HOUSE BILL NO. 319  An Act relating to the disposal of state land by lottery; and relating to the disposal, including sale or lease, of remote recreational cabin sites. REPRESENTATIVE HUGH FATE explained that the legislation was first introduced four years ago as HB 232, and since that time it has evolved with assistance from the environmental community, the Alaska Miners' Association, and the Department of Natural Resources (DNR). He said that the bill basically would move some public sector lands into private hands. It also designates which lands are available. He noted that high mineral-value lands, military reservations and selections by boroughs would be off limits. It designates those areas of land up for nomination, giving an individual the ability to nominate and choose land that he prefers. The DNR Commissioner makes the final decision whether the land is compatible with the nomination, and the Department would formulate regulations to address the program. Representative Fate explained that the fiscal note includes DNR's low figure of about $900 per acre, multiplied by the number of acres sold, to show a profit in the second, third and fourth years. He advised that during the first year, there would be expenditures in formulating regulations and public notices. He estimated that sales could be three to four times the conservative figures in the fiscal note. Representative Joule asked if the bill would limit how much land an individual could obtain in various regions of the state. Representative Fate answered that nothing limits the number of locations where an individual could purchase land, but there is a 5-acre limit. Representative Joule asked the type of title that would be involved. Representative Fate replied that it is fee simple, and clarified that the minerals are reserved by the State and the buyer wouldn't have subsurface rights. He reiterated that the high-mineral potential areas are off limits for staking. He pointed out that the bill includes safeguards against lawsuits by the buyer if someone comes in to exploit the subsurface minerals. Representative Foster noted that the backup is limited to Southcentral Alaska and the Copper Valley, and he asked if land would be available in Northwest Alaska. Representative Fate stated that it is anywhere there is available state land that is not encumbered. The final application would be reviewed by the DNR. JIM POUND, STAFF TO REPRESENTATIVE FATE, explained that Amendment #1 removes contractual language that was in the original bill. The contractual language is used by the Department of Natural Resources for all their land sales, and Legal felt it was unnecessary. The sponsor also wanted to delete the 150% lawsuit in Section 3 of the bill. Amendment #1 reads: Page 1, lines 1-2: Delete "relating to the reservation of rights by  the state in land contracts and deeds;" Page 2, line 1, through page 3, line 15: Delete all material. Renumber the following bill sections accordingly. Page 5, lines 2-5: Delete all material. Representative Croft asked if the deleted language included provisions that the mining industry wanted as a penalty to any lawsuits. Representative Fate replied that the mining industry never requested the 150% and he had included it for a high threshold but the penalty would have been more than the land was worth. Representative Croft asked what protections remain in the bill. Mr. Pound replied that the language in Section 2, even though deleted from the bill, would still apply to the contract between the DNR and the purchaser. Co-Chair Harris asked if Amendment #1 deletes all of Sections 2 & 3. Mr. Pound affirmed. Co-Chair Harris expressed concern that this bill might create a situation similar to that in the Mat-Su Valley with coal bed methane. He reiterated that under the Constitution, the State owns the subsurface rights. He noted limited protection in the bill for the private property owner who desires protection from drilling or mining on his property. He expressed that if this bill makes the situation worse, his intention is not to support it. He spoke to the need to strike a balance between mining and people's private property rights. Co-Chair Harris asked if the deletion of Section 2 eliminates the problem. Mr. Pound replied that the language in Section 2 is in existing statute, and it would still be used in the land contracts between the Department and the purchasers. He was unsure of the language in the Mat-Su Valley private sector contracts, but he thought that this language was more specific. Co-Chair Harris said that he would talk to Representative Fate. Representative Chenault referred to the new fiscal note that shows 7 full-time and one half-time employees in 2006. JIM DERRINGER explained that pages 7 and 8 of the fiscal note backup describe the 7-1/2 positions in the fiscal note. The sponsor increased the staff by one position over the Department's request. Representative Chenault noted that the older fiscal note backup showed 6-1/2 positions, and Mr. Derringer clarified that there would be 7-1/2 positions. Representative Hawker referred to the analysis in the previously published Fiscal Note #1 prepared by Land Sales/Municipal Entitlements in DNR. He noted the language, "The new program would have DNR negotiate private, non- competitive sales. (This is a significant change from the existing policy of only public, competitive land sales.)" He asked if that is an accurate statement. Mr. Pound replied that the bill authorizes an individual to select a parcel and request a first right of refusal, which could be considered a private sale, but it is ultimately up to the Commissioner whether it would be a private sale. Representative Hawker commented that, as written, it is not quite an accurate statement. Mr. Pound agreed. Representative Joule requested a sectional analysis of the bill. Mr. Pound said that he would provide one. MATT DAVIDSON, EXECUTIVE DIRECTOR, ALASKA CONSERVATION VOTERS, commented that the group had been involved in this legislation during the previous legislature. He explained that the Alaska Conservation Voters (ACV) could not support the bill at this time. The ACV supports land sales that safeguard important lands for public access, recreational opportunities, and fish and wildlife habitat. He said that HB 319 is unnecessary and unfair, and it would invite conflict with other users of these lands. Mr. Davidson urged the committee not to take quick action on the bill. Mr. Davidson thought the fiscal note figures were optimistic regarding how much land would be sold, and said that State land disposal programs don't make money. He referred to the April 2003 Alaska Conservation Alliance report (copy on file.) that shows that past state land sales haven't made money. The Department of Natural Resources has worked hard to make the state land sale program more efficient, and HB 319 is a step backward. He said that best interest findings for every single application would be cumbersome. The Department's estimate of over $400 thousand a year to process the applications would make it difficult for the state to make any money. The Department would be prohibited from selling land directly adjacent to these properties. If HB 319 isn't fully funded, and existing land sale programs stay in the budget, DNR resources would be drained for the existing programs. Mr. Davidson continued, expressing that the best interest findings by DNR would lead to the expectation of a decision to rule in the applicant's favor. He argued that because the bill language is noncompetitive and gives individuals the right of first refusal to the land selected, only Alaskans with access to the backcountry would have knowledge of these areas, and only the most powerful Alaskans would obtain the land. The bill has no mechanism to deal with conflicts that may arise. He discussed potentially conflicting adjacent uses that have not been addressed in the bill. He concluded that when the state builds a new subdivision in wild areas, it results in an over-harvest of fish and game resources. Co-Chair Harris asked if the Alaska Conservation Voters supports any more land going into public hands. Mr. Davidson affirmed that it supports the current DNR land sale program. Co-Chair Harris asked if the ACV supports any natural resource development. Mr. Davidson replied, "absolutely." Co-Chair Harris asked when in the past couple years the ACV has supported natural resource development. Mr. Davidson replied that natural resource development should pay its own way, provide jobs for Alaskans, not overly harm the environment, and be supported by locals. He asserted that in the coal bed methane development, three of those four principles were not met by the State. Co-Chair Harris asked if the ACV supports opening ANWR. Mr. Davidson replied the ACV does not have a position on it, but it would be fair to say that it does not support it. Co-Chair Harris commented that Mr. Davidson's critique of the bill was against public land going to the private sector, although he did express support for the Department's land lottery. He pointed out that Alaska has the most federal lands of any state in the nation, and Alaskans want to be able to own land. Mr. Davidson responded that the majority of state lands are neither high quality nor accessible. He said that there would be a lot of competition for the parcels in Southeast if the bill moves forward. He thought that there would be competition to use those parcels for public uses as well, and the lands have other values. HB 319 was heard and HELD in Committee for further consideration.