01/19/2006 09:00 AM Senate FINANCE

                                                                                                                                
     SENATE BILL NO. 55                                                                                                         
     "An Act instructing the commissioner of natural resources to                                                               
     issue a patent for the remaining interest in certain state                                                                 
     land to the owner of the agricultural rights to that land."                                                                
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  TOM  WAGONER,  sponsor  of the  bill,  testified  that  the                                                            
Department  of  Natural  Resources  was  available  to  address  the                                                            
question raised at the  previous hearing regarding mineral rights on                                                            
the property intended for transfer.                                                                                             
                                                                                                                                
DICK MYLIUS,  Acting Director, Division  of Mining, Land  and Water,                                                            
Department  of Natural  Resources,  noted  that the  Division  would                                                            
administer  the land transfer if this  bill passes. He assured  that                                                            
the State  would retain  subsurface rights.  The bill specifies  the                                                            
sale  would  be  a  "land  estate",  which  is differentiated   from                                                            
"mineral estate". Land  estate specifies the rights "from the ground                                                            
up" and mineral estate  involves the rights of oil and gas and other                                                            
resources  located  below the  surface.  In addition,  AS  38.05.125                                                            
provides  that in "each  contract for  the sale,  lease or grant  to                                                            
State land" the State would retain mineral rights.                                                                              
                                                                                                                                
Mr. Mylius explained this  statute is derived from the Statehood Act                                                            
provision  in  which  the  federal  government  required  that  land                                                            
transferred  from federal  to State  ownership  must remain  mineral                                                            
estate. This is enshrined  in the Alaska Constitution. Therefore, in                                                            
any public sale, the State retains mineral rights.                                                                              
                                                                                                                                
Senator Stedman  understood that mineral rights are  retained by the                                                            
State on  all lands acquired  since the Statehood  Act. He  asked if                                                            
patented  lands from  the time Alaska  was purchased  by the  United                                                            
States   from  Russia   through   territorial   days  were   treated                                                            
differently.                                                                                                                    
                                                                                                                                
Mr. Mylius replied  that the Alaska Constitution imposes  provisions                                                            
applying  to  pre-statehood   land  grants.  The  practices  of  the                                                            
University of  Alaska land trust and the Alaska Mental  Health Trust                                                            
Authority  land  trust  have  never  included  disposal  of  mineral                                                            
estate.  He was  unsure if  the "absolute  prohibition"  applies  to                                                            
these entities.                                                                                                                 
                                                                                                                                
Senator Stedman asked about  property that was patented between 1867                                                            
and statehood.                                                                                                                  
                                                                                                                                
Mr.  Mylius answered  that  in  many cases  the  federal  government                                                            
granted mineral estate  on these properties. Whether the homesteader                                                            
acquired the mineral  rights was a site-specific determination.  The                                                            
federal government  is not restricted from granting  mineral rights.                                                            
                                                                                                                                
Mr. Mylius also  told of federal mining laws providing  that patents                                                            
could be secured for mining claims on federal lands.                                                                            
                                                                                                                                
Co-Chair  Wilken  offered a  motion to  adopt  CS SB  55 (FIN),  24-                                                            
LS0287\F, as a working document.                                                                                                
                                                                                                                                
Without objection the committee  substitute, Version "F" was ADOPTED                                                            
as a working document.                                                                                                          
                                                                                                                                
Co-Chair  Green   recalled  discussion   at  the  previous   hearing                                                            
regarding  the  fiscal  note  and  whether   the  amount  should  be                                                            
indeterminate  rather than  zero. A revised  fiscal note  reflecting                                                            
this change was submitted.                                                                                                      
                                                                                                                                
Co-Chair  Wilken offered  a motion  to report  CS SB  55 (FIN),  24-                                                            
LS0287\F  from Committee  with  individual recommendations  and  new                                                            
fiscal note.                                                                                                                    
                                                                                                                                
There was no objection  and CS SB 55 (FIN) was MOVED  from Committee                                                            
with a new fiscal note  dated 1/17/06 from the Department of Natural                                                            
Resources in an indeterminate amount.