Legislature(1997 - 1998)

05/07/1997 03:50 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SENATE RESOURCES COMMITTEE                                  
                          May 7, 1997                                          
                           3:50 P.M.                                           
 MEMBERS PRESENT                                                               
 Senator Rick Halford, Chairman                                                
 Senator Lyda Green, Vice Chairman                                             
 Senator Loren Leman                                                           
 Senator Bert Sharp                                                            
 Senator Robin Taylor                                                          
 Senator Georgianna Lincoln                                                    
 Senator John Torgerson                                                        
  MEMBERS ABSENT                                                               
 All members present                                                           
  COMMITTEE CALENDAR                                                           
 Confirmation hearing:                                                         
  Oil and Gas Conservation Commission                                          
   Robert N. Christenson - appointee                                           
 HOUSE JOINT RESOLUTION NO. 35                                                 
 Encouraging federal legislation to improve federal fiscal terms for           
 a trans-Alaska gas pipeline.                                                  
  - MOVED HJR 35 OUT OF COMMITTEE                                              
 CS FOR HOUSE BILL NO. 141(RES) am                                             
 "An Act relating to a vessel permit moratorium for the Alaska                 
 weathervane scallop fishery; relating to management of the scallop            
 fisheries; and providing for an effective date."                              
  - MOVED SCSCSHB 141(RES) OUT OF COMMITTEE                                    
 CS FOR HOUSE BILL NO. 109(FIN)                                                
 "An Act relating to the management and disposal of state land and             
 resources; relating to certain remote parcel and homestead entry              
 land purchase contracts and patents; and providing for an effective           
  - HEARD AND HELD                                                             
  PREVIOUS SENATE COMMITTEE ACTION                                             
 HJR 35 - No previous action to be considered.                                 
 HB 141 - No previous action to be considered.                                 
 HB 109 - No previous action to be considered.                                 
  WITNESS REGISTER                                                             
 Representative Mark Hodgins                                                   
 State Capitol Bldg.                                                           
 Juneau AK 99801                                                               
  POSITION STATEMENT:   Sponsor of HJR 35.                                     
 Mr. Paul Fuhs                                                                 
 Yukon Pacific Corporation                                                     
 10652 Porter Lane                                                             
 Juneau AK 99801                                                               
  POSITION STATEMENT:   Supported HJR 35.                                      
 Mr. Earl Krygier                                                              
 Extended Jurisdiction Program Manager                                         
 Department of Fish and Game                                                   
 P.O. Box 25526                                                                
 Juneau AK 99802-5526                                                          
  POSITION STATEMENT:   Commented on HB 141.                                   
 Mr. Brett Huber, Staff                                                        
 Senate Resources Committee                                                    
 State Capitol Bldg.                                                           
 Juneau AK 99801                                                               
  POSITION STATEMENT:   Commented on HB 109.                                   
 Ms. Sarah Fisher, Staff                                                       
 Representative Gene Therriault                                                
 State Capitol Bldg.                                                           
 Juneau AK 99801                                                               
  POSITION STATEMENT:   Commented on HB 109.                                   
 Mr. David Rogers                                                              
 Tenass Pass Shellfish Co.                                                     
 211 4th Street, Ste 108                                                       
 Juneau AK 99801                                                               
  POSITION STATEMENT:   Commented on HB 109.                                   
 Ms. Jane Angvik, Director                                                     
 Division of Land                                                              
 Department of Natural Resources                                               
 3601 C Street                                                                 
 Anchorage AK 99503-5947                                                       
  POSITION STATEMENT:   Commented on HB 109.                                   
 Commissioner John Shively                                                     
 Department of Natural Resources                                               
 400 Willoughby Ave.                                                           
 Juneau AK 99801-1724                                                          
  POSITION STATEMENT:   Commented on HB 109.                                   
  ACTION NARRATIVE                                                             
  TAPE 97-32, SIDE A                                                           
 Number 001                                                                    
  CHAIRMAN HALFORD  called the Senate Resources Committee meeting to           
 order at 3:50 p.m. and said the first order of business would be              
 the confirmation hearing for the Oil and Gas Conservation                     
  MR. ROBERT CHRISTENSON,  appointee, reviewed his resume for the              
 committee.  He said he was in the oil and gas business for the last           
 20 years and has been working on projects on the North Slope and              
 Cook Inlet since 1978.  He said he was interested in bringing to              
 this position strength in dealing with oil companies.  He noted               
 that he had allegiance to none of them and had never worked for any           
 of them.  He also didn't know the Governor, even though he                    
 appointed him.  He had three conversations with him in his                    
 lifetime.  He said he was chronologically disadvantaged and was not           
 looking for this as a springboard to the Presidency and thought he            
 could be independent in his judgements regarding issues of the                
 Commission which are to conserve and uphold the State hydrocarbon             
  SENATOR GREEN  said she thought that the Commission was understaffed         
 and thought it was important that the commissioners who are quasi-            
 judicial, have adequate backup.                                               
  SENATOR TORGERSON  moved to send the standard letter to the full             
        HJR 35 ENCOURAGE FED TAX CHANGE FOR GAS PIPELINE                      
  CHAIRMAN HALFORD  announced  HJR 35  to be up for consideration.             
  REPRESENTATIVE MARK HODGINS,  sponsor, said he represented the House         
 Special Committee on Oil and Gas.  He said HJR 35 encourages                  
 federal legislation to improve federal fiscal terms for the trans             
 Alaska gas pipeline project.  The project now is in the range of              
 $12 - $15 million and if the project is to go forward, they need to           
 come up with strategies which lessen those costs.  This resolution            
 asks our delegation to introduce enabling legislation to reduce               
 some of the federal take on this project.  Their portion, based on            
 $3.50 cost of gas, is about $26 billion.  This project is based on            
 Dr. Pedro Van Muir's report and it seems reasonable at this point             
 to continue on with it.                                                       
  CHAIRMAN LEMAN  asked if he could comment on an article on gas to            
 liquids.   REPRESENTATIVE HODGINS  said that if they were to go to            
 the gas to liquids, there appears to be about a 30% - 40% loss of             
 gas.  There are 35 trillion cubic feet of gas on the North Slope              
 and they would be losing a lot of gas.  He didn't think technology            
 was in place to make it economically viable.  Dr. Van Muir said the           
 cost differential would be twice as expensive as BTUs for crude               
 oil.  It needs to be down to 1.25 to make it competitive with                 
 natural gas that they do have.                                                
 REPRESENTATIVE HODGINS said he thought it was important to stay the           
 course with the present project, but if things come up that would             
 enhance another project, they should look at it also.  He noted               
 that the State's take with the same scenario would be about $12 -             
 $13 billion out of a total project revenue of $150 billion.  The              
 federal government gets the biggest stake out of the trans Alaska             
 gas line.                                                                     
  CHAIRMAN LEMAN  asked if the Van Muir report had undergone                   
 sufficient peer review for him to believe it's a credible document.           
  REPRESENTATIVE HODGINS  replied that it gives them a good place to           
 Number 225                                                                    
  SENATOR SHARP  said he was on the Task Force over the last year and          
 this new technology was discussed at length and it was brought up             
 by one of the major oil companies.  Experts told them at that time            
 the technology is in its infancy.   REPRESENTATIVE HODGINS  said that         
 Exxon has a $100 million project at Katar doing this very thing.              
 Part of the technology involved is being in a very temperate area;            
 the North Slope would come under that maybe two days per year.                
 Number 261                                                                    
  MR. PAUL FUHS , Yukon Pacific Corporation, supported HJR 35.  He             
 pointed out that the combined State and federal take of the project           
 is about 40% of the economic rents, a huge burden on any project,             
 which is why it's legitimate to look at some tax breaks.  In some             
 cases, he said, if you reduce the federal taxes, you increase the             
 State take, because the federal taxes are written off before the              
 State calculates its State revenue.                                           
 MR. FUHS said that Idaho National Energy Labs did a big report in             
 conjunction with Lockheed Martin on gas to liquid and they said if            
 you give a $5 - $6 a barrel premium to the middle distillate gas to           
 liquids, there are a lot of paraffins formed which is why you need            
 a temperate climate.  He said the market wants LNG; Japan, Taiwan,            
 and Korea have all based their electrical generation and domestic             
 distribution of home heating and cooking fuels based on LNG.                  
 He said Hitler developed the LNG technology in World War II when he           
 couldn't get fuel and now the price has come down somewhat.  The              
 time to use gas to liquids is when the pipeline gets down to                  
 $300,000 barrels per day when it will not be economic.  A small gas           
 to liquids gas plant at that time (around 2009 - 2016) could extend           
 the life of the pipeline significantly.  The study shows that if              
 you don't do that at the time, you spend a billion barrels of oil             
 in the ground.  It's economic at a field level, but the pipeline is           
 shut down because the flow-through is too small.                              
 Number 314                                                                    
  SENATOR LINCOLN  asked since it's a resolution could it be written           
 in a way that would expand where they are sending it, like the                
 Energy Council.                                                               
  REPRESENTATIVE HODGINS  responded that he could probably get a               
 concurrence from the House if they made a change, but he thought it           
 was important to get it off and it would go to our congressional              
 delegation who would know who else to pass it to.                             
  SENATOR LEMAN  said they could mention something like that in a              
 transmittal letter.                                                           
 SENATOR LEMAN moved to pass HJR 35 from committee with individual             
 recommendations and $0 fiscal note.  There were no objections and             
 it was so ordered.                                                            
           HB 141 SCALLOP FISHERY/ VESSEL MORATORIUM                          
  CHAIRMAN HALFORD  announced  HB 141  to be up for consideration.             
  MS. AMY DOUGHERTY,  Aide to Representative Austerman, sponsor of HB
 141, read the sponsor statement.  She said it implements a                    
 moratorium within the State waters off Alaska.  Without it, it is             
 probable that there would be an increase in effort on the scallop             
 stocks, as well as the associated marine habitat, and create an               
 unmanageable fishery.  She had reviewed the committee's amendments            
 which she found acceptable.                                                   
  SENATOR SHARP  asked if this was establishing sort of a limited              
 entry situation.   CHAIRMAN HALFORD  replied yes and no; the                  
 moratorium is a kind of starting point.  He said two amendments               
 deal with how the system works and who gets in under the                      
 moratorium.  The third one deals with at least instructing the                
 Commission to look at a way to avoid transfer of permits and permit           
  SENATOR LINCOLN  said she would like to hear how the amendments are          
 incorporated into the bill because they make substantial changes.             
  MR. DALE ANDERSON,  Limited Entry Commission, said that the                  
 Commission found that the findings listed in this bill provide                
 grounds to implement a moratorium and they are ready to administer            
 it, if the legislature signs it into law.                                     
  MR. EARL KRYGIER,  Extended Jurisdiction Program Manager, said he            
 basically deals with the federal issues that interact with the                
 State fisheries.  He explained that the scallop fishery started in            
 1967 when a number (17) of boats came in from the east coast and              
 they fished them up and down.  He said that scallop fisheries are             
 very susceptible to overfishing.  We don't have a very large                  
 harvest in Alaska and the average harvest has been around a million           
 pounds of shucked meat.  On the east coast it's about 30 million              
 pounds annually.  We have also had problems with some of the beds             
 being depressed.                                                              
 Back in 1990 when we started to get a new influx of fishermen                 
 interested in the fishery, they became concerned when they saw the            
 same thing starting to occur.  They put together a management plan            
 that was done by the Board of Fisheries that was very restrictive.            
 Instead of having a statewide registration, they broke it up into             
 nine separate areas.  The beds don't move around and you can                  
 separate the main beds into separate management units for a                   
 sustainable harvest, MR. KRYGIER said.  That was fine until a Mr.             
 Big, a vessel from the east coast, decided to go out and fish in              
 federal waters only and didn't sign up for his State registration             
 that year.  They had always been able to manage the fisheries                 
 because any vessel that had signed a State registration has to                
 abide by their regulations when they fish in federal waters.  In              
 federal waters there aren't any regulations.                                  
 Mr. Big was fishing in federal waters without any limits and the              
 State went to the Council and had them shut down.  To do that they            
 had to make a federal fishery management plan which closed all                
 federal waters for 18 months.  So the rest of the vessels who                 
 weren't participating in the unregulated fishery were basically out           
 of business for that time.  The federal government tried to figure            
 out how to return this back to the State for management and put in            
 place an interim plan which adopted all the State regulations.  The           
 State calls all the shots, but it is very cumbersome and they are             
 trying to get a final solution which would turn the fishery back to           
 the State.                                                                    
  CHAIRMAN HALFORD  said he was actually concerned about the bottom            
 and asked how the dredges worked.   MR. KRYGIER  explained that they          
 have a metal ring bag with four inch diameter rings which basically           
 allows it to sort out the undersized scallops and allows them to              
 remain on the beds and grow.  They pull them back and forth across            
 the beds.  Various beds have sandy bottoms and there is very low              
 interaction with anything; almost no bycatch.  They have observers            
 on all of the vessels in federal waters.                                      
  CHAIRMAN HALFORD  asked what kept the bottom fish from going into            
 the same dredge.   MR. KRYGIER  said they trawl at a very slow rate.          
 There are some problems with crab and they manage these areas by              
 the crab bycatch rate, setting very conservative rates annually               
 that they can take, less than half a percent.                                 
  CHAIRMAN HALFORD  asked if the bycatch came up or did it just get            
 killed and stay on the bottom.   MR. KRYGIER  said most of it comes           
 up and there's a very high survival rate on the halibut.  The rates           
 on the other flat fish is quite small, also.                                  
  CHAIRMAN HALFORD  asked if ADF&G was certain that this type of               
 fishery is not doing any damage to other species.   MR. KRYGIER               
  replied that he did research at Oregon State University as an                
 oceanographer and he felt that they had to be very concerned about            
 the impacts on the habitat.  Most all areas are excluded from                 
  SENATOR TAYLOR  asked if he was familiar with a type of trawl                
 developed by a Mr. Kirkness.   MR. KRYGIER  replied that he was.              
  SENATOR TAYLOR  said that it didn't have the bycatch problem, but he         
 can't use it because it doesn't comply with existing regulations.             
  MR. KRYGIER  responded that they had offered the gentleman a number          
 of experimental permits to prove up his gear.   SENATOR TAYLOR  said          
 the problem he had was that the cost of proving up involved the               
 observer and some of the rest of it and he didn't have the funds.             
  CHAIRMAN HALFORD  asked if would be able to do it at all if they             
 passed the moratorium.   SENATOR TAYLOR  replied no.   MR. KRYGIER            
  said they have tried to work with him for a number of years and              
 offered lots of opportunities and have been unsuccessful.                     
 Number 522                                                                    
  SENATOR LINCOLN  asked who pays for the observers on all the                 
 vessels.   MR. KRYGIER  replied that the vessels on the outside coast         
 pay for all the observer coverage which is about $6,000 per month             
 for a full time observer.  In area H, Cook Inlet, the department              
 does not require full-time coverage.  Staff volunteers its own time           
 to go out and act as observers.                                               
  SENATOR LINCOLN  asked if that meant that state workers take time            
 off from their jobs to observe.   MR. KRYGIER  said that he                   
 understands in the Cook Inlet area some of it has been on State               
 time and some of it has been on weekends.  The outside waters are             
 managed by the Board of Fisheries so that the observer coverage is            
 paid by the catcher processors.  They do their work at sea so                 
 observers are needed to get biological data.                                  
 Number 559                                                                    
  SENATOR TAYLOR  asked why the Korean Hair Crab was being deleted.            
  MR. ANDERSON  explained that this bill mirrors the moratorium on             
 Korean Hair Crab that was passed and they are deleting "Korean Hair           
 Crab" and inserting "a fishery" which would include both.  He said            
 that these are the only two fisheries that have vessel permitting.            
  TAPE 97-32, SIDE B                                                           
   MR. KRYGIER  said the department has a fairly good understanding of         
 the commercially healthy beds from data gathered from a number of             
 fisheries over the years.                                                     
  SENATOR LEMAN  asked how large the scallop vessels are.   MR. KRYGIER        
  replied that there are two vessels at 63 feet and two vessels at 79          
 feet and probably none of those vessels would go into the Bering              
 Sea where the beds are way off shore.  It was both a summer and               
 winter fishery, but now they are making the opening on July 1                 
 through October or November.                                                  
  CHAIRMAN HALFORD  asked what the feds do if they don't pass this             
 bill.   MR. KRYGIER  replied that the Council is scheduled to take up         
 scallops again at their September meeting and they will try to set            
 up delegating the authority for the whole fishery back to the                 
 State.  The second thing they had on the agenda was whether or not            
 to move along with the license program.                                       
  CHAIRMAN HALFORD  asked what he thought of the amendments.   MR.             
 KRYGIER  said they would have no problem managing the fishery with            
 those amendments.                                                             
  SENATOR TORGERSON  moved amendment #1.   SENATOR LINCOLN  objected fo        
  MR. BRETT HUBER,  Staff to the Senate Resources Committee, said that         
 amendment #1 allows the vessels that qualify in the Area H waters             
 of Cook Inlet to also be permitted for the statewide waters.  There           
 are seven boats that qualify, two of which are Alaska vessels, five           
 of which are not.  Four vessels qualify in the Cook Inlet area, all           
 of which are Alaskan vessels.  This would allow those 11 boats to             
 fish in the statewide waters.                                                 
  SENATOR LINCOLN  said they have to have at least 1,000 pounds for            
 '95 and '96 and at least four 1,000 pounds between '84 and '96   and          
 asked if they would all meet that standard.   MR. ANDERSON  said yes,         
  SENATOR LINCOLN  withdrew her objection to amendment #1 and it was           
  SENATOR TORGERSON  moved to adopt amendment #2.   MR. HUBER  explaine        
 that the bill currently drafted deals with a vessel permit and the            
 only way you can change a vessel you are using in the permit is if            
 the vessel is damaged or sunk.  This amendment offers the                     
 opportunity for someone to change a vessel to use in the fishery,             
 but it would still preclude the vessel being any longer than the              
 vessel they qualified with or having more horse power.                        
  CHAIRMAN HALFORD  noted there were no objections to amendment # 2            
 and it was adopted.                                                           
  SENATOR TORGERSON  moved to adopt amendment # 3.   SENATOR LINCOLN           
  asked for an explanation.   MR. HUBER  said it asks the commission in        
 cooperation with the department to determine whether there's an               
 alternative form of limited entry that would concentrate on non-              
 transferable permits.   CHAIRMAN HALFORD  noted there were no                 
 objections and amendment # 3 was adopted.                                     
 CHAIRMAN HALFORD noted that amendment # 2 limited the ability of              
 the small boats, where most Alaskans are, to upgrade in size.  They           
 wanted to limit the horse power to impact the size dredge they                
 could handle and asked if that was consistent with the goal of                
 maximizing Alaskan participation.                                             
  MR. ANDERSON  responded that one of the goals of the limited entry           
 commission is to restrict an existing problem so that it doesn't              
 get any worse.   MR. HUBER  pointed out that adoption of the                  
 amendment didn't do that, but the text of the bill already had that           
 limitation of horse power and size.                                           
  MR. KRYGIER  said the moratorium on the east coast had a larger              
 effect on the upgrading of the bigger boats and kept them from                
 having more ability to power their gear.                                      
  CHAIRMAN HALFORD  said he didn't want the small boats to be limited          
 from being safe or economic.  He was concerned with the four small            
 Alaskan boats.   MR. ANDERSON  said he thought they would have to             
 define what a small boat is.  He said this legislation is a                   
 moratorium and authorizes the commission to do the study.  This               
 won't be the format it will be forever.  They need to establish a             
 constant to work with.                                                        
  MR. KRYGIER  said that Mr. Kirkson could petition the Board of               
 Fisheries to look into his development and they would be in a                 
 position to not shut off his future opportunities.                            
  SENATOR TORGERSON  moved to pass SCSCSHB 141(RES) from committee             
 with individual recommendations and the accompanying fiscal note.             
 There were no objections and it was so ordered.                               
         HB 109 MANAGEMENT OF STATE LAND AND RESOURCES                        
  CHAIRMAN HALFORD  announced  HB 109  to be up for consideration.             
  SARAH FISHER,  Staff to Representative Gene Therriault, said HB 109          
 is intended to clarify certain Title 38 statutes.  There are no               
 changes to the shore fisheries leases.  They have also pulled out             
 mining sections which are dealt with in HB 46.                                
  CHAIRMAN HALFORD  said he would like to go through the bill by               
 sections.   MR. DAVID ROGERS,   MS. JANE ANGVIK,  Director, Division o        
 Land, and Commissioner of Natural Resources  JOHN SHIVELY  joined the         
  CHAIRMAN HALFORD  briefly reviewed section 1 - 5.  He said it                
 abolishes the land bank and adds "identified and classified under             
 adopted regional land use plans."                                             
  MS. ANGVIK  explained under laws passed over the last decade                 
 regional land use plans are used to identify lands that would be              
 available and offered for private ownership.  More than 2 million             
 acres have been conveyed and classified through this process.                 
 Therefore, it is their conclusion that the land bank is now                   
 obsolete, because the methodology for disposal of land is through             
 the land use plans.                                                           
  CHAIRMAN HALFORD  asked if regional land use plans are adopted in            
 any place that anyone would want to dispose of land.  He did not              
 want to add another requirement that was another barrier to                   
 disposing of land.   MS. ANGVIK  explained that there are land use            
 plans in a majority of the State, but there is not one in Kodiak or           
 in the southwest portion of the State.  They could do a site                  
 specific disposal in Kodiak without a land use plan.  She said they           
 can lease land and permit land and they can do site specific plans            
 for a wide variety of purposes, but she didn't know for sure if               
 they could sell it.                                                           
 Number 250                                                                    
  SENATOR TORGERSON  asked if the Kenai has a comprehensive land use           
 plan they have been messing with for the last 12 years.   MS. ANGVIK          
  and it would be finished by Christmas.                                       
  SENATOR TORGERSON  asked if there would be a nomination process to           
 amend that.   MS. ANGVIK  replied that all land use plans can be              
 amended and there have been land disposals by the State on the                
 Kenai Peninsula, notwithstanding the fact that the area wide plan             
 has not yet been fully adopted.                                               
  CHAIRMAN HALFORD  noted that section 6 is repealed and reenacted to          
 read the commissioner "may" annually submit an appropriation                  
 request.  The old one said the commissioner "shall."   MS. ANGVIK             
 said the intent of this provision is to have land disposals being             
 regarded as the other resource disposal programs of DNR so it would           
 be included in the annual budgets as opposed to a separate category           
 that is required under existing statute.  It requires land                    
 disposals the same as they do gravel sale disposals or forest or              
 oil and gas disposals.  This would not require a separate request             
 of the legislature for the appropriation to do so.                            
  CHAIRMAN HALFORD  asked if this administration had ever submitted an         
 appropriation request for land disposal to the governor with the              
 budget.   MS. ANGVIK  said she didn't think so.   CHAIRMAN HALFORD            
  asked why they would change a law they ignored anyway.   MS. ANGVIK          
  replied that the intention is two-fold and the first is it's                 
 mandatory that they do this every year and she thinks that it is              
 quite correct that they do not. The second is that should there be            
 a request for a disposal of land that they actually provide the               
 full costs associated with that disposal including the survey and             
 appraisal of the lands.                                                       
  MS. ANGVIK  said that currently the land disposal program consists           
 of disposals through municipal governments under municipal                    
 conveyance programs as well as disposals to individuals under                 
 preference rights.        The last general disposal occurred in the fa        
 of 1996 and they still have some over-the-counter parcels as a                
 result of that offering.                                                      
  CHAIRMAN HALFORD  said his question about section 7 was the deletion         
 on line 12 of the term "staking and lease."  In the old first                 
 remote parcel program, and then homestead program, the methodology            
 that was used in areas that didn't have surveyed subdivision was              
 that the entrant had to stake it, lease it until he paid for the              
 survey, get the survey, and then purchase the land for fair market            
 value.  He thought by deleting "staking and lease" they were                  
 deleting that program essentially.   MS. ANGVIK  replied in 1988 the          
 law was changed eliminating staking as a legal description                    
 requirement because it became obsolete in the year the homesteading           
 law was changed to require the department to do cadastral surveys             
 before offering the parcels (instead of making the homesteader                
 survey it five years later).                                                  
  CHAIRMAN   HALFORD  asked what happened to the follower of the remote        
 parcel program and if there was any program where the entrant                 
 chooses the location, surveys it within the cadastral survey, pays            
 for the survey and the land.                                                  
  SENATOR GREEN  asked if there was anything in section 7 which                
 affects what they did in the agriculture land disposals.   MS.                
 ANGVIK  replied no and said that the land disposals are                       
 significantly smaller than the agriculture parcels.  An aliquot               
 park disposal would really leave the owner unclear on where they              
 were on the ground.                                                           
  CHAIRMAN HALFORD  said that section 8 didn't do any harm.                    
 The committee reviewed section 9 which skipped to section 29 where            
  MS. ANGVIK  explained they are trying to create a new remote                 
 recreational cabin site leasing program and take away the old                 
 public use cabin facilities.   MR. ROGERS  added they are replacing           
 the old remote cabin permit with a remote recreation lease.                   
   Regarding section 10,  MS. ANGVIK  said the assessment program was          
 designed to have municipal governments tell us what they were going           
 to do with the land and how much they had disposed of.  There was             
 a grant program, that no longer exists, that was associated with              
 this to help them get their selections.  Since they didn't have the           
 grant program anymore, they didn't see a reason to have this                  
  CHAIRMAN HALFORD  asked why they even have this section in the law           
 since it was part of a package that was designed to encourage                 
 municipalities to dispose of land in Juneau and in places where               
 they couldn't get land out because the only decent land was already           
 owned by the municipalities and not by the State.  The program was            
 a total failure and never worked.                                             
  TAPE 97-33, SIDE A                                                           
  CHAIRMAN HALFORD  said he was flagging section 12 and said he liked          
 section 13, page 5, line 16 and changing "may" to "should."   MS.             
 ANGVIK  said her understanding is that the entire remote parcel               
 program was repealed in 1983 and this bill is designed to pick up             
 the pieces that were left over.   CHAIRMAN HALFORD  said the remote           
 parcel program was combined with the homestead program in 1983, but           
 there was still a staking and location program unless it was                  
 changed later.   MS. ANGVIK  commented that people are staking the            
 parcels they are purchasing right now.  They have 90 days to stake            
 it from the time they say they are going to buy it.  She thought              
 that was the homesite program.                                                
  MS. FISHER  said she thought the staking provisions were taken out           
 because people were going in and staking over survey lines that               
 were already there and it was, therefore, redundant.  She didn't              
 know if there was a program of random staking.                                
  MS. ANGVIK  said she would get that information for the committee.           
  MR. ROGERS  referenced the sectional analysis that says the remote           
 parcel program was repealed in 1983, effective 1984, but the                  
 program would be alive until it leaves the year 2016 to accommodate           
 the 20-year purchasing contracts.                                             
  CHAIRMAN HALFORD  said he was involved at the time and they moved            
 the remote parcel program into the homesteading program where you             
 could do basically the same things.  The remote parcel program was            
 purchase and the homestead program was sweat equity.  They were               
 both 40 acre parcels in large areas that were laid out by the                 
 State.  The only difference was the method of payment, so the                 
 provisions of the remote parcel program carried forward however               
 long that homestead program stayed.  The homestead program was                
 always confused with homestead method of payment on a whole bunch             
 or other things that DNR was doing.  He didn't know what was left.            
  MS. ANGVIK  said she would get that information for the committee.           
 She explained currently they have land sales in public information            
 offices in Anchorage, Fairbanks, and Juneau.  These are the places            
 where state-wide offerings were staffed the last time they had one            
 and she thought section 15 was a reflection of that fact.                     
  CHAIRMAN HALFORD  noted that section 16 required the bidder to be            
 present and came from the same interests that wanted as much local            
 preference as they could get in the way the sales came out.   MS.             
 ANGVIK  said she understood that requirement to be ruled                      
 unconstitutional in a case called "Chambers" which allowed agents             
 to represent bidders who didn't have to be there.                             
  CHAIRMAN HALFORD  announced an at ease from 5:38 p.m. - 5:40 p.m.            
 Number 282                                                                    
  CHAIRMAN HALFORD  said he agreed with the first deletion in section          
 17 regarding the commissioner consulting with the assessor of a               
 municipality before determining the purchase price because other              
 provisions require an appraisal, and the second deletion he thought           
 referred to the Chambers case again.  He said the legislature had             
 tried to make it very difficult for people who weren't there to get           
 Number 339                                                                    
  MS. ANGVIK  explained regarding section 18 that the State had a hard         
 time determining interest on contracts when allowing people to                
 borrow money.  The methodology that was selected was from a federal           
 land bank farm credit district.  What replaces that is whatever the           
 current prevailing rate is plus four points, because they don't do            
 credit checks.   MR. ROGERS  pointed out that the State could choose          
 to extend contracts up to 20 years, but had discretion in that                
  MS. ANGVIK  explained that section 21 corrects a 1984 error which            
 was restoring the original intent of the veteran's preference                 
 auction law.  It clarifies that although the law does not apply to            
 a lottery or homesite programs, a veteran's preference auction must           
 be held before restrictive residential lots could be sold.  She               
 said the last time they had a sale it was by sealed bid.  You apply           
 the veteran's preference after seeing the price.                              
  CHAIRMAN HALFORD  asked if the veteran's preference was supported by         
 this administration.   MS. ANGVIK  said she would have to find out.           
  CHAIRMAN HALFORD  said a veteran's preference used to be a cash              
 discount rather than a preference among the eventual winners.                 
  MS. ANGVIK  said that section 22 updates the agricultural preference         
 right law and defines the term "adjacent" instead of "approximate             
 vicinity" which was removed from Title 38 in 1984.   CHAIRMAN                 
 HALFORD  said he agreed with that one and that section 23 was a               
 reference to that section.                                                    
  MS. ANGVIK  said section 24 allows upland owners to obtain a                 
 noncompetitive shoreland lease and treats shoreland leases the same           
 as tideland and submerged land.                                               
  CHAIRMAN HALFORD  said that section 25 was fine.                             
  MR. ROGERS  said that section 26 directly affects him as he is part          
 owner of shellfish business on an aquatic farm site.  It allows               
 them to convert their permits to leases.  People in the industry              
 wanted more certainty like leases versus permits, longer terms,               
 etc.   MS. ANGVIK  explained that currently there is a three year             
 permit that can evolve into a lease, but it also changes one of the           
 provisions of law that was struck down by the Supreme Court                   
 recently of setting up planning districts.  They couldn't provide             
 for a permit unless they had assessed the cumulative affects of               
 mariculture activity on the adjacent properties and they had to do            
 all that before they could even issue a permit.  Section 26 takes             
 that requirement away and says they can do leases and they are not            
 required to do that kind of planning, but can do their regular plan           
 that they use in development of the leases.                                   
  MS. FISHER  inserted that changing permits to leases has always been         
 the intent of the bill.                                                       
 Number 432                                                                    
  CHAIRMAN HALFORD  asked if anyone opposed this section.  There were          
 no indications of any.                                                        
  MS. ANGVIK  said that section 27 restores surface lease sites after          
 leases terminate.  This applies mostly to the North Slope oil                 
 development.  It also protects the State against liability of high            
 clean up costs by indicating that the owner of the lease has to be            
 responsible for cleaning up the sites.  It provides that in the               
 case of residential leases, if a lease is terminated, that the                
 individual can get an appraisal of the improvements that have                 
 occurred there.  If they exceed $10,000 the State would return that           
  CHAIRMAN HALFORD  asked if "residential" was taken out in the last           
 version and asked the reason.    MS. FISHER  said that was a                  
 recommendation of the department.   MS. ANGVIK  explained that                
 current law says that the ability to be able to recover investments           
 applies to all uses and this would restrict it to just being able             
 to recover expenses for residential uses.  The intention of the               
 department is that a commercial user was usually able to amortize             
 the cost of their investment over the life of the lease, whereas a            
 homesteader is not intending to amortize the cost of his home over            
 the same period of time.                                                      
  CHAIRMAN HALFORD  announced a recess at 6:00 p.m. and called the             
 meeting back to order at 6:48 p.m.                                            
  CHAIRMAN HALFORD  asked if the reason for this was because the State         
 wanted to change the use and terminate the lease from the State               
 side.   MS. ANGVIK  replied that it would be because the time has run         
 out or the individual has not fulfilled their requirements under              
 the terms of the lease.                                                       
  CHAIRMAN HALFORD  wanted to be sure this wasn't a special provision          
 that dealt with a State's interest in conversion of use in which              
 case he thought the State should pay someone for their investments.           
  MS. ANGVIK  said that Senator Taylor did not agree with this                 
 proposal last year because he thought that any investment should be           
  SENATOR TAYLOR  asked her to explain how this section works.   MS.           
 ANGVIK  explained that if a homesteader had a lease and was unable            
 to prove up or purchase it, the land would return to the State who            
 would then have an appraiser assess the value of the improvements             
 on the land.  If the improvements exceeded $10,000, when the State            
 made that lease available to someone else, any increase over that             
 $10,000 would be returned to the lessee.  She thought the most                
 problematic issues the State has faced in this area is with oil               
  SENATOR GREEN  asked if the time periods were very firm because of           
 a lease ending in January and it's an underground tank.   MS. ANGVIK          
  said if you are a lease holder, you know years in advance when your          
 lease ends, so you would know in advance if it were going to                  
 expire, if you were going to renegotiate it, or if there was a                
 problem with the tank.                                                        
  TAPE 97-33, SIDE B                                                           
  COMMISSIONER SHIVELY  said the way it's written the commissioner can         
 extend the time any amount he wants to.  He thought the reason the            
 tanks were in there is if they stay there any length of time, the             
 State would start to assume the liability for any clean up                    
  MS. FISHER  said that section 28 is a conforming amendment needed            
 due to repeal of the bonding requirement for the director of the              
 Division of Lands.   COMMISSIONER SHIVELY  said he thought all major          
 offices of the State are bonded under a general bond.                         
  MS. ANGVIK  said regarding section 29, there is a remote cabin               
 permit program which exists only in statute because it has never              
 been implemented.  The intent is for the land to be used to build             
 a structure, if you could get a lease which would give you an                 
 interest in holding of the land and is program is designed to do              
 that in remote areas of the State.  The program has never been                
 implemented because a structure is not a temporary use of the land.           
 This allows people to have renewable five-year leases for cabins in           
 remote sites.  At any time during a total of 10 years the lessee              
 could purchase the site after getting it appraised and surveyed,              
 just as in the former open-to-entry and remote parcel programs.               
 Number 552                                                                    
  SENATOR TORGERSON  asked what law the squatters at Caribou Hills             
 were under.   MS. ANGVIK  responded that the Caribou Hills area is in         
 public ownership because there have been no transfers of land to              
 individuals there.  So they are all trespassing.                              
  CHAIRMAN HALFORD  suggested deleting, "if the land is classified for         
 that purpose under the procedures required by AS 38.05.300 and                
 38.05.945."  He said if you have something that's going to work and           
 then you find a land plan against it, at least it doesn't mandate             
 that it be done.  He did not want to build barriers that they                 
 couldn't cross when the department says there isn't money for the             
 land use plan effort.                                                         
  MS. ANGVIK  inserted that she had found the answer to another matter         
 regarding section 3 that they cannot dispose of an interest of land           
 by disposal if it hasn't had an area land use plan that has been              
 approved.  The reason for that is that in 1987 the State of Alaska            
 lost a Supreme Court challenge on the question of whether or not we           
 had to have area land use plans in order to dispose of lands                  
 (Chase).  At that time the land use planning laws were adopted and            
 as a result of those laws and the Supreme Court interpretation,               
 they are required to do area land use planning before they can                
 dispose of lands.  If you don't want to do that, you have to go               
 back to the land use planning section of Title 38 and change that.            
  CHAIRMAN HALFORD  didn't want to prohibit the plans, but wanted to           
 avoid the mandate of the plans because there are areas where there            
 isn't a lot of interest but they could be offered for sale.                   
   MS. ANGVIK  emphasized there was a loophole which allows them to            
 hold an auction without a land use plan.                                      
  SENATOR TORGERSON  said there were provisions in the Kenai plan that         
 weren't liked, so they didn't have a plan.      He favored the                
 nomination process and land banks.   CHAIRMAN HALFORD  noted that             
 this repeals all that.  He reminisced that the land bank actually             
 worked for a while in the '80s.  He thought the positive pressure             
 was relieved and the negative pressure was growing from                       
 municipalities that had to provide roads to places that were                  
 disposed of.                                                                  
  CHAIRMAN HALFORD  said section 29 was workable, but he didn't agree          
 with the classification program.  In this case the State does all             
 that the purchaser pays for: the survey, appraisal and platting.              
 The benefit is that the State choose surveyors that do it all the             
 same so it would be consistent.  The disadvantage is if you say the           
 purchaser has to pay that out of pocket, you find that more people            
 don't do it.  They just get their lease and build their cabin and             
 then lose their interest.  Most rural surveys cost about $5,000, he           
  CHAIRMAN HALFORD  said that he agreed with language allowing the             
 lessee to purchase the remote recreational cabin site by having it            
 appraised in a manner acceptable to the department, but he had a              
 problem with the reimbursement on line 29, page 13.   COMMISSIONER            
 SHIVELY  explained that the difference anticipated under the sale             
 provision (a) is that the department would get to it in their time            
 and then charge people, but in (b) if during that period people               
 wanted to do it themselves and did it in an acceptable manner, they           
 could pay for it directly.   CHAIRMAN HALFORD  said he liked that.            
 Number 400                                                                    
  SENATOR TAYLOR  said he was concerned with fair market value and             
 asked at what time that is established.   CHAIRMAN HALFORD  explained         
 in previous programs it refereed to fair market value at the time             
 of entry.   MS. ANGVIK  said it is common for appraisers to do a              
 comparable of any specified year.   CHAIRMAN HALFORD  asked what the          
 lease fee was. He asked if the lease fee represents a reasonable              
 economic rent for a lease hold use.  He also thought it was                   
 legitimate to appraise at the time of entry.   SENATOR TAYLOR  said           
 he thought it was appropriate that the land be paid for at a fair             
 market value at the time of entry.                                            
  SENATOR GREEN  pointed out that fair market value for the site               
 including work done was inconsistent with "at any time."   CHAIRMAN           
 HALFORD  said that needed to be fixed.                                        
 Number 370                                                                    
  MS. ANGVIK  said that section 30 allows the State to be able to              
 provide non-profit corporations and tax-exempt organizations   State          
 lands for public purposes.  Right now they are restricted to                  
 garbage dumps and cemeteries.  This will allow them to convey lands           
 to for subdivision parcels that were originally set aside as open             
 lands.  She said there are many governmentally unorganized areas of           
 the State where homeowners associations are capable of being                  
 stewards of those resources.                                                  
  CHAIRMAN HALFORD  asked how that worked.   MS. ANGVIK  said that an          
 organization applies to be able to have a piece of land, for                  
 instance a picnic area, and they would be able to convey it to                
 them.   SENATOR TAYLOR  said he would like to see another phrase used         
 to instead of "public facility" that would expand the application.            
  MS. FISHER  said this section says the commissioner needs to ensure          
 by regulation or deed restriction that the conveyances serve a                
 public purpose and are in the public interest.   CHAIRMAN HALFORD             
  said he thought it had to be tax-exempt first in reference to page           
 14, line 27 - that it modifies all the categories and added that              
 that is limiting.                                                             
 Number 298                                                                    
  CHAIRMAN HALFORD  said section 31 was fine.                                  
  MS. ANGVIK  said section 32 was requested by the Department of Law           
 and clarifies that the division may allow livestock grazing,                  
 commercial berry picking or mushroom harvesting, and similar                  
 minimal-value consumptive uses by issuing permits.                            
 She said that section 33 and 34 goes along with the aquatic farming           
 proposed amendments.  It would relieve them of the responsibility             
 of mandatory public hearings on each of those leases and it is the            
 only lease on which a mandatory public hearing is required.                   
  MS. ANGVIK  said section 36 gives them the opportunity to increase           
 an annual rental of $100 for the permit holders of a lottery until            
 they prove up instead of having a one-time charge.                            
  MS. ANGVIK  inserted here that she got more information in reference         
 to earlier questions.  She said they started in the '60s with                 
 simple auctions.  In '68 it was changed to the open entry program             
 where they would go out and stake their parcel, generally between             
 5 and 20 acres, and come back, tell the department and it was                 
 theirs.  If you wanted, you could have it immediately surveyed and            
 after 10 years it was yours.  In 1979 that was changed to the                 
 remote parcel program - the difference being that the acreage went            
 from 5 - 20 to 40 acres.  The process is the same.  In 1983 it was            
 changed to the homestead program which still exists today.  This              
 initially was to go out and stake it personally and it was subject            
 to borough platting authorities.  After the boroughs decided that             
 homesteader staking was incompatible with land use plans associated           
 with boroughs, they required a survey.  For two years the survey              
 was required of the homesteader and then the State started doing it           
 conveying by aliquot parts.  This is when the disposal program was            
 changed from just going out there to the State actually laying out            
 exterior boundaries in subdivisions.                                          
  CHAIRMAN HALFORD  asked if the homestead program still existed               
 outside of municipalities.   MS. ANGVIK  replied yes.  Now people             
 stake, but they stake inside a lot that the State has subdivided.             
 She has been told that staking is still a requirement of law, but             
 it is stupid because they don't need to do it.  In 1988 the                   
 homesteading law was changed saying no survey was required, but the           
 boroughs said if they don't do the survey, the State must.  And               
 that is how they got into disposing of land in those subdivisions.            
  CHAIRMAN HALFORD  asked what the requirements were for homesteads            
 outside of organized municipalities.   MS. ANGVIK  replied that you           
 could stake and if you surveyed it, it was yours in two years for             
 free.  If you built a house within three years and lived on that              
 site for 27 months, it was yours for free.  If you didn't do that,            
 you could build the house and after five years you could buy it at            
 fair market value.  These are the steps today.  The one big change            
 in the bill tonight is they are getting rid of the building the               
 house part of the homestead because it is extraordinarily expensive           
 for them to check if the houses were built.                                   
  SENATOR TAYLOR  asked if there were lands still out there.   MS.             
 ANGVIK  replied yes, but it still needs to be staked and it's within          
 a subdivided parcel that the State subdivided and surveyed.                   
  CHAIRMAN HALFORD  said that was never the intention of the remote            
 parcel program or the homestead program that followed it.  At one             
 point there was a requirement in statute that you couldn't stake              
 within a quarter mile of any other property.  It was designed so              
 that people would not gather in groups and demand services.                   
  MS. ANGVIK  said that the lottery system exists today, as well as an         
 auction and they have small homesites which are five acres.  If you           
 build a house and live in it, you get the land for free or you can            
 simply buy it.                                                                
  MS. ANGVIK  reviewed in 1995 they held a sale of 424 parcels all             
 over the State.  Two hundred and thirty nine were sold.  The rest             
 of them are still being sold over the counter today.  Homestead               
 applications were given to 16,000 people; they received 4,100                 
 applications back and the most popular homesteads were at the end             
 of Petersville Road near Denali and Jack Bay near Valdez.                     
  SENATOR TAYLOR  said that he wanted land to be made available for            
 disposal, and that it be accurately surveyed, and be accessible by            
 other State lands.   COMMISSIONER SHIVELY  said he was to get a               
 recommendation within the next few weeks about the next disposal.             
  CHAIRMAN HALFORD  asked what was generated in the '95 sale.   MS.            
 ANGVIK  said there were two answers.  One is the five percent the             
 State got and the contracts.  However, the State sold most of the             
 contracts in order to generate $25 million to put into the Mental             
 Health settlement.                                                            
  TAPE 97-34, SIDE A                                                           
   MS. ANGVIK  said they have not created a new land offering in this          
 State for many years and this appraisal issue was one of the                  
 reasons.  Every single parcel had to be appraised with the actual             
 cost being $340,000 for three people doing it full time.  They                
 actually brought in $22,000.  So right now it's actually a break              
 even perspective with respect to the actual cash layout it took               
 them to do the sale.  One of their concerns is that land disposals            
 be done right like in the best areas, where there's the highest               
 demand, and figure out what the State should do to prepare for it             
 and decide if they need to subdivide additional land.  All of those           
 things are costly.                                                            
  CHAIRMAN HALFORD  commented that the highest priority people had at          
 their State land disposal in an early analysis was good t.v.                  
  SENATOR TAYLOR  asked what their current inventory was.  COMMISSIONER        
 SHIVELY  replied it was about 5,000 surveyed lots.  A lot of the              
 land that people wanted has been selected by or conveyed to                   
 municipalities.   MS. ANGVIK  said one million of the best acres went         
 to the Mental Health Trust, the next million went to the                      
 University, and the next best land went to the municipalities.                
 Number 134                                                                    
  CHAIRMAN HALFORD  said he didn't agree with section 37 saying that           
 homesite entry permits be offered at lottery.   MS. ANGVIK  responded         
 that lottery procedures was formerly a statutory requirement, but             
 a 1984 amendment left the connection between the lottery and the              
 homesite unclear.  This provision says the department is required             
 to adopt regulations to do this.   CHAIRMAN HALFORD  said the                 
 original reason for this was there were few homesite parcels, which           
 was Oral Freeman's argument, and that's where they started the                
 stuff about the lottery being in the community and you have to be             
 present.  This all came out of southeast Alaska's lack of available           
 land.  He's not sure that offering all the homesite parcels by                
 lottery makes sense.                                                          
  CHAIRMAN HALFORD  asked if those were paid for at fair market value          
 and what were the other variables.   MS. ANGVIK  said in the lottery          
 program you have the appraised value and that's the price you pay.            
 This auction says if there is more than one, everyone needs a                 
 fighting chance.                                                              
  COMMISSIONER SHIVELY  said, in response to a comment from Senator            
 Taylor, that there is a problem in being a public land State in               
 talking about homesites, oil leases, etc..  It's a lot different              
 than an individual owning it.  Some of it is loaded on by ourselves           
 and a good part of it gets put on by the judicial system.                     
  CHAIRMAN HALFORD  said sections 38 - 42 all deal with the homestead          
 program which still exists with staking and location and he didn't            
 think they should do that.  He would rather fix it than abolish it.           
 This turns it into a pre-subdivided program.  All the references              
 take out staking and it was never intend to apply to subdivided               
 parcels.  There is no reason subdivided parcels can't be offered              
 under homestead provisions, but to repeal the other provisions for            
 opening other areas to homestead staking is a mistake.                        
  MS. ANGVIK  reiterated that the big thing in this section is that it         
 removes the requirement to build the house.   CHAIRMAN HALFORD  said          
 that was fine.  She responded that the homestead program is still             
 alive and well; it does repeal all the remnants of the other ones             
 that are no longer in operation.   CHAIRMAN HALFORD  said he knows            
 the homestead program is still operational, but there are no areas            
 open to it.                                                                   
 Number 278                                                                    
  MS. ANGVIK  said it seemed the lynch pin in this is the survey and           
 if there's a way to require people to get the land surveyed, then             
 maybe they can go out there.  She had been told by someone in the             
 Division of Land that what complicated it was in '88 the law was              
 amended to not require a survey.   CHAIRMAN HALFORD  asked how they           
 could buy it without a survey.   MS. ANGVIK  said they would buy              
 aliquot parts.   CHAIRMAN HALFORD  said that was a legal description          
 and it takes a surveyor to find an aliquot part on the ground.                
  MS. FISHER  said that the repealer a lot of people are interested in         
 is 38.09.050 (d) and (e) on page 19, line 29, removing the                    
 restrictions on selling or subdividing land after it has been                 
 conveyed to a homesteader.  Right now there is a 10 year                      
 restriction on being able to subdivide.   CHAIRMAN HALFORD  said the          
 reason for that was to help people get land and not create little             
 communities demanding services and to avoid speculation.  There's             
 also a restriction on alienation.                                             
  MS. ANGVIK  said because of the 10-year prohibition the value of the         
 land is reduced by 50% right now.  If this is repealed, the flip              
 side is a revenue stream to the State.  It increases the value to             
 fair market value.                                                            
  CHAIRMAN HALFORD  said the restrictions applied to only the                  
 homestead and the remote parcel program.   MS. ANGVIK  said the               
 repealer takes care of both of them.                                          
  CHAIRMAN HALFORD  said the remote parcel alienation and subdivision          
 restrictions were part of a compromise that, in his opinion, got              
 more land available because it dealt with the fear that some people           
 were opposed to any disposal in their areas and opposed to creating           
 any new communities.                                                          
 Number 419                                                                    
  MS. ANGVIK  said section 45 authorizes railroad, highway, and                
 utility line rights-of-way within Chugach State Park necessitated             
 by the Seward Highway relocation project at Bird Point between                
 Anchorage and Girdwood.                                                       
  CHAIRMAN HALFORD  said section 46 was fine and asked if anyone               
 objected to changing the time before this takes place from 90 to              
 120 days.  No one objected.                                                   
  MS. ANGVIK  explained that section 47 adds a savings clause                  
 protecting homesite entry permits (and subsequent patents) granted            
 by lottery after July 6, 1984 which was the effective date of an              
 amendment that dropped a reference to the lottery statute, leaving            
 no statutory guidance on how to issue homesite entry permits.                 
  MS. ANGVIK  said section 48 specifies the interest rate of prime             
 plus four for new contracts.   CHAIRMAN HALFORD  said that they               
 entered into a lease agreement that went into a purchase agreement            
 based on a statutory interest rate that was in effect at the time             
 they made entry.  And this is saying the new contract they are                
 going to get is different than the one that started the process               
 when they made their entry.  He thought entry was a commitment to             
 contract even though it wasn't the initial contract.                          
  COMMISSIONER SHIVELY  explained that a statutory rate was based on           
 a floating rate.   MS. FISHER  added that the reason this section was         
 put in was so that people wouldn't come in to renegotiate their               
 contracts to a lower rate which would cost DNR too much.                      
  MS. FISHER  said section 50, the retroactive section, was put in             
 because of navigability claims.   MS. ANGVIK  said that the first             
 part lifts the six-year statute of limitations.  So section 50 says           
 we get to go back to the beginning with respect to the federal                
 government on navigability.                                                   
 Number 500                                                                    
  CHAIRMAN HALFORD  said they would go through section by section for          
 a quick review of the changes.  He said that sections 1 and 2 are             
 fine.  Section 3 is amended to say "must include, but are not                 
 limited to."   MS. ANGVIK  commented that their attorney said if they         
 use those words they are in the middle of the Chase case all over             
 again.  The issue of whether or not you have to use land use plans            
 for disposals was decided by the Supreme Court.   CHAIRMAN HALFORD            
  responded that then you have to change the enabling legislation and          
 asked what that would take.   MS. ANGVIK  replied that would take the         
 planning section which is 38.04.065.   MS. FISHER  suggested saying           
 "disposals may include" or leave the drafter the ability to                   
 determine the best way to deal with it.  Discussion of the Chase              
 case ensued.   COMMISSIONER SHIVELY  said he didn't know why DNR              
 couldn't be exempted from the planning requirement for certain                
  CHAIRMAN HALFORD  said section 4 and 5 were fine.  Section 6 on line         
 30 changed "may" to "shall."                                                  
  TAPE 97-34, SIDE B                                                           
  Section 7 is deleted.   MS. FISHER  asked if the committee wanted all        
 the staking sections removed.   CHAIRMAN HALFORD  indicated yes.   MS.        
 ANGVIK  asked if he wanted to stake subdivided lands.   CHAIRMAN              
 HALFORD  said he wanted that to only apply to subdivided lands and            
 not change anything else.                                                     
  CHAIRMAN HALFORD  said sections 8 and 9 were fine.  Repeal section           
 10, all of 38.04.021, and section 11.  Section 12 was deleted.                
 Section 13 was o.k.                                                           
 Number 498                                                                    
  CHAIRMAN HALFORD  said to delete section 14.  Sections 15, 16, 17,           
 18, and 19 were fine.   SENATOR LEMAN  said he didn't agree with the          
 interest rates in section 20 and asked if they could use prime plus           
 2.   CHAIRMAN HALFORD  said that was too cheap.   SENATOR LEMAN  asked        
 what the market rate was.   COMMISSIONER SHIVELY  responded that it's         
 impossible to finance raw land at a bank.  So he didn't think these           
 interest rates were out of line, at all.  They decided on prime               
 plus 3 percent instead of 4 percent.   MS. ANGVIK  reminded them that         
 there were no credit checks.                                                  
  MS. ANGVIK  said there was no veteran's program today and that is            
 because the way the statute is written there is no way to give                
 preference.  Language in section 21 says if we're going to have a             
 preference for veterans, we would have to hold a sale to which only           
 veterans could come and allows them to do that.  She explained that           
 the reason it does that is that in 1984 the law did not apply to              
 the lottery, homesite or homestead programs.  This allows that to             
 occur at an auction.  There was no objection to section 21.                   
 Sections 22, 23, 24, 25 and 26 were fine.      In section 27  CHAIRMAN        
 HALFORD  said he would move below-ground tanks into the longer                
 category or at least to 60 days because that's existing law.  There           
 was no objection to that.                                                     
  CHAIRMAN HALFORD  said that section 28 was fine.  He suggested               
 deleting, "if the land is classified for that purpose under the               
 procedures required by 38.05.300 and 38.05.945." in section 29.               
  SENATOR TAYLOR  said they should take out "dispersed populations."           
  COMMISSIONER SHIVELY  added that dispersed populations is slightly           
 redundant because they say remote recreational cabin sites, etc.              
  CHAIRMAN HALFORD  said to delete the rest of the sentence after              
 "sites" on page 13, line 26.                                                  
  SENATOR TAYLOR  said that "at time of entry" needs to be added on to         
 "fair market value" on page 13, line 29 and page 14, line 8                   
 (section 29).  There were no objections.                                      
 Sections 30, 31, 32, 33, 34, 35, 36 and 37 were fine.                         
    MS. ANGVIK  said she did not think they wanted to let the staking          
 issue be involved in section 38.  This section says they can get              
 land by lottery.   CHAIRMAN HALFORD  said the guts of this amendment          
 is to delete the old Oral Freeman language that you've got to do it           
 close to home.                                                                
  CHAIRMAN HALFORD  said section 39 was deleted.   MS. ANGVIK      aske        
 they could still charge the fee on page 18, lines 11 and 12.                  
  CHAIRMAN HALFORD  said they would go from $5 to $10, not $20, but            
 they are restoring (4) and (5).                                               
 Number 247                                                                    
  CHAIRMAN HALFORD  said he was inclined to delete section 40 because          
 it is in conflict with the staking.   MS. ANGVIK  said the big thing          
 was the houses on page 19, paragraph (3).  It was decided to delete           
 that paragraph.                                                               
  CHAIRMAN HALFORD  asked if there was any requirement to live on the          
 land.   MS. ANGVIK  replied that you could do option 1 which is live          
 on the land, pay for the survey and platting, and....   CHAIRMAN              
 HALFORD  said he was uncomfortable with that because he thought they          
 would be eliminating the old program.   MR. ROGERS  said this related         
 to the broader question of kind of fixing this program to cover his           
 concerns.   CHAIRMAN HALFORD  said the only thing he agreed to in             
 section 40 is elimination of the habitable dwelling requirement -             
 none of the additions and none of the other deletions because he              
 thought they were in conflict with all the other existing statutes.           
 There were no objections to that.                                             
 Section 41 was fine.   MS. ANGVIK  added that nothing prevents them           
 from residing in a temporary dwelling.   CHAIRMAN HALFORD  emphasized         
 they didn't care what they lived in anymore.                                  
  CHAIRMAN HALFORD  asked what section 42 does.   MS. ANGVIK  answered         
 that it was a new section that affects remote parcel programs.                
 This section would prohibit the department from imposing conditions           
 on new remote parcel purchase contracts.  This is a repealer they             
 were talking about.                                                           
  CHAIRMAN HALFORD  said the 38.09. sections needed to be reviewed             
 because he didn't want the entire homestead program to be repealed.           
  MS. ANGVIK  replied that 38.09.050 were just done - where the people         
 don't have the restriction of not being able to subdivide the land.           
 38.09.050 (d) and (e) say they can subdivide and sell it.                     
 CHAIRMAN HALFORD  noted that they had five repealers, plus the three          
 on mariculture.                                                               
  MR. ROGERS  asked about the other repealers.   MS. FISHER  explained         
 that 38.08.090 is unnecessary because of 43.  It is a disclaimer of           
 intent to provide services.   MR. ROGERS  asked about the 38.04               
 repealers.   MS. FISHER  said those all go with the land disposal             
 bank.   MS. ANGVIK  added that 38.05.057 repeals the down payments at         
 land lotteries.  She didn't know why that was in there.  She said             
 that 38.05.079 eliminated the remote cabin permit program.                    
  CHAIRMAN HALFORD  said that could go because they replaced it.               
 Section 45 was fine.  Section 46 was aquatic farming.  MS. ANGVIK             
  said she would like to add a couple of words to say that there are           
 people who have applied for renewal and have been approved, but               
 they haven't received their permit yet on the day the Supreme Court           
 ruled.  And this saves them.  The other people who had applied for            
 a new one are approved, but on the day the court ruled, they didn't           
 have a piece of paper that said they were.                                    
    CHAIRMAN HALFORD  said section 47 was fine.  Section 48 was changed        
 to prime plus 3 percent.                                                      
  MS. ANGVIK  said that section 49 allows the department to adopt              
 regulations in advance of the bill's effective date, but doesn't              
 take effect until July 1.                                                     
  CHAIRMAN HALFORD  said that section 50 was a 30-year retroactive             
 clause.   SENATOR TAYLOR  said that sets a new record for reach.   MS.        
 ANGVIK  said it was constitutionally allowable.                               
  CHAIRMAN HALFORD  asked if there was a question on the other part of         
 the permitees.   MS. FISHER  said she talked to the legislative               
 drafter, Mr. Luckhaupt, and he still needed to talk to the AG's               
 office because they are trying to give permit holders preference in           
 order to get the lease under the bill, but there's the problem with           
 when you grant a final decision, how do you give them a permit that           
 no longer exists.                                                             
 Number 49                                                                     
  CHAIRMAN HALFORD  asked about the fiscal note.   MS. ANGVIK  said it         
 was a positive $93,000.   CHAIRMAN HALFORD  said there was a change           
 in allowing the increase from $5 to $10, not $20.   MS. ANGVIK  said          
 she didn't think that was calculated in the fiscal note, anyhow.              
  SENATOR LEMAN  moved to adopt a CS incorporating the amendments              
 referenced so far.  There were no objections and it was so ordered.           
  CHAIRMAN HALFORD  adjourned the meeting at 9:15 p.m.                         

Document Name Date/Time Subjects