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Environmental groups challenge Port MacKenzie rail plan

Posted: March 3, 2012 - 12:02pm

The nonprofit environmental groups Cook Inletkeeper, the Sierra Club and Alaska Survival are challenging the Surface Transportation Board’s approval of the Port MacKenzie Rail Extension.

The three groups oppose the federal board’s November decision to construct the 32-mile rail line to connect the port to an existing rail near Houston. They have filed a legal challenge to the 9th Circuit Court of Appeals to review this decision, which took around three years to pass. The Matanuska-Susitna Borough and Alaska Railroad Corp. are filing to intervene in the Petition for Review.

The final legal complaint hasn’t been determined yet. The groups are still deciding on an exact tactic, which they said will likely tie into an environmental issue.

The groups haven’t yet cited a specific point in their filing, but Bob Shavelson, director of advocacy at Cook Inletkeeper, said this is coming. A notice from the Mat-Su Borough states that, based on the Petition for Review, officials expect it will involve environmental policy even though the Surface Transportation Board approved an Environmental Impact Statement.

Shavelson said that while environmental issues – especially on salmon streams – are certainly a concern, the main point is to get in a legal tactic to slow down or stop construction.

“That’s because you don’t have a legal handhold to challenge a project just because it’s a bad project. You have to fall into one of these little categories,” he said.

Mat-Su Public Affairs Director Patty Sullivan said the economics surrounding the extension have been studied extensively by the Institute of Social and Economic Research, University of Alaska Fairbanks and Northern Economics.

“The ISER cost benefit assessment alone gives the rail link extraordinarily good returns on the infrastructure investment. The benefit to cost ratio ranges from 1.9, based only on transportation savings, up to 40, with the mineral production as stimulated by the rail link,” she said in an email response.

She said UAF Economic and Engineering Geologist Paul Metz projects mineral development with a cumulative gross metal value of $173 billion, which would generate taxes and royalties and fees to the state of $300 million per year over a 60-year period.

She added that two lessees have made the rail part of their long-term development plans. One company will be importing ultra-low sulfur diesel, which will be loaded onto railcars and distributed to the Interior. The second company will focus on large project logistics importing armour stone, steel, machinery and pipe.

Alaska Railroad Corp. spokesman Tim Sullivan said the borough would be the best to comment, as this is a borough project.

In an earlier email response, Sullivan said the petition to review the Surface Transportation Board’s decision won’t affect construction as of yet because the court has not ordered any stops.

Sullivan wrote, “Construction is ongoing, and beginning in March construction will proceed on the first five miles of rail embankment heading toward the city of Houston. When completed the 32-mile rail link will bring Alaska economic diversification, state revenues, and thousands of jobs.”

There has already been at least $92 million collected for the expansion through different appropriations. The borough is seeking an additional $60 million from the state to complete two-thirds of the project. The full completion will cost another $120 million.

Sullivan said that in-state expenditures during construction are estimated at nearly $200 million. Construction activity is projected to generate 1,700 to 1,900 temporary construction jobs.

Shavelson called this a “smokescreen” by the borough in saying the project will create jobs and prosperity but not providing enough numbers or information on it. He said there are no numbers on the operating costs and believes the expansion will never pay for itself.

The opposition stems from concerns about the project as a whole. Shavelson describes the rail expansion as a “boondoggle” project that is wasteful and unnecessary.

Shavelson said the biggest problem was that the borough has not clearly identified what it will cost to operate, making it a potential loss of public money. He said the expansion isn’t even necessary because the railroad already goes to tidewater in Anchorage, Seward and Whittier.

“This falls clearly under the category of build it and they will come,” Shavelson said.

He also said the project could increase shipping costs due to shipping around the Gulf of Alaska and offloading costs at the port.

Emily Fehrenbacher, associate regional representative at the Sierra Club, agreed, saying the rail expansion is another big project taking in a lot of money but feels they haven’t necessarily seen the economics are going to work out in sustaining it.

“Especially since this project is only going to one big industry, which is the coal industry so we’re concerned about public funding going to benefit one industry,” she said.

She said another concern was that the project was rushed through without enough discussion to nearby communities, such as safety, dust, quality of life and access to recreation trails. She said these are still broader concerns rather and the actual filing will still consist of a narrower tactic.

Shavelson said this project is another in a long line of big Alaska projects that the organization sees as overblown. He cited the Port of Anchorage, Knik Arm Bridge and Goose Creek Correctional Center as projects that have cost too much or been unable to show transparent operating costs.

“We’re concerned about Port MacKenzie because if you look around, that area is a treasure trove of boondoggles and this is just another one,” he said.

Jonathan Grass can be reached at jonathan.grass@alaskajournal.com.

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