Legislature(1993 - 1994)

01/18/1993 08:00 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
               HOUSE RESOURCES STANDING COMMITTEE                              
                        January 18, 1993                                       
                            8:00 a.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Bill Williams, Chairman                                       
  Representative Bill Hudson, Vice-Chairman                                    
  Representative Pat Carney                                                    
  Representative John Davies                                                   
  Representative Joe Green                                                     
  Representative Jeannette James                                               
  Representative Eldon Mulder                                                  
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Representative Con Bunde                                                     
  Representative David Finkelstein                                             
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  Overview:  Department of Natural Resources                                   
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Glenn A. Olds, Commissioner                                                  
  Department of Natural Resources                                              
  400 Willoughby Avenue                                                        
  Juneau, AK  99801-1724                                                       
  Phone:  907-465-2400                                                         
  POSITION STATEMENT: Provided information on the Department                   
                                                                               
  Anne McCord, Assistant Commissioner                                          
  Department of Natural Resources                                              
  400 Willoughby Avenue                                                        
  Juneau, AK  99801-1724                                                       
  Phone:  907-465-2400                                                         
  POSITION STATEMENT: Provided information regarding the                       
                      mental health lands trust                                
                                                                               
  Raga Elim, Special Assistant                                                 
  Department of Natural Resources                                              
  400 Willoughby Avenue                                                        
  Juneau, AK  99801-1724                                                       
  Phone:  907-465-2400                                                         
  POSITION STATEMENT: Offered his support to the legislature                   
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-2, SIDE A                                                            
  Number 000                                                                   
                                                                               
  The House Resources Committee was called to order by                         
  Chairman Bill Williams at 8:04 a.m.  Members present at the                  
  call to order were Representatives Williams, Hudson, Carney,                 
  Davies, Green, James, and Mulder.                                            
                                                                               
  CHAIRMAN BILL WILLIAMS announced that an overview by the                     
  Department of Natural Resources (DNR), would be the topic                    
  for the meeting and that a folder had been provided by the                   
  DNR for the members.  He said that the DNR had been asked to                 
  present a basic overview, including the structure of the                     
  DNR, functions and duties of the various divisions,                          
  legislative priorities for the session and a brief                           
  description of key issues that the DNR was currently                         
  involved in.  He asked that specific issues be discussed in                  
  later meetings.                                                              
                                                                               
  Number 060                                                                   
                                                                               
  (Chairman Williams noted the arrival of Representative                       
  Mulder at 8:09 a.m.)                                                         
                                                                               
  GLENN OLDS, COMMISSIONER, DNR, pointed out the DNR had given                 
  a pre-session overview in Juneau, Fairbanks and Anchorage                    
  for new legislative members and apologized for any                           
  repetition.  He explained that the DNR accounted for 80% of                  
  the state's revenue and had a rippling effect on everyone.                   
                                                                               
  COMMISSIONER OLDS provided the committee excerpts from                       
  Governor Hickel's book, "Who Owns America?" published in                     
  1971.  He felt it would be good background reading and that                  
  it addressed the critical character of Alaska, which                         
  differed from all other states.                                              
                                                                               
  Number 160                                                                   
                                                                               
  COMMISSIONER OLDS referenced a map titled "Who Owns Alaska"                  
  provided by the DNR which showed the state of Alaska                         
  superimposed on the lower 48 states.  He said that when                      
  Alaska became a state, the federal government wanted to give                 
  the state only 23 million acres of land.  Since all the                      
  other states had developed their resource base through                       
  taxation and land given them by the Homestead Act and other                  
  acts, and because Alaska had no infrastructure over those                    
  years, except for the railroad, which the federal government                 
  built in the interest of providing some infrastructure, the                  
  state needed a larger resource base for its development.                     
  This, he felt formed the thesis for his presentation.                        
  Alaska had been given 106 million acres of upland.                           
                                                                               
  COMMISSIONER OLDS pointed out Alaska had a longer coastline                  
  than the continental United States and that the state owned                  
  62 million acres of tidewater lands.  His prediction was                     
  that this land was the state's most valuable asset.  He                      
  pointed out further that Alaska had been placer mining for                   
  200 million years and had dumped that residue on the                         
  continental shelf.                                                           
                                                                               
  COMMISSIONER OLDS also pointed out that 59 percent of the                    
  land was owned by the Federal government (218 million acres)                 
  and 28 percent (104-106 million acres) was owned by the                      
  state.  In the Native Lands Settlement Act, 12 percent of                    
  the land (44 million acres) was given to Native peoples                      
  principally through the Native corporations.  Slightly less                  
  than one percent of the land was owned privately.                            
                                                                               
  COMMISSIONER OLDS noted the Native lands, although held                      
  privately, were owned collectively.  He observed that the                    
  state of Alaska was an owner-state unlike any other state,                   
  which presented the state with an inordinate responsibility                  
  not carried by government in other states.                                   
                                                                               
  Number 223                                                                   
                                                                               
  COMMISSIONER OLDS pointed out Article VIII of the State                      
  Constitution established the DNR and the mandate for the DNR                 
  because of the nature of the State's ownership pattern.  He                  
  said that Alaska's resources had become the primary basis                    
  for the generating of revenue unlike most states, whose                      
  revenue came from taxation imposed.                                          
                                                                               
  COMMISSIONER OLDS read:  "Section 1. It is the policy of the                 
  State to encourage the settlement of its land and the                        
  development of its resources by making them available for                    
  maximum use consistent with public interest."  He stated                     
  that in debates the terms "multiple use" and "maximum use"                   
  had its roots in Section 1. of the Constitution.                             
                                                                               
  COMMISSIONER OLDS read further:  "Section 2. The legislature                 
  shall provide for the utilization, development, and                          
  conservation of all natural resources belonging to the                       
  state,...for the maximum benefit of its people."  He found                   
  himself defending the idea that the state should develop its                 
  resources.  He said that constitutional intent was very                      
  clear regarding the development of the state's resources and                 
  conservation was a concern in regard to sustainability.                      
  This he hoped would explain the priorities that DNR had                      
  taken.                                                                       
                                                                               
  Number 317                                                                   
                                                                               
  COMMISSIONER OLDS referenced the booklet, "A Strategic Plan"                 
  and the Governor's Priorities for Alaska as outlined on page                 
  1 (A Strategic Plan, October 1992 by the Department of                       
  Natural Resources may be found in the Resources Committee                    
  Room, Capitol #124, and after the adjournment of the second                  
  session of the 18th Alaska State Legislature, in the                         
  Legislative Reference Library.)  He cited the first priority                 
  was to implement the responsibilities of an owner state.                     
                                                                               
  COMMISSIONER OLDS said that DNR had been on an accelerated                   
  course to get the land given to the state by the federal                     
  government and that it was not an easy task.  He pointed out                 
  that although statehood was received in 1959, the state had                  
  not consummated the selection of that land.  He provided a                   
  map titled "Alaska's Land Selection History" which showed                    
  the land owned by the state in 1959, in 1971 (at the time of                 
  the Native Lands Settlement Act), in 1980 (at the time of                    
  the Alaska National Interest Lands Conservation Act, ANILCA)                 
  and then in 1991.                                                            
                                                                               
  COMMISSIONER OLDS explained that when the governor asked him                 
  to move from the Department of Commerce to the DNR, he                       
  suggested it was the obligation of the DNR to fast track the                 
  acquisition of the remaining 23 million acres.  He felt it                   
  was prudent to tie up the land for the state as fast as                      
  possible because Congress could redefine the land from which                 
  the state was selecting the final 23 million acres and in                    
  that redefinition make it useless to the state.                              
                                                                               
  COMMISSIONER OLDS also felt that with all the wilderness                     
  that had already been tied up in Alaska, the state did not                   
  need any more, especially given the difficulty and expense                   
  to get into that wilderness.  He informed the committee that                 
  on December 31, 1992, the DNR had filed the state's final                    
  claim.  He alerted the committee to the possibility of                       
  overlap of choice or double filing because of Native lands                   
  and state lands.                                                             
                                                                               
  COMMISSIONER OLDS stated that if at any time a military base                 
  was dismantled, the state would have some land left.  The                    
  state had the privilege of "over selection" and had "over                    
  selected" and now, the state had taken the first stage of                    
  filing the claim.  He explained the second stage would be to                 
  file for patent, a procedure that was proceeding at barely                   
  one million acres a year.                                                    
                                                                               
  COMMISSIONER OLDS advised of his meetings with the Bureau of                 
  Land Management (BLM) in Washington, D.C., and in Alaska, at                 
  which all agreed that the process should proceed at a faster                 
  pace.  He gave July 1, 1993 as the date for the refinement                   
  of the land priorities within that over-selection process.                   
  He said that the DNR had initiated talks with Alaska Natives                 
  so that the state would recognize the lands Alaska Natives                   
  had filed and not duplicate that land selection.                             
                                                                               
  Number 378                                                                   
                                                                               
  REPRESENTATIVE JOE GREEN asked when the problem of dual                      
  filings would be resolved.                                                   
                                                                               
  COMMISSIONER OLDS responded that the DNR had been                            
  encouraging the BLM and Native leaders to accelerate a                       
  solution to the dual filings.  He pointed out dual filings                   
  made both the state and Native people vulnerable because                     
  Congress could create another wilderness area and pull that                  
  land out of the selection process.  For example, he noted                    
  that west of Prudhoe Bay the state's geological survey had                   
  only mapped 7 percent of the land, but had recognized two                    
  geological formations with the same generic geological                       
  structure as Prudhoe.  It would be possible for the federal                  
  government to create a wilderness in that area removing that                 
  land from the selection process, he added.                                   
                                                                               
  COMMISSIONER OLDS felt the DNR was maximizing information in                 
  determining top priorities for land that were presumed areas                 
  for oil, gas, coal, minerals, timber and so on.  He believed                 
  as soon as the state gravitated toward a piece of land                       
  effort was made by some organizations to tie that land up.                   
  As a result, the state's efforts in this area were done                      
  openly but quietly.  The DNR's technical division and                        
  steering commission were doing their best to identify the                    
  most promising lands for the state to select.                                
                                                                               
  COMMISSIONER OLDS advised the final configuration had not                    
  been made public.  He believed it was in the state's best                    
  interest not to go public until the state filed for patent.                  
  He stated that the mental health lands were overlaid on this                 
  situation as well.                                                           
                                                                               
  Number 433                                                                   
                                                                               
  REPRESENTATIVE ELDON MULDER noted the Native people as well                  
  as the state had a claim if a military base was                              
  decommissioned.  He asked if Fort Richardson was to close                    
  who would have priority over that land.                                      
                                                                               
  COMMISSIONER OLDS thought military installations were in a                   
  different category, and had a different criteria because of                  
  the requirement that a military reservation could be                         
  reactivated, but believed Native people would have priority.                 
  He said there was a list of many priorities with regard to                   
  military land, such as non-profit organizations, local                       
  community organizations, etc., and that it was a complicated                 
  process.                                                                     
                                                                               
  REPRESENTATIVE HUDSON said history showed even if military                   
  installations were closed the land was held for years until                  
  released.                                                                    
                                                                               
  COMMISSIONER OLDS believed the Native Lands Settlement Act                   
  had priority with regard to military land, but that land                     
  would be vulnerable to reactivation.                                         
                                                                               
  Number 471                                                                   
                                                                               
  REPRESENTATIVE JOHN DAVIES asked what percent of land could                  
  the state over-select and what did the July 1, 1993                          
  definement deadline mean.                                                    
                                                                               
  COMMISSIONER OLDS said the state could over-select 25                        
  percent of the land.  He advised July 1, 1993 was a self-                    
  imposed deadline, at which time the DNR would define the                     
  land priorities in preparation for filing patent.  He added                  
  the process was moving slowly, in part because of the cost                   
  of the process, and because the DNR did not have the budget                  
  to do the process comprehensively and swiftly.  He explained                 
  that the fundamental survey for the patent alone was a very                  
  expensive project.                                                           
                                                                               
  Number 480                                                                   
                                                                               
  REPRESENTATIVE DAVIES said the state's geological survey had                 
  mapped approximately seven percent of the state.  He asked                   
  if that same percentage was true of the 23 million acres and                 
  if so, did the State have enough information at this time                    
  for the selection process.                                                   
                                                                               
  COMMISSIONER OLDS agreed the state needed to make its                        
  decisions on the basis of the most comprehensive information                 
  available, but he felt that was a trade-off with the                         
  vulnerability of non-decision.  He said three fundamental                    
  categories of high, medium and low had been mapped in all                    
  the sectors and the mapping division reflected the newest                    
  information available.                                                       
                                                                               
  According to COMMISSIONER OLDS, the governor indicated the                   
  state should not select everything and crowd the time frame                  
  so that the state would not choose land that it knew nothing                 
  about.  The mapping division indicated they could not do                     
  much more than what they were doing at present, and because                  
  of the mental health lands, eight million acres of what the                  
  Commissioner felt to be the state's best lands had already                   
  been tied up.                                                                
                                                                               
  COMMISSIONER OLDS advised that on July 1, 1993, the state                    
  would not make a total appeal for patenting.  He believed                    
  the filing would protect the state against aggressive                        
  Congressional action or at least it was the most secure                      
  action the state could take.                                                 
                                                                               
  Number 525                                                                   
                                                                               
  REPRESENTATIVE GREEN asked if in the filing process the                      
  state and Native people selected the same land, would that                   
  land be granted to the Native people rather than the state.                  
                                                                               
  COMMISSIONER OLDS agreed that this could happen and a                        
  solution was being sought with the Native peoples.                           
                                                                               
  Number 562                                                                   
                                                                               
  COMMISSIONER OLDS stated the DNR's first priority was to                     
  consummate the Statehood compact, and its second priority                    
  was to stimulate resource based economic activity while                      
  conserving the state's wild and scenic values.  He noted the                 
  DNR was not only in the process of mapping and identifying                   
  the resources but also insuring corridors were open for                      
  access to those lands.  He said the state's resources would                  
  be of no value if no one could get to them.                                  
                                                                               
  COMMISSIONER OLDS felt the federal government had locked in                  
  many wilderness areas where roads or access were not                         
  permitted, and that the selection of corridors was a top                     
  priority for the state.  He pointed out SR 2477 (U.S.                        
  Congress) and all other elements were part of that selection                 
  process.  On a "Land Ownership" map he pointed out areas                     
  owned by the state, the Federal government, and the state's                  
  land selection, including the corridors chosen.                              
                                                                               
  COMMISSIONER OLDS noted the pipeline corridor would assure                   
  access to the Brooks Range and other corridors would insure                  
  access to minerals, oil and gas, and timber resources.  He                   
  said he was working with Acting Commissioner Paul Fuhs to                    
  link commerce and economic development and international                     
  trade with our resource development because our resource                     
  development's inner reference was to enhance the quality of                  
  life of our people in land to the municipalities and in the                  
  private sector.                                                              
                                                                               
  COMMISSIONER OLDS pointed out the state's economy was driven                 
  by the way in which it developed its resources, and that                     
  markets for the state's resources were not in Alaska, but in                 
  the Pacific Rim.  If the state was able to export its                        
  products to its best market like every other state in the                    
  union, it would mean about $185 million more a year in oil                   
  revenue alone.  He said the Jones Act was configured when                    
  Alaska was still a colony, which meant the state's                           
  productivity must go through Seattle.                                        
                                                                               
  Number 613                                                                   
                                                                               
  COMMISSIONER OLDS stated the third mission for the DNR was                   
  to simplify Title 38, its regulatory system.  Members were                   
  provided an outline for Title 38, which began in 1957 with                   
  14 pages and had been expanded to 183 pages.  Commissioner                   
  Olds suggested one of the reasons oil companies were taking                  
  their business to other companies was because of existing                    
  regulatory functions.                                                        
                                                                               
  Number 651                                                                   
                                                                               
  COMMISSIONER OLDS stated the DNR's fourth mission was an                     
  educational one.  He felt most Alaskans did not understand                   
  the ownership compact and the nature of our resource                         
  economy.                                                                     
                                                                               
  COMMISSIONER OLDS pointed out on a General Land Status map                   
  that 40 percent of the fresh water was owned by the state.                   
  He believed by the end of the century fresh water would be                   
  as valuable as oil, and stated that the state of Alaska                      
  might be cash poor but its resources accounted for great                     
  value.  He pointed out "Capitalizing our Assets in a                         
  Leverage Position" on the map, which showed fourteen oil and                 
  gas basins, and mineral and timber deposits to which the DNR                 
  had assigned a generic value.  The low-end of that value was                 
  $367 billion with the high-end at $6 trillion and $662                       
  million, he disclosed.                                                       
                                                                               
  TAPE 93-2, SIDE B                                                            
  Number 000                                                                   
                                                                               
  COMMISSIONER OLDS felt Alaska's wealth was in the resources                  
  owned by the State and the value was related to our wisdom                   
  and effectiveness in its proper and appropriate development.                 
  He concluded that the fundamental mission of the DNR was to                  
  manage the resources in both the short and long-term to                      
  maximize the benefit for all the people of the state's                       
  resources with environmental sensitivity and with our                        
  children's heritage in mind.                                                 
                                                                               
  Number 059                                                                   
                                                                               
  COMMISSIONER OLDS stated that in each category of                            
  responsibility the strategic plan had been dollarized and                    
  put in a time frame.  He asked the members to turn to the                    
  back page of the Strategic Plan so that he might introduce                   
  them to the various divisions of DNR.  He felt the Division                  
  of Agriculture was the most clouded in the public mind, and                  
  noted the state at present was farming less than one million                 
  acres.  He added the cost to government was caused in part                   
  by the high cost of living.                                                  
                                                                               
  COMMISSIONER OLDS argued the cost of living could be                         
  decreased by providing modern sustainable agriculture even                   
  if it was only marketed within Alaska.  He had requested                     
  that one million acres be moved into the agricultural                        
  category.  John Cramer, Director of Agriculture, federal and                 
  state soil and conservation units, and the University of                     
  Alaska have been working together to strengthen the                          
  agricultural programs in Alaska, he added.                                   
                                                                               
  Number 100                                                                   
                                                                               
  COMMISSIONER OLDS pointed out Thomas Smith was the State                     
  Geologist and Director of the Geological and Geophysical                     
  Surveys Division, whose job was to map, identify and                         
  generate information essential for the utilization and                       
  development of the resources.  He felt the Division was very                 
  sophisticated and highly competent.  The Division was also                   
  responsible for volcanoes and earthquake studies and, with                   
  the University, provided state-of-the-art integration of                     
  information for the state.  He said the mapping for 7-1/2                    
  million acres had been requested to be completed in seven                    
  years and this year's budget reflected a restoration of $1                   
  million out of the capitol fund for this task.                               
                                                                               
  Number 180                                                                   
                                                                               
  COMMISSIONER OLDS said 29 percent of the United States'                      
  forest was in Alaska and the largest forest, the Tongass,                    
  was in federal hands.  He disclosed the Division faced three                 
  main problems, the first being the infestation of bark                       
  beetle.  The Division had developed a comprehensive task                     
  force to address this problem.  He explained that March 1,                   
  1993 had been set as the final deadline for the selection of                 
  a new director and that Dean Brown was now Acting Director.                  
  Secondly, he said the Division was looking at value added                    
  development.  For instance, instead of shipping round logs                   
  overseas the state would look for alternative development in                 
  that area.                                                                   
                                                                               
  Number 240                                                                   
                                                                               
  COMMISSIONER OLDS stated the Division of Land was the                        
  biggest and was heavily driven by statutory priorities.  He                  
  explained that the DNR was working for the simplification                    
  and clarification of the planning process within the                         
  Division which, at present, had nine levels with four                        
  different statutory requirements at every level.  The DNR                    
  was also looking for ways to move more land into municipal,                  
  school and private areas where it could be developed and                     
  taxed at a local level.  He felt if the state did not have                   
  cash, it could use what it did have to help communities,                     
  especially in rural Alaska, become more economically viable.                 
                                                                               
  Number 268                                                                   
                                                                               
  COMMISSIONER OLDS pointed out that the Division of Mining                    
  represented one of the oldest occupations in Alaska, which                   
  had brought some of our early non-Native immigrants.  He                     
  said mining had not directly created a lot of revenue for                    
  the state, but had generated jobs and revenue to local                       
  businesses.  Fort Knox in Fairbanks would provide 300-500                    
  jobs and its life cycle was predicted to last 15-25 years.                   
  The Red Dog Mine had provided 500 jobs in that northern                      
  region, developed a cash base for some of the economy and                    
  generated the possibility for an infra-structure of roads,                   
  he said.                                                                     
                                                                               
  COMMISSIONER OLDS pointed out further that Greens Creek Mine                 
  on Admiralty Island had provided 15 percent of the jobs in                   
  Juneau and was a major player in local economic development.                 
  He said the DNR was pressing the international trade group                   
  for a new free trade agreement with Mexico and Canada to                     
  break down some barriers between those countries and Alaska.                 
                                                                               
                                                                               
  COMMISSIONER OLDS felt there was a possibility of building a                 
  road out of Juneau through the Taku area and, with the                       
  capacity of hydro power in that area in excess of the                        
  state's need, a trade could be made between Canada and                       
  Alaska for Canada's help in building the road which could                    
  access Canada's mine and allow Juneau to connect with the                    
  Alcan highway.                                                               
                                                                               
  Number 322                                                                   
                                                                               
  COMMISSIONER OLDS said the Division of Oil and Gas produced                  
  the largest revenue for the state.  The activity of this                     
  Division had generated over $1 billion in royalties in the                   
  last two years by past royalty settlements in collaboration                  
  with the Attorney General's Office, he added, and suggested                  
  a portion of that settlement be used for exploration in this                 
  Division.                                                                    
                                                                               
  Number 350                                                                   
                                                                               
  COMMISSIONER OLDS added the Division of Water has had much                   
  interest with regard to exportation of the state's water.                    
  He said the governor had not suggested damning any rivers,                   
  but argued that the state dumped a billion acre feet of                      
  water into the ocean each year or 892 billion gallons of                     
  water a day.  According to the Commissioner, the governor                    
  felt the water could be taken at the mouth of the ocean and                  
  pipelined south.  The state had been given title to all                      
  navigable rivers in Alaska.  By definition, if a river was                   
  navigable, of which the State has 3,000, it also had the                     
  possibility of a mining claim, he stated.                                    
                                                                               
  Number 403                                                                   
                                                                               
  COMMISSIONER OLDS advised the Division of Parks and Outdoor                  
  Recreation was the overseer for the largest park system in                   
  the United States, and noted this Division serviced visitors                 
  for seventy-five cents a visit while the federal parks were                  
  spending $15 per visitor.  He said that an effort was being                  
  made to collaborate with the Department of Transportation to                 
  supply funds for the creation of more pull out parking and                   
  camp facilities.                                                             
                                                                               
  Number 417                                                                   
                                                                               
  COMMISSIONER OLDS provided a list of DNR's staff and phone                   
  numbers for the members' use, and noted all the DNR's                        
  division offices were in Anchorage, except the                               
  Commissioner's office, the financial operation and human                     
  resources which were located in Juneau.                                      
                                                                               
  Number 450                                                                   
                                                                               
  COMMISSIONER OLDS then introduced Anne McCord, Assistant                     
  Commissioner and lawyer, who provided the committee with a                   
  "Mental Health Lands Trust Reconstitution Project Overview"                  
  for their reference.  (This overview may be found in the                     
  Resources Committee Room, Capitol #124, and after the                        
  adjournment of the second session of the 18th Alaska State                   
  Legislature, in the Legislative Reference Library.)                          
                                                                               
  ANNE McCORD, ASSISTANT COMMISSIONER, DNR, had five points                    
  regarding the mental health litigation.  She said she would                  
  talk about the creation and dissolution of the trust, the                    
  lawsuit that was filed by Vern Weiss, Chapter 66, the                        
  settlement agreement, and the mental health project status.                  
                                                                               
  MS. McCORD explained that the Mental Health Lands Trust was                  
  created by the United States Congress in 1956, which granted                 
  to Alaska one million acres of federal land to be held in                    
  public trust for those members of society who had some kind                  
  of mental illness.  In 1959, when Alaska was admitted to the                 
  Union, the state assumed the duties of the trustee as well                   
  as management of the trust.  Subsequent to that time, the                    
  State had neglected to perform many of its duties in regard                  
  to the trust and much of the land had been transferred to                    
  third party private interests when it should have been held                  
  in trust, she said.                                                          
                                                                               
  MS. McCORD further explained that in 1978, the Alaska                        
  legislature recognized this neglect and transferred what was                 
  left of the mental health lands to the general grant lands                   
  and directed that one and one-half percent of revenue from                   
  all state lands be put in a monetary trust for the provision                 
  of mental health services.                                                   
                                                                               
  In 1982, MS. McCORD continued, Vern Weiss filed a lawsuit on                 
  behalf of his minor son, which became a class action suit                    
  asking the court to order the reconstitution of the trust or                 
  some other equitable compensation, as the court deemed                       
  appropriate.  The suit reached the Alaska Supreme Court in                   
  1985, and the court held that the state had breached its                     
  duty as fiduciary of the trust, and that the 1978                            
  redesignation state law was invalid.  The Supreme Court                      
  ruled that the trust must be reconstituted in as much as                     
  possible to its original state given the fact that the state                 
  had to look at comparable factors, and that they be of equal                 
  and fair value to the original trust land.  The parties made                 
  numerous attempts to go about that and failed, she added.                    
                                                                               
  MS. McCORD advised that the legislature, in 1991, fashioned                  
  Chapter 66 which set the parameters to guide the parties as                  
  the Court saw fit in reaching a settlement.  She pointed out                 
  there were a lot of factors incorporated in Chapter 66 such                  
  as the parties obligations to work jointly and the DNR's                     
  responsibilities to assess the land so both plaintiff and                    
  defendants could make the selections.                                        
                                                                               
  Number 520                                                                   
                                                                               
  MS. McCORD explained that Chapter 66 had a deadline of 1994                  
  for this settlement to be accomplished.  She advised a                       
  settlement agreement had been signed by three of the four                    
  plaintiff groups with the defendant, the state of Alaska,                    
  which basically set out more of the process of how the state                 
  and plaintiffs could reach an agreement, how the land was to                 
  be reconstituted, and also incorporated the list of                          
  hypothecated lands.                                                          
                                                                               
  MS. McCORD iterated that the settlement was a joint                          
  interactive project between the defendant and plaintiffs.                    
  In the event the parties were unable to reach agreement, the                 
  Supreme Court had original jurisdiction over the matter and,                 
  if by 1994 no agreement had been made, the Court could make                  
  the selection and foreclose on properties as they saw fit,                   
  she added.                                                                   
                                                                               
  Number 546                                                                   
                                                                               
  MS. McCORD stated the mental health project was set up to                    
  implement Chapter 66 in the settlement agreement.  She                       
  explained that Chapter 66 provided a process whereby the DNR                 
  and the plaintiffs would look at the technical, legal and                    
  administrative work that needed to be accomplished in order                  
  to come to a mutual agreement and understanding of what                      
  lands should be selected to reconstitute the trust.                          
                                                                               
  MS. McCORD explained that the Chief of Land Record                           
  Information, Diane Lyles, was in the process of performing                   
  the base mapping for the state, compiling the data, doing                    
  title work, analyzing land for comparable characteristics                    
  and value, and that this information was being shared with                   
  the plaintiffs and their attorneys to the extent allowed                     
  under federal and state law so that a mutual decision could                  
  be reached regarding the lands to reconstitute the trust.                    
                                                                               
  MS. McCORD stated that some environmental and industrial                     
  groups opposed the settlement.  For example, some oil and                    
  gas groups feared that the settlement could cloud land                       
  titles which would place the state under a different                         
  fiduciary obligation under which they would have to operate.                 
  She stated further that based on the mental health project                   
  status report, the goal was to convey all the conveyable                     
  original trust and much of the conveyable land with                          
  encumbrances by January and June, 1993.                                      
                                                                               
  Number 573                                                                   
                                                                               
  REPRESENTATIVE PAT CARNEY asked the status of the                            
  availability to the public of the hypothecated lands, and                    
  what direction or authority Director Ron Swanson of the                      
  Division of Land had to dispose of those lands.                              
                                                                               
  MS. McCORD answered that the land was available for public                   
  use, but that it could not be tied up.  She said that a one                  
  year permit for grazing, for example, could be allowed, but                  
  long-term leases or obligations would not be imposed on                      
  those properties.                                                            
  COMMISSIONERS OLDS said it was not right to tie up seven                     
  million acres to hypothecate 600,000 acres.  He felt the                     
  DNR's obligation was to insure comparability in the land                     
  pool, but that the pool had been made too large to insure                    
  flexibility of selection and that the state had tied up                      
  every developmental feature.  He advised that he was                         
  pressing for the attitude that one million acres would be a                  
  sufficient pool to guarantee comparability for 600,000                       
  acres.                                                                       
                                                                               
  Number 595                                                                   
                                                                               
  REPRESENTATIVE CARNEY said Director Swanson in Anchorage,                    
  approximately a month and half ago, indicated to him that he                 
  had full authority to dispose of most of the six million                     
  acres.                                                                       
                                                                               
  COMMISSIONER OLDS agreed with that statement.                                
                                                                               
  MS. McCORD referred the committee to the Mental Health Lands                 
  Trust Reconstitution Project Overview, page 8, where it                      
  stated:  "Original Trust land; all departmental actions on                   
  such land must be reviewed by the Plaintiffs and there must                  
  be written concurrence to any proposed action...Hypothecated                 
  land; all departmental actions on such land must be reviewed                 
  by the Plaintiffs, although they have only the right to                      
  review and comment on proposed actions; they do not have                     
  concurrence authority."                                                      
                                                                               
  Number 603                                                                   
                                                                               
  REPRESENTATIVE JEANNETTE JAMES said she understood Chapter                   
  66 was not effective until the lawsuit had been settled and                  
  all time had expired for appeal.  She questioned whether                     
  Chapter 66 could have any binding authority, such as                         
  authority to foreclose on any of the hypothecated lands, and                 
  felt the mental health people would want 6.7 acres to                        
  support 600,000 acres.  She asked if lands could be                          
  identified that were not in the hypothecated lands as a                      
  selection.                                                                   
                                                                               
  Number 613                                                                   
                                                                               
  COMMISSIONER OLDS answered that the lands outside the                        
  hypothecated lands could be nominated, but the final                         
  decision would be made by the DNR with final review by the                   
  Court.  If the Court viewed the decision as being equitable,                 
  it would stand.  He stated it was in the state's best                        
  interest to insure the lands were as valuable as possible                    
  because under the law, the income from any mental health                     
  lands not required for mental health responsibilities would                  
  go into the state's general funds.  He felt the plaintiff                    
  who had not signed the settlement, had not wanted                            
  development of the land and if the state would come to a                     
  settlement those lands would be developed to maximize their                  
  income.                                                                      
                                                                               
  Number 628                                                                   
                                                                               
  REPRESENTATIVE JAMES understood the plaintiff was concerned                  
  that all the Mental Health Trust Authority had to support                    
  mental health issues was land and that would not necessarily                 
  guarantee a cash flow, and wanted to be insured there would                  
  be cash to take care of the mentally ill that the plaintiff                  
  represented.  She felt the state should be working harder                    
  for the settlement, and appealed to the administration and                   
  legislators to realize how important it was for the mental                   
  health issue to be settled and to work for a quick                           
  settlement.                                                                  
                                                                               
  COMMISSIONER OLDS said that was the DNR had the same                         
  concern.                                                                     
                                                                               
  Number 640                                                                   
                                                                               
  REPRESENTATIVE GREEN pointed out that if a settlement was                    
  not achieved by 1994, it would go to court and then on to                    
  appeals, all the while creating havoc for potential                          
  development.  He asked if there was any solution other than                  
  the exchange of lands to achieve a settlement.                               
                                                                               
  Number 648                                                                   
                                                                               
  MS. McCORD preferred this question be referred to the                        
  Department of Law, but based on her knowledge said that                      
  since all parties had signed the settlement agreement except                 
  for one plaintiff, the parties would have to go before the                   
  Alaska Supreme Court and ask that the settlement agreement                   
  be set aside and the Court would have to concur with that                    
  request.  The parties would then have to propose another                     
  settlement agreement to the Court, she concluded.                            
                                                                               
  REPRESENTATIVE GREEN believed that still might be a faster                   
  track than the one on which the State was presently.                         
                                                                               
  MS. McCORD agreed with that statement.                                       
                                                                               
  REPRESENTATIVE JAMES stated the Court would find it very                     
  difficult not to accept the settlement if all plaintiffs                     
  were in agreement.                                                           
                                                                               
  MS. McCORD said that was probably true.                                      
                                                                               
  Number 659                                                                   
                                                                               
  REPRESENTATIVE HUDSON stated a cash settlement from the                      
  general fund could be used to settle the mental health trust                 
  lawsuit, but demand for settlement had reached the billions                  
  of dollars so the solution was not an easy one.  He felt                     
  that all competing interests, with the mental health                         
  recipients considered as a number one priority, should be                    
  represented and somehow a solution found.                                    
                                                                               
  TAPE 93-3, SIDE A                                                            
  Number 000                                                                   
                                                                               
  REPRESENTATIVE JAMES understood that providing the trust was                 
  established and the funds were then available for handling                   
  the mental health issues in the state, money still would                     
  have to be appropriated by the legislature and the                           
  legislature would have the authority to appropriate more                     
  money into or out of the fund for other purposes.  She                       
  believed settlement of the mental health lands lawsuit was                   
  imminent and a push should be made to make it happen.                        
                                                                               
  Number 021                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked if the DNR had considered making                 
  available lands that clearly identified revenue streams.                     
                                                                               
  COMMISSIONER OLDS felt it was in everyone's interest to                      
  include those lands, because anything in excess of the                       
  mental health needs would go into the general fund.  He also                 
  felt that six percent of the state's revenue for mental                      
  health needs was high and if it came to a judgement of                       
  equity before the Supreme Court in terms of dollar volume,                   
  it would be hard to sustain that amount which was three                      
  times the amount used to generate resources to pay for                       
  mental health.                                                               
                                                                               
  Number 072                                                                   
                                                                               
  COMMISSIONER OLDS referred members to the one page outline                   
  of Title 38.                                                                 
                                                                               
  MS. McCORD explained that the original document, enacted in                  
  1957, basically established the laws for the territory of                    
  Alaska in regard to natural resources and land.  She said                    
  the original 14 page Title 38 had grown into an 183 page                     
  document and in addition, there were over 400 pages of                       
  regulations.  She disclosed Commissioner Olds had asked her                  
  to rework Title 38, a final draft of which would be reviewed                 
  by her by Friday (January 22), then given to the governor                    
  and the Department of Law for their review.  She invited the                 
  committee to have a special hearing on the rework of Title                   
  38.                                                                          
                                                                               
  Number 160                                                                   
                                                                               
  COMMISSIONER OLDS introduced Raga Elim, Special Assistant                    
  and Legislative Liaison to the Resource Committee.  He said                  
  the DNR would bring only a few bills to the legislature this                 
  year and the revision of Title 38 would be one of those.                     
                                                                               
  Number 191                                                                   
                                                                               
  REPRESENTATIVE HUDSON pointed out that since he and                          
  Representative Mulder served on the Regulatory Review                        
  Commission, and since he chaired the Labor and Commerce                      
  Economic Development Committee he hoped these committees                     
  would be a part of the process of the revision of Title 38.                  
  He stated the Speaker of the House had appointed a task                      
  force on economic development which would also be involved                   
  in the revision of Title 38.  He then asked for an                           
  appointment with Asst. Commissioner McCord in order to                       
  review the status of the revision and how it might impact                    
  the committees.                                                              
                                                                               
  Number 216                                                                   
                                                                               
  RAGA ELIM, SPECIAL ASSISTANT AND LEGISLATIVE LIAISON said he                 
  looked forward to working with the committee and their                       
  staffs and offered himself as a facilitator between the DNR                  
  and the legislature.  He said further that there would be a                  
  number of bills that would impact the DNR and promised to                    
  work with the legislature to provide information as needed.                  
                                                                               
  COMMISSIONER OLDS requested some lead time in providing                      
  information since most of his staff was in Anchorage.                        
                                                                               
  REPRESENTATIVE GREEN asked if the DNR would continue to                      
  operate as if new legislation had been enacted.  His                         
  experience was that the permitting process, for example, was                 
  guided by what would be enacted as well as what was in                       
  place, so certain things had to be accomplished even if                      
  there was no statutory requirement to that effect.                           
                                                                               
  MS. McCORD said the DNR was looking at that process in its                   
  overview of Title 38 to see what steps could be legally                      
  recommended and sensibly deleted from existing statute to                    
  streamline the process.  The requirements had to be observed                 
  as set up by case law and the Constitution, which gave the                   
  department some latitude, but the department would stay                      
  mindful of the responsibility to the public interest and for                 
  future generations, she added.                                               
                                                                               
  Number 275                                                                   
                                                                               
  COMMISSIONER OLDS said the DNR's goal was to simplify and                    
  clarify the process and legislation must be started early in                 
  the session to be successful.                                                
                                                                               
  Number 320                                                                   
                                                                               
  REPRESENTATIVE JAMES asked if the Title 38 revision would be                 
  seen by this year's session.                                                 
                                                                               
  COMMISSIONER OLDS said it was hoped the revision would be                    
  before the legislature this session.                                         
                                                                               
  Number 355                                                                   
                                                                               
  CHAIRMAN WILLIAMS said the committee would request a                         
  separate hearing for the mental health trust lands.  He                      
  noted Thursday's meeting had been changed to Wednesday,                      
  January 20, for an overview by the Department of                             
  Environmental Conservation, and on Friday, January 22, there                 
  would be an overview of the Department of Fish and Game.                     
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  There being no further business to come before the House                     
  Resources Committee, Chairman Williams adjourned the meeting                 
  at 9:55 a.m.                                                                 

Document Name Date/Time Subjects