Legislature(1995 - 1996)
05/01/1995 09:03 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 16 - INCREASE LAND GRANT TO UNIVERSITY OF ALASKA JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES (DNR), said the department does not support SB 16. He stated the department does not believe it makes good public policy to transfer one million acres of state land to the university. He noted at best some kind of short-term incremental benefit for the state will be received. The university has argued if they receive the land, there are less restrictions on how they develop the land and they can develop it faster. He observed that is an accurate argument, although those processes are all under review by the administration, as to whether or not the state's processes are too complex. MR. SHIVELY stated he does not believe there is currently a huge bonanza out there that will make a big dent in the state's budget by getting lands out to development one year, two years or even five years quicker. He felt there are other opportunities for the university. Currently, many people think the federal government has more land than it needs and in Alaska, the federal government is the largest landowner. He stated the department has offered support to the university to go back to discuss federal lands with Congress and the administration. MR. SHIVELY said even if the university pays DNR to do the work necessary to transfer the land, it is extra work and an extra cost to be taken out of the incremental benefit. He noted the fact that SB 16 is a 13 page bill indicates the complexity the state is facing in trying to get something that makes sense. He felt the bill will further complicate things and does not give the state the benefit it needs at this point. CO-CHAIRMAN JOE GREEN asked why the first course would not be to try and get the land the university needs from the federal government. MR. SHIVELY responded he is not even sure where the one million acres figure came from. He said his understanding is it is just a figure that was determined to give the university a land base from which they can generate income in order to offset university expenses. He noted there is no magic to the number. He pointed out at the time of statehood, there was no guarantee as to how much land the university would get. CO-CHAIRMAN BILL WILLIAMS felt Mr. Shively was off base in regard to his comments about the benefits that would be received and the costs it would take to get the land to the university. He said the state has 105 million acres of land and is in a very tight budget crunch presently. He stated it is a proven fact, at least in regard to the Native corporations, the lands were made to work. CO-CHAIRMAN WILLIAMS felt if the university got the land, they would make it work and the amount of money the university would receive by managing it would be received faster since they are in the private sector. He said anytime one has to go through a process like the state has to go through in managing its lands...if it takes five years to get a piece of legislation out or five years to get a timber sale out, the marketplace has been lost. He found Mr. Shively's comments disturbing. MR. SHIVELY stated if SB 16 passes, the university will not have one million acres of land. Rather, they will have the right to negotiate with the state to get one million acres of land. He said that land would take some time to transfer. He pointed out the single, most viable resource the state has to sell is timber. The potential for oil and gas leasing for the university is not great and mining would not give them much ready revenue. He noted the university will still have to manage any timber given to them under the sustained yield requirement, which is a requirement the Native corporations do not have. MR. SHIVELY said it is not clear whether or not the university, if they do not manage their resources responsibly, will also have the same requirements the state does, either through the Board of Regents or the legislature, since they are a public body. He stated there is no question the university can get things out faster than the department can but it is an incremental time value to the state and may be responsive to the timber market. He reiterated the university is not going to have the land July 1, and probably will not have it by July 1, 1996, if SB 16 is passed. CO-CHAIRMAN WILLIAMS noted that Mr. Shively had been a land manager for quite some time in the Native community and knows the Native community has not received all of its 44 million acres of land. He said when that land is received, it is known the land will not start working immediately. He stated it takes a lot of management time to get that land working in the right manner. He felt if the university at least got the nod they were going to get the land, they would start managing it. CO-CHAIRMAN WILLIAMS said the Alaska Native Claims Settlement Act (ANCSA) was passed in 1971. He stated the village corporation he is from still has not received all of its conveyances but is planning for it and has had the time to plan for it. Number 242 MR. SHIVELY stated the Native corporations, even though they have not received all of their entitlement, have a good idea where that entitlement is going to come from. The university, on the other hand, will be selecting out of 83 million acres and it is not as easy for them to plan exactly what lands they are going to get, whether it will be timber, minerals, or lands used for individual land disposals. He stressed he is not saying there would be no benefit to the state. He is not sure the incremental benefit the state will get is worth the process required to determine where the university gets their one million acres of land, taking the department's attention away from other things. MR. SHIVELY said the last time it was a contentious issue as to which lands the university was going to get. He noted the state just went through one major distribution of state lands with the mental health trust issue, which still is not completed. He thought the mental health trust land disposal will take at least two more years. CO-CHAIRMAN WILLIAMS felt the university understands the processing required. He said this land grant will provide jobs and noted the Governor has talked about families and jobs over and over. REPRESENTATIVE PETE KOTT asked what kind of process will be involved in selecting the one million acres. Number 283 MR. SHIVELY responded the process could happen in several different ways. Ordinarily what would happen is the university would look at the state's land base and make suggestions as to which lands they might want title to. Assuming the state and the university could come to some agreement, the process of transferring the lands would begin. He noted there are certain lands mentioned in SB 16 which the university cannot look at. CO-CHAIRMAN GREEN said, "You made a very good point in that if those lands that could be convertible perhaps into money generating interests within a reasonable foreseeable future, those are excluded from their selection base. Would that then...your early comments kind of set the stage that what they would be selecting...unless they were going to wait and see what happens to the other 20 million acres that we eventually get patent to...would be goat pasture..." MR. SHIVELY stated currently, lands which have immediate economic value are timber lands not on the department's five year schedule. He said lands with oil and gas leasing potential are unknown. The department is doing some frontier areas now and proposing some lands not having a lot of potential. He said the department would probably not want to give lands on the North Slope to the university. Otherwise, it is lands the university might want to lease for recreational use. He noted those type of lands do not bring a huge amount of money to either the university or the state. Number 331 REPRESENTATIVE KOTT questioned based on the one million acres to be selected and all the exclusions built into the bill, how much land is potentially available. MR. SHIVELY replied he did not know the answer to the question. He said if the map on the wall is looked at, particularly the blue areas, there would still be a substantial portion of the land available to the university but what kind of economic value there is in much of that land is questionable. He stated it might be possible for the university to look at approximately one-half of the state's entitlement. CO-CHAIRMAN GREEN noted for the record that Representative Nicholai had joined the committee at 9:10 a.m. CO-CHAIRMAN GREEN said the two issues causing concern are why the university would not be selecting federal lands rather than state lands and the nebulous number of one million acres as it relates to the university's need. He stated the annual report of the Statewide Office of Land Management indicates the Wrangell-St. Elias Park had selected about 250,000 acres of university land and the exchange amount had not been arrived at yet. He wondered if that is something which would continue. MR. SHIVELY clarified the question is whether the university might sell or trade the one million acres. CO-CHAIRMAN GREEN replied yes. MR. SHIVELY stated he could not answer the question. He felt the university has done a good job in managing their assets. Number 385 CO-CHAIRMAN WILLIAMS stated in Section 4 of SB 16, on page 4, lines 24 through 29, prior existing rights are addressed including coal leases, mining claims, and timber sales. He asked how these prior rights will be handled under the provisions of SB 16. MR. SHIVELY said it was his understanding those lands are not available to the university. CO-CHAIRMAN WILLIAMS noted there does not seem to be any provision in SB 16 for a minimum size for selections and conveyances. He thought it might make more sense, and be cheaper for the state to convey lands in a minimum size of 640 acres. He said that is the way land selections by the state, under the Statehood Act, are handled. MR. SHIVELY stated he cannot answer the question. He agreed the larger the parcel conveyed, the easier it is. He thought in dealing with the university, the department would try to address that issue. REPRESENTATIVE IRENE NICHOLIA asked if SB 16 would have an impact on the Tanana Valley State Forest. MR. SHIVELY said the Tanana Valley State Forest is a designated area and it is his understanding if the land is in a unit like a state forest, it is unavailable for selection but there are other state lands in that forest which could be available. REPRESENTATIVE NICHOLIA stated the Tanana Valley State Forest is a popular place for people interested in the timber industry which concerns her. Number 437 MARTIN EPSTEIN, DIRECTOR, LAND MANAGEMENT, UNIVERSITY OF ALASKA, testified via teleconference and stated he was available for questions. CO-CHAIRMAN GREEN recalled a question regarding the university selecting state land versus trying to get federal land. WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA, responded the university has pursued a federal land grant and has spoken at length with Senator Stevens and Representative Young. They have told the university they do not see any opportunity for that to occur at this point in time. She noted Senator Stevens and Representative Young are helping the university with some language which would free up some constraints on the university's original land grant. CO-CHAIRMAN GREEN asked if they gave a reason. MS. REDMAN stated the rationale goes back to the original land grant. She said at the time of statehood, when the original land grant was extinguished, the rationale was that because the federal government was giving the state so much land, the federal government told the state they could pick up the balance. CO-CHAIRMAN GREEN clarified that was here say and not written anywhere. MS. REDMAN said there is nothing written. However, there is a record that people have researched at the time of statehood but there is nothing in the formal dissolution of the original conveyance acknowledging the state would pick up the difference. Number 475 CO-CHAIRMAN GREEN asked if that is based on memory, would there be any merit to a joint resolution to the federal government. He also wondered if there is any urgency in the university getting the land before such a resolution could be acted on. MS. REDMAN stated a resolution would be helpful. She thought a resolution asking the federal government to match the amount finally realized through SB 16 would be beneficial. She said the university would encourage the legislature to move forward with conveyance of some portion of land. CO-CHAIRMAN GREEN wondered if the university has specific land it would like to select. MS. REDMAN responded the university does not have specific plans for any lands, although Mr. Epstein is aware of lands available. CO-CHAIRMAN GREEN recalled he had earlier referred to the annual report of the Statewide Office of Land Management which had mentioned the 250,000 acre transfer. He asked for comments on that transfer. MR. EPSTEIN stated the item Representative Green is referring to was a sale of land to the National Park Service (NPS). He said the NPS plans to construct its Wrangell-St. Elias headquarters on that property. He noted the sale was quite advantageous to the university because in addition to receiving funds for the sale of the property, the university will also benefit from the large number of employees and tourists who stop in to visit the headquarters site because the university owns the land surrounding the parcel sold. MS. REDMAN explained it is the policy of the Board of Regents to not sell land unless there is an enormous benefit or it is impossible for the university to determine a way to develop the land effectively. She said the university's land grant lands are held for a long term to develop revenues, so it is quite unusual for the university to sell land. CO-CHAIRMAN GREEN noted the article in the report says the final purchase price had not yet been determined. He asked if that sale had been consummated yet. MR. EPSTEIN replied the university got fair market value for the land sold to the NPS and at this point, and some incalculable value that the surrounding lands will benefit from due to the presence of the employees and tourists. He stated the NPS was unwilling to invest in a new headquarters on leased lands. Number 543 CO-CHAIRMAN GREEN asked why the number one million acres was chosen, since the university does not have a plan already. RON SWANSON, DIRECTOR, DIVISION OF LAND, DNR, testified via teleconference and stated he has no idea where the figure came from. He did not think there was any justification behind the number as far as past legislation on the federal side. He stated the only thing he can surmise is that the mental health trust land was one million acres and perhaps the university felt their land grant should be equal to that amount. CO-CHAIRMAN WILLIAMS asked if the state is entitled to more lands from the federal government. MR. SWANSON replied the state currently owns 89 million acres and the full entitlement is 106 million acres. CO-CHAIRMAN WILLIAMS questioned whether or not the state can get more than the 106 million acres. MR. SWANSON responded no and added that amount of land is all the state is entitled to under the Statehood Act. Number 574 CO-CHAIRMAN GREEN asked if the state gives the university one million acres, could that one million acres be picked up as part of the 106 million acres. MR. SWANSON stated no. CO-CHAIRMAN GREEN recalled the commissioner had indicated that because of the restrictions in SB 16 and the problems with the mental health settlement, it would be costly manpower wise and that the value of the land left available would be diminished. He asked Mr. Swanson to comment. He wondered since the plan is not there yet and there is no justification for the one million acres, why is there such an urgency. MR. SWANSON stated the best thing he can do is compare this to the mental health issue which everyone has suffered through for the last decade. In the end, the legislature designated 900,000 plus acres to become mental health land and the department went through a very exhaustive process to identify those lands with environmental groups, public interest groups, and industry. He said the bottom line is there is not that much out there for the state to offer. He noted the state has a lot of habitat land, recreation land, etc., but not a lot of land available immediately. MR. SWANSON said the concerns with SB 16 include having the university select land, the department conveying the land and getting challenged at every turn by industry or interest groups. With SB 16, the department will probably be challenged by someone on every acre. He thought it was a much better process to identify the land up front and get it behind them. He stated he is not aware of any land, other than possibly timber, that can be turned into bucks right away. CO-CHAIRMAN GREEN noted last year, the legislature passed an exploration licensing bill for large blocks of acreage to be put up for concession-type leasing and those are not on the five year forecast now. He asked if the selection of land took some time, would that allow the university to come into a concession-type block and select land not on the five year forecast. MR. SWANSON said if the land is not on the five year schedule, the university may select it. MS. REDMAN stated SB 16 allows an additional five years for the state to get things into the five year plan before the university can even select. She added the commissioner controls every acre of land put up for conveyance. She said she was incredulous with the discussion. CO-CHAIRMAN GREEN clarified there is no over-topping. He said this is only a selection that is subject to the approval of the DNR commissioner. Number 632 MS. REDMAN stated the DNR commissioner has total control over what lands are put up for possible selection by the university. The restrictions within the bill relative to the state's five year oil and gas plan...everything is off limits. She said as a result of concerns expressed last year, an additional five years for the state to get things into the oil and gas plan has been provided. Therefore, the university could not select any oil and gas lands for ten years. CO-CHAIRMAN GREEN clarified the university's plan cannot proceed until the land is selected. He wondered if the university has a plan they would select around. MS. REDMAN replied yes to both. She said the university cannot proceed until lands are put up for selection by the commissioner. She noted the university currently has 100,000 acres in the state on which it is generating substantial income from currently. The university's plan for new selections would be compatible with what it has now in terms of trying to build a diverse portfolio, including lands which may be contiguous to lands the university currently has. She stressed the university is trying to determine ways to generate new revenue for the state as the university is part of the state. Therefore, every dollar the university can generate on state land is a new dollar generated for the state. CO-CHAIRMAN GREEN recalled it has been mentioned several times that the only land available for the university's selection would be either timber lands or high speculation lands. MS. REDMAN stated the university is also making money on gravel and recreational property. She said while it might be true that the university is not looking at a bonanza, there is a steady stream of additional income out there, which may not be great in terms of a Prudhoe Bay but if it is generating one, two, or five million dollars a year in additional revenue to the state, that is significant over the long term. She pointed out that is additional revenue not currently coming into the state. MS. REDMAN said she appreciates Mr. Swanson's concerns about additional work for DNR, which is the reason the university assumed it would pick up all costs of the selections. She reiterated the commissioner is in total control of how the lands get put up for conveyance. Therefore, the university is agreeable to making some sort of agreement with the commissioner on a mechanism to try and adjust the department's workload. REPRESENTATIVE NICHOLIA asked Ms. Redman if she has a map of the lands the university is thinking about selecting. MS. REDMAN stated the university does not have lands it may be thinking about selecting and pointed out all of the blue areas on the map on the wall. She noted the commissioner would first have to put lands up for possible selection. TAPE 95-61, SIDE B Number 000 REPRESENTATIVE KOTT asked when the university would begin identifying lands for selection. MS. REDMAN replied with the exception of oil and gas lands, or lands currently tied up in the mental health settlement, the identification of lands could begin immediately upon passage of SB 16, so the commissioner could put lands up for possible selection. REPRESENTATIVE ALAN AUSTERMAN clarified it is up to the DNR commissioner. MS. REDMAN replied it is totally up to the commissioner. CO-CHAIRMAN GREEN noted only 80 percent of the state's lands are patented currently. He asked if the university anticipates, and it started now, they would be (indiscernible) for some of those or would it confine its selections to that which is already patented. MS. REDMAN responded the university would probably be doing some betting in terms of lands that would be freed up when the mental health settlement is concluded. She said there is a ten year selection period, so the university would not select all of the land in the next couple of years. CO-CHAIRMAN GREEN asked if the university anticipates any degree of similarity between the university's selection and the mental health trust selection. MS. REDMAN stated the university does not expect anything like that. She stressed the university is prohibited from entering into any litigation. She recognized Mr. Swanson's dilemma because as far as he is concerned, in terms of the land selections and conveyance, there is no difference between the mental health situation and the university's situation. She noted Mr. Swanson still will be hassled with a lot of land selection problems. She said the university is sympathetic to that and is interested in trying to mitigate that as much as possible. MS. REDMAN added there is still a possibility third parties may enter into complaints, grievances, litigation, etc., relative to the final selection. She said the university would, through the public process and through local community efforts, try to mitigate as much of that as possible. She pointed out it is not in the university's interest, as a major public agency in the state, to get into any kind of conflict with different regional interests. The university's interest is to try and reach land resource plans within a region which people have general agreement on. Number 083 REPRESENTATIVE KOTT noted Ms. Redman had indicated the selection process could take up to ten years. He thought the university has until the year 2009 to make the final selections. If that is correct, he has a question regarding the fiscal note. He stated the fiscal note shows a $71,000 amount tied to SB 16 beginning fiscal year 1996. He asked if the selection process drags on until 2009, can it be assumed the $71,000 will carry forward until 2009 if that is when the university makes their final selection. MR. SWANSON responded the university is going to be in control of the way they make their selections. He assumed at the beginning there would be a minimal amount of work (indiscernible) most amount of work. He thought the $71,000 could go up an incremental amount over that depending on the agency's (indiscernible) and demand. REPRESENTATIVE KOTT noted there is $60,000 in the fiscal note tied to personal services. He asked if one person would be added to the department's staff to work the issue. MR. SWANSON replied that is a fair assumption. He stated the details would need to be worked out with the university since they would do the majority of the work. However, the department would need one staff person to review best interest findings, final findings, etc. CO-CHAIRMAN GREEN noted it does not really matter if the expense is through DNR or the university, the state still has to pay. REPRESENTATIVE KOTT said that was his argument. He pointed out the state is obligated in the end to fund this. MS. REDMAN said the costs are funded with proceeds from the land. Therefore, program receipts money would be used to fund the position. CO-CHAIRMAN GREEN asked if those proceeds are from the land to be acquired. MS. REDMAN replied the costs would be funded from the university's current land grant funds. She said funds from all of the university's land development go into a statutorily set up natural resource fund which the legislature appropriates. REPRESENTATIVE AUSTERMAN pointed out if the university receives one million more acres and it starts generating more funds, the $71,000 is well spent. (Representative DAVIES joined the committee.) CO-CHAIRMAN GREEN noted there were at least five amendments to be made and there is not time to hear them. He assigned the bill to a sub-committee to review the amendments. He stated the sub- committee will be chaired by Representative Kott and include Representatives Davies and Green. He said the committee will hear SB 16 again on Wednesday, May 3. Number
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