Legislature(1999 - 2000)

03/21/2000 08:53 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE                                                                                                         
March 21, 2000                                                                                                                  
8:53 A.M.                                                                                                                       
TAPE HFC 00 - 74, Side 1                                                                                                        
TAPE HFC 00 - 74, Side 2                                                                                                        
Co-Chair Therriault reconvened the House Finance Committee                                                                      
meeting from 3/20/00 at a.m. 8:53 a.m.                                                                                          
Co-Chair Mulder    Representative G. Davis                                                                                      
Co-Chair Therriault    Representative Foster                                                                                    
Vice Chair Bunde   Representative Grussendorf                                                                                   
Representative Austerman   Representative Williams                                                                              
Representative J. Davies                                                                                                        
Representatives Phillips and Moses were absent from the                                                                         
ALSO PRESENT                                                                                                                    
Senator Robin Taylor, Sponsor; Wendy Redman, Vice President,                                                                    
Statewide Programs, University of Alaska; Mike Tibbles,                                                                         
Staff, Representative Therriault.                                                                                               
TESTIFIED VIA TELECONFERENCE                                                                                                    
James Morton, Manager, City and Borough of Yakutat; Robert                                                                      
Loeffler, Director, Division of Mining, Land and Water,                                                                         
Department of Natural Resources; Dick Mylius, Chief,                                                                            
Resource Assessment and Development, Division of Mining,                                                                        
Land and Water, Department of Natural Resources.                                                                                
CSSB 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."                                                                                        
CSSB 7 (FIN) am was heard and HELD in Committee                                                                                 
for further consideration.                                                                                                      
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."                                                                                        
Co-Chair Therriault provided members with proposed committee                                                                    
substitute, work draft 1-LS0072\W2, Laukhaupt 3/2/00 (copy                                                                      
on file).                                                                                                                       
SENATOR ROBIN TAYLOR, SPONSOR testified in support of the                                                                       
legislation. He emphasized that the state of Alaska is going                                                                    
to gain a half million acres of land from the federal                                                                           
government, as a result of the legislation. The only way                                                                        
that the state can gain the additional land is to provide an                                                                    
equal match of state land. He maintained that under the                                                                         
legislation the university would receive an endowment of one                                                                    
million acres of land, which would provide an economic base                                                                     
and greater autonomy and reduce the state's general fund                                                                        
Co-Chair Mulder MOVED to ADOPT work draft 1-LS0072\W2,                                                                          
Laukhaupt 3/2/00. There being NO OBJECTION, it was so                                                                           
MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT discussed                                                                        
changes made by the committee substitute.                                                                                       
A technical change was made on page 3, lines 10 - 11:                                                                           
deleting "except as provided in AS 14.40.368(2)" in order to                                                                    
reflect changes made in that section.                                                                                           
In section 5 on page 4, line 10 "annually" was deleted and                                                                      
"periodically" inserted to conform to the change made on                                                                        
line 14. Under the change the university would not be                                                                           
required to submit an annual land list selection. He                                                                            
observed that there might be years when a list is not                                                                           
Vice Chair Bunde questioned the intent of the change.                                                                           
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY                                                                    
OF ALASKA observed that the bill has a 10-year window. The                                                                      
university intends to make selections every year within the                                                                     
10-year period. However, the legislation would allow them to                                                                    
miss a year. Vice Chair Bunde concluded that, while the                                                                         
selection may not be every year, it would be on a regular                                                                       
Mr. Tibbles observed that "governor" was removed and                                                                            
replaced with "commissioner" on line 14, page 4. This                                                                           
removes a step and recognizes that the university would be                                                                      
working with the Department of Natural Resources.                                                                               
The process of approving the selection list was amended on                                                                      
page 4, lines 23 and 24: legislative action would no longer                                                                     
be required. The selection list would be approved if the                                                                        
legislature does not take action.                                                                                               
Mr. Tibbles referred to page 4, lines 29 and 30. He                                                                             
maintained that no additional language is necessary since                                                                       
land that "has been reserved by law from the public domain"                                                                     
would cover refuges and parks.                                                                                                  
Subsection (2) was rewritten to clarify that there is a                                                                         
three-step process: land can be selected if it is vacant,                                                                       
unappropriated, or unreserved; municipalities are only given                                                                    
120 days to submit their claim; and the university is                                                                           
required to give notice to the municipality if land within                                                                      
the municipality is selected.                                                                                                   
Vice Chair Bunde questioned if municipalities must approve                                                                      
the university's action. Mr. Tibbles explained that the                                                                         
municipality would have to take action to select the land.                                                                      
Co-Chair Therriault observed that the municipality could                                                                        
insert their selection before that of the university, but                                                                       
that they only have 120 days to take action.                                                                                    
Ms. Redman noted that the municipality and university could                                                                     
make an agreement for joint ownership of land within a                                                                          
Mr. Tibbles observed that if the commissioner denies land                                                                       
selected by a municipality, the land would fall back to the                                                                     
university's selection list.                                                                                                    
On page 5, line 21 the "5" was changed to "3". Mr. Tibbles                                                                      
explained that if oil and gas were discovered on land                                                                           
selected by the university within the first "three" years of                                                                    
the selection, the state would keep the resources.                                                                              
Co-Chair Therriault clarified that the university cannot                                                                        
select lands that have an existing oil or gas lease. Ms.                                                                        
Redman noted that if oil or gas is found within the three-                                                                      
year period that the resource belongs to the state of Alaska                                                                    
for perpetuity.                                                                                                                 
The minimal size requirement of the parcels for land                                                                            
selection was changed from 640 acres to 40 acres on page 6,                                                                     
line 2. The change was made in response to concerns that the                                                                    
university may be forced to select land that could not                                                                          
support income.                                                                                                                 
On page 6, line 22 language was added requiring the                                                                             
commissioner of the Department of Natural Resources to                                                                          
provide his determination denying the selection in writing.                                                                     
On page 6, lines 30 and 31 a new subsection (3) was added to                                                                    
give a new municipality the first option to select lands.                                                                       
The new municipality would only have three years to make the                                                                    
selection. The commissioner can deny the selection.                                                                             
In response to a question by Co-Chair Mulder, Ms. Redman                                                                        
noted that there are two newly formed municipalities. She                                                                       
observed that there is currently no time limit on their                                                                         
selection. Co-Chair Mulder questioned if the language is                                                                        
redundant. Ms. Redman clarified that the intent is not that                                                                     
the commissioner would try to anticipate new municipalities.                                                                    
The legislation refers to currently formed new                                                                                  
municipalities. Co-Chair Mulder agreed and noted that it                                                                        
would be problematic to try to anticipate the formation of                                                                      
new municipalities.                                                                                                             
On page 7, line 5 "within 120 days" was inserted to conform                                                                     
to prior sections.                                                                                                              
The period of time in which the commissioner can refuse to                                                                      
convey land without a determination was changed from 3 to 2                                                                     
years on line 12, page 7. Ms. Redman noted that the change                                                                      
would speed up the process of conveyance. Mr. Tibbles                                                                           
observed that the commissioner has broad powers to say no                                                                       
within the two-year period. Ms. Redman stressed that the                                                                        
intent is to go on with other selections if necessary.                                                                          
There is a new subsection (6) on page 6, to allow the                                                                           
commissioner to withdraw land that he believes is not in the                                                                    
best interest of the state to convey outside of state                                                                           
Page 8, line 12 clarifies that the university would bear the                                                                    
cost of its own selection: platting and surveying.                                                                              
Line 22 - 24 and 28 - 30 on page 8 makes changes consistent                                                                     
with the requirement that the legislature has to take action                                                                    
to disallow the selection.                                                                                                      
There was a technical change on page 9, line 1 in subsection                                                                    
(k) to reflect previous changes.                                                                                                
Mr. Tibbles referred to subsection (m) on page 9. He noted                                                                      
that the House Resources version stated that "the                                                                               
commissioner may not convey the land unless the commissioner                                                                    
reserves easements, rights-of-way, and other forms of access                                                                    
. sufficient to ensure all current access and reasonably                                                                        
foreseeable future access, to adjacent public or private                                                                        
land or water." He felt that there was enough protection                                                                        
under AS 14.40.365(h)(1)(e). He stressed that the language                                                                      
creates an unknown situation with "foreseeable future                                                                           
access". The committee substitute was amended to state: "The                                                                    
commissioner shall convey land . with notice to the                                                                             
university if the land under conveyance includes easements,                                                                     
rights-of-way, and other forms of access." Co-Chair                                                                             
Therriault concluded that any easement that was in place at                                                                     
the time of conveyance would continue.                                                                                          
Subsection (n) is new and would allow the university to                                                                         
appeal a decision by the commissioner through the review                                                                        
process that is in place within the Department of Natural                                                                       
On line 20 of page 9: "consistent with the Constitution of                                                                      
the state of Alaska and the Alaska Statehood Act" was added.                                                                    
On page 10, line 19 the Board of Regents was required to                                                                        
adopt a permitting process consistent with the subsection.                                                                      
A few additional financial categories were added to the                                                                         
confidentiality section on page 10, lines 29 and 30. The                                                                        
university is already complying with this requirement. Ms.                                                                      
Redman affirmed that the section is based on current policy.                                                                    
A clarification was made on page 11, subsection (1). A                                                                          
selection cannot be made if there is an existing oil and gas                                                                    
mining lease, but land may be selected with a different type                                                                    
of lease. The provision is divided into leases on the land                                                                      
prior to selection and those after the selection. Subsection                                                                    
(A) states that the university is entitle to receive income                                                                     
obtained from an existing lease after the land is conveyed.                                                                     
Mr. Tibbles explained that if the lease happens after the                                                                       
land is selected, but before it is conveyed, than the money                                                                     
is to be set-aside in a separate account. When the land is                                                                      
conveyed the money would also be conveyed. Co-Chair                                                                             
Therriault noted that it would take an appropriation by the                                                                     
Page 12, subsection (2) deals with the responsibility of the                                                                    
management of the land. The responsibility for the                                                                              
management of the land begins on the day the land is                                                                            
recorded as conveyed to the university.                                                                                         
Section 7 is new and provides for a university demonstration                                                                    
Co-Chair Therriault observed that Representative J. Davies                                                                      
expressed concern regarding the use of "may" instead of                                                                         
"shall" in section 7.                                                                                                           
Mr. Tibbles observed that "in consultation with" should be                                                                      
added after "a management plan is prepared" on page 12, line                                                                    
22. Co-Chair Therriault noted that Representative J. Davies                                                                     
expressed support for the change.                                                                                               
Mr. Tibbles noted that the final change was made on page 14,                                                                    
section 9: "own by the university" was changed to "land                                                                         
conveyed to the University of Alaska under AS 14.40.365."                                                                       
Co-Chair Therriault observed that the setback requirement                                                                       
under the bill is more than is required by the Forest                                                                           
Practices Act. The legislation maintains the setback that is                                                                    
currently used by the university (100-foot). The Forest                                                                         
Practices Acts requires a 60-foot setback, but the                                                                              
university currently uses a 100-foot setback.                                                                                   
Representative Williams expressed concern that the language                                                                     
not adversely impact the Forest Practices Act.                                                                                  
Co-Chair Therriault pointed out that the management of state                                                                    
forestland adheres to a 100-foot buffer zone; the Forest                                                                        
Practices Act applies to private land. Ms. Redman observed                                                                      
that the language conforms to current law for management of                                                                     
state forestland under AS 41.17. The underlying portion                                                                         
clarifies that any state forestlands conveyed to the                                                                            
university would fall under the same provisions.                                                                                
Representative Grussendorf referred to page 4, line 31. He                                                                      
observed that if the commissioner denies the municipal                                                                          
selection that the university would be the next in line for                                                                     
the selection. He questioned under what situation the                                                                           
commissioner of Department of Natural Resources would refuse                                                                    
land selected by a municipality and have it fall back for                                                                       
selection by the university. He questioned the criteria used                                                                    
by the commissioner to deny the selection.                                                                                      
Co-Chair Therriault stressed that the provision only applies                                                                    
to the selection and that the university selection could                                                                        
also be denied. The commissioner is under no obligation to                                                                      
approve either selection.                                                                                                       
Co-Chair Mulder noted that the secretary of the Interior is                                                                     
opposed to any selection of federal land. He expressed                                                                          
concern that the commissioner of the Department of Natural                                                                      
Resources could stop all state land transfers if they                                                                           
opposed the principle of land selection. Ms. Redman agreed                                                                      
that the commissioner is endowed with a great deal of power                                                                     
and expressed the hope that they would not use the power in                                                                     
a frivolous way. The intent is to allow the commissioner to                                                                     
oversee the state's best interest. The commissioner would                                                                       
have to provide a written reason for the denial. She                                                                            
stressed that the commissioner would be subjected to                                                                            
political pressure and felt that there would be a sufficient                                                                    
appeal process.                                                                                                                 
Co-Chair Mulder expressed concern that the mechanism allows                                                                     
an exchange to occur and includes an appeal process.                                                                            
Co-Chair Therriault stressed that it is important to the                                                                        
university and the legislature that the reason for denial be                                                                    
placed in writing.                                                                                                              
Representative Grussendorf pointed out that the university                                                                      
is being allowed to pick small parcels and that they would                                                                      
not be forced to take the bad with the good. He questioned                                                                      
if the confidentiality provisions could allow interest                                                                          
groups to influence the university's decision.                                                                                  
Representative Foster asked what would prevent the                                                                              
university from forming parks with their land. Ms. Redman                                                                       
emphasized that there is a fiduciary responsibility to                                                                          
provide income for the university. She pointed out that the                                                                     
university has a history of commitment to develop the lands                                                                     
in a responsible way and to provide income for the                                                                              
Representative Foster questioned if the university could                                                                        
select land that was already over selected by Native                                                                            
corporations. Ms. Redman observed that the legislation                                                                          
contains provisions to reduce over selections. Page 4, lines                                                                    
17 to 28 limit the university's ability to over select.                                                                         
Co-Chair Mulder discussed over selections and suggested that                                                                    
the legislation would encourage resolution of over                                                                              
selections through competition.                                                                                                 
Co-Chair Therriault observed that the university is able to                                                                     
submit a list on an annual basis of not more than 25 percent                                                                    
of all the land that they are eligible to select. The land                                                                      
would be conveyed gradually over the 10-year period.                                                                            
In response to a question by Representative Grussendorf, Co-                                                                    
Chair Therriault clarified that there is a 3-year provision                                                                     
on oil and gas leases and that the university cannot select                                                                     
land with oil and gas leases.                                                                                                   
Vice Chair Bunde concluded that subsurface rights of private                                                                    
land belong to the state. The university would own                                                                              
subsurface rights with the exception of oil and gas. Co-                                                                        
Chair Therriault agreed and pointed out that the university                                                                     
is a subdivision of the state.                                                                                                  
Representative Foster asked about land with an undeveloped                                                                      
mining claim. Ms. Redman stressed that the university would                                                                     
be disallowed from selecting any land with an existing                                                                          
mining claim.                                                                                                                   
ROBERT LOEFFLER, DIRECTOR, DIVISION OF MINING, LAND AND                                                                         
WATER, DEPARTMENT OF NATURAL RESOURCES testified via                                                                            
teleconference. He commented on changes made by the                                                                             
(TAPE CHANGE, HFC 00 - 74, SIDE 2)                                                                                              
Mr. Loeffler referred to changes made on page 11, line 18.                                                                      
He observed that when land with a lease is conveyed to the                                                                      
university that the income of the land would go to the                                                                          
University of Alaska. He maintained that the provision would                                                                    
allow the university to select lands that the state has                                                                         
developed. He maintained that the provision could have an                                                                       
adverse affect on the landfill program; the university could                                                                    
select lands developed by the state under the landfill                                                                          
Mr. Loeffler discussed changes made on page 6, line 2. The                                                                      
previous version of the legislation allowed selection of 640                                                                    
acres: this was changed to 40-acre parcels in the committee                                                                     
substitute. He observed that a previous version of the bill                                                                     
containing 40-acre selections was changed to 640 acres                                                                          
because of the additional survey costs. He estimated that                                                                       
40-acre parcels would add $600 thousand dollars a year to                                                                       
the cost of the legislation. The university would pay the                                                                       
cost, through the Department of Natural Resources.                                                                              
Mr. Loeffler referred to access provisions on page 9, line                                                                      
8. Previous versions of the bill required the Department of                                                                     
Natural Resources to reserve easement rights; the committee                                                                     
substitute only requires that the department notice that                                                                        
easements exist. He maintained that the bill would give the                                                                     
process to the university. He stressed that this provision                                                                      
would be contrary to the provisions of established law. He                                                                      
pointed out that the department has had an aggressive                                                                           
program, in concert with the Department of Fish and Game, to                                                                    
ensure the protection of public easement on all state lands                                                                     
and waters. He thought that the department was required to                                                                      
reserve public access.                                                                                                          
Mr. Loeffler reviewed changes made in subsection (2) on page                                                                    
4. He observed that the state is concern with the                                                                               
competition between the municipalities and university. He                                                                       
felt land denied to municipalities should not be available                                                                      
to the university. He maintained that the provision                                                                             
anticipates that some items denied to municipalities would                                                                      
be allowed to the university.                                                                                                   
Mr. Loeffler summarized that the Division has concerns                                                                          
regarding: revenue, public access, increase in costs from                                                                       
going from 640 to 40 acres and the fact the bill would allow                                                                    
land to the university that has been denied to                                                                                  
Representative Foster observed that there is a window of                                                                        
opportunity for Native Viet Nam a veteran to select land. He                                                                    
questioned if a veteran could place a claim on land selected                                                                    
by the university.                                                                                                              
DICK MYLIUS, CHIEF, RESOURCE ASSESSMENT AND DEVELOPMENT,                                                                        
DIVISION OF MINING, LAND AND WATER, DEPARTMENT OF NATURAL                                                                       
RESOURCES explained that veterans could not select state                                                                        
selected or state owned land. There is no potential for                                                                         
conflict with the legislation.                                                                                                  
Ms. Redman responded to concerns brought up by the                                                                              
Department of Natural Resources. She emphasized that land                                                                       
might not be selected, within a municipality, unless it is                                                                      
vacant, unappropriated and unreserved.                                                                                          
Mr. Loeffler responded that he interpreted page 4, section 5                                                                    
as having three independent clauses. Land must be vacant,                                                                       
unappropriated and unreserved land; if it is disapproved                                                                        
(and municipal land is often disapproved because it is not                                                                      
vacant, unappropriated and unreserved) than the university                                                                      
gets priority. There is also a definitional clause.  He                                                                         
agreed that if the interpretation is as Ms. Redman stated                                                                       
that it is not an issue. He observed that the language is                                                                       
JAMES MORTON, MANAGER, CITY AND BOROUGH OF YAKUTAT testified                                                                    
via teleconference. He stated that his concerns were                                                                            
addressed by the previous testimony.                                                                                            
Co-Chair Therriault noted that the legislation would be                                                                         
heard again at 1:30 p.m.                                                                                                        
SB 7 was heard and HELD in Committee for further                                                                                
The meeting was adjourned at 9:50 a.m.                                                                                          
House Finance Committee 9 3/21/00                                                                                               

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