CS FOR SENATE BILL NO. 7(FIN) am "An Act relating to the University of Alaska and university land, and authorizing the University of Alaska to select additional state land." Co-Chair Therriault provided members with proposed committee substitute, work draft 1-LS0072\W2, Laukhaupt 3/2/00 (copy on file). SENATOR ROBIN TAYLOR, SPONSOR testified in support of the legislation. He emphasized that the state of Alaska is going to gain a half million acres of land from the federal government, as a result of the legislation. The only way that the state can gain the additional land is to provide an equal match of state land. He maintained that under the legislation the university would receive an endowment of one million acres of land, which would provide an economic base and greater autonomy and reduce the state's general fund support. Co-Chair Mulder MOVED to ADOPT work draft 1-LS0072\W2, Laukhaupt 3/2/00. There being NO OBJECTION, it was so ordered. MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT discussed changes made by the committee substitute. A technical change was made on page 3, lines 10 - 11: deleting "except as provided in AS 14.40.368(2)" in order to reflect changes made in that section. In section 5 on page 4, line 10 "annually" was deleted and "periodically" inserted to conform to the change made on line 14. Under the change the university would not be required to submit an annual land list selection. He observed that there might be years when a list is not submitted. Vice Chair Bunde questioned the intent of the change. WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA observed that the bill has a 10-year window. The university intends to make selections every year within the 10-year period. However, the legislation would allow them to miss a year. Vice Chair Bunde concluded that, while the selection may not be every year, it would be on a regular basis. Mr. Tibbles observed that "governor" was removed and replaced with "commissioner" on line 14, page 4. This removes a step and recognizes that the university would be working with the Department of Natural Resources. The process of approving the selection list was amended on page 4, lines 23 and 24: legislative action would no longer be required. The selection list would be approved if the legislature does not take action. Mr. Tibbles referred to page 4, lines 29 and 30. He maintained that no additional language is necessary since land that "has been reserved by law from the public domain" would cover refuges and parks. Subsection (2) was rewritten to clarify that there is a three-step process: land can be selected if it is vacant, unappropriated, or unreserved; municipalities are only given 120 days to submit their claim; and the university is required to give notice to the municipality if land within the municipality is selected. Vice Chair Bunde questioned if municipalities must approve the university's action. Mr. Tibbles explained that the municipality would have to take action to select the land. Co-Chair Therriault observed that the municipality could insert their selection before that of the university, but that they only have 120 days to take action. Ms. Redman noted that the municipality and university could make an agreement for joint ownership of land within a municipality. Mr. Tibbles observed that if the commissioner denies land selected by a municipality, the land would fall back to the university's selection list. On page 5, line 21 the "5" was changed to "3". Mr. Tibbles explained that if oil and gas were discovered on land selected by the university within the first "three" years of the selection, the state would keep the resources. Co-Chair Therriault clarified that the university cannot select lands that have an existing oil or gas lease. Ms. Redman noted that if oil or gas is found within the three- year period that the resource belongs to the state of Alaska for perpetuity. The minimal size requirement of the parcels for land selection was changed from 640 acres to 40 acres on page 6, line 2. The change was made in response to concerns that the university may be forced to select land that could not support income. On page 6, line 22 language was added requiring the commissioner of the Department of Natural Resources to provide his determination denying the selection in writing. On page 6, lines 30 and 31 a new subsection (3) was added to give a new municipality the first option to select lands. The new municipality would only have three years to make the selection. The commissioner can deny the selection. In response to a question by Co-Chair Mulder, Ms. Redman noted that there are two newly formed municipalities. She observed that there is currently no time limit on their selection. Co-Chair Mulder questioned if the language is redundant. Ms. Redman clarified that the intent is not that the commissioner would try to anticipate new municipalities. The legislation refers to currently formed new municipalities. Co-Chair Mulder agreed and noted that it would be problematic to try to anticipate the formation of new municipalities. On page 7, line 5 "within 120 days" was inserted to conform to prior sections. The period of time in which the commissioner can refuse to convey land without a determination was changed from 3 to 2 years on line 12, page 7. Ms. Redman noted that the change would speed up the process of conveyance. Mr. Tibbles observed that the commissioner has broad powers to say no within the two-year period. Ms. Redman stressed that the intent is to go on with other selections if necessary. There is a new subsection (6) on page 6, to allow the commissioner to withdraw land that he believes is not in the best interest of the state to convey outside of state ownership. Page 8, line 12 clarifies that the university would bear the cost of its own selection: platting and surveying. Line 22 - 24 and 28 - 30 on page 8 makes changes consistent with the requirement that the legislature has to take action to disallow the selection. There was a technical change on page 9, line 1 in subsection (k) to reflect previous changes. Mr. Tibbles referred to subsection (m) on page 9. He noted that the House Resources version stated that "the commissioner may not convey the land unless the commissioner reserves easements, rights-of-way, and other forms of access . sufficient to ensure all current access and reasonably foreseeable future access, to adjacent public or private land or water." He felt that there was enough protection under AS 14.40.365(h)(1)(e). He stressed that the language creates an unknown situation with "foreseeable future access". The committee substitute was amended to state: "The commissioner shall convey land . with notice to the university if the land under conveyance includes easements, rights-of-way, and other forms of access." Co-Chair Therriault concluded that any easement that was in place at the time of conveyance would continue. Subsection (n) is new and would allow the university to appeal a decision by the commissioner through the review process that is in place within the Department of Natural Resources. On line 20 of page 9: "consistent with the Constitution of the state of Alaska and the Alaska Statehood Act" was added. On page 10, line 19 the Board of Regents was required to adopt a permitting process consistent with the subsection. A few additional financial categories were added to the confidentiality section on page 10, lines 29 and 30. The university is already complying with this requirement. Ms. Redman affirmed that the section is based on current policy. A clarification was made on page 11, subsection (1). A selection cannot be made if there is an existing oil and gas mining lease, but land may be selected with a different type of lease. The provision is divided into leases on the land prior to selection and those after the selection. Subsection (A) states that the university is entitle to receive income obtained from an existing lease after the land is conveyed. Mr. Tibbles explained that if the lease happens after the land is selected, but before it is conveyed, than the money is to be set-aside in a separate account. When the land is conveyed the money would also be conveyed. Co-Chair Therriault noted that it would take an appropriation by the legislation. Page 12, subsection (2) deals with the responsibility of the management of the land. The responsibility for the management of the land begins on the day the land is recorded as conveyed to the university. Section 7 is new and provides for a university demonstration forest. Co-Chair Therriault observed that Representative J. Davies expressed concern regarding the use of "may" instead of "shall" in section 7. Mr. Tibbles observed that "in consultation with" should be added after "a management plan is prepared" on page 12, line 22. Co-Chair Therriault noted that Representative J. Davies expressed support for the change. Mr. Tibbles noted that the final change was made on page 14, section 9: "own by the university" was changed to "land conveyed to the University of Alaska under AS 14.40.365." Co-Chair Therriault observed that the setback requirement under the bill is more than is required by the Forest Practices Act. The legislation maintains the setback that is currently used by the university (100-foot). The Forest Practices Acts requires a 60-foot setback, but the university currently uses a 100-foot setback. Representative Williams expressed concern that the language not adversely impact the Forest Practices Act. Co-Chair Therriault pointed out that the management of state forestland adheres to a 100-foot buffer zone; the Forest Practices Act applies to private land. Ms. Redman observed that the language conforms to current law for management of state forestland under AS 41.17. The underlying portion clarifies that any state forestlands conveyed to the university would fall under the same provisions. Representative Grussendorf referred to page 4, line 31. He observed that if the commissioner denies the municipal selection that the university would be the next in line for the selection. He questioned under what situation the commissioner of Department of Natural Resources would refuse land selected by a municipality and have it fall back for selection by the university. He questioned the criteria used by the commissioner to deny the selection. Co-Chair Therriault stressed that the provision only applies to the selection and that the university selection could also be denied. The commissioner is under no obligation to approve either selection. Co-Chair Mulder noted that the secretary of the Interior is opposed to any selection of federal land. He expressed concern that the commissioner of the Department of Natural Resources could stop all state land transfers if they opposed the principle of land selection. Ms. Redman agreed that the commissioner is endowed with a great deal of power and expressed the hope that they would not use the power in a frivolous way. The intent is to allow the commissioner to oversee the state's best interest. The commissioner would have to provide a written reason for the denial. She stressed that the commissioner would be subjected to political pressure and felt that there would be a sufficient appeal process. Co-Chair Mulder expressed concern that the mechanism allows an exchange to occur and includes an appeal process. Co-Chair Therriault stressed that it is important to the university and the legislature that the reason for denial be placed in writing. Representative Grussendorf pointed out that the university is being allowed to pick small parcels and that they would not be forced to take the bad with the good. He questioned if the confidentiality provisions could allow interest groups to influence the university's decision. Representative Foster asked what would prevent the university from forming parks with their land. Ms. Redman emphasized that there is a fiduciary responsibility to provide income for the university. She pointed out that the university has a history of commitment to develop the lands in a responsible way and to provide income for the university. Representative Foster questioned if the university could select land that was already over selected by Native corporations. Ms. Redman observed that the legislation contains provisions to reduce over selections. Page 4, lines 17 to 28 limit the university's ability to over select. Co-Chair Mulder discussed over selections and suggested that the legislation would encourage resolution of over selections through competition. Co-Chair Therriault observed that the university is able to submit a list on an annual basis of not more than 25 percent of all the land that they are eligible to select. The land would be conveyed gradually over the 10-year period. In response to a question by Representative Grussendorf, Co- Chair Therriault clarified that there is a 3-year provision on oil and gas leases and that the university cannot select land with oil and gas leases. Vice Chair Bunde concluded that subsurface rights of private land belong to the state. The university would own subsurface rights with the exception of oil and gas. Co- Chair Therriault agreed and pointed out that the university is a subdivision of the state. Representative Foster asked about land with an undeveloped mining claim. Ms. Redman stressed that the university would be disallowed from selecting any land with an existing mining claim. ROBERT LOEFFLER, DIRECTOR, DIVISION OF MINING, LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES testified via teleconference. He commented on changes made by the committee. (TAPE CHANGE, HFC 00 - 74, SIDE 2) Mr. Loeffler referred to changes made on page 11, line 18. He observed that when land with a lease is conveyed to the university that the income of the land would go to the University of Alaska. He maintained that the provision would allow the university to select lands that the state has developed. He maintained that the provision could have an adverse affect on the landfill program; the university could select lands developed by the state under the landfill program. Mr. Loeffler discussed changes made on page 6, line 2. The previous version of the legislation allowed selection of 640 acres: this was changed to 40-acre parcels in the committee substitute. He observed that a previous version of the bill containing 40-acre selections was changed to 640 acres because of the additional survey costs. He estimated that 40-acre parcels would add $600 thousand dollars a year to the cost of the legislation. The university would pay the cost, through the Department of Natural Resources. Mr. Loeffler referred to access provisions on page 9, line 8. Previous versions of the bill required the Department of Natural Resources to reserve easement rights; the committee substitute only requires that the department notice that easements exist. He maintained that the bill would give the process to the university. He stressed that this provision would be contrary to the provisions of established law. He pointed out that the department has had an aggressive program, in concert with the Department of Fish and Game, to ensure the protection of public easement on all state lands and waters. He thought that the department was required to reserve public access. Mr. Loeffler reviewed changes made in subsection (2) on page 4. He observed that the state is concern with the competition between the municipalities and university. He felt land denied to municipalities should not be available to the university. He maintained that the provision anticipates that some items denied to municipalities would be allowed to the university. Mr. Loeffler summarized that the Division has concerns regarding: revenue, public access, increase in costs from going from 640 to 40 acres and the fact the bill would allow land to the university that has been denied to municipalities. Representative Foster observed that there is a window of opportunity for Native Viet Nam a veteran to select land. He questioned if a veteran could place a claim on land selected by the university. DICK MYLIUS, CHIEF, RESOURCE ASSESSMENT AND DEVELOPMENT, DIVISION OF MINING, LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES explained that veterans could not select state selected or state owned land. There is no potential for conflict with the legislation. Ms. Redman responded to concerns brought up by the Department of Natural Resources. She emphasized that land might not be selected, within a municipality, unless it is vacant, unappropriated and unreserved. Mr. Loeffler responded that he interpreted page 4, section 5 as having three independent clauses. Land must be vacant, unappropriated and unreserved land; if it is disapproved (and municipal land is often disapproved because it is not vacant, unappropriated and unreserved) than the university gets priority. There is also a definitional clause. He agreed that if the interpretation is as Ms. Redman stated that it is not an issue. He observed that the language is confusing. JAMES MORTON, MANAGER, CITY AND BOROUGH OF YAKUTAT testified via teleconference. He stated that his concerns were addressed by the previous testimony. Co-Chair Therriault noted that the legislation would be heard again at 1:30 p.m. SB 7 was heard and HELD in Committee for further consideration.