Legislature(1993 - 1994)

01/26/1994 01:40 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE                     
                        January 26, 1994                                       
                           1:40 p.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Steve Rieger, Chairman                                                
 Senator Bert Sharp, Vice-Chairman                                             
 Senator Loren Leman                                                           
 Senator Mike Miller                                                           
 Senator Jim Duncan                                                            
 Senator Johnny Ellis                                                          
 Senator Judy Salo                                                             
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 ALL MEMBERS PRESENT                                                           
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 217                                                           
 "An Act relating to land of the University of Alaska and                      
 authorizing the University of Alaska to select additional state               
 public domain land."                                                          
                                                                               
 SENATE BILL NO. 229                                                           
 "An Act making an appropriation for the construction of a dormitory           
 at the University of Alaska Anchorage; and providing for an                   
 effective date."                                                              
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 217 - No previous action to record.                                        
                                                                               
 SB 229 - No previous action to record.                                        
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Senator Kelly                                                                 
 Prime Sponsor                                                                 
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Reviewed SB 229.                                         
                                                                               
 Sherrie Goll                                                                  
 Alaska Women's Lobby                                                          
 P.O. Box 22156                                                                
 Juneau, Alaska 99802                                                          
 POSITION STATEMENT:  Supported SB 229.                                        
                                                                               
 Brian Rogers                                                                  
 Vice-President of Finance                                                     
 University of Alaska                                                          
 207 D Butrovich Bldg.                                                         
 University of Alaska                                                          
 Fairbanks, Alaska 99775                                                       
 POSITION STATEMENT:  Supported SB 229 and reviewed SB 217.                    
                                                                               
 Senator Frank                                                                 
 Prime Sponsor                                                                 
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Supported SB 217.                                        
                                                                               
 Chip Thoma                                                                    
 Juneau, Alaska                                                                
 POSITION STATEMENT:  Reviewed SB 217.                                         
                                                                               
 Ron Swanson                                                                   
 Director of the Division of Land                                              
 P.O. Box 107005                                                               
 Anchorage, Alaska 99510-7005                                                  
 POSITION STATEMENT:  Reviewed SB 217.                                         
                                                                               
 Jack Chenoweth                                                                
 Legal Services                                                                
 Legislative Affairs Agency                                                    
 130 Seward Street                                                             
 Juneau, Alaska 99801-2105                                                     
 POSITION STATEMENT:  Reviewed amendments to SB 217.                           
                                                                               
 Gerald Gallagher                                                              
 Director of the Division of Mining                                            
 Department of Natural Resources                                               
 P.O. Box 107016                                                               
 Anchorage, Alaska 99510-7016                                                  
 POSITION STATEMENT:  Offered information.                                     
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 94-3, SIDE A                                                             
 Number 001                                                                    
                                                                               
 CHAIRMAN RIEGER called the Senate Health, Education and Social                
 Services (HESS) Committee to order at 1:40 p.m.                               
                                                                               
 Number 011                                                                    
 CHAIRMAN RIEGER introduced  SB 229  (APPROP: UAA 600 BED DORMITORY)           
 as the first order of business before the committee.                          
                                                                               
 SENATOR KELLY, primary sponsor for SB 229, reviewed his sponsor               
 statement.  He emphasized the need to find a method of funding for            
 additional housing on the Anchorage campus in order to develop the            
 University of Alaska as a whole.  He stated that the housing should           
 pay for itself.  He explained the current attempt to put together             
 a plan with the Alaska Housing Finance Corporation, the Board of              
 Regents, and the University trying to incorporate bonding                     
 mechanisms with some cash infusion that would make it all pencil              
 out.                                                                          
                                                                               
 SHERRIE GOLL, Alaska Women's Lobby, supported the building of a new           
 dormitory on the Anchorage campus.  She addressed the issue of                
 students' safety in dormitories.  She suggested installing peep               
 holes and dead bolts in the dormitory to increase students' safety.           
                                                                               
 Number 117                                                                    
                                                                               
 BRIAN ROGERS, Vice-President of Finance for the University of                 
 Alaska System, stated support for SB 229 from the University of               
 Alaska.  The Board of Regents capital request to the legislature              
 this year does include some student housing in Anchorage, but not             
 the entire amount of SB 229.  He discussed the attempts at                    
 solutions to finance the dormitory.  He supported this                        
 appropriation.                                                                
                                                                               
 SENATOR RIEGER stated that the primary question with SB 229 is the            
 funding.                                                                      
                                                                               
 Number 184                                                                    
                                                                               
 SENATOR DUNCAN asked if surveys similar to the University of Alaska           
 Anchorage survey had been done in Fairbanks and Juneau.  Dr.                  
 Roger's said that an analysis of student demand in Juneau indicates           
 that Juneau needs fifty-two more beds, at a cost of $2.5 million.             
                                                                               
 SENATOR LEMAN requested information regarding the projected $50,000           
 per student per occupant cost.                                                
                                                                               
 BRIAN ROGERS explained that the cost includes common areas such as            
 food service facilities and study areas.  Furthermore, the cost               
 includes built in features anticipating heavier wear and tear on              
 the building.  He said that they are considering alternative                  
 funding such as private operation with joint use.                             
                                                                               
 SENATOR ELLIS moved that SB 229 be passed out of committee with               
 individual recommendations.  Hearing no objections, it was so                 
 ordered.                                                                      
                                                                               
 Number 278                                                                    
 CHAIRMAN RIEGER introduced  SB 217  (INCREASE LAND GRANT TO UNIV. OF     F    
 ALASKA) as the final order of business before the committee.                  
                                                                               
 SENATOR FRANK, primary sponsor for SB 217, reviewed his sponsor               
 statement.  He explained that if some proposed amendments were                
 adopted to SB 217, the bill would deal with the Mental Health Trust           
 Issue by delaying the effective date until after the Mental Health            
 Trust is settled.  He stated that the $1 million fiscal note is               
 substantial.  He cited the dedication of funds prohibition in the             
 constitution as an issue that needs addressing.  There are some               
 proposed amendments addressing this issue.                                    
                                                                               
 Senator Frank pointed out that the university needs to look to non-           
 General Fund sources of revenue to fulfill its goals.  Currently,             
 the university has attempted to increase private sector grant                 
 funding which would decrease dependence on the General Fund.  He              
 maintained that while SB 217 would exempt the university from                 
 certain elements of the Alaska Public Land Statutes, SB 217 would             
 still provide notice and access to the public.                                
                                                                               
 Number 358                                                                    
                                                                               
 BRIAN ROGERS reviewed the history of the land grant for the                   
 University of Alaska referring to Terrence M. Cole's A Land Grant     t    
 College Without the Land:  A History of the University of Alaska's            
 Federal Land Grant.  He said that the university is now actively             
 in the land management business.  Net income from the land                    
 development is deposited in an Endowment Trust Fund managed by the            
 Department of Revenue.  The university receives that income                   
 annually and uses it to inflation proof the trust fund, pay for the           
 cost of land management, and for university programs.  He pointed             
 out that the spending of this money is annually part of the budget            
 request.                                                                      
                                                                               
 Dr. Rogers specified that SB 217 does not allow selection of land             
 with leases of oil and gas.  He concurred with Senator Frank's                
 suggestion to place an effective date on the bill which                       
 acknowledged the primacy of the Mental Health settlement.  He                 
 expressed the desire to change the fiscal note's fund source from             
 the General Fund to Inter Agency Receipts.  In conclusion, he                 
 indicated that Alaska had the largest federal grant of all of the             
 states, however, Alaska's higher education percentage is the forty-           
 ninth of the fifty states.                                                    
                                                                               
 SENATOR SALO asked about potential problems with selection and more           
 specifically with municipalities that may not have completed their            
 selection process.  Dr. Rogers pointed out that the proposed three            
 year delay to university selection should give the municipality               
 time to finish its selection.                                                 
                                                                               
 Number 443                                                                    
                                                                               
 BRIAN ROGERS, in response to Senator Rieger, clarified that the               
 Trust Fund was not subject to the Executive Budget Act because it             
 was in existence at statehood.  Dr. Rogers said that he had placed            
 the income in the Annual Budget Request because he felt it was                
 appropriate there.  He specified that the $21 million is a                    
 financial asset of the Trust Fund not the land value.                         
                                                                               
 CHIP THOMA was concerned with the Gulf of Alaska due to the high              
 value of these lands for king salmon and wildlife habitat.  He                
 stated that his only concern was with the timberlands.  In review             
 of SB 217, he said he would confine his comments to the Board of              
 Regents.                                                                      
                                                                               
 Number 474                                                                    
                                                                               
 RON SWANSON, Director of the Division of Land, said that the                  
 Department of Natural Resources does support, in principle, the               
 university obtaining more land to support its educational program.            
 He was concerned with the availability of suitable lands and the              
 timing.  He expressed the need to enact a time limit on university            
 selection.  He explained that the land conveyed to the university             
 in the long term should be developed to generate money into the               
 university system, however, this would not result in immediate                
 revenue for the university.                                                   
                                                                               
 Mr. Swanson mentioned the type of land that can be conveyed.  He              
 pointed out that land sale contracts should be addressed.  He                 
 stressed the need to clarify the definition of the word "mineral".            
 He offered to fax his testimony for the packet on SB 217.                     
                                                                               
 Number 563                                                                    
                                                                               
 CHAIRMAN RIEGER numbered the proposed amendments and introduced               
 Rogers' Amendment 1 which corresponds to Chenoweth's Amendment 6 as           
 the first up for discussion.  Regarding Rogers' Amendment 1, he               
 said that "a final court determination which resolves all                     
 outstanding issues" might be unsteady because of issues occurring             
 after the effective date.                                                     
                                                                               
 BRIAN ROGERS stated that Chenoweth's Amendment 6 would only hold              
 hypothecated land out of selection while Rogers' Amendment 1 would            
 delay the start of the selection process until the final court                
 determination in Weiss v. State.  He agreed that Chenoweth's                  
 Amendment 6 does the better job with this issue.                              
                                                                               
 TAPE 94-3, SIDE B                                                             
                                                                               
 Number 581                                                                    
                                                                               
 In response to Senator Salo's question about "all outstanding                 
 issues" causing a delay, Dr. Rogers stated that some substantial              
 non-land related issues may need to be settled in addition to                 
 settling portions of the land.  A final resolution in Weiss v.                
 State may not come until the judge certifies that they have                   
 received all the land.  Conveying the land could take four years,             
 which under Rogers' Amendment 1 would delay the process for four              
 years as well.  Under Chenoweth's Amendment 6, the process could              
 begin on lands that were not originally Mental Health lands,                  
 hypothecated lands, or Mental Health selected lands.                          
                                                                               
 CHAIRMAN RIEGER requested that Jack Chenoweth address Amendment 6.            
 He asked when SB 217 would take effect if his amendment was                   
 adopted.                                                                      
                                                                               
 JACK CHENOWETH of Legal Services for the Legislative Affairs                  
 Agency, said that ch. 66 SLA 1991 will not become effective until             
 the courts have entered a decision on the Weiss litigation, at                
 which time section 7 of his amendment becomes effective.  Since the           
 effective date of ch. 66 may be later than the effective date of SB
 217, section 8 was inserted as a directive to the Commissioner of             
 Natural Resources.  This allows selection under the guidelines of             
 section 7 during the time between the effective dates of SB 217 and           
 ch. 66.                                                                       
                                                                               
 Number 550                                                                    
                                                                               
 CHAIRMAN RIEGER asked if the university could select oil and gas              
 lands under Chenoweth's Amendment 6.  Mr. Chenoweth stated that his           
 amendment does not change what is in the main bill.                           
                                                                               
 BRIAN ROGERS explained that the university can select the mineral             
 estate on lands, but not if there is an existing oil and gas lease            
 upon them.                                                                    
                                                                               
 SENATOR LEMAN moved that Chenoweth's Amendment 6 be adopted:                  
                                                                               
 AMENDMENT 6                                                                 
                                                                               
 Page 1, line 2, following " land ":                                           
  Insert " ;and providing for an effective date "                              
                                                                               
 Page 4, line 28, through page 5, line 12:                                     
  Delete all material and insert:                                              
                                                                               
   "(d) The commissioner may not convey title to any land                      
    selection made by the university under this section if                     
   the commissioner determines that the proposed selection                     
                                                                               
    (1) includes land for which, at the time of its                            
    selection under this section, a municipality has                           
    made a selection under AS 29.65, unless the land                           
    selection is, at a later date, rejected by the                             
    commissioner of natural resources or relinquished by                       
    the municipality;                                                          
                                                                               
    (2) is not in the best interests of the state; in                          
    making a determination under this paragraph as to                          
    whether a selection by the university is in the best                       
    interests of the state, the commissioner shall                             
    consider                                                                   
                                                                               
     (A) the interest of the general public in                                 
     retention of the land in state ownership;                                 
                                                                               
     (B) ensuring an appropriate diversity in                                  
     the character of land owned by the state                                  
     and by the university;                                                    
                                                                               
     (C) the public benefits achieved by conveyance                            
     of the land to the university;                                            
                                                                               
     (D) the probable potential for the development                            
     of the land and its resources and the probable                            
     income to the university from the conveyance of                           
     the land;                                                                 
                                                                               
     (E) benefits to the university from the                                   
     conveyance of the land to it; and                                         
                                                                               
     (F) the efficiency of the management of the                               
     land resulting from the conveyance of the                                 
     land."                                                                    
                                                                               
 Page 7, following line 17:                                                    
  Insert new bill sections to read:                                            
                                                                               
 " * Sec. 7.  APPLICABILITY OF UNIVERSITY SELECTION RIGHTS UNDER AS            
 14.40.365 TO LAND.  In addition to the land that, under AS                    
 14.40.365(d), the commissioner of natural resources may not convey            
 to the University of Alaska, the commissioner of natural resources            
 may not convey land for which, at the time of its selection by the            
 university,                                                                   
                                                                               
    (1) is subject to conveyance to the Alaska Mental                          
    Health Trust Authority under sec. 54, ch. 66, SLA                          
    1991;                                                                      
                                                                               
    (2) is land that the commissioner of natural                               
    resources reasonably believes should be conveyed                           
    to the Alaska Mental Health Trust Authority under                          
    sec. 55, ch. 66, SLA 1991, as compensation to that                         
    trust for original mental health trust land not                            
    available for return to the corpus of the trust; or                        
                                                                               
    (3) is land described in sec. 56, ch. 66, SLA 1991,                        
    as listed in "Lands Hypothecated to the Mental                             
    Health Trust, May 1991" located in the office of the                       
                                                                               
    director of the division of lands, Department of                           
    Natural Resources, in Anchorage, Alaska, that has                          
    been hypothecated to secure reconstitution of the                          
    mental health trust; however, as the reconstitution                        
    of the mental health trust is accomplished and the                         
    hypothecated land is release on a pro rata basis,                          
    the University of Alaska may select the land and the                       
    commissioner may convey it.                                                
                                                                               
   *Sec. 8.  LEGISLATIVE INTENT.  It is the intent of the legislature     e    
 that, if sec. 7 of this Act takes effect after the effective date             
 of secs. 1 - 6 of this Act, the commissioner of natural resources             
 reject, as inconsistent with the best interests of the state,                 
 selections of land by the University of Alaska under AS 14.40.365,            
 added by sec. 4 of this Act, of land described in sec. 7 of this              
 Act.                                                                          
                                                                               
   *Sec. 9.  Section 7 of this Act takes effect on the effective date     e    
 of ch. 66, SLA 1991."                                                         
                                                                               
                                                                               
 SENATOR DUNCAN clarified the effective date issue.  He asked if               
 land could be conveyed to the university with the exception of                
 possible replacement Mental Health lands.  Mental Health                      
 replacement lands cannot be conveyed until the courts sign off on             
 ch. 66.                                                                       
                                                                               
 JACK CHENOWETH said that Senator Duncan was correct.  He informed             
 the committee that the Mental Health Trust Authority would have               
 first choice on replacement land, compensation land, and                      
 hypothecated land until it is released.                                       
                                                                               
 SENATOR DUNCAN questioned the hypothecated land list and if all               
 such lands had been identified.                                               
                                                                               
 JACK CHENOWETH referred to a previous suggestion that the section             
 setting out the hypothecated land list should be revised.  If this            
 revision occurs then an amendment to this would follow.  He                   
 asserted that the doubt is in the period of time between the taking           
 effect of SB 217 and the taking effect of ch. 66.  The commissioner           
 could choose to ignore the statement of legislative intent in                 
 section 8 of his amendment.  He stated that the hypothecated lands            
 list should have been completed in May 1991, but he did not know if           
 DNR could continually upgrade the list.                                       
                                                                               
 Number 517                                                                    
                                                                               
 BRIAN ROGERS pointed out that section 7 of Chenoweth's Amendment 6            
 should cover the issue of the hypothecated lands list.  Even if               
 land was not on the 1991 list, the commissioner can convey land to            
 the Mental Health Trust which would be on the replacement list.  He           
 said that the Mental Health Authority would be contacted before any           
 lands are selected in order to avoid litigation.                              
 SENATOR DUNCAN asked if there is a cut-off date stating that no               
 additional lands can be selected or added to the hypothecated list            
 by the Mental Health community.  Dr. Rogers said that in order for            
 Judge Green to make a final decision the process must be complete.            
                                                                               
 RON SWANSON clarified that ch. 66 requires the completion of the              
 reconstitution of the buying process by December 1994.  Statute               
 specifies December 3, 1994 as the cut-off, after which no lands               
 could be added.                                                               
                                                                               
 JACK CHENOWETH stated that SB 217 does have a December 1, 1994 cut-           
 off date, however, that legislation cannot take effect until after            
 litigation and appeals have ended.  That could be fifteen years.              
                                                                               
 Number 488                                                                    
                                                                               
 SENATOR SALO asked if although land could not be added to that                
 list, land would be freed up from the list and available for                  
 university selection.  Mr. Chenoweth explained that the                       
 hypothecated land list should shorten as land is reconstituted into           
 the Trust, which would make land available to the university and              
 others for selection.                                                         
                                                                               
 SENATOR SALO inquired as to potential litigation with lands that              
 may come under the proposed exploration licensing legislation.                
                                                                               
 Number 453                                                                    
                                                                               
 SENATOR LEMAN explained the proposed exploration licensing                    
 legislation, SB 151, with regard to SB 217.  Senator Leman and                
 Senator Salo discussed financial issues regarding who would receive           
 profits from oil lands under these two bills.                                 
                                                                               
 CHAIRMAN RIEGER reiterated Senator Salo's concerns.  If both bills            
 pass, then those exploration companies who want to bid on land for            
 redevelopment are accepting the risk that the university may select           
 some of that land subsequent to the exploration companies'                    
 commitment.                                                                   
                                                                               
 BRIAN ROGERS informed the committee that if both bills pass, the              
 agreement between the department and the oil company would have to            
 be followed.  The exploration agreement and the lease would have to           
 be under the terms agreed to when the department entered into the             
 agreement.  There is a revenue issue for the state should there be            
 oil that is profitable and royalties are paid.  He stated that                
 royalties not deposited into the Alaska Permanent Fund would be               
 available to the university.                                                  
                                                                               
 SENATOR SALO commented that access by the companies to state land             
 and to university land did not seem the same.  She noted that the             
 university could have a different plan for use of the land other              
 than allowing exploration.                                                    
 Number 409                                                                    
                                                                               
 SENATOR DUNCAN asked if the department had taken a position on                
 this.  He further asked if the amendment did the job.                         
                                                                               
 RON SWANSON voiced the department's support.                                  
                                                                               
 There being no further discussion or objections, Amendment 6 was              
 adopted.                                                                      
                                                                               
 CHAIRMAN RIEGER introduced Chenoweth's Amendment 5 which                      
 corresponds to Rogers' Amendment 2 as the next amendments up for              
 discussion before the committee.                                              
                                                                               
 BRIAN ROGERS stated that the income from the Endowment Trust Fund             
 is dealt with under the Executive Budget Act, therefore, these                
 amendments may not be necessary.  These amendments were prepared in           
 case of concern.                                                              
                                                                               
 JACK CHENOWETH discussed his amendment and his instruction to make            
 the fund subject to legislation appropriation.  He pointed out his            
 editing of the definition of "University Receipts" which has an               
 effect in the Fiscal Procedures Act and the Executive Budget Act.             
                                                                               
 Number 358                                                                    
                                                                               
 CHAIRMAN RIEGER moved to adopt Chenoweth's Amendment 5:                       
                                                                               
 AMENDMENT 5                                                                 
                                                                               
 Page 1, line 1, after " Alas  ka ":                                           
  Delete " and "                                                               
  Insert " , "                                                                 
                                                                               
 Page 1, line 2, after " land ":                                               
  Insert " , and defining net income from the University of                    
  Alaska's   endowment trust fund as 'university receipts'                     
  subject to prior legislative appropriation "                                 
                                                                               
 Page 6, following line 10:                                                    
  Insert new bill sections to read:                                            
 " *Sec. 6.  AS 14.40.400(e) is amended to read:                               
                                                                               
   (e)  Subject to legislative appropriation, the  [THE]                     
   Department of Administration shall disburse the net                         
   income from the trust fund upon vouchers approved                           
   by the president and treasurer of the University of                         
   Alaska specifying the purpose for which the money                           
   is to be used and showing it is to be used in conformity                    
   with this section.                                                          
                                                                               
   *Sec. 7.  AS 14.40.491 is amended to read:                                  
   Sec. 14.40.491  DEFINITION OF UNIVERSITY RECEIPTS.  In AS                   
   14.40.120 - 14.40.491, "university receipts includes                        
    (1) student fees, including tuition;                                       
    (2) receipts from university auxiliary services;                           
    (3) recovery of indirect costs of university                               
    activities;                                                                
    (4)  the net income of the trust fund established in                      
    AS 14.40.400 and  receipts from sales and rentals of                      
    university property;                                                       
    (5) federal receipts;                                                      
    (6) gifts, grants, and contracts; and                                      
    (7) receipts from sales, rentals, and the provision                        
    of services of educational activities."                                    
                                                                               
 Hearing no objections, Amendment 5 was adopted.                               
                                                                               
 Number 348                                                                    
                                                                               
 CHAIRMAN RIEGER introduced Chenoweth's Amendment 7 and Rogers'                
 Amendment 3 as the next amendments up for discussion.                         
                                                                               
 BRIAN ROGERS said that both amendments accomplish the same                    
 objective and either would do the job.  The purpose of these                  
 amendments is if there is an existing lease when the land is                  
 selected, the revenue from the existing lease would go to the state           
 for the duration of the lease.                                                
                                                                               
 SENATOR DUNCAN asked if the university might select land that is              
 under a lease.  Dr. Rogers said that the university might do this             
 in order to issue the next lease upon the expiration of the current           
 lease.                                                                        
                                                                               
 JACK CHENOWETH pointed out that something other than a lease, a               
 contract, would be handled by the bill as page 5, line 18 provides.           
 He stated that his amendment, 7, does not cover something other               
 than a lease.                                                                 
                                                                               
 RON SWANSON reiterated the scenario Senator Duncan posed.                     
                                                                               
 SENATOR RIEGER asked if a contract or a lease contained a renewal             
 option, who would receive the benefit if the option was renewed.              
 Mr. Chenoweth said that he did not address that specifically.  Mr.            
 Chenoweth stated that if the leases' agreement itself provides for            
 a renewal option, the state being the leaser is in a position to              
 exercise that.  That option should be renewed with the benefits               
 continuing to go to the state until the completion of the lease.              
                                                                               
 SENATOR DUNCAN clarified that the department's support is behind              
 Rogers' Amendment 3.                                                          
                                                                               
 SENATOR SHARP moved to adopt Rogers' Amendment 3:                             
                                                                               
   AMENDMENT 3                                                               
                                                                               
 Page 6, after line 3, insert new *Sec. 5 to read:                             
                                                                               
   *Sec. 6.  AS 14.40 is amended by adding a new section to read:              
                                                                               
  Sec. 14.40.366.DISPOSITION OF INCOME FROM EXISTING                           
  ENCUMBRANCES.  Income from land selections by the University                 
  of Alaska under AS 14.40.365 which are subject to                            
  encumbrances listed in AS 14.40.365(a)(1)(A)-(E) shall be                    
  transmitted to the State of Alaska during the pendency of the                
  primary term of the lease, contract, claim, sale or permit.                  
  Equitable title to such selections shall vest with the                       
  University of Alaska only upon fulfillment of the primary term               
  of said lease, contract, claim, sale or permit.                              
                                                                               
 Number 285                                                                    
                                                                               
 GERALD GALLAGHER, Director of the Division of Mining at DNR,                  
 explained the process of his issuing of leases.  Mr. Chenoweth                
 specified that if the renewal of the lease arises from a provision            
 in the current lease, then the renewal is part of the original.               
 The state would continue to receive the benefits of the lease or              
 any renewal of it until it ends.                                              
                                                                               
 SENATOR SALO asked if not allowing the university selection of                
 lease lands would create hardship for the university.  Dr. Rogers             
 expressed the universities' preference to select land with other              
 encumbrances which are limited in time duration.  He explained that           
 the university does not want to be precluded from some of the                 
 better land in Alaska.  Senator Salo communicated the need to                 
 anticipate the potential conflict between the university and the              
 interests of the state in selection.                                          
                                                                               
 SENATOR SHARP recommended consideration of Rogers' Amendment 3.               
                                                                               
 SENATOR DUNCAN suggested that Mr. Chenoweth draft some language               
 that clarifies renewable leases and renewed leases.                           
                                                                               
 GERALD GALLAGHER explained sub-surface leases and the renewal                 
 process.  He said that there is a clause in the first lease that              
 states there will be a subsequent lease as long as there is                   
 production.                                                                   
                                                                               
 RON SWANSON addressed the lease question as well.                             
                                                                               
 SENATOR SHARP moved to redraft Amendment 3.  Hearing no objections,           
 it was so ordered.                                                            
                                                                               
 CHAIRMAN RIEGER introduced Rogers' Amendment 4 as the final                   
 amendment up for consideration.  He clarified that the issue of               
 this amendment was regarding municipalities that have not made                
 selection and have unfulfilled entitlements.                                  
                                                                               
 Number 198                                                                    
                                                                               
 RON SWANSON pointed out that there are statutes limiting municipal            
 selection.  In response to Chairman Rieger, Mr. Swanson said that             
 some municipalities have an entitlement which they have not yet               
 selected and their time limit has not run out.  Mr. Swanson                   
 referred to an amendment that froze municipal entitlements until              
 January of this year.                                                         
                                                                               
 CHAIRMAN RIEGER requested that the sponsor and Mr. Chenoweth work             
 together towards an amendment addressing Rogers' Amendment 4 and              
 the clean up of Amendment 3.                                                  
                                                                               
 BRIAN ROGERS offered an amendment to the fiscal note.  He proposed            
 changing the fund source of the fiscal note from the General Fund             
 to the net income from the land.                                              
                                                                               
 SENATOR SHARP expressed his doubts regarding the state's ability to           
 transfer 6(i) mineral lands.                                                  
                                                                               
 SENATOR FRANK said that the university is a municipality of the               
 state and that this is not a transfer from the state.  By bringing            
 this issue through the Executive Budget Act there shouldn't be a              
 violation of 6(i).                                                            
                                                                               
 SENATOR DUNCAN stated that the 6(i) question involves the Mental              
 Health lands which could be possible litigation in the U.S. Supreme           
 Court.                                                                        
                                                                               
 GERALD GALLAGHER clarified that 6(i) refers to Section 6(i) of the            
 Statehood Act.  He discussed the rules regarding 6(i).                        
                                                                               
 BRIAN ROGERS asserted that the university is a constitutional                 
 corporation of the state unlike municipalities.  He reiterated that           
 transfer of ownership to the university is not a transfer out of              
 state ownership.                                                              
                                                                               
 CHAIRMAN RIEGER requested that the amendments be done by Monday               
 when SB 217 will be before the committee again.  He stated that the           
 time limit issue, land sales contracts and co-leases for Amendment            
 3, and municipal selections should be addressed.                              
                                                                               
 BRIAN ROGERS expressed the need to exclude selection of existing              
 land sale contracts.  He said that a six or seven year limit would            
 be appropriate to complete selection.                                         
                                                                               
 There being no further business before the committee, Chairman                
 Rieger adjourned the meeting at 3:00 p.m.                                     
                                                                               

Document Name Date/Time Subjects