SB 42-QUITCLAIM LAND TO UNITED STATES  4:15:30 PM CHAIR BIRCH announced the consideration of Senate Bill 42 (SB 42). 4:15:53 PM SENATOR COGHILL, sponsor of SB 42, provided an overview of the bill. He opined that Native allotments have been a significant issue for about 100 years and he considers it unfinished business. He said unfortunately, the federal government has conveyed land to Alaska that had a prior claim on it. The intent of the legislation is to address the prior claim. He said committee members will probably hear from the Department of Natural Resources (DNR) that following the reconveyance requirement exactly is hard. However, the requirement must be addressed and if following the process cannot be done then what is the first next step. He explained that the bill starts with the fact that there was a prior right supported by court cases. He noted that his staff, Rynnieva Moss, will provide committee members with additional details. He said the allotment issue came to him mainly because he started researching the Homestead Act as a means of getting more land into private hands. He continued as follows: Many people got homesteads in Alaska and we tried to say, "We should also do it as a state," they got 160 acres or whatever it was and at the same time we had Native allotments; funny thing about that was Native allotments were based on "already usage" in an area and the Homestead Act was you've got to go "prove up" in that area. All the Homestead Acts got approved and very few of the Native allotments got approved, and it was a BLM issue but then along comes the state. We get statehood, we get selected lands, we selected, they transferred them, and then oops, we've got a Native allotment of a prior right on it. That's kind of where we are at, that doesn't describe all the Native allotments, but this is trying to right that the best we know how, that's the general reason why. 4:18:11 PM RYNNIEVA MOSS, Staff, Senator Coghill, Alaska State Legislature, Juneau, Alaska, provided the sectional analysis for SB 42 as follows: • Section 1:  Powers and duties of the director of the Division of Lands by mandating he or she quitclaim deeds "land or an interest in land to the federal government after a determination that the land or the interest in land was wrongfully or erroneously conveyed by the federal government to the state." Currently that director has permissive authority to do so when land was wrongfully or erroneously conveyed to the state. • Section 2:  Exempts lands quitclaimed under Section 1 from AS 38.05.125, reservation of subsurface resource rights to the State of Alaska. This would allow for mineral rights to titled owners of Native allotments. • Section 3:  Exempts the new provision pertaining to quitclaim deed to the federal government from AS 38.05.125, restriction on sale, lease or other disposals of agricultural land. This eliminates the limitation on use of such land to agricultural use. • Section 4:  AS 38.05.035 makes quitclaim deeds to the federal government when the land was wrongfully or erroneously conveyed to the state a permissive actions. This statute is repealed, and the quitclaim deed becomes mandatory under Section 1. MS. MOSS summarized that Section 1 requires the DNR to give a quitclaim deed to the Bureau of Land Management (BLM) for lands that were selected as Native allotments so that BLM can deed that land to the rightful owner. The reason for the provision in Section 1 is for the DNR to keep track of the fact that the state is losing land selections amounting to 103 million acres; so, the legislation would subtract those entitlements from the 103 million acres. She added that the state has actually over selected by 25 percent and that allows for the changes proposed by the legislation. She detailed that section 2 reserves subsurface rights to the original owner, the Native entitlement. She explained that section 3 makes sure that the land from the quitclaim deed is not used as agricultural land, that it is fee simple land with all rights reserved. She said section 4 repeals the current statute that says that the department "may" and will be changed to "shall." 4:19:41 PM She explained that the federal court decision in Aguilar v. United States basically said that there was already a preexisting title or right to that land when the BLM gave it to the state under state selections. She said BLM should recover and give that land to the rightful owner and if it takes adjudication, BLM should sue the state to get that land back. The federal court decision is very plain. She said the committee will hear from DNR that there are exceptions because some of the allotments are in the Trans Alaska Pipeline System (TAPS) right-of-way. She noted that BLM and DNR have signed a memorandum of understanding (MOU) that would allow for land swaps with the allotment owners upon the approval of the owner. However, in 1971 when the Alaska Native Claims Settlement Act (ANCSA) was passed that repealed the 1906 Native Land Allotment Act there were 10,000 applicants with 16,000 parcels ranging from 40 to 160 acres. Currently, about 300 allotments are still pending. MS. MOSS said DNR currently is transferring six to eight parcels a year and the sponsor feels that the state can do a lot better. 4:21:21 PM SENATOR COGHILL emphasized that the legislation is not to pick on DNR; the intent is to "put the heat" under an issue because the process has taken over 100 years. As a result, progeny from 15 different family groups have a claim on an allotment and the members have a hard time even agreeing among themselves. He said the state should facilitate an immediate allocation for the family groups that can agree. He conceded that there are subsurface rights on some allotments, but the rights would be retained to those who would have it. He noted that there is concern that the allotment involves Indian country. However, the process is really a private land allotment that belongs to the owners. SENATOR KIEHL asked how the subsurface rights piece works in the bill. MS. MOSS explained that when the people claimed the land, they had subsurface rights, whereas the state retains subsurface rights when it owns the land. The bill lays out a process that would allow the state to quitclaim deed the property back to the federal government with subsurface rights. That acreage gets written off the 103 million acres and BLM would title the land to the original owner with all subsurface rights. 4:23:27 PM SENATOR BISHOP asked her to clarify that the state's 103 million acres stays whole and the allotment comes out of the government's acreage. MS. MOSS answered that is correct. SENATOR KAWASAKI asked why the bill is needed. He opined that the allotment should have already been done by DNR. MS. MOSS answered that the law says that the allotment is permissive, not mandatory. The bill says the allotment is mandatory. SENATOR KAWASAKI said the bill instructs DNR to do the allotment, but he was unclear about the directive to the BLM. MS. MOSS explained that the Aguilar court case said, "Not only do you need to give this land back to the original owner, if you can't get the state to do it you should go to court and sue the state; they ruled that they should adjudicate this." 4:24:36 PM CHAIR BIRCH opened invited testimony. 4:24:57 PM DESIREE DUNCAN, Native Lands Manager, Central Council Tlingit and Haida Indian Tribes of Alaska, Juneau, Alaska, testified in support of SB 42. She detailed that Tlingit and Haida provides Native Alaska trust services to 11 communities in Southeast Alaska. They currently have approximately 20 title recovery cases which includes villages that are not served by the Central Council. The Native Alaskan applicants have been waiting for over 50 years to get title to their land and most are deceased, and their heirs are now waiting for what is rightfully theirs. Right away the Homestead Act gave the land to non-Natives. SB 42 is a very important bill that will allow Native allotment applicants to get the land that their ancestors applied for many years ago. 4:27:02 PM SHEILA NEKETA, Staff, Land Management Services, Bristol Bay Native Association, Dillingham, Alaska, testified in support of SB 42. She detailed that the Bristol Bay Native Association is working on 36 pending Native allotments located on state selected land, allotments that were determined valid by the BLM but were erroneously and wrongfully conveyed to the state. She asserted that the state refuses to reconvey the identified lands back to BLM. She noted previous public testimony for similar legislation from Bristol Bay participants in 2014 and asked that the testimonies be included in support of SB 42. She said SB 42 is very important to the people in the Bristol Bay service- provider area for what it means to themselves, their relatives, and their subsistence lifestyle. 4:30:51 PM ROBERT BREAN, Allotment Claimant, Anchorage, Alaska, testified in support of SB 42. He explained that his mother is a recipient of authorization from the federal government for a Native allotment that she applied for in the mid-1960s. He opined that a lot of the land was expedited in the interest of developing the oil fields and getting a pipeline built. He said what the federal government did not do was actively pursue surveying of Native allotment parcels and finalizing the paperwork to transfer Native allotment parcels to individuals. He summarized that SB 42 will provide DNR with the leverage and legality to do the right thing for Native allotments. 4:36:08 PM MITCHELL ALLAN, Allotment Claimant, Fairbanks, Alaska, testified in support of SB 42. He quoted a Native rights booklet that leaned towards a positive action on Native allotments by saying, "There is an immediate need for a fair and just settlement of all claims by Natives and Native groups in Alaska." He added that the booklet also says, "The settlement should be accomplished rapidly with certainty without litigation." He disclosed that he has been dealing with his Native allotment claim since 1971, shortly before the law was repealed. He said SB 42 will resolve his Native allotment issue. SENATOR COGHILL commented that he hopes Mr. Allan ultimately receives his allotment. 4:39:12 PM MURRAY CLAYTON, Allotment Claimant, Fairbanks, Alaska, testified in support of SB 42. He disclosed that BLM has determined that his allotment application is valid, and BLM has asked the state to reconvey his allotment to him. He said after 48 years his hope is that for his allotment to come to a satisfactory conclusion. 4:41:20 PM MARTY PARSONS, Director, Division of Mining, Land and Water, Alaska Department of Natural Resources, Anchorage, Alaska, stated that the division is making a sincere effort to reconvey lands to BLM for the purposes of certificating lands to the noted Native allottees. He said previous testimony has made it clear that reconveyance is important to the Native community of Alaska. The division understands how important reconveyance is, and the division takes the matter extremely seriously. The division has taken some important steps to resolve the conveyance transfers. The division recently entered into a cooperative agreement with BLM to hire a dedicated staff whose sole purpose is to focus on working on reviewing the conveyance requests from BLM to reconvey lands and to help fulfill the state's obligation under the federal program. MR. PARSONS explained that the division is actively reviewing 12 files to see if they can be reconveyed. The division has 70 files where the division is waiting for additional information from BLM before the division can continue its review. The division has already reconveyed 282 parcels to the BLM for certification to the allottees. He said to provide the best opportunity for allottees to receive the land that they have historically used, the division has reopened over 100 cases that were previously closed or denied for reconveyance. Many of the allotment files have been closed because they were for lands that were affected by state pipeline projects or because the lands were located within legislatively designated areas (LDA). Earlier decisions were based on the position that lands inside the LDAs were removed from the public domain and cannot be made subject to the allotment application. Through further and more detailed review of the enabling language, the division found that such a strict interpretation of LDAs may have been an error, so if the division reapplies what is known as the "Relates Back Doctrine" which means if the allottee had claimed the land prior to the LDA being put into place, that provides the division with an opportunity to remove the noted obstacles for reconveyance so that many of the previously denied allotment applications are currently under review for potential reconveyance. Similarly, a better definition of the Alaska Natural Gas Pipeline Project also allowed the division to remove other obstacles for reconveyance. He disclosed that all reconveyances are subject to the public process for the disposal of the state interest as indicated under Article 8, Section 10 of the Alaska Constitution. 4:44:51 PM He said the division has reviewed the current language of SB 42 and has prepared an indeterminate fiscal note. When the division considers whether to approved BLM's request to reconvey parcels, the division does a thorough review to see if there are any third-party interest in the land, if it contains constructed state infrastructure, or if it provides access to mineral or oil and gas deposits. He explained that an outcome of the Supreme Court's 1979 decision in Aguilar v. United States, currently the state can enter into a settlement release agreement with the allottees to make the conveyance subject to these interests. As written, SB 42 would change the law so that the only criteria necessary for mandating that the state must reconvey parcels of land is whether the conveyance to the state was made in error. Parcels reconveyed under such criteria cannot be made subject to roads, pipelines, transmission lines, historic access routes, or recreational facilities constructed by the state, or other easements required by law; if this infrastructure cannot be protected, the state would have to provide a lease or right-of- way from the allottee or the state would have to get the land back from the allottee either by buying it or condemning it through an eminent domain process. In addition, land sold through auction or conveyed to the University of Alaska, Mental Health Trust, or municipalities would need to be reacquired in order to fulfill the request for conveyance. Under the current SB 42, if a parcel was found to have been conveyed in error then not only would the land itself but the subsurface mineral estate would also be reconveyed back to the federal government. If the mineral estate was found to contain "leaseables" or "locatables," things like gold, coal, or oil and gas, the estate would be split between the allottee and the federal government, and the federal government would retain the mineral rights; this would deprive the state with an opportunity for revenues that would otherwise be retained by working with the surface landowner under the current statute. 4:47:13 PM MR. PARSONS explained that in addition to potential fiscal concerns with HB 42 as written, there are concerns that the passage of the bill will not significantly increase the speed of which allottees receive their allotment certifications. BLM is currently processing only five or six quitclaim deeds a year due in large part because all the allotments require to have a field inspection before BLM accepts the quitclaim deed. If the field inspection shows that the parcel is contaminated, then regardless of source, whether it is from the allottee or someone trespassing on the allotment, BLM will reject the quitclaim deed and the allotment will not be certificated. At the current rate of five to six certifications a year, certification would take more than three decades based on BLM's current inventory of allotments to the allottees. He emphasized that the state of Alaska and the division consider the reconveyance of the Native allotments as a serious and important undertaking. He summarized that the division has attained agreement with BLM to provide funding for a position within the division's realty services section that is dedicated to the review of active and previously closed allotment cases as well as to reinterpret previous impediments to the reconveyance of allotment parcels. The division's staff is largely engaged with multiple service providers to discuss difficult cases with the intent to find resolutions that includes reconfiguring a parcel, to remove a parcel from a potential piece of state infrastructure like the Alaska Highway, or help identify a substitute parcel from the state's selected lands. The division believes its allotment work is a clear indication that the state is actively seeking to increase the number of parcels to be conveyed and to fulfill the federal commitment. MR. PARSONS said another way the division can help to complete conveyances of Native allotments is for the state to continue to increase the land available for selections as substitute parcels. As the ANCSA corporations complete their land entitlement, more land identified by the state converts from what's known as "top filing" or "future interest of the state," to "selected status" that becomes available for the state to receive under its entitlement. Lands which are not identified for the final 5.5 million acres of state land entitlement can be made available for Native allottees to select as a substitute parcel if the original parcels cannot be conveyed. 4:50:03 PM He explained that there is 7.8 million acres of substitute parcel land that the division has identified. The division realizes that some of the substitute land is less than desirable due to topography or lack of infrastructure, but as more lands are converted into "selected status," the division is seeing an increase in the pool of land that is desirable for the allottees. He reiterated that the state takes completion of the allotment program very seriously and the division looks forward to working with the sponsor to craft a path forward with respect to the rights of the Alaska Natives so they can obtain their allotments and to fulfill the federal allotment program as well as to protect the state's interest. SENATOR COGHILL thanked Mr. Parsons for providing the committee with a clear idea of what is happening as well as detailing some of the complexities of how the state must deal with reconveyance. He said Aguilar v. United States probably came up with a clear criteria and asked Mr. Parsons if the bill should mirror the court decision's criteria. MR. PARSONS answered that Aguilar v. United States provides a process as well as a "thick book" that provides all the steps necessary. He said the bill can mirror the case; however, the division is actively working under the "may" language for reconveyance to the federal government where the division has no control over allotment cases reconveyed to the federal government where cases may take years to certificate to the allottees. SENATOR COGHILL agreed that the state cannot make the federal government do anything. He said he will work with the division to find a better pathway forward with the bill's language. He specified that his intent was to show the committee the complexity with allotment as well as honoring the "prior right." 4:53:19 PM SENATOR BISHOP asked if Mr. Parsons said it could take BLM 30 years to reconvey. MR. PARSONS answered yes, at BLM's current rate of certifying five to six allotments a year. He detailed that the division is waiting for additional information on 70 parcels. He added that the 12 parcels the division is actively reconveying will take a couple of years. He said unfortunately because of the work required by BLM before they can accept the state's quitclaim deed, field research and time is required before land can be reconveyed to the allottees. SENATOR BISHOP said he will talk to Senator Coghill to address the reconveyance. SENATOR KIEHL asked how unresolved Native allotment land could have ended up with state infrastructure and state easements. He said his experience is that DNR does not let anybody do anything on state land with a question mark on it. MR. PARSONS answered that when ANCSA was passed, the allotment program was closed, and many applications were passed to the Bureau of Indian Affairs (BIA) or other agencies and then lost. Lands continued to be conveyed to the state between the time that the allotment program was closed, and Aguilar v. United States was adjudicated. The allotments the division is working on came to light, in many cases, after the state had already received title but before the state knew that there was an underlying allotment claim on the land. 4:56:38 PM SENATOR GIESSEL referenced an allotment spreadsheet that Ms. Moss provided to the committee. She noted that many of the allotments are in national parks, national forests, and national wildlife refuges. She asked Ms. Moss if the allotments in federal park land makes the process more complicated. MS. MOSS answered that she did not know. She opined there could be an issue and noted that Congress just passed a Vietnam veterans' allotment that listed exceptions to where lands could not be selected that included the Arctic National Wildlife Refuge (ANWR), national forest system land designated as wilderness by Congress, military land, and inner-outer corridors of right-of-ways such as TAPS. SENATOR COGHILL opined that what the federal government said and what Aguilar v. United States says, might give the state instruction on how to create a way forward for the allottees who may never be able to get the land based on some of the criteria, but the allottees should get the opportunity to get some land. He admitted that some of the allottees that he has spoken with have indicated that they are not interested in a swap at the beginning; however, if the allotment cannot be physically done, there must be a pathway forward. He summarized that he will work with DNR and some of the legal teams that have talked about the legal structure under Aguilar v. United States to figure out how allotments can be transferred and creating a pathway with BLM to separate allotments that there is no practical way to process. MS. MOSS noted that Mr. Parsons described about 100 parcels that have been denied in the past that would fall under the public lands that are currently being reviewed for possible approval. 4:59:03 PM CHAIR BIRCH held SB 42 in committee.