Legislature(1999 - 2000)

05/12/1999 01:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 7 - INCREASE LAND GRANT TO UNIV. OF ALASKA                                                                                   
CO-CHAIR SANDERS announced that the final order of business before                                                              
the committee would be CS for Senate Bill No. 7(FIN) am, "An Act                                                                
relating to the University of Alaska and university land, and                                                                   
authorizing the University of Alaska to select additional state                                                                 
land."  Acknowledging the shortage of time, Co-Chair Sanders said                                                               
he would take as much testimony as possible in the remaining time                                                               
and then recess to the call of the chair.                                                                                       
Number 1198                                                                                                                     
MEL KROGSENG, Legislative Assistant to Senator Robin Taylor, Alaska                                                             
State Legislature, noted that although CSSB 7(FIN) am is similar to                                                             
previous legislation on this subject, it is a new bill.  Amendments                                                             
from various committees were tacked onto last year's bill, which                                                                
resulted in conflicting and confusing sections.  That bill, cleaned                                                             
up by Legislative Legal and Research Services, is before the                                                                    
committee currently.                                                                                                            
MS. KROGSENG explained that CSSB 7(FIN) am provides the university                                                              
with 250,000 acres of state land.  The university was created as a                                                              
land grant college by the federal government.  It was created as an                                                             
agricultural and mining school.  Although promised vast amounts of                                                              
land by the federal government, the university only received                                                                    
111,000 acres.  The remaining entitlement was extinguished at                                                                   
statehood when the state was given some 103 million acres of land.                                                              
There are many restriction regarding which lands can and cannot be                                                              
selected.  She noted that the committee should have a sectional                                                                 
analysis of CSSB 7(FIN) am.                                                                                                     
Number 1079                                                                                                                     
MS. KROGSENG continued with highlights of the bill.  She informed                                                               
the committee that lands not available for selection are the                                                                    
following:  land reserved for the public domain; land included in                                                               
a five-year proposed oil and gas leasing program; leased land or                                                                
land for which a lease is pending for other purposes; land subject                                                              
to an oil, gas, or coal lease or coal prospecting permit; land                                                                  
subject to a mining claim, prospecting site, upland mining lease,                                                               
or mining leasehold location; land necessary to carry out the                                                                   
purposes of an inter-agency land management agreement; and land                                                                 
subject to conveyance under a land exchange or settlement                                                                       
agreement.  Land selected by a municipality is not an option.                                                                   
Furthermore, land that a commissioner may believe will be selected                                                              
by a municipality can be withheld by the commissioner for three                                                                 
MS. KROGSENG noted that CSSB 7(FIN) am includes the new provision                                                               
allowing the municipalities the first right of refusal.  She                                                                    
pointed out that the following land also may not be conveyed:  land                                                             
subject to an oil and gas exploration license, and land which the                                                               
commissioner believes may be part of an oil and gas exploration                                                                 
lease.  Any land conveyed is subject to a possessory interest.                                                                  
Furthermore, the Department of Natural Resources (DNR) shall                                                                    
provide public notice of intent to convey the land.  She informed                                                               
the committee that the university shall pay all survey and transfer                                                             
associated costs, except the recording of the title transfer.                                                                   
MS. KROGSENG pointed out some transfer conditions.  Coal, ores,                                                                 
minerals, fissionable material, geothermal resources, and fossils                                                               
transfer when the title to the land transfers.  Oil and gas                                                                     
resources, however, only transfer for land selected after the                                                                   
effective date of the Act, and then only five years after the                                                                   
effective date.  Therefore, if the state develops or sells an oil                                                               
lease and gets revenue from the oil lease prior to selection by the                                                             
university, the state will continue to get that money in                                                                        
perpetuity, even if the oil is discovered three years after the                                                                 
effective date of the Act.  The university would only receive oil                                                               
and gas revenues for oil discovered five years or later than the                                                                
effective date of the Act.  That was of concern in the prior                                                                    
legislation, Ms. Krogseng noted.  The current legislation also                                                                  
increases the size of the acreage that the university must select                                                               
to 640 acres or more, unless the commissioner believes it to be in                                                              
the best interest of the state for the university to select a                                                                   
smaller parcel.                                                                                                                 
Number 0834                                                                                                                     
MS. KROGSENG reiterated that oil and gas revenues go to the state                                                               
for five years after the effective date of the Act even if the land                                                             
is conveyed.  "Well actually, the oil and gas continue on," she                                                                 
then stated.  "All other revenues transfer to the university fund                                                               
conveyance as title.  So, if they were a mining or a grazing lease,                                                             
... that lease revenue would transfer to the university fund                                                                    
conveyance."  She pointed out that the bill includes a provision                                                                
for the Board of Regents to give up 20 percent of the revenue                                                                   
derived from the resource sales in the area closest to a campus,                                                                
provided the local municipality provides a match.  Without that                                                                 
match, the Board of Regents would not be required to provide that                                                               
revenue to the campus.                                                                                                          
MS. KROGSENG directed the committee to page 9, lines 27-30, which                                                               
attempts to address the concern regarding continued use by the                                                                  
public of the land to be conveyed.  She noted that an issue had                                                                 
arisen today regarding the potential access, if the land was later                                                              
sold to a third party.  Land placed on the list must come before                                                                
the legislature for approval similar to the Local Boundary                                                                      
Commission's land.  The legislature has the ability to eliminate                                                                
proposed land from the list or to approve the land with certain                                                                 
access conditions.                                                                                                              
MS. KROGSENG expressed her belief that CSSB 7(FIN) am meets the                                                                 
requirements of legislation introduced by U.S. Senator Murkowski,                                                               
which would provide Alaska with 250,000 acres with no strings                                                                   
attached, as well as an additional 250,000 acres if the state                                                                   
matches with an additional 250,000 acres.  This would go far in                                                                 
making the University of Alaska a truly land-based college, she                                                                 
said.  The University of Alaska is second-to-last in the amount of                                                              
land it currently has.  She mentioned a map and an overlay which                                                                
the committee reviewed during the meeting.                                                                                      
Number 0502                                                                                                                     
REPRESENTATIVE JOULE asked if CSSB 7(FIN) am discusses the types of                                                             
lands the university would select.  For example, would some land                                                                
classifications be off-limits?                                                                                                  
MS. KROGSENG said there is a list of lands unavailable for                                                                      
selection, but that list is not done by classification; the                                                                     
commissioner provides a list of available lands. The bill does                                                                  
specify the lands that may not be selected.                                                                                     
REPRESENTATIVE JOULE inquired how that selection compares with the                                                              
pending selections of municipalities.                                                                                           
MS. KROGSENG replied that the municipalities, under current law,                                                                
are more restricted; the lands available for selection under this                                                               
legislation are more far-reaching.  She noted that she had                                                                      
discussed that issue with the Alaska Municipal League (AML), but it                                                             
could not be addressed in this legislation due to the                                                                           
single-subject title rule.                                                                                                      
REPRESENTATIVE JOULE suggested that the university would be bumped                                                              
ahead, in terms of the types of classifications to which they have                                                              
MS. KROGSENG said yes; according to her understanding of the                                                                    
legislation, certain lands that the university could select would                                                               
not be available to a municipality.                                                                                             
Number 0294                                                                                                                     
REPRESENTATIVE JOULE asked if the AML is supportive of this                                                                     
MS. KROGSENG replied, "What we did in the legislation was ... if                                                                
the university selects land within municipal boundaries and that                                                                
municipality has a remaining entitlement, then the municipality has                                                             
the first right of refusal."  She did not have a letter of support                                                              
from the AML, she said, but doesn't believe they oppose the                                                                     
Number 0222                                                                                                                     
REPRESENTATIVE BARNES requested that Ms. Krogseng provide the                                                                   
committee with the use of the acreage presently held by the                                                                     
MS. KROGSENG agreed to that, but noted that Ms. Redman was present                                                              
and may have that information.                                                                                                  
CO-CHAIR SANDERS requested that Ms. Krogseng also provide the                                                                   
committee with the income stream coming from that land, at present.                                                             
MS. KROGSENG agreed to that, as well.                                                                                           
CO-CHAIR SANDERS asked if the university would pay start-up                                                                     
expenses from the income generated from the land or from general                                                                
fund monies.                                                                                                                    
MS. KROGSENG expressed her understanding that income from the land                                                              
which the university currently manages is placed in the land trust.                                                             
The interest from the land trust pays start-up expenses.                                                                        
CO-CHAIR SANDERS inquired as to the provisions regarding the                                                                    
state's oil rights.                                                                                                             
MS. KROGSENG explained that if oil was found within five years of                                                               
the effective date of this Act, the revenue stays with the state in                                                             
perpetuity.  If oil is found after five years of the effective date                                                             
of this Act, the revenue stream goes to the university.                                                                         
CO-CHAIR SANDERS said he found that to be counterproductive, if the                                                             
goal is to support the university.  He added, "We're going to give                                                              
them some land, as long it doesn't make much money.  If it makes a                                                              
little money, they can have it.  But if it makes very much money,                                                               
we want it."                                                                                                                    
MS. KROGSENG said she believes that provision was placed in the                                                                 
legislation some time ago.                                                                                                      
TAPE 99-34, SIDE A                                                                                                              
Number 0001                                                                                                                     
MS. KROGSENG commented that there was some concern regarding                                                                    
speculation and taking the state's revenue streams.  She understood                                                             
that there have been many compromises over the years, in attempting                                                             
to develop a program and a document that works for the university                                                               
as well as the state.                                                                                                           
CO-CHAIR SANDERS said he understood Ms. Krogseng to say that the                                                                
university could sell the land.                                                                                                 
MS. KROGSENG said that is correct.  She further explained that the                                                              
university would have to go through the public process, as does the                                                             
DNR.  She requested that Ms. Redman come forward to answer some of                                                              
these questions.                                                                                                                
Number 0196                                                                                                                     
WENDY REDMAN, Vice President, Statewide University of Alaska                                                                    
System, commented that she "really loved" this bill six years ago,                                                              
but she "likes" this bill now.  Ms. Redman said that the                                                                        
university, as a land grant university, has a long history and                                                                  
tradition of managing land.  Other than the DNR, the university is                                                              
the only state agency set up to manage land.  She believes that the                                                             
university's record illustrates the phenomenal job it has done                                                                  
managing its 100,000 acres.                                                                                                     
MS. REDMAN informed the committee that although the university was                                                              
originally allotted 350,000 acres from the federal government, it                                                               
only received 100,000 acres.  At statehood, the original lands had                                                              
not been surveyed and so were given up.  Those lands were managed                                                               
by the state and mingled with other state lands for the good of all                                                             
Alaskans, which was the intent.  In the first 30 years of state                                                                 
management, those lands generated $590,000 total. The university                                                                
sued the state to have management of those lands returned to the                                                                
university.  By the time the university won that suit, however, the                                                             
university's original lands were not available because the land had                                                             
been given away.  Therefore, the university received lands of                                                                   
similar value.                                                                                                                  
MS. REDMAN pointed out that in the ten years that the university                                                                
has had active management of the lands, it has generated $32                                                                    
million from the 100,000 acres.  She said the university is an                                                                  
aggressive land manager, which she acknowledged did cause some                                                                  
problems.  For example, the university has engaged in timber                                                                    
cutting, which caused some difficulties.                                                                                        
Number 0452                                                                                                                     
MS. REDMAN reported that the university believes it is in the                                                                   
state's interest and its own interest to generate new revenue for                                                               
the state.  She pointed out that when land is put into the                                                                      
university, it generates revenue that wouldn't otherwise be                                                                     
available to the state or to the university to use; that is the                                                                 
idea of getting these lands into development, which she believes                                                                
the university can do more effectively than the state can.  Ms.                                                                 
Redman clarified that she was not speaking negatively about the                                                                 
DNR, which has done a great job with oil and gas because it has the                                                             
resources and staff to do it.  However, outside of oil and gas, the                                                             
DNR has not had the staff to get land out into the private sector.                                                              
MS. REDMAN informed the committee that she would provide copies of                                                              
the recent land management report that lists all of the                                                                         
university's properties and the activity, pending and ongoing, on                                                               
those properties, as well as the financial statements from the land                                                             
grant trust fund.  [Before the end of the meeting, members received                                                             
copies of a lengthy document titled, "Statewide Office of Land                                                                  
Management Annual Report," dated February 1999.]  She echoed Ms.                                                                
Krogseng's comment that this legislation encompasses many                                                                       
MS. REDMAN addressed Co-Chair Sanders' question regarding oil and                                                               
gas.  Under CSSB 7(FIN) am, it would be very difficult to determine                                                             
how to obtain any oil and gas lands.  There has been some support                                                               
from the oil and gas industry for some joint projects; for those,                                                               
it is easier for that industry to be involved with the university,                                                              
rather than the state.  There has been some opposition to this from                                                             
various groups, however, such as the environmental community,                                                                   
hunters and fishermen, who are concerned with limited access to the                                                             
lands acquired by the university.  This legislation attempts to                                                                 
address that concern with language indicating the continuance of                                                                
the customary utilization and access to the land, to the maximum                                                                
extent the university could.  Also, prior to transfer of land into                                                              
third-party hands, such entry would be allowed on university land.                                                              
Beyond that, however, the university cannot make any commitments                                                                
regarding use.                                                                                                                  
MS. REDMAN emphasized that she would prefer a bill with specific                                                                
acres designated.  In conclusion, she pointed out that this                                                                     
legislation will not solve any financial problems for the                                                                       
university.  Land development takes much time, and potential income                                                             
is in the future.  Therefore, no immediate or short-term financial                                                              
problems of the university would be solved.                                                                                     
Number 0829                                                                                                                     
REPRESENTATIVE BARNES inquired as to the location of the                                                                        
university's land that was logged.                                                                                              
MS. REDMAN replied that the logging is occurring in the Yakataga                                                                
region, Cape Suckling.  Furthermore, the university had land in                                                                 
Southeast Alaska, in the Ketchikan region, that was logged.  She                                                                
also recalled some land on Afognak Island that is part of the                                                                   
original settlement with the state.                                                                                             
REPRESENTATIVE BARNES asked about Ms. Redman's statement that if                                                                
the university developed lands, it would be well into the future                                                                
before the university could derive any income from it.                                                                          
MS. REDMAN reiterated that land development is a long-term process;                                                             
therefore, it will not solve financial problems next year or the                                                                
following year.  Money generated from land development is placed                                                                
into the natural resources trust fund, which was established by the                                                             
legislature.  The university only utilizes the earnings of the                                                                  
fund, minus inflation-proofing, in order that an income stream is                                                               
generated.  Ms. Redman informed the committee that the operating                                                                
budget is $160 million a year.                                                                                                  
REPRESENTATIVE BARNES emphasized that state land cannot be disposed                                                             
of to anyone for a quick solution.                                                                                              
MS. REDMAN clarified, regarding a previous question from                                                                        
Representative Joule, that the state cannot transfer any public                                                                 
domain land to the university.  This is because the university is                                                               
not public domain land.  Therefore, any lands already legislatively                                                             
designated as park land cannot be transferred to the university.                                                                
CO-CHAIR SANDERS, in the interest of time, asked that testifiers                                                                
limit testimony to three minutes.                                                                                               
Number 1137                                                                                                                     
KEVIN TRITT testified via teleconference from Anchorage, voicing                                                                
opposition to SB 7 as it currently stands.  He has followed the                                                                 
university land grant as legislation, and as a student, he said,                                                                
for a few years.  Some practices implemented by the university as                                                               
land managers, particularly in the Cape Yakataga region, have                                                                   
caused him to oppose this bill.  The university wasn't put into the                                                             
best of situations with Cape Yakataga, as they were given the                                                                   
timber rights only, he noted.  This bill doesn't adequately appease                                                             
his concerns that the university may select further timber lands.                                                               
He agrees with Wendy Redman that it would be better to have a bill                                                              
which specifies the exact lands to be given to the university.                                                                  
MR. TRITT mentioned that a number of Southeast Alaska communities                                                               
have opposed the university's land grant because of its practices                                                               
at Cape Yakataga.  He offered a copy of a documentary film prepared                                                             
by university students from the Environmental Education Club, who                                                               
felt that the university's procedures at Cape Yakataga aren't sound                                                             
ecological management practices and don't represent the type of                                                                 
university that they wish to attend.                                                                                            
Number 1304                                                                                                                     
CO-CHAIR SANDERS accepted Mr. Tritt's offer of the tape, asking him                                                             
to send it through the Anchorage LIO.                                                                                           
Number 1344                                                                                                                     
JOHN EASTON, Bristol Bay Coastal Resource Service Area (Bristol Bay                                                             
CRSA), testified via teleconference from Dillingham, specifying                                                                 
that he was speaking on behalf of their elected board, which                                                                    
represents 11 communities.  They oppose SB 7.  Although strong                                                                  
supporters of the university system, they believe indiscriminately                                                              
giving public land to the university in a period of declining                                                                   
revenues is not the answer.  Rather, a more reliable way to fund                                                                
the university is needed, now and in the future.                                                                                
MR. EASTON informed the committee that the majority of land within                                                              
his coastal district is owned by the state and managed by the DNR.                                                              
Two major adopted land use plans are in effect:  the Bristol Bay                                                                
Area Plan and the Nushagak/Mulchatna Rivers Recreational Management                                                             
Plan.  These plans, representing years of hard work, provide an                                                                 
outline for resource developers on state land and allow the coastal                                                             
district involvement in the public planning process.  However, SB
7 doesn't account for future uses of these lands, and it will                                                                   
eliminate guidelines for how the university manages these lands.                                                                
Mr. Easton cautioned that there are highly valued public resources                                                              
at risk here.  He asked the committee to not support this bill but                                                              
to reevaluate other options to fund the university.                                                                             
Number 1465                                                                                                                     
RUSSELL NELSON, Land Manager, Choggiung Limited (village                                                                        
corporation), testified via teleconference from Dillingham.  He                                                                 
expressed strong concerns about SB 7 and potential land selection                                                               
in the Nushagak/Mulchatna drainage.  Choggiung Limited is a major                                                               
land owner along the Nushagak River; their lands, surrounded by                                                                 
state lands, are managed under the guidelines of the                                                                            
Nushagak/Mulchatna Recreation Management Plan.  This bill creates                                                               
the potential for developing lands in the Nushagak/Mulchatna area,                                                              
removing those lands from the public planning process.                                                                          
CO-CHAIR SANDERS called upon Jane Angvik, Director, Division of                                                                 
Land, DNR, who reserved her comments for a later time.                                                                          
Number 1550                                                                                                                     
TOM ARMOUR, Manager, City and Borough of Yakutat, testified via                                                                 
teleconference, specifying that he was speaking as a professional                                                               
municipal manager, not reiterating the assembly's position.  He                                                                 
indicated the City and Borough of Yakutat supports the concept of                                                               
first rights for, and protection of, a priority for municipal lands                                                             
selections.  This first right of refusal, as it is now, is much                                                                 
appreciated, and he believes this bill version is far better than                                                               
what they've dealt with in the past.                                                                                            
MR. ARMOUR recommended a simple amendment stating that "municipal                                                               
land selections shall receive first priority in selections,                                                                     
adjudications and/or conflicts."  Second, on page 8, lines 27 and                                                               
28, he suggested adding that the university wouldn't be able to                                                                 
proceed with selections under this bill until January 1, 2000.                                                                  
This simple protective device recognizes the proliferation of                                                                   
borough annexations and creations either underway or being                                                                      
considered, in view of other declining state assistance.  Finally,                                                              
Mr. Armour reiterated a suggestion of March 4 that some portion of                                                              
the income stream to the nearest university branch instead go to                                                                
the nearest municipal government.  Noting that many selections take                                                             
place in areas lacking university branches, he said these                                                                       
selections remove local revenue generation possibilities.  He                                                                   
believes that would also benefit newly forming local governments.                                                               
Mr. Armour concluded by commending the current version.                                                                         
Number 1780                                                                                                                     
ROSS COEN came forward on his own behalf, informing members that                                                                
he'd just graduated from the University of Alaska Fairbanks.  He                                                                
spoke in opposition to SB 7; although the university requires                                                                   
adequate funding, he believes this is little more than a                                                                        
short-sighted land giveaway.  He reported that a now-retired                                                                    
philosophy professor at the university, Dr. Walter Benish (ph),                                                                 
still teaches classes on a volunteer basis because otherwise the                                                                
philosophy department would fold.  Revenue from SB 7 won't come in                                                              
for at least ten years, and Dr. Benish cannot teach on a volunteer                                                              
basis until money starts coming in.  This bill doesn't solve the                                                                
university's funding problems, he concluded, imploring the                                                                      
committee to instead fund the university through the regular                                                                    
appropriations process.                                                                                                         
Number 1865                                                                                                                     
CHOW TAYLOR, Alaska Municipal League (AML), came forward,                                                                       
specifying that the AML doesn't oppose the bill but has some                                                                    
concerns.  She expressed appreciation for inclusion of the first                                                                
right of refusal but also voiced concern that it only applies to                                                                
the VUU [vacant, unappropriated, unreserved] lands that                                                                         
municipalities are entitled to select under Title 29.  The AML                                                                  
doesn't believes that other lands which the university would be                                                                 
eligible to take under Title 14 would be subject to objections by                                                               
the municipalities, which aren't able to select those lands.  Many                                                              
municipalities are trying to complete their land conveyances, and                                                               
the state currently owes municipalities more than 600,000 acres.                                                                
MS. TAYLOR restated that under current law, municipalities are only                                                             
entitled to select vacant, unappropriated, unreserved lands.  If                                                                
some of those selections are denied by the state, they would have                                                               
the opportunity to ask the state to reclassify some of those lands,                                                             
so that they might select them at a later date.  If the university,                                                             
in the meantime, can come in and select lands other than VUU lands,                                                             
those would be taken out of consideration for municipalities.                                                                   
MS. TAYLOR informed the committee of some suggestions by the AML:                                                               
1) that the university not be allowed to select lands within                                                                    
municipalities until their land selections are completed, or 2)                                                                 
that the university be limited to selecting VUU lands within                                                                    
municipal boundaries, or 3) that municipalities be allowed to                                                                   
select all classifications of lands within their boundaries, as                                                                 
would be the university.                                                                                                        
CO-CHAIR SANDERS requested that Ms. Taylor provide those                                                                        
suggestions in writing, to which she agreed.                                                                                    
Number 1992                                                                                                                     
MS. KROGSENG emphasized that first, Senator Taylor doesn't believe                                                              
this is an immediate solution for the university's financial woes.                                                              
However, if they don't start working on a long-range fiscal plan                                                                
for the university, they will be in the same situation in five,                                                                 
ten, fifteen or twenty years.  This bill isn't trying to address                                                                
the immediate financial needs of the university.  Second, regarding                                                             
municipal entitlements, it is her understanding that 90-some                                                                    
percent of the lands due to municipalities have already been                                                                    
selected, although they have yet to be conveyed.  Once selected,                                                                
lands are totally off the table.                                                                                                
Number 2065                                                                                                                     
CO-CHAIR SANDERS recessed the House Resources Standing Committee                                                                
meeting at 3:47 p.m., to the call of the chair.  [A new meeting was                                                             
subsequently called for May 7, 1999, at which time CSSB 7(FIN) am                                                               
was heard again.]                                                                                                               

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