HOUSE BILL 191 "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 date." Representative Therriault explained that HB 191 was a housekeeping measure intended to clarify certain Title 38 statutes governing the Department of Natural Resources (DNR) management of State land and resources. HB 191 was intended to bring greater efficiency to the management of state lands without sacrificing public involvement in land use decisions. He concluded that the bill was not intended to be a complete rewrite of Title 38, pointing out that it was supported by 3 the Administration in anticipation of streamlining state government. Representative Therriault MOVED to adopt work draft #9- LS0766\M, Luckhaupt, 4/25/95, as the version before the Committee. There being NO OBJECTION, it was adopted. RON SWANSON, DIRECTOR, DIVISION OF LAND, DEPARTMENT OF NATURAL RESOURCES, provided the Committee members a sectional analysis of the legislation. Representative Brown asked for further clarification of the agricultural disposal section. Mr. Swanson replied that Section #21 addresses preference rights and provides the Department discretion to review the qualifications of those bidding. Section #22 would change the terminology of the approximate vicinity. Representative Therriault noted that it was his intention that when dealing with the Department regarding sale or utilization of State land, the State should receive fair market value of leasing and sales. Representative Brown agreed with Representative Therriault's intention. She asked if the legislation would address the conditions and requirements attached to the agricultural disposal. Mr. Swanson explained that those conditions would be a part of that program. The initial portion of the lease requires a development plan. Representative Brown asked the Department's current plans for the agricultural disposal. Mr. Swanson advised that the Division of Agriculture is currently in charge of those parcels and that a small amount of disposals continue to occur each year. Representative Grussendorf asked if the work draft contained language which could create management problems for the Department. Mr. Swanson advised that the legislation had been worked on for several months and that the Department was satisfied with the result. Co-Chair Hanley asked if the set net lease costs would be substantially increased. Mr. Swanson noted that currently only the administrative costs would be recuperated. The leases range from $150-$300 per year depending on when the lease was issued. Set net sites in the Cook Inlet average selling price would be $24 thousand dollars. He noted that the permit could not be sold without the lease and that amount should include the total combined cost. Co-Chair Hanley disagreed explaining that depending on the site location, a person would pay much more than the amount suggested by Mr. Swanson. Mr. Swanson agreed it would be site specific. 4 Representative Therriault reminded Committee members that those people were using State land for economic benefit. He pointed out that in Statute a cap existed limiting the value to $300 dollars. Co-Chair Hanley pointed out "may" had been used in the legislation. Currently, one does not need a lease. He asked if everyone would be charged for tideland use or would they not apply for a lease. Mr. Swanson replied that there are currently two thousand set net licenses issued. When the Department goes to "fair market value", some of those will not continue their lease. Although, with the increased permit cost, income brought to the State will triple. Representative Brown questioned the impact of Section #29 which deals with post mining location corners. She asked if that section would allow someone to stake a new mining claim on the surface of land which is already owned. Mr. Swanson responded, Section #29 would reserve the mineral estate as required by law to the State which would allow anyone to come in and stake whatever mineral interests exist. If there is any discovery or development, compensation must be made to the surface owner. Representative Brown thought that Section #29 was worded so as to allow a person to stake land prior to getting the surface owners involved. She thought the language would establish a mining conflict between the land owner and the State. Mr. Swanson agreed, although, he noted that once the earth is being turned over, a bond must be posted or compensation must be made to the surface owner. Mr. Swanson explained that Section #29, specifies that a bond must be posted when the earth is turned except when going in and posting the corners. That would be the only case when a bond would not need to be posted. Representative Brown asked how private surface parcels currently are staked. Mr. Swanson noted that on State disposal land, a variety of possibilities exist. If it were a small subdivision, it would be closed to mineral entry prior to the sale of the subdivision. Representative Brown asked how that would be affected by the change offered in Section #31. Mr. Swanson acknowledged that current language would close it to mining but not to mineral location. Those gaps would be closed. Representative Brown inquired in passage of the bill, would any current land parcels be affecting someone's residence. Mr. Swanson commented that any small size surface disposal done by the State would be closed after the mineral entry. 5 A conflict could be created within municipalities because they are left open at their request due to mineral entry. Representative Brown asked if the provision contained in Section #29 would be available also to municipalities. Mr. Swanson noted that they would be because the land originally came from the State who reserves those subsurface rights. The State controls what happens beneath the ground. Representative Brown asked what mechanism would be available to the surface owner to prevent staking of the claims on their land. Mr. Swanson explained that there would be two methods: 1. Request that the State close it to mineral entry; 2. File their own mining claim. Discussion followed between Representative Brown and Mr. Swanson regarding the value of the surface being affected by a mining claim and the surface versus the subsurface bonding. Representative Therriault reiterated that the legislation would allow the State to protect it's subsurface rights. Representative Brown thought that Section #29 could establish a situation of conflict and could cause problems for those who have acquired service. Under current law, if someone wanted to do that, they would need to negotiate in advance the compensation. She understood that in the language of the bill, once the staking rights had occurred, the rights would then exist. Representative Brown noted that the surface owner would be in a weakened position to receive fair compensation for their property. Representative Therriault pointed out that the State would close the rights before the surface title was transferred. (Tape Change HFC 95-103, Side 2). Representative Brown asked if it would be a problem for the Department if Section #29 was changed. Mr. Swanson responded that Section #29 was requested by the Department, although, pointed out that there was currently a Supreme Court decision which negates the premise of Section #29. Representative Therriault provided Committee members with a memorandum response to that Superior Court decision from Kerwin Krause, Mineral Property Manager, Department of Natural Resources. [Attachment #1]. Mr. Swanson explained why Section #29 would be more beneficial to the State stating that if a higher subsurface value exists, then the surface being used for should be discovered. He advised that concern exists by private land owners being able to control what happens to the State's subsurface. 6 Representative Brown agreed with Mr. Swanson, although, noted concern of staking by private parties on private lands without the State's knowledge, involvement or control. Mr. Swanson advised that the State would know, as claims legally have to be posted. He did not think inclusion of Section Mr. Swanson instructed that the provision would not change people posting "nuisance" mining claims. The State will determine if the claim is valid. Representative Brown asked whose responsibility would it be for the private land owner, who had a "nuisance" mining claim on their property, to execute the law and the decision. Mr. Swanson replied that it would be the State's responsibility to respond to a nuisance mining claim regardless of who the property was registered to. Representative Brown questioned how many "nuisance" claims had been eliminated resulting from action of the Department. Mr. Swanson did not know, although pointed out that the number of "nuisance" claims have been decreasing due to filing procedures. Representative Therriault referenced Section #32 of the legislation. Mr. Swanson explained the changes to that section. The intent of that section makes State interest in line with that of the federal government. Currently, an alien from a country with "like privileges" can receive authority to stake claims. That privilege has not been exercised thus the inclusion of that language in Section Representative Brown asked if provisions were contained in the legislation which would affect the oil and gas leasing program. Mr. Swanson stated that Section #30 contained one provision which would affect oil and gas by removing the requirement that the director of that division be bonded. Representative Brown inquired if policy changes existed in the proposed legislation. Mr. Swanson commented that policy changes would be made to land disposals placing them under fair market value consideration rather than "give away". Representative Therriault added that Section #51 addresses railroad and utility realignment. Representative Brown questioned the status of land and resources previously disposed of before 1982. Mr. Swanson referenced two provisions; first, Section #52 which provides a savings cost to the Department for home site permits. The other provision deals with remote parcels and the way they are issued. Representative Brown disclosed that she was the 7 owner of a remote parcel which could be affected by that provision. Discussion followed regarding the restrictions currently in law which reduce fair market value by 50%. REED STOOPS, AJ ASSOCIATES, JUNEAU, testified in opposition to Section #29. He explained that Section #29 had been included in the bill resulting from a recent court case regarding a mining claim located on private land. In that case, the judge ruled that in order to do prospecting and file a mining location on land which has been conveyed to a private individual and not closed to private entry, it would be the obligation of the person filing the claim to go to the land owner for consent or to the Department and file a bond to compensate for damages which might be done. He continued, Section #29 would change that decision by providing the person filing the claim permission to enter on private property without the permission of the land owner and without the permission of DNR to file a claim. He emphasized that it would not make sense for someone to trespass on private property without the permission of the landowner. The current decision has been filed in the Supreme Court, placing the land owner in conflict with the mining claimant. Mr. Stoops noted that the factual information provided in Attachment #1 was incorrect. Representative Therriault advised that there are currently techniques being developed to look into the ground in order to find mineral deposits without drilling or digging. He asked if there was an alternative to by-passing the land owner, and going directly to DNR to receive approval and posting for bond. Mr. Stoops noted that under current law, the miner is allowed to go to the Department and file a bond. Mr. Swanson spoke against posting of bonds for the aeromagnetic investigation activity. Mr. Stoops noted that there exists a question if aeromagnetic investigation would be sufficient to constitute a "discovery". He added, two different circumstances are at stake, private and public lands. Representative Therriault noted that since this section was controversial and that there currently exists a court case, he would not object to removing the Section #29. Representative Brown MOVED to delete Section #29. There being NO OBJECTION, it was adopted. Representative Therriault MOVED to report CS HB 191 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. 8 CS HB 191 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Natural Resources and a zero fiscal note by the Department of Fish and Game dated 4/10/95.