED 1/8/99 1/19/99 20 (H) READ THE FIRST TIME - REFERRAL(S) 1/19/99 21 (H) TRANSPORTATION, RESOURCES 1/29/99 102 (H) SPONSOR SUBSTITUTE INTRODUCED - REFERRALS 1/29/99 102 (H) READ THE FIRST TIME - REFERRAL(S) 1/29/99 102 (H) TRANSPORTATION, RESOURCES, FINANCE 2/02/99 (H) TRA AT 1:00 PM CAPITOL 17 2/02/99 (H) MOVED OUT OF COMMITTEE 2/02/99 (H) MINUTE(TRA) 2/03/99 129 (H) TRA RPT 5DP 2NR 2/03/99 129 (H) DP: KEMPLEN, SANDERS, COWDERY, HALCRO, MASEK 2/03/99 129 (H) NR: HUDSON, KOOKESH 2/03/99 129 (H) 2 ZERO FISCAL NOTES (DOT, DNR) 2/03/99 130 (H) REFERRED TO RESOURCES 2/05/99 147 (H) COSPONSOR(S): HARRIS 2/08/99 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Testified as sponsor of SSHB 12. DENNIS POSHARD, Legislative Liaison/ Special Assistant Office of the Commissioner Department of Transportation and Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-3904 POSITION STATEMENT: Answered questions relating to SSHB 12. FRANK MIELKE, Chief Right of Way and Utilities Southeast Region Division of Design and Engineering Services Department of Transportation and Public Facilities 6860 Glacier Highway Juneau, Alaska 99801 Telephone: (907) 465-4541 POSITION STATEMENT: Answered questions relating to SSHB 12. LAUREL BARGER-SHEEN Department of Economic Development City of Delta Junction P.O. Box 229 Delta Junction, Alaska 99737 Telephone: (907) 895-1081 POSITION STATEMENT: Testified in support of SSHB 12. ACTION NARRATIVE TAPE 99-5, SIDE A Number 001 CO-CHAIR JERRY SANDERS called the House Resources Standing Committee meeting to order at 1:05 p.m. Members present at the call to order were Representatives Sanders, Ogan, Morgan, Whitaker, Joule and Kapsner. Representatives Harris, Masek and Barnes arrived at 1:09 p.m., 1:10 p.m. and 1:16 p.m., respectively. SSHB 12 - RAIL/UTILITY EASEMENT TO AK-CANADA BORDER Number 032 CO-CHAIR SANDERS announced the committee would hear Sponsor Substitute for House Bill No. 12, "An Act relating to a utility corridor and railroad right-of-way between the Alaska Railroad and the Alaska-Canada border." He noted that the Anchorage and Fairbanks Legislative Information Offices (LIOs) were on teleconference. Number 042 REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, sponsor of SSHB 12, presented the bill. She pointed out that people have questioned its necessity, because in 1982 identification of this corridor was authorized in statute, to connect Alaska's existing railroad with the Canadian border. She referred to a red booklet showing the route, titled "Alaska Railroad Extension Route Selection, Eielson to Canadian Border," dated July 1979 and produced by the Department of Transportation and Public Facilities (DOT/PF), which followed a 1979 study. At that time, there was an interest in connecting to the Lower 48 through Canada, and some building of the rail bed towards Alaska occurred in Canada. However, when Alaska didn't go forward with its end, either that rail wasn't laid or the portion which had been laid was pulled up. REPRESENTATIVE JAMES pointed out that in 1994 she had passed HB 183, which authorized delineation of a corridor from Fairbanks to the Seward Peninsula, as well as HB 184, which authorized the $10,000 for a study to determine the cost of acquiring the right-of-way from Eielson to the Canadian border. She said her purpose had been to let the world know that the issue of this corridor was not dead. In 1995, the DOT/PF reached a cost estimate of $6.363 million to acquire the right-of-way; $7,876 of the $10,000 appropriation was expended in doing so. However, in 1996 the application was withdrawn "due to lack of interest," in spite of the 1994 legislation that indicated a continuing interest. REPRESENTATIVE JAMES told members the next step is to reauthorize delineation of the corridor; SSHB 12 brings the old legislation up to date, authorizing the right-of-way but expanding it from 300 feet to 500 feet. She is not expecting any state appropriation for this, nor a fiscal note. The bill says this is subject to legislative appropriation, which would be through other legislation or a budget process. She is asking that it be authorized in case federal, international or private money becomes available. Noting that DOT/PF representatives were available to answer questions, she informed members that someone from the Alaska Railroad had testified at the earlier House Transportation Standing Committee hearing. Number 133 CO-CHAIR OGAN referred to the role played by the railroad across the Lower 48 in opening up the West. He said it seems Alaska would be well-served by railroad connections to the Lower 48. Mentioning talk of a possible railroad connection to Siberia using a tunnel, he expressed support for SSHB 12. REPRESENTATIVE JAMES said she has been working with people in the Yukon Territory, as many have indicated this would benefit them in their businesses. The tourism industry has been particularly interested; although numerous buses bring tourists up the "Alcan" (Alaska Highway), tourist industry people have indicated the trip would be much cheaper by rail, as one rail car holds two busloads. The biggest advantage, however, is that people prefer to use more comfortable rail travel instead of going by bus. There is also a big interest in tourism access to the Wrangell-St. Elias Mountains, perhaps to relieve pressure on Denali National Park and Preserve; there is no way to get tourists to the former location on a two-day bus ride. Representative said she intends to see that this happens sometime, although she doesn't know how yet. Number 191 REPRESENTATIVE HARRIS asked what is included in the DOT/PF's 1995 cost estimate of $6,363,000 to acquire the right-of-way. REPRESENTATIVE JAMES referred members to a one-page document titled, "Right of Way Cost Estimate, State Highway" [provided in packets attached to a two-page letter dated August 7, 1996]. She said she assumes there would be some land trades, as well as land purchases. Number 207 REPRESENTATIVE HARRIS asked how far it would be from the border to connect to the Canadian railroad. REPRESENTATIVE JAMES explained that it is about 400 miles from the Canadian border to connect in Canada, and about 380 miles from Eielson Air Force Base to the border. She pointed out that she hadn't specified from where to where. The best route may come in around Talkeetna, for example, rather than into Eielson. She is asking for the best route, both economically and physically. Number 225 REPRESENTATIVE HARRIS asked whether there is an anticipation of working with the Canadian government to develop an easement that connects with Canada's infrastructure. REPRESENTATIVE JAMES said yes. A small group including herself had met once with the Yukon Territory delegation on that issue, and another meeting is planned in Whitehorse, probably in April, with representatives from the British Columbia Railway and other interested parties. She emphasized the need to work together on this. Number 243 REPRESENTATIVE HARRIS said he applauds the sponsor for taking this long-overdue step. REPRESENTATIVE WHITAKER concurred, then asked whether Representative James is aware of vested interests that might not be well-served by a railroad connection to the Lower 48. REPRESENTATIVE JAMES referred to HB 183 in 1994, involving a connection from Fairbanks to the Seward Peninsula. She said there are always rural residents who like to be remote, and who depend upon being remote. However, a railroad is controlled access. If some people don't want rail travelers to bother their village, the railroad can go around and not stop there. In contrast, others who want a connection can build a road to the railroad. She has found a change in the attitudes of rural residents over the last five years; now many want jobs or a small tourism business, for example, although they may not be totally sold on the idea yet. Furthermore, Representative James said she is not aware of any economic interests that may not be well-served by this. In fact, a recent conversation indicated that more rail would result in more trucking jobs because rail doesn't deliver items to the final destination. It would be cheaper and safer for truck trailers to ride on the train instead of using the "Alcan," and those people are supportive of the connection. Number 305 CO-CHAIR SANDERS pointed out that few Alaskan truckers come up over the Alaska Highway; most of those truckers are outsiders. Number 310 REPRESENTATIVE BARNES asked why the DOT/PF withdrew the order for the right-of-way. REPRESENTATIVE JAMES said she can only rely on what they told her, which is that the Bureau of Land Management (BLM) likes to clear applications off the books. She suggested it may have been from a perceived lack of interest, although she'd thought the $10,000 allocated [in 1994] had indicated the legislature's interest in that corridor. Number 333 REPRESENTATIVE BARNES asked whether Representative James had made it known to those officials since then. REPRESENTATIVE JAMES said yes, they'd had many conversations, and they now understand that there is an interest. As she recalled, Mr. Poshard had testified that he didn't know if the DOT/PF would make that same decision today, and that it was probably a mistake. Number 348 REPRESENTATIVE JOULE asked whether the Canadians had done anything to move their rail line closer to the border. REPRESENTATIVE JAMES said she could find out. Her understanding is that at the time, the Canadians prepared rail bed and had laid some track in Alaska's direction; although they pulled up some track when Alaska didn't go forward, the rail bed is still there to Dease Lake. Number 372 REPRESENTATIVE KAPSNER asked what the federal government has been doing to advance this project. REPRESENTATIVE JAMES answered that the "TEA-21" [Transportation Equity Act for the 21st Century] has an emphasis on rail, and some money has been allocated for a demonstration project to determine access on the other side of Fairbanks and towards Western Alaska; that feasibility study is to be done between the railroad and the DOT/PF. Representative James said a number of people had talked with U.S. Senator Stevens, and providing there is public support, she believes money from the federal government might be available. She indicated an agreement with the Canadians would be necessary, then added that also in the TEA-21 are national corridor planning and border infrastructure programs. She mentioned NAFTA [North American Free Trade Agreement] and suggested that a connection such as rail - which is the best way to move equipment and freight, especially - would certainly assist the economies of not only Alaska but also Canada and the Lower 48. Number 406 DENNIS POSHARD, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities (DOT/PF), came forward at Co-Chair Sanders' request, saying he had nothing to add but would answer questions. REPRESENTATIVE BARNES asked why the DOT/PF had vacated the right-of-way with the BLM. MR. POSHARD deferred to Mr. Mielke. Number 422 FRANK MIELKE, Chief, Right of Way and Utilities, Southeast Region, Division of Design and Engineering Services, Department of Transportation and Public Facilities (DOT/PF), told members he is acting as chief for the right-of-way committee for the state. He explained that at some point site-specific information is required to perfect a BLM application. The DOT/PF had received a right of entry allowing them to go onto the land, survey it and do studies. All of the right-of-way work was done; the information is still there; and the route is still delineated on the DNR status plats, as far as state lands, and still appears as a reservation. However, the DOT/PF was unable to perfect its application across federal lands; the next step would have been the filing of an environmental impact statement (EIS), but there was no funding for that. That is another level in the application process, similar to what was done for the Trans-Alaska Gas System, which required setting up an office; obtaining permits, including Title 16 permits; doing the EIS; and obtaining a conditional right-of-way. Mr. Mielke said there hasn't been the interest or money to go that level of application with this project. He emphasized that the information is there and the application can be resubmitted whenever the state is ready to go forward to that next level. Number 446 REPRESENTATIVE BARNES asked if the DOT/PF had notified anyone in the legislative branch that money was needed for an EIS. MR. MIELKE said he couldn't answer that, but he finds no evidence of it. REPRESENTATIVE WHITAKER suggested the Alaska Railroad Corporation could be, or should be, a driving force behind the expansion. He asked whether the DOT/PF had held conversations or corresponded with them about that. MR. POSHARD said Representative James has worked diligently with the railroad, and the DOT/PF has held discussions with them. In addition, someone from the Alaska Railroad Corporation had testified in the previous committee that they have been involved and are interested in moving forward with the corridor delineation. Number 469 REPRESENTATIVE KAPSNER stated her understanding that the Alaska Railroad Corporation is one of the few utilities that makes money for the state. She asked whether they would be interested in paying for part of it. MR. POSHARD replied that he assumes that would be an option, although he hadn't heard it discussed. REPRESENTATIVE BARNES pointed out that the Alaska Railroad Corporation makes money for itself, not for the state. Furthermore, she can't say they truly show a profit, she said, because they frequently have to go to the federal government for additional grants. For example, last year there was an additional $10 million to upgrade portions of the railroad bed. Number 488 CO-CHAIR SANDERS referred to the 1994 legislation; he asked when the BLM had come back and asked whether there was any interest. MR. POSHARD said he didn't have that information with him, although he believes it was in 1996. CO-CHAIR SANDERS suggested two or three years is a short time to even come back and ask. Noting that a great deal of interest had been expressed, he requested paperwork on how this happened. MR. POSHARD agreed to provide that. He pointed out that these applications had been on the books, without moving forward, since the 1982 study. He added that the DOT/PF is working with Representative James to correct the situation. Number 517 REPRESENTATIVE BARNES asked what the Administration's position is on SSHB 12. MR. POSHARD replied that the Administration has not taken a position, although they are more than willing to work with Representative James and to delineate the corridor, should the legislature appropriate money for that. REPRESENTATIVE BARNES requested that, whether SSHB 12 has moved out or not, Mr. Poshard come back before the committee with what is needed to ensure that the right-of-way work goes forward, and with an assurance that the Administration truly supports this effort. MR. POSHARD agreed to provide that. He pointed out that the DOT/PF's "Fiscal Analysis for SSHB 12," submitted with the zero fiscal note, gives a rough estimate of what it would cost to proceed with a new delineation and to acquire the right-of-way. Number 552 REPRESENTATIVE BARNES suggested the DOT/PF and the Alaska Railroad Corporation move together on it. She mentioned the economic necessity of having development unrelated to oil. Number 589 REPRESENTATIVE HARRIS stated his understanding that there is a zero fiscal note because no money has been asked for. MR. POSHARD affirmed that, explaining that SSHB 12 doesn't actually require the DOT/PF to do anything unless there is an appropriation. The attached fiscal analysis shows that the cost would be a little more than $60,000 to complete the work required by SSHB 12, if the legislature were to appropriate money. To move forward and actually acquire the right-of-way would be, obviously, a much larger figure. REPRESENTATIVE HARRIS stated his understanding that SSHB 12 reauthorizes what happened in HB 184 [1994]. MR. POSHARD said he believes that is correct, with minor changes. REPRESENTATIVE HARRIS asked why the cost of acquiring the right-of-way is now $60,000. Number 610 MR. MIELKE explained that the DOT/PF wants to verify that the route is still the best one, as there have been land status changes, for example. Furthermore, in anticipation of the EIS, they need to look for alternatives. "If you're doing an EIS, even if there's no imaginable other alternative, you've got to look at one, and it may be timely to do that anyway," he concluded. REPRESENTATIVE BARNES recalled that part of the right-of-way was delineated during World War II, and that the corridor has existed since then. MR. MIELKE said he believes there is a "line on a map somewhere," but no corridor or land was set aside or reserved. REPRESENTATIVE BARNES asked Mr. Mielke to research that, as she remembered differently. She suggested it was probably laid out when the Alaska Highway was built. MR. POSHARD said they would be happy to research that. TAPE 99-5, SIDE B Number 001 CO-CHAIR SANDERS relayed information from the previous committee, presented by the Alaska Railroad Corporation, indicating there had been testimony in 1994 that building the railroad would run about $1 million per mile; at roughly 500 miles, that would be a half-billion dollars. Co-Chair Sanders said they now indicate it would be $3 million per mile. He questioned why, with 2.5 percent [inflation] over the past five years, the cost had gone up so much. He suggested the need to move on this now, to avoid these increases. Number 034 LAUREL BARGER-SHEEN, Department of Economic Development, City of Delta Junction, testified via teleconference in support of SSHB 12. She told members Delta Junction residents are enthusiastic about the idea of the railroad extending its services to Delta Junction, Fort Greely and Canada, which residents believe will provide more efficient transportation for the area's goods. Rail expansion traditionally has brought economic development, which her region desperately needs because of the impending closure or realignment of Fort Greely in 2001. Residents believe a public-private partnership might be practical for this project because if the national missile defense siting team chooses Fort Greely as their location, they may be willing to chip in funds to further this project. Ms. Barger-Sheen emphasized that land values are increasing steadily. She reminded members of what this could mean to Alaska's future, including expansion of economic development opportunities for the Interior, as well as support services for Anchorage. Number 065 REPRESENTATIVE BARNES asked what the status of agriculture is in Delta Junction. MS. BARGER-SHEEN said there have been two or three successive years of environmental problems, and they are up against hard times. However, they are exploring exotic meat markets with bison herds, as well as other forms of agricultural production. A dairy processor is interested in expanding operations, and there is a new business proposal for a vegetable processing plant. REPRESENTATIVE BARNES asked if the Delta barley project is gone. MS. BARGER-SHEEN said no, there are still producers out there, although there has been a substantial shortage of grain due to three years of bad weather. REPRESENTATIVE BARNES asked if the bison are still eating the barley. MS. BARGER-SHEEN said yes, and there is now a domestic herd supplying the exotic meat market; there has been substantial demand not only from Japan but also locally and in the Lower 48, as the meat is leaner than beef. REPRESENTATIVE BARNES asked where they get the vegetables for the processing plant. MS. BARGER-SHEEN replied that there are several local producers, including a large potato farm and a large carrot farm. REPRESENTATIVE BARNES mentioned the private prison that it is hoped will be located at Fort Greely, suggesting that prisoners, goods and services could be transported by rail. Number 114 CO-CHAIR OGAN noted that a statute in Title 16 allows excess bison to be used for agricultural purposes. Number 154 REPRESENTATIVE BARNES made a motion to move SSHB 12 from the committee with the attached zero fiscal note(s); she asked unanimous consent. There being no objection, SSHB 12 moved from the House Resources Standing Committee. ADJOURNMENT Number 165 There being no further business before the committee, the House Resources Standing Committee meeting was adjourned at 1:55 p.m.