nor any other State law prevents the appointment and service, as a member of the Board, of any officer or employee of the State of Alaska occupying a position which is specifically designated herein, but no other individual who is an Alaska State or Borough official or employee, either elective or appointive in any branch of the State or Borough government shall serve as a member of the Board during his incumbency as such official or employee. The terms of the three members of the Board from the railroad industry shall be for six years, except that the initial term only of one shall be for two years, one for four years, and one for six years. Each member of the Board, before entering on duty shall take an oath faithfully to discharge his duties of office.

(a) The Board shall meet at the call of the Executive Secretary of the Board, who shall require it to meet not less often than once each one hundred and eighty days, at least one of which meetings each year shall be in Anchorage, Alaska; shall review the general policies of the Corporation and shall establish general policy to be executed by the President of the Corporation. The Board shall act only by a majority vote of those present at a meeting attended by a quorum, and such quorum shall consist of six members of the Board. Subject to the foregoing, vacancies in the membership of the Board shall not affect its power to act. Members of the Board shall not be paid a salary in their capacity as Directors, but under regulations and in amounts prescribed by the Board and approved by the Stockholder, may be paid by the Corporation a reasonable per diem allowance in lieu of subsistence expenses in connection with attendance at meetings of the Board or in connection with the time spent on special service of the Corporation, and their travel expenses to and from meetings or when on special service. The Board shall keep minutes of each meeting and send a certified copy to the Stockholder.

(b) The management of the Corporation under the General Policy set by the Board shall be vested in a President of the Corporation who shall be highly skilled in the railroad industry, and a staff of full-time executive officers headed by the President of the Corporation.

(c) The President of the Corporation shall be appointed by the Stockholder with the advice of the Board. To assist the President of the Corporation in the execution of the Corporation's functions, there shall be a Vice President who shall be appointed by the President of the Corporation with the advice and consent of the Board. The Vice President shall perform such duties as the President of the Corporation may from time to time designate, and shall be acting President of the Corporation during the absence of disability of the President of the Corporation or in the event of a vacancy in the office of the President of the Corporation. SEC. 9. (a) As of the effective date of this Act, there is hereby conveyed to the Corporation all right, title and interest of the State of Alaska in the assets of the agency known as The Alaska Railroad, constructed, owned, operated and maintained, by the United States or the State of Alaska, in the State of Alaska or elsewhere, including all funds in The Alaska Railroad Revolving Fund, all rolling stock, equipment, supplies, machinery, tools, and rights in real estate acquired by the State of Alaska from the United States government or otherwise, whether acquired by The Alaska Railroad by grant, reservation, withdrawal from the public domain of the United States or the public lands of the State of Alaska, or by purchase by the United States government or the State of Alaska.

(b) As of the effective date of this Act, there is hereby employed and transferred to the Corporation all personnel presently employed by the Agency known as The Alaska Railroad, and all personnel performing services for said Agency on a reimbursable basis who wish to accept such employment. Such transfer and employment of personnel shall be made without reduction in compensation.

(c) To carry out the functions authorized by this Act, there is hereby established an Alaskan Railroad Corporation Fund, hereinafter referred to as the "Fund". The capital of the Fund shall consist of such amounts as may be advanced to it from appropriations, together with the value of assets transferred to the Fund, less the liabilities assumed, at the beginning of its operations. The value of assets transferred shall be determined by the Corporation, taking into consideration original cost, less depreciation, the usable value to the transferee if clearly less than cost, obsolete and unusable inventories and other reasonably determinable shrinkages in value: Provided, That land cost or value shall not be taken into consideration in computing the value of assets transferred to the Corporation: Provided, further, That the Fund shall remain available to the Corporation until expended as authorized by law.

(d) Receipts from any operations or transactions under this Act shall be credited to the Fund, and may be deposited in the Department of Revenue of the

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State of Alaska or such State depository as is designated by the Commissioner of Revenue, without payment to the Corporation by the State of interest thereon, or may be invested as provided in subsection (f) of this section. The Fund shall be available for payment of all obligations and expenditures of the Corporation under this Act, whether for operating costs, capital improvements or otherwise. (e) When capital improvements or other necessary or desirable expenditures are beyond the ability of the Corporation to pay, such sums as may be required are authorized to be appropriated. All appropriations for the Corporation shall be without fiscal year limitations. Such appropriations shall be transferred to the Fund.

(f) Whenever any capital in the Fund is determined by the Corporation to be in excess of its current needs, such capital may be invested in the name of the Corporation in treasury notes or other appropriate securities as determined by the Board, and the interest or earnings therefrom shall accrue to the Fund. (g) Appropriations are hereby authorized for payment to the Corporation of such amounts as may be shown in the annual budget program of the Corporation as necessary to cover actual losses of prior years sustained in the conduct of its activities.

SEC. 10. Terminal and station grounds and rights of way through the lands of the State of Alaska are hereby granted for the construction of railroads, telegraph and telephone lines, and pipelines authorized by this Act and those heretofore granted under the Act of March 12, 1914, 38 Stat. 305, as amended, of the Statutes at Large of the United States of America, and acquired by the State of Alaska, are hereby confirmed. In addition to the public lands heretofore withdrawn from the public domain of the United States and the public lands of the State of Alaska and transferred to The Alaska Railroad or its predecessor in name, and which are by the terms of this Act transferred to the Corporation on the effective date hereof, the Governor of the State of Alaska may hereafter, in such manner as he deems advisable, make reservation of such additional lands in the public lands of the State of Alaska as are or may be necessary or useful to the Corporation in carrying out the purposes of this Act. In all instruments conveying rights for public lands sold, taken up, entered, or located in Alaska, there shall be expressed that there is reserved to the Corporation, a right of way for the construction of railroads, telegraph and telephone lines and pipelines to the extent of one hundred feet on either side of the center line of any such road, and twenty-five feet on either side of the center line of such telegraph or telephone line or pipeline. All such existing reservations in patents issued or to be issued by the United States government shall be available to the Corporation to the same extent as they were originally reserved for The Alaska Railroad or its predecessor in name under the Act of March 12, 1914, 38 Stat. 305, 48 U.S.C. 301-308 of the Laws of the United States of America.

SEC. 11. Regardless of any other provisions of this Act, with respect to train and engine service employees of the Corporation engaged in road service, the straight time rate per hour for purposes of overtime computations shall be the mileage rate for the basic day in the applicable class of service divided by eight. For purposes of said section, no payments to train and engine service employees of the Corporation in the form of arbitraries or constructive allowances shall be used to increase the straight time rate as defined in the preceding sentence or to increase the amount of overtime compensation otherwise due and payable. SEC. 12. All Acts or portions of Acts not consistent with this Act shall be subordinate to and shall not apply to the Corporation.

SEC. 13. The right to alter, amend, or repeal this Act by specific reference thereto is expressly reserved.

SEC. 14. This Act shall become effective on January 1, 1971, or on the date of enactment, whichever occurs later.

Senator GRAVEL. Could we call the hearing to order, please?
Mr. Froid, the floor is yours.

STATEMENT OF STANLEY H. FROID, VICE PRESIDENT, TUDOR ENGINEERING, SAN FRANCISCO, CALIF., AND CHAIRMAN OF THE BOARD OF CONTROL, TUDOR-KELLY-SHANNON; ACCOMPANIED BY DAVID G. FRITZ, VICE PRESIDENT, KELLY, PITTELKO, FRITZ & FORSSEN, ANCHORAGE, ALASKA

Mr. FROID. Senator Gravel, Senator Stevens, Senator Jordan and Senator Cook, I am Stanley H. Froid, vice president of Tudor Engineering in San Francisco, Calif. I have a brief statement I would like to read.

I am also chairman of the board of control of Tudor-Kelly-Shannon, a joint venture retained by the Federal Highway Administration to perform certain transportation studies in Alaska. With me is Mr. David G. Fritz, vice president of Kelly, Pittelko, Fritz & Forssen, Anchorage, Alaska, and a member of the board of control of TudorKelly-Shannon.

The comments I have to make at this time do not speak directly to the subject of sale of the Alaska Railroad. These comments are made from my position of a transportation engineer having some direct familiarity with the subject railroad. To clarify such relation, the joint venture of Tudor-Kelly-Shannon has been retained to study the engineering feasibility of extending the Railroad to several areas in the north and northwestern portions of the State of Alaska. Such studies of extensions axiomatically include considerations of operation and maintenance both of the existing system and projections to the subject extensions. This is necessary to arrive at reasonable cost estimates of construction and future operation over alternative alignment locations.

Our studies include consideration of operation under the given geographical and climatic restraints and comparison of such with the practices of others in somewhat similar circumstances. We find that current practices of maintenance and operation on the Alaska Railroad compare quite favorably with the other systems.

I have personally made an inspection trip of the existing line from Fairbanks to a short way north of Anchorage. This portion of the line traverses varied geographical and geological areas. It is my opinion that the maintenance practices and activities to upgrade the quality and stability of the permanent facilities are quite appropriate and reflect good management, sound judgments and a balanced expenditure of efforts and assets. The line is in good physical condition to accommodate a substantial growth in traffic of those items that today are most economically transported via a railroad.

I would in addition to my prepared statement wish to add at this time in connection with our study we have been at work 3 months out of a 25-month scheduled program. Accordingly, our definitive costs which may have been of particular note are certainly far from complete and we would not be in a position to speak with authority as to what our final results may show.

Mr. Fritz and I, of course, are available for such questions as you deem appropriate.

Senator GRAVEL. Thank you.

Senator Cook.

Senator Cook. What you are really saying is exactly what Senator Stevens said, that no major decision should be made relative to the disposition of this railroad until the study is completed.

Mr. FROID. We are not involved in economic studies but from the viewpoint of engineering feasibility to make such a determination as you have reference to now, Senator Cook, would in my opinion be premature.

Senator Cook. In regard to this corridor study I would add the fact that the study takes you all the way to the North Slope and that you are not going to have to project the economics of it, but certainly will have to project its feasibility.

Senator GRAVEL. Senator Jordan.

Senator JORDAN. Is the terrain to carry this road north of the same general type as that where the railroad is now?

Mr. FROID. There are many areas now traversed by the existing facilities that are similar to those further north. There are some areas to the north that are, I would say, more rugged than currently traversed but nothing from construction of a railroad would be a major obstacle.

Senator GRAVEL. Senator Stevens.

Senator STEVENS. You are also saying we just got started.

Mr. FROID. Correct.

Senator STEVENS. Do you have alternate routes that you are going to examine from the point of view of engineering feasibility concerning the railroad area north of Fairbanks?

Mr. FROID. We would be programed to provide some information tomorrow which would make it a bit repetitive, but in order to clarify our position our charge is to study the feasibility of a corridor and to produce the definitive costs for construction of a railroad from the vicinity of Fairbanks to the North Slope and to not consider a highway over that portion of the country. Our consideration is from the vicinity of Bettles or Alatna to the west to the mineral enriched area considering an engineering feasibility of both railroad and highway.

Senator GRAVEL. That would be from Fairbanks. In other words, what you are saying is that you are studying the engineering for railroad and highway up to Alatna?

Mr. FROID. No, sir. We are studying the feasibility of the railroad only from Fairbanks to Prudhoe Bay. From the vicinity of Alatna and the Bettles north-south segment will be the segment to the west in which there will be consideration of both railroad and highway.

Senator GRAVEL. Then you have a road from Bettles west which would not tie into any possible road system?

Mr. FROID. The assumption made in assigning us our scope of services to be performed was that the highway facility might be constructed by others to which our study would connect.

Senator Cook. In other words, this is only your part of that contract?

Mr. FROID. Yes, sir.

Senator Cook. I see.

Senator GRAVEL. We are doing the engineering for the railroad authority is really what we are doing in this study?

Mr. FROID. Yes.

Senator GRAVEL. You go to the construction of track after you have turned in your report?

Mr. FROID. Yes. Our report would define definitive costs of constructing the facility.

Senator GRAVEL. The railroad.

Senator Cook. At that point may I say the real answer to Senator Stevens' question is that obviously you will take into consideration all alternative routes because you have to make a definitive study of location and a definitive study of costs.

Mr. FROID. Yes, as applies to engineering feasibility.

Senator Cook. Right.

Senator GRAVEL. What about the economic feasibility, have there been any studies done to make a determination before going into the $3 million study whether or not an economic study prefaced this?

Mr. FROID. I think I would have to look to others to answer that, sir. Our assignment began at the point that there was a desire for a study of engineering feasibility over the given segments.

Senator GRAVEL. So there was no economic study done to your knowledge?

Mr. FROID. Not as a part of our contract.

Senator GRAVEL. Well, in your initial research if there had been any studies available certainly this is something that in your work you would have reviewed before performing the specifics in your

contract.

Mr. FROID. Yes. We have not secured information that applied specifically to the total area of which we are making this study. Senator GRAVEL. Have you any economic transportation studies? Have you seen any economic transportation studies of activities to the north, be it the railroad, the highway, air or what have you? Mr. FROID. Not to the character that I believe you have reference, Senator.

Senator GRAVEL. And if such existed it is something that you would have acquired for your library?

Mr. FROID. Hopefully.

Senator GRAVEL. And it would have been quite an oversight if you had not?

Mr. FROID. Yes, and we would have been quite aware.

Senator GRAVEL. The point I am trying to make is that if there are studies of transportation to the north, you would be aware?

Mr. FROID. Yes.

Senator GRAVEL. And you are not aware?

Mr. FROID. That is right.

Senator GRAVEL. So we are proceeding with the economics as before we made any study. Is this a fair assumption?

Mr. FROID. I don't know that I can specifically say yes or no to you, Senator.

Senator Cook. What percentage of the entire contract for the corridor study do you have?

Senator GRAVEL. Three million dollars was awarded for the study. Mr. FROID. Yes, sir.

Senator GRAVEL. How much of the $3 million do you have in your contract?

Mr. FROID. We are operating at a cost-plus-a-fixed-fee contract, sir, with our estimate that the costs of the project would be in the order of $2 million.