Legislature(1999 - 2000)

01/25/1999 03:10 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE RESOURCES COMMITTEE                                                                                        
                   January 25, 1999                                                                                             
                      3:10 P.M.                                                                                                 
MEMBERS PRESENT                                                                                                                 
Senator Rick Halford, Chairman                                                                                                  
Senator Robin Taylor, Vice Chairman                                                                                             
Senator Pete Kelly                                                                                                              
Senator Jerry Mackie                                                                                                            
Senator Lyda Green                                                                                                              
Senator Sean Parnell                                                                                                            
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                  
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                              
SENATE BILL NO. 6                                                                                                               
"An Act relating to the disposal of state land."                                                                                
     -MOVED OUT OF COMMITTEE                                                                                                    
SENATE BILL NO. 7                                                                                                               
"An Act relating to the University of Alaska and university land,                                                               
and authorizing the University of Alaska to select additional state                                                             
     -HEARD AND HELD                                                                                                            
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
SB 6 - No previous action to consider.                                                                                          
SB 7 - No previous action to consider.                                                                                          
WITNESS REGISTER                                                                                                                
Mr. Dick Mylius                                                                                                                 
Division of Land                                                                                                                
Department of Natural Resources                                                                                                 
3601 C Street                                                                                                                   
Anchorage, AK 99503-5947                                                                                                        
POSITION STATEMENT: Supported SB 6.                                                                                             
Ms. Marty Rutherford, Deputy Commissioner                                                                                       
Department of Natural Resources                                                                                                 
3601 C Street                                                                                                                   
Anchorage, AK 99503-5921                                                                                                        
POSITION STATEMENT: Opposed SB 7.                                                                                               
Ms. Wendy Redman                                                                                                                
University of Alaska                                                                                                            
3211 Providence Dr.                                                                                                             
Anchorage, AK 99508-4675                                                                                                        
POSITION STATEMENT: Supported SB 7.                                                                                             
Kay Brown                                                                                                                       
Alaska Conservation Voice                                                                                                       
750 W 2nd Ave #109                                                                                                              
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Opposed SB 7.                                                                                               
ACTION NARRATIVE                                                                                                                
TAPE 99-2, SIDE A                                                                                                               
Number 001                                                                                                                      
                 SB 6 - DISPOSALS OF STATE LAND                                                                                 
CHAIRMAN HALFORD called the Senate Resources Committee meeting to                                                               
order at 3:10 p.m. and announced SB 6 to be up for consideration.                                                               
MS. MEL KROGSENG, Staff to Senator Taylor, sponsor, said SB 6 is a                                                              
housekeeping measure that was recommended by the DNR last year.  It                                                             
will provide the tools necessary for the Department to offer 50,000                                                             
acres of land that was previously offered and not sold or has come                                                              
back to the State for various reasons.  It has a zero fiscal note.                                                              
SENATOR LINCOLN explained that rural and bush Alaska has a hard                                                                 
time getting notification of the land disposals.  She asked the                                                                 
sponsor to make sure the notification would truly be statewide.                                                                 
MS. KROGSENG responded that she would talk to the Department                                                                    
specifically on this issue.                                                                                                     
MR. DICK MYLIUS, Department of Natural Resources, supported SB 6                                                                
because it would allow them to get parcels for sale that have been                                                              
returned to them.  In response to Senator Lincoln' concern, he said                                                             
he would try to get notification into newspapers several weeks in                                                               
advance of the offering.                                                                                                        
SENATOR LINCOLN commented that smaller communities don't                                                                        
necessarily get the newspapers or they get them way late and asked                                                              
if they could use other means of communication that the smaller                                                                 
communities already utilize, like internet.                                                                                     
SENATOR TAYLOR moved to pass SB 6 out of committee with individual                                                              
recommendations.  There were no objections and it was so ordered.                                                               
SB 7-INCREASE LAND GRANT TO UNIV. OF ALASKA                                                                                     
CHAIRMAN HALFORD announced SB 7 to be up for consideration.                                                                     
Number 165                                                                                                                      
MS. MEL KROGSENG, staff to Senator Taylor, explained that there are                                                             
three minor changes to this University lands bill that was                                                                      
introduced last year.  It grants 250,000 acres of State land to the                                                             
University and removes the requirement for legislative approval of                                                              
the land selected, removes the reversionary clause that allows the                                                              
DNR to take the land back after a 10-year period if they didn't                                                                 
feel it was being managed right, and removes the immunity clause.                                                               
The exempt lands would be lands subject to a coal lease or where a                                                              
lease application is pending, land reserved by law from the public                                                              
domain, land included in a five-year proposed oil and gas leasing                                                               
program, and leased land where the lease application is pending.                                                                
To encourage local support for the individual campuses, an amount                                                               
not to exceed 20 percent of the income derived from lands conveyed                                                              
would be give to the campuses in the region from which the revenues                                                             
were generated contingent on a similar amount being given to that                                                               
campus by the local municipality.                                                                                               
SENATOR PARNELL asked why the reversionary clause was removed.                                                                  
SENATOR TAYLOR explained that the reversionary clause would cause                                                               
a cumbersome process because they would tentatively select lands                                                                
which would have to come back to the legislature for approval.                                                                  
After the process was completed, there was still the 10-year                                                                    
reversionary clause that would allow the Department to come back in                                                             
and take the lands back again.  He wanted the University to have                                                                
complete discretion on how to use the land as they do now with                                                                  
their lands.                                                                                                                    
Number 249                                                                                                                      
SENATOR PETE KELLY asked if they left the oversight in, would that                                                              
aid the DNR in a best interest finding.                                                                                         
SENATOR TAYLOR said he thought it would, but he didn't think it                                                                 
should have to.  Best interest findings are not required today on                                                               
existing lands.                                                                                                                 
SENATOR LINCOLN said according to the article that was passed out,                                                              
that this legislation was unattainable as well by the Clinton                                                                   
Number 308                                                                                                                      
MS. MARTY RUTHERFORD, Deputy Commissioner, Department of Natural                                                                
Resources, opposed SB 7. She said that a number of similar bills                                                                
had been vetoed in past years.  It would basically be very                                                                      
difficult for DNR to carry out the conveyance because of the                                                                    
complexity of identifying and managing all State lands until the                                                                
conveyance is complete and the impact to the development community                                                              
while the 20-year plus process is occurring and municipalities with                                                             
outstanding entitlements, the unknown impact of future                                                                          
municipalities that might incorporate, and the interplay between                                                                
this entitlement with the new school trust land litigation.  She                                                                
asked them to consider an alternative proposal that would bring new                                                             
revenues to the State, not just redirect existing revenues.                                                                     
MS. RUTHERFORD said they have found there is minimal viably                                                                     
developable lands and the University would add to the existing                                                                  
municipal competition.  Entitlement lands were designated as an                                                                 
incentive for incorporation and as a means for munis to support                                                                 
themselves through revenue legislation.  Furthermore, about one                                                                 
half of Alaska remains in the unorganized borough.  This would make                                                             
it difficult for future borough to receive any developable                                                                      
entitlement lands.  It would also create uncertainties about land                                                               
ownership hampering development.  She noted it would reduce instate                                                             
timber processing because the University would most likely select                                                               
the most productive timber lands reducing the State's timber base                                                               
which is used to calculate the sustained yields and allowable                                                                   
harvest levels.  As a trust, the University manages its lands for                                                               
maximum revenues and, therefore, sells its timber for export.                                                                   
This bill allows the State's oil and gas properties to be selected                                                              
unless they are already leased or proposed to be leased every year                                                              
during the University's 20-year selection period.  This does not                                                                
protect areas of interest under the new oil and gas exploration                                                                 
licensing program and this is just when there is interest in areas                                                              
that have had no previous interest.                                                                                             
SB 7 would essentially eliminate the State's land disposal program                                                              
for the next 20 years as the University would most likely select                                                                
most of the already subdivided State tracts which are most suitable                                                             
for future land disposal areas.                                                                                                 
In the legislative interim new litigation was filed against the                                                                 
State alleging that the State breeched the trust of the School                                                                  
Lands Trust and proposes reconstituting it.  SB 7 compounds the                                                                 
difficulty in resolving the litigation as the University will                                                                   
probably select lands that will be necessary if the State is                                                                    
required to reconstitute the land trust.                                                                                        
MS. RUTHERFORD added that it would be extremely expensive to                                                                    
transfer 250,000 acres costing an estimated $1.5 million for each                                                               
of 10 years. Most State revenues are produced from subsurface                                                                   
resources and the University will select the most productive lands                                                              
it can within the boundaries of SB 7 removing them from management                                                              
in the best interest of all Alaskans and decreasing revenues to the                                                             
general fund.                                                                                                                   
The Administration has historically supported increasing the                                                                    
University's land entitlement from the federal government.  It is                                                               
incumbent to believe the University did not receive a fair and                                                                  
equitable land entitlement from the feds when compared to other                                                                 
institutions.  The limited federal conveyance foreclosed the                                                                    
University's ability to generate revenues.  However, the Governor                                                               
has stated that lands conveyed by the federal government to the                                                                 
State under the Alaska Statehood Act should be managed for the                                                                  
benefit of all Alaskans and not earmarked for single agencies and                                                               
has recommended seeking enactment of legislation which would                                                                    
earmark a portion federal revenues from oil and gas development in                                                              
the National Petroleum Reserve Alaska to fund the corpus of a                                                                   
University endowment.  Interest from this endowment could then be                                                               
used by the University.  She added that she had 12 proposed                                                                     
amendments to submit to the Committee. She commented to Senator                                                                 
Taylor that the bill does not propose a federal match.                                                                          
SENATOR TAYLOR retorted that he thought they should have the lands                                                              
whether the feds came through or not.                                                                                           
Number 443                                                                                                                      
MS. WENDY REDMAN, University of Alaska, said the University was                                                                 
established as a land grant university.  Because they were caught                                                               
in the statehood issue, the lands that would have been appropriated                                                             
to them with the federal legislation were eliminated.  So the                                                                   
University did not get the full land grant rights they are entitled                                                             
to.  Secretary Babbit's position is that the feds don't owe us                                                                  
anything.  The State made a decision going into statehood that they                                                             
would not segment lands, that we would be better served as a state                                                              
if we didn't separate lands for different agencies.                                                                             
She suggesting naming the acres in the bill to define who would                                                                 
oppose the bill.  However, she added that as many say, this bill                                                                
won't really solve the University's problems.  It is very long term                                                             
and is merely another tool to help the University and perhaps the                                                               
Number 499                                                                                                                      
MS. REDMAN explained that Senator Lincoln inserted section                                                                      
14.40.369 into the bill some years ago which requires the                                                                       
University to provide for continued customary and traditional use                                                               
on all its lands, a condition that does not exist for any other                                                                 
University.  As long as that clause remains, our attorneys feel                                                                 
that we need additional tort immunity.  This bill provides a                                                                    
provision, however, for the Commissioner to withhold conveyance of                                                              
land if it is not in the best interests of the State which she                                                                  
thought was a powerful statement.                                                                                               
SENATOR PARNELL asked Ms. Redman for a fiscal note that would                                                                   
project the revenue this will produce.                                                                                          
MS. REDMAN answered that they would not produce any revenue during                                                              
the first five years.                                                                                                           
SENATOR LINCOLN asked her to explain where the $1.6 million for                                                                 
operating the program would come from.                                                                                          
MS. REDMAN explained that there would be no State general funds                                                                 
utilized for the land, but funds would come from management of                                                                  
other lands.                                                                                                                    
SENATOR MACKIE asked where the money would come from and would it                                                               
come from existing programs that would have normally been budgeted.                                                             
MS. REDMAN said it would come from existing and new lands.  Money                                                               
that would go to develop new lands would be coming from current                                                                 
programs.  She explained that funds from the Land Grant Trust are                                                               
not tied to on-going programs because there isn't enough money to                                                               
do that. It wouldn't cut into operating expenses for the individual                                                             
TAPE 99-2, SIDE B                                                                                                               
Number 560                                                                                                                      
MS. KAY BROWN, Alaska Conservation Voice, opposed SB 7 because it                                                               
comes at too high a cost to all Alaskans and SB 7 does not                                                                      
guarantee adequate or reliable funding for the University.  It robs                                                             
Alaskans of more effective opportunities to capitalize on our                                                                   
assets rather than simply liquidating them to finance a specific                                                                
state function.  It is deleterious to local economies.  Because the                                                             
University seeks to maximize revenue, it would rapidly liquidate                                                                
its existing timber assets in the round.  The University has                                                                    
ignored local processing and hiring opportunities in the three past                                                             
timber sales.  Third, because of the University's aggressive                                                                    
development policies, the bill threatens fish and wildlife                                                                      
resources as well as subsistence, recreational, and commercial uses                                                             
that depend on them.  It threatens community water sources, local                                                               
use and planning options.  It would further complicate confusing                                                                
ownership patterns and make sorting out the conflict a costly and                                                               
time consuming process.  Fourth, SB 7 curtails highly valued access                                                             
rights.  She concluded by urging the legislature to support the                                                                 
University through time-tested endowment methods, not land give-                                                                
aways like SB 7.                                                                                                                
SENATOR HALFORD said they would take testimony on SB 7 at another                                                               
time and adjourned the meeting at 4:05 p.m.                                                                                     

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