Legislature(2003 - 2004)

05/04/2004 01:45 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 560-MUNICIPAL LAND USE REGULATION                                                                                          
CHAIR HOLM  announced that  the next order  of business  would be                                                               
HOUSE BILL NO. 560, "An  Act relating to application of municipal                                                               
ordinances  providing  for  planning,   platting,  and  land  use                                                               
regulation  to interests  in land  owned by  the Alaska  Railroad                                                               
Corporation; and providing for an effective date."                                                                              
BARBARA  COTTING,  Staff  to Representative  Holm,  Alaska  State                                                               
Legislature, informed the  committee that before it  is CSHB 560,                                                               
Version I.  Version I reflects  changes made in the Senate adding                                                               
bonding for the railroad to Greely.                                                                                             
Number 0907                                                                                                                     
REPRESENTATIVE MASEK   moved to adopt CSHB 560,  Version I, dated                                                               
5/4/04, as the working document.                                                                                                
CHAIR HOLM objected for discussion purposes.                                                                                    
The committee took an at-ease from 1:58 p.m. to 1:59 p.m.                                                                       
Number 0945                                                                                                                     
PAT  GAMBLE,  President  &   CEO,  Alaska  Railroad  Corporation,                                                               
Department of Community & Economic  Development (DCED), turned to                                                               
the rail  corridor portion of Version  I.  He related  that there                                                               
has been discussion  between ARRC and the  military regarding the                                                               
active  duty military  from Fort  Wainwright who  need to  access                                                               
upwards of  1 million acres  of training land south  of Fairbanks                                                               
and those at  Fort Greely [who need access to]  the missile site.                                                               
The ARRC  has reviewed  those two missions  and has  suggested it                                                               
may be able  to provide an alternative in terms  of enhancing the                                                               
capability to  perform the mission,  the quality of life  for the                                                               
work  place as  well as  the families,  and doing  it cheaper  by                                                               
using ARRC's tax-free bonding capability.   Mr. Gamble emphasized                                                               
that this  concept is  being presented today  in order  to obtain                                                               
pre-approval  so  that if  the  dialogue  is continued  with  the                                                               
military, the concept  could be taken to the proposal  level.  He                                                               
expressed the need to know  that the legislature would find favor                                                               
with bonding for the aforementioned.                                                                                            
CHAIR HOLM commented  that it's difficult for  the legislature to                                                               
agree with something before the fact.                                                                                           
MR.  GAMBLE said  that the  initial concern  has centered  on the                                                               
financing.   Mr. Gamble  explained that  ARRC's proposal  is that                                                               
the  debt  service   would  be  paid  by   contract  through  the                                                               
Department of the  Army and the financial means  of the Strategic                                                               
Defense  Missile  Command.   Therefore,  two  contracts would  be                                                               
combined in order  to guarantee the debt service  over the period                                                               
of the  bond.  The aforementioned  seems to be the  main concern.                                                               
"As far as  the DNR hook would  be that we would in  fact use the                                                               
same geographical  corridor area  that has been  surveyed several                                                               
times over the past ... half  a century and that we, for example,                                                               
are talking  about the gas  pipeline going  down," he said.   The                                                               
corridor would follow  the east side of the Tanana  River to Flag                                                               
Hill where it would cross the  river at a bridge and proceed down                                                               
the  west  side  and  eventually  traverse  across  [via  another                                                               
bridge] to the  Fort Greely and Delta Junction area.   Mr. Gamble                                                               
related  that he  didn't believe  there have  been objections  to                                                               
continuing to consider the aforementioned  corridor.  In response                                                               
to Chair Holm, Mr. Gamble  related his hesitation in referring to                                                               
the  area beyond  Delta Junction  because the  route hasn't  been                                                               
surveyed to his satisfaction.                                                                                                   
CHAIR HOLM related  his interest in a long-term  approach [to the                                                               
area  beyond Delta  Junction]  because it  doesn't  seem to  make                                                               
sense to be on the west side of the Tanana River.                                                                               
MR.  GAMBLE informed  the committee  that the  engineers have  to                                                               
determine  which  side  [of  the river]  is  suitable  for  rail.                                                               
Furthermore,   the  current   route  to   Delta  Junction   under                                                               
discussion has  been reviewed specifically  for 79 mile  per hour                                                               
(mph) track  because of the  commuter service to  Delta Junction.                                                               
The  aforementioned calls  for  certain geographic  requirements.                                                               
Mr. Gamble  turned to the  Delta Junction Fort Greely  area where                                                               
[the track] would  round the corner and move east,  there's not a                                                               
mandate to have  79 mph track.   He indicated that if  there is a                                                               
need to slow  down in that area  in order to keep  the costs down                                                               
due  to  the geography  of  the  area, it  could  be  done.   For                                                               
example, the  railroad could cut  through a mountain to  keep the                                                               
track straight  and maintain a  speed of  79 mph or  the railroad                                                               
could proceed around the end of  the mountain and slow down to 49                                                               
mph.  In the aforementioned  case, the cost would be considerably                                                               
less to use the curved track versus going through the mountain.                                                                 
CHAIR HOLM  related that going east  to the border is  quite flat                                                               
terrain, and therefore there should be options for the railroad.                                                                
Number 1360                                                                                                                     
REPRESENTATIVE STEPOVICH  interjected that the costs,  route, and                                                               
options of the railroad are dictated  by the projected use of the                                                               
railroad.  Therefore,  he inquired as to the use  of the railroad                                                               
by Fort Greely.                                                                                                                 
MR. GAMBLE pointed out that  the [legislation] includes a trigger                                                               
relating the  notion that this has  to be viable from  a military                                                               
point of  view.   The military has  to agree to  the life  of the                                                               
bonds to  fund the debt service.   Mr. Gamble explained  that the                                                               
concept is  to handle  the service  requirements of  two separate                                                               
military entities through  a single line.  He noted  that each of                                                               
the  military entities  intend to  accomplish  their mission  and                                                               
have forecasted  the costs to do  so.  The ARRC's  proposal is to                                                               
lay  the debt  service costs  down  and on  a year-by-year  basis                                                               
allow the military to review what  ARRC would charge them under a                                                               
contract as opposed  to what would be required  for that military                                                               
entity  in  appropriations  plus  what  would've  been  paid  for                                                               
operations   and  maintenance   moving   forward   alone.     The                                                               
aforementioned  has  been  done  internally in  Alaska  with  the                                                               
active duty  Army at  Fort Wainwright and  there was  very strong                                                               
support for  the proposal by which  the active duty Army  at Fort                                                               
Wainwright would  have rail access  down to Flag Hill  across the                                                               
river with  a spur entering 11  miles in the training  area.  The                                                               
remaining approximately  35 miles down  to Fort Greely  would [be                                                               
used] for some  freight but mainly to provide  the National Guard                                                               
in the area  the opportunity to decide whether they  want to live                                                               
at  Fort  Greely -  Delta  [Junction]  or Fairbanks.    Fairbanks                                                               
offers  an attractive  living environment  compared to  living in                                                               
renovated housing  at Fort  Greely, not  to mention  that certain                                                               
services are [only]  provided in Fairbanks.   Allowing the option                                                               
to  live  in Fairbanks  could  avoid  the appropriated  costs  of                                                               
rebuilding Fort  Greely.   The aforementioned  provided a  lot of                                                               
merit to  the proposal and  elicited interest and desire  to move                                                               
to the next level in the process.                                                                                               
REPRESENTATIVE  STEPOVICH surmised  that  the  railroad would  be                                                               
constructed in time for the missiles to be transported on it.                                                                   
MR. GAMBLE  related his  educated guess  that the  railroad would                                                               
probably be a  backup plan when weather  conditions prevented the                                                               
missiles  from being  flown  in and  out of  the  airfield.   Mr.                                                               
Gamble informed the committee that  the principle way to move the                                                               
missiles is by air and there is no backup plan.                                                                                 
Number 1595                                                                                                                     
REPRESENTATIVE OGG  inquired as to the  current bonding authority                                                               
of ARRC.                                                                                                                        
MR. GAMBLE explained  that ARRC has quite a  unique capability to                                                               
issue tax-free revenue  bonds, which aren't subject  to the state                                                               
cap.   The  restriction for  ARRC probably  lays within  the fact                                                               
that it [has] to be for  state and railroad purposes.  In further                                                               
response to Representative Ogg, Mr.  Gamble confirmed it would be                                                               
unlimited on  revenue.  In  fact, last year the  legislature pre-                                                               
approved  $17  billion  of  authorization for  ARRC  due  to  the                                                               
possibility  of  the  gas  pipeline.   Mr.  Gamble  informed  the                                                               
committee  that  ARRC  has  never  before  bonded.    In  further                                                               
response  to  Representative  Ogg,   Mr.  Gamble  confirmed  that                                                               
[statute] specifies that  when ARRC comes to  the legislature for                                                               
bonding approval it has to be project specific.                                                                                 
CHAIR  HOLM turned  attention to  [the rail]  from Healy  to Flag                                                               
MR. GAMBLE stated that it's  a separate issue that hasn't entered                                                               
into this proposal.                                                                                                             
Number 1703                                                                                                                     
MR. GAMBLE  turned to the  first half of  Version I.   Mr. Gamble                                                               
explained that  [this legislation] is  to reenact the  status quo                                                               
and  the capability  that ARRC  has had  for 18  years until  the                                                               
recent Alaska  Supreme Court decision.   With regard  to planning                                                               
and  zoning authority  over  ARRC at  the  municipal level,  ARRC                                                               
argued that we  were exempt while the challenge  stated that ARRC                                                               
needed  to obtain  a permit.   The  court did  not decide  on the                                                               
issue as to  whether ARRC was or wasn't exempt.   He related that                                                               
the  court  said:    "Because the  legislature  did  not  clearly                                                               
express  its intent  to  exempt the  railroad  from local  zoning                                                               
laws, we reverse and remand."   Therefore, there is the option of                                                               
the  legislature to  express the  intent more  clearly and  if it                                                               
doesn't, the court provided some  guidance.  The ARRC agreed with                                                               
the  minority on  the decision,  which said  that ARRC  is exempt                                                               
from planning  and zoning.   Mr. Gamble explained that  he agreed                                                               
that ARRC is  exempt from planning and zoning because  there is a                                                               
federal exemption from  planning and zoning for  railroads.  When                                                               
the transfer  occurred, the legislature  attempted to  mirror the                                                               
federal exemption  for the railroad  at the state level  for much                                                               
of  the  same  purposes  that  the  federal  government  exempted                                                               
railroads.   However, the court specified  that the legislature's                                                               
language was unclear.   Mr. Gamble specified that  he agreed ARRC                                                               
is  exempt  from  planning and  zoning  because  the  legislature                                                               
passed the  legislation, which was  signed by the governor.   The                                                               
legislation has been in existence  for 18 years, and therefore it                                                               
seems that  the intent  of the legislation  and the  [bodies that                                                               
passed  it] are  clear.   The court's  decision has  led to  this                                                               
legislation, which attempts to provide  a clear expression of the                                                               
intent that has been enforced for the last 18 years.                                                                            
Number 1850                                                                                                                     
REPRESENTATIVE MASEK,  upon hearing from those  in the Matanuska-                                                               
Susitna  Borough, expressed  concern  with Section  1, which  she                                                               
said she didn't support.                                                                                                        
REPRESENTATIVE  KAPSNER inquired  as to  ARRC's understanding  of                                                               
the  relationship between  Eklutna  and (indisc.).   She  further                                                               
inquired as  to ARRC's  view of  a municipality  having authority                                                               
over its site and how "we" can be more neighborly.                                                                              
MR. GAMBLE  opined that a  healthy relationship between  ARRC and                                                               
the  Native Village  of Eklutna  and Eklutna,  Inc., needs  to be                                                               
maintained because  a lot of business  has been done and  will be                                                               
done  with those  two  entities.   He said  that  the court  case                                                               
doesn't poison the relationship in  any way.  It's important that                                                               
the legal  issues not  become personal.   The  ARRC is  trying to                                                               
keep  the large  picture  in  [perspective].   In  regard to  the                                                               
federal  exemption for  interstate commerce,  ARRC's position  is                                                               
that it's an instrument of the  state and the same concerns exist                                                               
for intrastate  commerce.  Mr. Gamble  acknowledged that interest                                                               
of the municipalities and boroughs  is related to land use rather                                                               
than operational  control of  the railroad.   However,  the court                                                               
has said  that without  the exemption, a  permit must  be applied                                                               
for in  every case.  If  one disagrees "with what  you get back,"                                                               
then litigation is  the next step.  During  litigation, the court                                                               
will decide whether  it agrees with ARRC's  position, after which                                                               
the  appeals  process  can  occur.   Mr.  Gamble  said  that  the                                                               
aforementioned occurs  with over 13 entities  along the Railbelt.                                                               
The  very nature  of the  dialogue and  concern expressed  by the                                                               
entities along the  line is the reason the  federal exemption was                                                               
made in  the first place because  when the process is  tied up in                                                               
court on a  case-by-case basis, it, in effect,  stops the action.                                                               
"It is  precisely this  issue that  ... the  federal law  and the                                                               
legislators  ... when  they wrote  the state  law were  trying to                                                               
overcome," he said.   The actions of one  municipality or borough                                                               
can have  a ripple effect  with the municipality or  borough next                                                               
MR. GAMBLE related,  in an attempt to allay  concerns, that about                                                               
80 percent of  ARRC's projects are federally  funded.  Therefore,                                                               
a very involved  public process is required  through the National                                                               
Environmental Policy  Act of  1969 (NEPA).   All  ARRC's projects                                                               
are  listed  on its  web  site  and  listed by  municipality  and                                                               
borough.   Mr.  Gamble  said  that taking  away  all that  public                                                               
process leaves  a number of  ARRC funded projects, which  tend to                                                               
be the  cheap ones  because ARRC  likes to  use federal  money to                                                               
leverage ARRC's money.   The smaller projects, such  as fixing an                                                               
electrical  junction  box,  are  capital  projects.    Some  have                                                               
expressed interest in that level  of detail, but he opined that's                                                               
for  the  legislature  to  decide.   The  issue  is  whether  the                                                               
legislature  wants to  exercise control  over ARRC  at the  state                                                               
level  rather than  at the  individual  municipality and  borough                                                               
Number 2121                                                                                                                     
REPRESENTATIVE STEPOVICH  inquired as  to the largest  project or                                                               
most track laid since the completion of the railroad in 1923.                                                                   
MR. GAMBLE  stated that no  new track  has been laid  since 1923.                                                               
The  project to  Fort Greely  would be  the first  new main  line                                                               
track for the Alaska railroad, in fact in the United States.                                                                    
REPRESENTATIVE  OGG  inquired  as   to  the  reasons  behind  the                                                               
exemptions for the railroad.                                                                                                    
MR. GAMBLE posed a situation in  which ARRC requests a permit and                                                               
obtains agreement  from the  Matanuska-Susitna Borough  to bypass                                                               
the  alternate route  around  Wasilla.   Suppose  the project  is                                                               
upwards  of $100  million  and ARRC  doesn't own  the  land.   He                                                               
further proposed  that an agreement  is reached with  the borough                                                               
and  the  entire NEPA  process  goes  through  and there  is  the                                                               
decision to  build the project  with federal  funds.  Due  to the                                                               
court  decision,  the  process  can  include  any  individual  or                                                               
private group who wants to  challenge the approval or disapproval                                                               
of a  permit request and  leave ARRC  with no tool  to illustrate                                                               
that it  has done the  public outreach, NEPA process,  and agreed                                                               
with the municipality.  Therefore,  ARRC has to stop and litigate                                                               
each challenge.                                                                                                                 
REPRESENTATIVE  OGG inquired  as  to how  [subsection] (b)  deals                                                               
with  the individual  because [subsection]  (b) seems  to address                                                               
local control through  the local government and  doesn't speak of                                                               
individuals at all.                                                                                                             
MR. GAMBLE specified that [subsection]  (b) addresses the court's                                                               
concern such  that clarifying the  language allows  the exemption                                                               
[to be  reinstated].  The  exemption speaks to the  individual or                                                               
local private group, who can't  prevail under the exemption.  Mr.                                                               
Gamble clarified that state law  preempts an individual's ability                                                               
to  have an  equal opportunity  as a  municipality or  borough to                                                               
challenge [the project].                                                                                                        
Number 2335                                                                                                                     
REPRESENTATIVE  OGG  posed a  situation  in  which ARRC  has  the                                                               
exemption and  owns real estate  through a municipality  with the                                                               
500-foot  corridor  specifications.   If  this  was the  railroad                                                               
proposal from  Fairbanks to the  Alaska border, he  supposed that                                                               
the railroad  could hug  that 500-foot corridor  on one  side and                                                               
wouldn't be under  Tok's ordinances and could  develop a shopping                                                               
center or  a rock pit.   He asked  if that  is the type  of power                                                               
ARRC wants.                                                                                                                     
MR. GAMBLE  replied no.  The  ARRC board thought of  that in 1993                                                               
and established Board  Rule 17, which specifies that  ARRC has to                                                               
stay in the  railroad business and not become  equity partners in                                                               
other business  ventures for  construction.   With regard  to the                                                               
gravel pit  being located  next to a  residential area,  ARRC has                                                               
never done that ... [tape changes mid-sentence].                                                                                
TAPE 04-16, SIDE B                                                                                                            
MR.  GAMBLE related  that  as  a rule,  ARRC  would continue  the                                                               
outreach  currently done  with the  municipalities and  boroughs.                                                               
It's not  likely, he opined,  that ARRC would ever  try something                                                               
like  [constructing a  gravel pit  next to  a residential  area].                                                               
Although the concern  is that the risk of that  is high, ARRC has                                                               
not  done such  under  the  past 18  years  under the  exemption.                                                               
Therefore, he opined that the risk is very low.                                                                                 
Number 2337                                                                                                                     
REPRESENTATIVE  OGG agreed  that  ARRC probably  wouldn't do  the                                                               
aforementioned,  but  he  questioned  what would  be  wrong  with                                                               
writing the  language similar  to that  for a  road right-of-way.                                                               
This  [exemption  language] seems  fairly  broad  and raises  red                                                               
MR. GAMBLE noted  that there has been a suggestion  in the Senate                                                               
Finance Committee  that a  sunset clause  could be  included such                                                               
that ARRC would continue under  the status quo, save Eklutna, for                                                               
a period  of time during which  a task force will  try to develop                                                               
the seam between  operational use and the  flexibility to operate                                                               
the railroad  would want  for interstate  commerce purposes.   He                                                               
suggested the sunset would be July  1st.  The task force could be                                                               
comprised  of the  13  entities  along the  Railbelt  as well  as                                                               
appropriate  representation from  the  House and  Senate and  the                                                               
majority and the minority without the  rush of the end of session                                                               
being a  factor.  The ARRC  is willing to do  the aforementioned,                                                               
he related.                                                                                                                     
Number 2202                                                                                                                     
REPRESENTATIVE  KAPSNER  related  that  one of  the  letters  she                                                               
received in  opposition to  this legislation had  to do  with the                                                               
Eklutna  spiritual  site.   The  author  of  the letter  had  the                                                               
impression  that ARRC  wants  to make  a gravel  pit  out of  the                                                               
original site of the community.   For that reason, communities in                                                               
her district have supported Eklutna.                                                                                            
MR. GAMBLE said  that there has been a bit  of a miscommunication                                                               
because ARRC has never used that area  as a gravel pit.  The rock                                                               
quarry  has  been continuously  mined  by  ARRC since  the  early                                                               
1940s.   In the Land  Transfer Act  and the Alaska  Native Claims                                                               
Settlement Act  (ANCSA) there was  an agreement made as  the land                                                               
was partitioned  and the approximately  36,000 acres  was granted                                                               
to ARRC  in the transfer.   During that process, the  rock quarry                                                               
was allocated to  ARRC as part of the settlement.   In the 1990s,                                                               
there was an  MOA regarding the continued use of  the quarry with                                                               
the  provision that  "at such  time  as the  railroad would  stop                                                               
using  the quarry  - the  need for  that rock  went away  and the                                                               
railroad  didn't  need it  anymore  -  it  would revert  back  to                                                               
Eklutna,  Inc."    The aforementioned  agreement  was  made  with                                                               
Eklutna,  Inc. whereas  the court  case  is with  the Village  of                                                               
Eklutna.   Mr.  Gamble reiterated  that  ARRC has  not and  would                                                               
never obtain gravel  from this particular area  because gravel is                                                               
used  for   fill  and  used   for  things  that   are  relatively                                                               
unimportant compared  to the quality  of the rock at  the Eklutna                                                               
site.   There  aren't a  lot of  sources of  the quality  of rock                                                               
found at the  Eklutna site, which is  why ARRC has used  it.  Mr.                                                               
Gamble acknowledged  that ARRC would  want the rock found  at the                                                               
Eklutna  site, but  emphasized that  it  would want  it on  terms                                                               
amendable to  the Village  of Eklutna.   If  there are  no terms,                                                               
ARRC would  still like  to determine the  appropriate use  of the                                                               
site.   He  emphasized that  he wanted  to keep  the rock  quarry                                                               
issue out  of the court  case because  it's possible it  could be                                                               
worked  out with  the  Village  of Eklutna  because  a number  of                                                               
issues are being worked on  successfully with Village of Eklutna.                                                               
Mr. Gamble  said, "As  a state instrumentality,  in this  day and                                                               
age, ... the check and balance  first has to be through the board                                                               
and the board  has a sense of  what is going to  work and doesn't                                                               
work and then if that board is  to be overruled, it's going to be                                                               
overruled  by this  body  right  here."   He  opined that  ARRC's                                                               
policy for the  future will have to be to  address each municipal                                                               
and public issue head-on and in an amicable manner.                                                                             
Number 2037                                                                                                                     
REPRESENTATIVE KOOKESH recalled Mr.  Gamble's desire to have some                                                               
time  between  now  and  next  July  based  on  the  status  quo.                                                               
However, he pointed out that the  status quo isn't how [ARRC] has                                                               
envisioned it due to the Supreme Court decision.                                                                                
MR.  GAMBLE  clarified  that  the  status  quo  to  which  he  is                                                               
referring is that of the [past] 18 years ago.                                                                                   
REPRESENTATIVE KOOKESH  reiterated that since the  Alaska Supreme                                                               
Court  decision, the  status quo  of the  [past] 18  years is  no                                                               
longer the status quo.                                                                                                          
MR. GAMBLE  clarified that the status  quo he is defining  is the                                                               
exemption that ARRC has been  operating under since [the Transfer                                                               
Number 1988                                                                                                                     
REPRESENTATIVE  MASEK  related  her understanding  that  ARRC  is                                                               
protected by the Interstate  Commerce Commission Termination Act,                                                               
49 U.S.C.  701, which she  said read:   "State or  local economic                                                               
regulations  which could  significantly  interfere with  railroad                                                               
operations is prohibited."                                                                                                      
MR. GAMBLE  explained that the  aforementioned addresses  that in                                                               
planning and  zoning, a  municipality may,  for example,  want to                                                               
control the speed  of a particular track section or  the hours of                                                               
operation  of a  particular  track section.   The  aforementioned                                                               
would impact  interstate commerce and that  operational nature of                                                               
ARRC is exempt with regard to the federal legislation.                                                                          
REPRESENTATIVE  MASEK  noted that  seven  of  the railroads  that                                                               
transport  the majority  of the  nation's  freight aren't  exempt                                                               
from local planning  authority.  For example,  Union Pacific, the                                                               
largest railroad company in the  nation, operates in 23 different                                                               
states  and hundreds  of local  communities without  the type  of                                                               
blanket exemption ARRC is seeking.                                                                                              
MR.  GAMBLE reiterated,  "The  railroads are  exempt.   In  fact,                                                               
there  are a  lot of  court cases  challenging that."   The  most                                                               
common  [challenge] is  regarding whistle  blowing.   The federal                                                               
law  specifies that  the  whistles must  be  blown, although  the                                                               
communities are challenging that.   Because of so many cases, the                                                               
courts have been  very successful in pressuring  the railroads to                                                               
try to use technology to address the problem.                                                                                   
REPRESENTATIVE KOOKESH asked if the  federal exemption is for the                                                               
railway  on   which  the  trains   traverse  or  does   it  speak                                                               
specifically to  the areas within  a municipality where  ARRC has                                                               
its train stations and storage yards.                                                                                           
MR. GAMBLE  said that  the state  language refers  to all  of the                                                               
areas [mentioned by Representative  Kookesh].  However, he wasn't                                                               
sure to what the federal protection referred.                                                                                   
REPRESENTATIVE  KOOKESH requested  clarification  on the  federal                                                               
Number 1824                                                                                                                     
CHAIR HOLM announced that HB 560 will be set aside.                                                                             
[HB 560 was taken up again later in the meeting.]                                                                               
HB 560-MUNICIPAL LAND USE REGULATION                                                                                          
CHAIR HOLM returned  the committee's attention to  HOUSE BILL NO.                                                               
560,  "An Act  relating  to application  of municipal  ordinances                                                               
providing  for planning,  platting,  and land  use regulation  to                                                               
interests in land  owned by the Alaska  Railroad Corporation; and                                                               
providing for an effective date."                                                                                               
CHAIR HOLM announced that he didn't  intend to report HB 560 from                                                               
committee today,  although he wanted  to take the  testimony from                                                               
those present.                                                                                                                  
Number 1414                                                                                                                     
KATHY WELLS, Executive Director,  Friends of Mat-Su, informed the                                                               
committee that  Friends of  Mat-Su is a  local land  use planning                                                               
organization.  She  related that Friends of Mat-Su  is opposed to                                                               
HB  560, which  would exempt  Alaska Railroad  Corporation (ARRC)                                                               
from  local  and municipal  zoning.    She further  related  that                                                               
residents in the  13 Railbelt communities aren't  aware that this                                                               
legislation  is being  considered.   Furthermore,  ARRC has  been                                                               
operating for  18 years  without this  exemption and  already has                                                               
protections against local economic  regulatory interference.  The                                                               
recent  Supreme Court  ruling  wouldn't  cause interference  with                                                               
essential operations.   Ms.  Wells expressed  the need  for local                                                               
communities  to  have  the  opportunity  to  comment  through  an                                                               
adequate public process on this  legislation.  A railroad doesn't                                                               
need wholesale  governmental immunity from local  zoning in order                                                               
to  operate.    As  mentioned   by  Representative  Masek,  seven                                                               
railroads that  are privately owned  operate by abiding  by local                                                               
zoning.   Those  seven railroads  operate and  continue to  grow.                                                               
The  recent  proposed committee  substitute  (CS)  has added  the                                                               
extension  of Fort  Greely and  describes the  public purpose  of                                                               
bonds for this project, which  confuses the issues that generated                                                               
HB 560, which is this  exemption.  Therefore, Ms. Wells suggested                                                               
that Section 1 of Version I  be removed.  She questioned the need                                                               
to rush with this legislation,  and expressed the need to educate                                                               
the public about the necessity for this exemption.                                                                              
Number 1295                                                                                                                     
MARC LAMOREAUX,  Eklutna Tribe, began  by recalling  Mr. Gamble's                                                               
earlier testimony that  ARRC wouldn't place a gravel  pit next to                                                               
a nice  neighborhood and questioned  whether ARRC  didn't believe                                                               
the  Native Village  of  Eklutna  is a  nice  neighborhood.   Mr.                                                               
Lamoreaux urged the  committee to reject HB 560.   He opined that                                                               
many of  the arguments  regarding why  the railroad  doesn't need                                                               
the  exemption,  such  as   the  Interstate  Commerce  Commission                                                               
Termination  Act.   He  further opined  that  the recent  Supreme                                                               
Court  decision   wouldn't  interfere  with   essential  railroad                                                               
operations.   The  Supreme  Court case  adopts  the balancing  of                                                               
interest test,  which has  been adopted by  the vast  majority of                                                               
courts that  have addressed the  issue of government  immunity in                                                               
the last  30 years.   [The balancing  of interest test]  has been                                                               
found to  constitute good  and enlightened  public policy  in the                                                               
area of zoning  because the test requires the  railroad to comply                                                               
with  local zoning  when it  doesn't create  a hardship  for [the                                                               
railroad].   Furthermore,  the test  would immunize  the railroad                                                               
from  local  zoning  when  compliance  with  local  zoning  would                                                               
interfere  with  the  railroad's  operations.   He  likened  [the                                                               
balancing of  interest test]  to the  requirements placed  on the                                                               
Department  of Transportation  & Public  Facilities (DOT&PF)  and                                                               
other state  agencies under  Title 35.   Under the  recent Alaska                                                               
Supreme Court  decision, local and  public officials  are allowed                                                               
to  have input  while the  essential operations  of the  railroad                                                               
aren't hindered.   However, this legislation  would eliminate all                                                               
public  input and  that  from local  government.   Mr.  Lamoreaux                                                               
noted  that  his  written  testimony, which  he  agreed  to  fax,                                                               
reviews  the  history  of  the situation  in  Native  Village  of                                                               
Eklutna.  He  mentioned that the Alaska Supreme  Court noted that                                                               
the   site    [in   the   Native    Village   of    Eklutna]   is                                                               
historically/culturally significant,  which should  be considered                                                               
during the conditional use permitting process.                                                                                  
Number 1024                                                                                                                     
SARA HEIDEMAN,  Attorney, Native  Village of  Eklutna, reiterated                                                               
that  the land  being  destroyed  by ARRC  is  of historical  and                                                               
cultural  significance, which  was  confirmed by  an ARRC  study.                                                               
She recalled  Mr. Gamble's  testimony that  the rock  being taken                                                               
from  the site  at Eklutna  is superior  quality, "proven  by the                                                               
fact that  they've been  taking ballast  out of  that pit  for 80                                                               
years."   However, that's  not true  because ARRC's  testimony at                                                               
the trial was  that ARRC only recently started using  the rock at                                                               
the Eklutna  site for  ballast.  There  are other  comparable and                                                               
available  sites that  have, obviously,  been  used for  decades.                                                               
"So, it's just a  fortuity that they own it and  now want to use,                                                               
that this issue is coming up," she related.                                                                                     
MS. HEIDEMAN  then turned to  the Interstate  Commerce Commission                                                               
Termination Act,  which was passed  in 1995.  This  Act abolished                                                               
the Interstate Commerce Commission  (ICC), placed restrictions on                                                               
state and local regulation of  railroads, and created the Surface                                                               
Transportation Board.   Under this  federal law, state  and local                                                               
regulation  that  significantly  interferes  with  core  railroad                                                               
operations is  prohibited and those  core railroad  functions are                                                               
regulated by  the Surface  Transportation Board.   Ms.   Heideman                                                               
pointed out  that only  after passing the  federal law  would one                                                               
enter  the  balancing test  adopted  by  the Supreme  Court  last                                                               
month.   The only reason  Mr. Gamble  specified for the  need for                                                               
ARRC to  have a blanket  exemption is because "it  would encumber                                                               
progress."      However,   she   reiterated   earlier   testimony                                                               
highlighting  that  DOT&PF  is required  to  comply  with  zoning                                                               
generally, while it  can be exempt from it  in appropriate cases.                                                               
The  aforementioned is  what  the balancing  test  would do  with                                                               
MS. HEIDEMAN recalled  Mr. Gamble saying that  if this [balancing                                                               
test] applied  to ARRC, and  ARRC obtained the  necessary permits                                                               
from a  municipality, an objecting  third party could  cause ARRC                                                               
to stop  and deal with  it.  However, that's  not the case.   She                                                               
said  that if  ARRC obtains  a  conditional use  permit from  the                                                               
municipality  and a  third party  objected, that  objection could                                                               
occur through the standard planning  and zoning appeal processes.                                                               
However, it  wouldn't stop  the effect of  the permit  during the                                                               
appeal process unless  the third party can show  that it's likely                                                               
to  win  the  appeal  and  can  put  up  a  bond.    The  bonding                                                               
requirements, she noted, prevent most  members of the public from                                                               
stopping the effect of a permit.   In the last three years of the                                                               
litigation between ARRC  and the Native Village  of Eklutna, ARRC                                                               
has operated the  gravel pit because the village  didn't have the                                                               
financial ability  to pay  a bond to  stop operations  during the                                                               
appeal process.  Ms. Heideman  recalled that Mr. Gamble indicated                                                               
that the  private rail companies  that operate [in the  Lower 48]                                                               
are exempt  from land  use regulations,  but disagreed  and noted                                                               
that  those  companies  are  subject to  the  provisions  of  the                                                               
federal  law.   Other  than the  federal law  there  is no  other                                                               
blanket immunity from land use regulations.                                                                                     
Number 0702                                                                                                                     
VERA  JAMES,  Alaska Native  Health  Board  (ANHB), informed  the                                                               
committee  that  ANHB  advocates   on  behalf  of  229  federally                                                               
recognized tribes, including Eklutna,  in relation to health care                                                               
and other  issues.  She  related that ANHB believes  that passage                                                               
of  HB   560  would  be   detrimental  to   adjacent  residential                                                               
landowners  and  the  public.    Should  the  proposed  exemption                                                               
encompassed  in  HB 560  be  granted,  she understood  that  ARRC                                                               
intends to  blow up the  Eklutna site and  turn it into  a gravel                                                               
pit.   Therefore, ANHB urges the  legislature not to pass  HB 560                                                               
because it  fails to take  into account the voices  and interests                                                               
of residents [of Eklutna] and the public.                                                                                       
Number 0621                                                                                                                     
SUSANNE DiPIETRO  informed the committee  that she is  a resident                                                               
of Government Hill  in Anchorage.  She related  her opposition to                                                               
Section 1  [of Version I].   She  further related that  there are                                                               
plenty of public  and private businesses and  state entities that                                                               
comply with  zoning in  doing business  statewide.   Ms. DiPietro                                                               
turned to the unfairness of  this proposed exemption because, for                                                               
instance, a  private business that  happened to own a  quarry and                                                               
wanted to mine would have to  obtain a conditional use permit for                                                               
which  a public  process is  attached.   The aforementioned  is a                                                               
cost of  business.   However, with  this exemption  ARRC wouldn't                                                               
have to  incur that cost.   She emphasized the need  to seriously                                                               
consider  why one  would set  up  such an  unfair situation  when                                                               
there  is no  showing that  having  to comply  with local  zoning                                                               
would  unduly burden  ARRC.   Therefore,  she suggested  deleting                                                               
Section  1 and  passing the  remainder  of the  legislation.   If                                                               
ARRC, operating  without the exemption, is  having troubles, then                                                               
it  can  document  those  and  return  to  the  legislature  with                                                               
specific problems necessitating the exemption.                                                                                  
Number 0440                                                                                                                     
KEVIN  RITCHIE,  Executive   Director,  Alaska  Municipal  League                                                               
(AML), informed  the committee that  the committee  packet should                                                               
include  a  letter from  AML.    The  2004 policy  statement  AML                                                               
adopted states:   "The League feels strongly  that local planning                                                               
and zoning  laws and review  processes shall apply to  state land                                                               
use  actions   to  allow  for  comprehensive   local  control  of                                                               
community  development."   However,  AML acknowledges  that in  a                                                               
statewide  transportation system,  there will  be some  number of                                                               
issues   that  have   to   be   regulated  consistently   between                                                               
communities,  otherwise it  will  disrupt operations.   He,  too,                                                               
highlighted  that  DOT&PF  has  found ways  to  work  with  local                                                               
municipalities.  He noted that  two communities are going to meet                                                               
this evening  to consider the concept  of doing some form  of the                                                               
proposal embodied in HB 560 with a sunset.                                                                                      
REPRESENTATIVE STEPOVICH inquired as  to why [the municipalities]                                                               
weren't involved sooner.                                                                                                        
MR. RITCHIE  said that  the municipal policy  has been  in effect                                                               
for some time.   This particular legislation is in  response to a                                                               
recent lawsuit.   Furthermore, the  language is so broad  that it                                                               
takes the exemption from local control to a new level.                                                                          
Number 0190                                                                                                                     
PAT  GAMBLE,  President  &   CEO,  Alaska  Railroad  Corporation,                                                               
Department  of Community  & Economic  Development (DCED),  in his                                                               
closing remarks  said that  this process has  made the  case that                                                               
when something is  opened up broadly, there is  a broad response.                                                               
He related  his understanding from  the testimony today  that the                                                               
operational issues  aren't really of  concern while the  land use                                                               
issues are.   He pointed out  that at the federal  level there is                                                               
the unreasonably  burdened interstate  commerce test, which  is a                                                               
legal issue that  has operational implications.   The very nature                                                               
of this issue begs for time in  order to determine how and if the                                                               
line [between  interstate commerce  and operational  issues] will                                                               
be clarified.  Therefore, Mr.  Gamble suggested that the proposal                                                               
made in the Senate  side to tackle this over a  period of time in                                                               
an  attempt to  draw the  lines might  be appropriate.   However,                                                               
maintaining the  status quo with  a sunset would address  some of                                                               
the current projects.                                                                                                           
TAPE 04-17, SIDE A                                                                                                            
MR. GAMBLE indicated  ARRC's interest in participating  in a task                                                               
force to  tackle this  issue and report  back to  the legislature                                                               
with the appropriate path forward.                                                                                              
CHAIR HOLM  indicated that  the legislation  would be  held until                                                               
the possibilities are known.                                                                                                    
Number 0092                                                                                                                     
REPRESENTATIVE STEPOVICH  surmised that  ARRC wants to  work with                                                               
the municipalities.                                                                                                             
MR.  GAMBLE  agreed and  related  his  desire  to  be part  of  a                                                               
consensus   and  clarify   the   legislative   language  to   the                                                               
satisfaction of the court.                                                                                                      
CHAIR HOLM  agreed and noted  that those at  the end of  the rail                                                               
line know  that whatever happens  "upstream" on the  railroad has                                                               
consequences at  the end  of the  line as well.   He  said, "It's                                                               
apparent to me  that it's very important that  the 13 communities                                                               
don't impact negatively  the cost of transportation,  the cost of                                                               
our intrastate  commerce, and ... put  that price to bear  on one                                                               
end of the hose, if you will ...."                                                                                              
Number 0251                                                                                                                     
REPRESENTATIVE  OGG inquired  as to  why the  minimalist approach                                                               
shouldn't  be taken  rather  than the  broad  brush that's  being                                                               
MR. GAMBLE characterized Representative  Ogg's question as one to                                                               
pose in  the task  force.   If there's  a way  to go  forward and                                                               
define [the exemption] rather than  an all or nothing approach or                                                               
minimalist view, he  expressed interest in working on  that.  "My                                                               
original  argument was  an all  or nothing  based on  the greater                                                               
good as  I see it,  that's clearly not going  to win the  day ...                                                               
and to  continue that  argument is simply  ... fruitless  for the                                                               
railroad to pursue," he said.                                                                                                   
REPRESENTATIVE OGG  surmised that with the  broad-brush approach,                                                               
the law  [under the Supreme  Court's decision] would be  the law.                                                               
He questioned why  ARRC [and everyone involved] wouldn't  be in a                                                               
better  position asking  for  the federal  law  and then  propose                                                               
which specifics to Alaska zoning law should be overridden.                                                                      
MR.   GAMBLE  answered   that  Representative   Ogg's  suggestion                                                               
probably couldn't  come together this session.   Furthermore, the                                                               
task  force  and the  sunset  clause  could accomplish  the  same                                                               
REPRESENTATIVE OGG said he begged  to differ because the language                                                               
would  be  shorter,   such  that  it  would   read:    "Municipal                                                               
ordinances  providing  for  planning,   platting,  and  land  use                                                               
regulations adopted  under Alaska  statutes or  other law  do not                                                               
apply to core  railroad operations as defined  in federal statute                                                               
and regulations."  He opined that the aforementioned is clear.                                                                  
MR.  GAMBLE pointed  out that  the language  would require  legal                                                               
staff  to  define  the  "core   railroad  operations,"  which  he                                                               
indicated could take  some time.  For instance,  ARRC is building                                                               
the Operations  Center at Ship  Creek.  Although if  the building                                                               
isn't built  the railroad can  continue its operations,  he would                                                               
argue that  the building is  essential to operations if  he moves                                                               
everyone  out of  the  current building.    The question  becomes                                                               
whether  the  building  is  just  that or  is  it  core  railroad                                                               
operations.   Currently, ARRC  is in the  process of  obtaining a                                                               
building permit  for this building,  which would normally  not be                                                               
the case except to let  the municipality know that a nonmunicipal                                                               
building is  being built in  the railroad  area.  The  task force                                                               
could  draw the  line to  the satisfaction  of all  those on  the                                                               
Railbelt.   Mr. Gamble said that  he didn't have an  objection to                                                               
Representative Ogg's suggestion.                                                                                                
Number 0697                                                                                                                     
CHAIR  HOLM  announced  that  HB  560 would  be  heard  again  on                                                               
Thursday, at  which time  he would reopen  testimony.   He closed                                                               
public testimony  for the  day.   Chair Holm  inquired as  to the                                                               
relationship between interstate and intrastate commerce.                                                                        
MR. GAMBLE specified that ARRC falls under the ICC.                                                                             
REPRESENTATIVE STEPOVICH  asked if the core  railroad requirement                                                               
is the Division of Operations.                                                                                                  
MR. GAMBLE predicted  that is an area where there  will be debate                                                               
because a core requirement for  the railroad is to obtain ballast                                                               
or  gravel.   He  confirmed that  core  operations would  include                                                               
speed, whistle blowing, scheduling,  et cetera.  However, running                                                               
a hotel isn't a core operation.   Again, the question is where to                                                               
draw  the   line  for   land  use.     In  further   response  to                                                               
Representative  Stepovich, Mr.  Gamble confirmed  that ARRC  does                                                               
have a  Division of Operations  that doesn't fall under  the core                                                               
railroad requirement.   He related that the 36,000  acres of ARRC                                                               
real  estate necessitates  an entire  division  that is  separate                                                               
from  operations.    Mr.  Gamble  explained  that  ARRC  has  one                                                               
division that addresses planning,  construction, and financing up                                                               
to the  point of building  [the rail].   If there is  a facility,                                                               
real estate development and management  deals with it while track                                                               
stays within the  operations division.  Once a  facility, even if                                                               
an operational building, is built,  the real estate division owns                                                               
the building.                                                                                                                   
MR. GAMBLE, in response to Chair  Holm, explained that by law the                                                               
Board of  Directors of  ARRC manages  the railroad  and delegates                                                               
the authority to  him to operate it  on a daily basis  as well as                                                               
certain management  rights.  Therefore, anything  above a certain                                                               
dollar  amount has  to be  approved by  the board,  including all                                                               
land use  and real estate  issues.   He confirmed that  the board                                                               
members are  appointed by the  governor.   The board is  a seven-                                                               
member board in which the positions  are specified in law and the                                                               
members serve  at the pleasure  of the  governor.  He  noted that                                                               
certain positions, such as the  commissioners of DCED and DOT&PF,                                                               
are always  members of the board.   The board also  consists of a                                                               
labor     representative,    regional     representatives,    and                                                               
representatives   with  experience   "outside  train   operations                                                               
management."   He indicated that  there are at least  four public                                                               
members.   In  further response  to Chair  Holm, Mr.  Gamble said                                                               
that the board  isn't terribly politicized and he  has never seen                                                               
a situation in  which the activities promoted by  the board would                                                               
run counter to  the municipalities [in which  the railroad runs].                                                               
He opined that the independence of the board has been admirable.                                                                
[HB 560 was held over.]                                                                                                         

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