HOUSE BILL NO. 130 An Act granting certain state land to the University of Alaska and establishing the university research forest; and providing for an effective date. Co-Chair Chenault MOVED to ADOPT work draft #24-GH1034\X, Bullock, 4/12/05, as the version of the legislation before the Committee. There being NO OBJECTION, it was adopted. Representative Weyhrauch explained the changes, deleting Page 6, Lines 12-18; deleting Page 6, Lines 25-26; Page 7, Line 5, deleting "shall"; Page 7, Line 6, deleting material after (1) and inserting "shall"; Page 7, Line 7, after (2) inserting "may". 3:15:51 PM He indicated that the Native allotment language had been added back and the lands conveyed are included under Subsection (e), which simplified the bill. Representative Weyrauch noted that initial testimony related to the 250,000 acres in the bill. The draft committee substitute identifies specific parcels outlined in Subsections N & O on Pages 5 & 6. Those sections remove parcels based on that information. In adopting the committee substitute, it became a public policy call that the University receives land for development, promotes private investment and increases the tax base of the State. All those things must overlay with concerns regarding quick development and insure that the communities that have lands adjacent can get the lands for borough formation. Subsection N identifies parcels that would be deleted from University lands while Subsection O addresses if a borough forms. The language provides a four- year opportunity for specifically Wrangell and Petersburg so they can move forward in forming boroughs. 3:19:07 PM Representative Weyhrauch informed members that there are more requests for exclusion of certain lands. 3:20:29 PM Representative Weyrauch addressed language on Page 7, Subsection C, before the Board of Regents offers a parcel for sale, they "shall" offer the right of first refusal to the municipality. That language encourages and allows the Board of Regent to give the first right of refusal to develop land for municipal purposes. The second thing it does is offer the second right of refusal to non-profit organizations to develop the land for purposes consistent for historic uses. That would be a discretionary offer. In the Committee's Letter of Intent, it does not indicate that the University should convey land to a non-profit corporation for conservation uses or non-productive purposes. He noted he had worked closely with the University of Alaska on that language. 3:22:33 PM Representative Weyhrauch addressed the Letter of Intent, which indicates that land, conveyed for the Coldfoot node area would not be used for businesses that would compete with other business already there. He explained why that language had been included in the Letter of Intent and not in the body of the bill. The Department of Natural Resources and the University of Alaska are working out arrangements for the provision. Representative Weyrauch advised that Sections #1 and #2 inserted in the House Resources Committee had been deleted in the proposed committee substitute. 3:24:32 PM DICK MYLIUS, DEPUTY DIRECTOR, DIVISION OF MINING LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES, stated that the Department is "generally satisfied" with the changes, however, he had not yet seen the committee substitute nor the Letter of Intent. Representative Croft questioned making the change from "shall" to "may". Representative Weyhrauch referenced Subsection C, Page 7, explaining that language was: · When the University receives the lands from the Department of Natural Resources and they decide to dispense of them, they must offer the first right of refusal to the closest municipality; and · They may offer the second right of refusal to a non- profit organization. Representative Weyrauch continued, Version X does not include all lands that Wrangell and Petersburg want. 3:29:20 PM Representative Croft pointed out that the old version used "shall". Representative Weyhrauch explained that "shall" was used in the version to which statewide testimony had th been taken on April 9. He noted that "may" had replaced "shall" in the version before the Committee as requested by the University. 3:30:11 PM PETE KELLY, DIRECTOR, STATE RELATIONS, UNIVERSITY OF ALASKA, commented that the changes seemed consistent with conversations between Representative Weyrauch, the University and the Department of Natural Resources. He pointed out concern on Page 2, regarding the duties of the Board as the new language represents a departure from the rules for that board. He thought that it would direct the resources from the University's budget in statute rather than through an appropriations bill. Representative Weyhrauch responded that the duties of the University's Board of Regents could insure that they adequately fund the Cooperative Extension Service. The University "shall" hire any vacant position within the Cooperative Extension Service within 90-days of vacancy. That language was removed because of concerns from the University. However, the duties of the Board of Regents to insure that the Cooperative Extension Service is staffed are broader language and became the compromise. Representative Weyrauch believed that the entire "notion" of the University lands bill would generate income to the University of Alaska. That is integrative to the public support of the University and the public's support of a strong and healthy University system. He thought that one of the best ways would be to work with the Cooperative Extension Service. 3:33:57 PM Mr. Kelly interjected that the Board of Regents duties are very broad; they do not get into the hiring of chancellors or vice presidents, however, the proposed version regulates that the Board of Regents "shall" attend to specific staffing of a low level position. That would be directing appropriations, which is a far departure for the duties of the Board of Regents. 3:34:58 PM Representative Croft asked the relationship between the Cooperative Extension Service and the management of the proposed lands. Representative Weyhrauch emphasized that the lands are connected to the people and the people use those lands. 3:36:12 PM Co-Chair Meyer asked if the University was willing to accept that "fit". Mr. Kelly replied that the University does not accept the language. He stressed that this is a lands bill and that the proposed language could fit under the title. He reiterated that inclusion of that language would make the bill address duties for the Board of Regents. There is a far distance between the general duties of the Legislature and the specific duties for such a low level position. 3:36:58 PM Vice-Chair Stoltze appreciated the proposed language. Co-Chair Meyer stated the language would remain in the bill and if a Committee member wanted to make an amendment, they could. 3:37:44 PM Representative Moses MOVED to ADOPT Amendment #1, #24- GH1034\F.4, Bullock, 4/8/05. Vice-Chair Stoltze OBJECTED. MOIRA SMITH, STAFF, REPRESENTATIVE WOODIE SALMON, explained the amendment, which takes into consideration testimony received from residents in and around McCarthy regarding the land in that area intended to be transferred to the University of Alaska. The residents are opposed to that land being included. Co-Chair Chenault inquired what that area currently was being used for. Ms. Smith responded that it is used primarily for gravel and wood. Currently, those residents apply for permits from the Department of Natural Resources to extract gravel and take wood. Co-Chair Chenault inquired if the residents tend to own their own lands. Ms. Smith believed that many of them do. She noted that the amendment would add a new parcel to the list. Mr. Mylius interjected that the bill must come up with 250,000 acres in order to make the requested amount for the University. The McCarthy parcel that is being requested is 12,500 acres. He stated that the Department of Natural Resources was opposed to the amendment. A roll call vote was taken on the motion. IN FAVOR: Croft, Foster, Moses OPPOSED: Hawker, Holm, Kelly, Stoltze, Weyhrauch, Chenault, Meyer Representative Joule was not present for the vote. The MOTION FAILED (3-7). 3:42:22 PM Representative Croft clarified the changes necessary to Amendment #2 in order that it fit the version before the Committee. 3:43:31 PM Representative Croft MOVED to ADOPT Amendment #2, #24- HB1034\L.2, Bullock, 4/12/05. Vice Chair Stoltze OBJECTED. Representative Croft stated that Amendment #2 would provide a change in direction for the legislation. He acknowledged that if the lands were in the University's hands, they would be more aggressive in their management. When addressing State lands that have not been developed to the support of the people of Alaska, is not okay. By giving the University, Point Thomson, the University might be more successful in getting the value from that resource production. He declared there was no better potential the State could offer. Representative Croft pointed out that the amount of funding needed by the University is substantial at $225 million dollars a year. Let the University do the development that has so far eluded the State. If the State develops it, the University could continue the arrangement and in addition, 25% of the remainder would go into a trust fund. He acknowledged that the amendment was aggressive, but suggested what is needed is "real development with real resources". 3:48:38 PM Co-Chair Meyer pointed out that the amendment would totally change the direction of the bill. He asked the State's share of Pt. Thomson. Representative Croft replied that they would own the land. The University is a State entity. The Legislature can transfer State lands or sub-surface rights between the pockets of State government entities. Co-Chair Meyer recalled that the area is Exxon's gas field. Representative Croft advised that the State of Alaska owns the land and it is leased out. Representative Holm questioned if it is possible to transfer the sub-surface rights. 3:50:26 PM Mr. Mylius responded that the Legislature could do that. The prohibition of transferring the mineral, oil and/or gas rights is somewhat restricting and that it could not be transferred to an out of State ownership. Since the University is an entity of the State, legally it could be done; however, he clarified that the Department of Natural Resources does not support the amendment. Representative Kelly thought that the proposed amendment would destroy the bill. Representative Weyhrauch hoped that the State could endow the University with income producing properties to help make it a wealthy institution so that it could do all the necessary research programs. He aspired to that. He thought that the amendment sometime could provide that seed; however, said it would be better in another bill at another time. He indicated that he would support pursuing that idea. Co-Chair Meyer agreed. 3:53:39 PM Representative Croft distributed a handout: "The 15-year Forecast of Point Thomson Unit Royalty Revenues" from the Department of Natural Resources projections. (Copy on File). He disagreed that Amendment #2 would be a major shift of direction for the bill. If the University could get that land, it could be more aggressive. There could be $1.2 billion dollars in that trust fund; nothing in the proposed bill could come close to that amount. He urged reconsideration of the amendment. Representative Croft pointed out how the University of Texas had obtained their wealth from sub-surface rights. He thought that the amendment encourages an alternative and that the core title of the bill would continue to be the same. The Senate could place other parcels back into the bill. Representative Croft referenced the suggestion of creating a new bill including the concept and questioned why do that. Since the University needs substantial funding and if development is important, then the University would be more aggressive getting it done. The amendment should be adopted. He commented that the amendment provides an opportunity to do the largest land grant for the University. He urged that the Legislature "put their money where mouths are". 3:58:38 PM Vice-Chair Stoltze understood that the bill was a companion to federal legislation and asked how it could merge with the federal proposal. Representative Croft replied that he had spoken with the Department of Natural Resources and if the State gives 250,000 acres, the federal government would match that. If the State put up the Point Thomson land that would not qualify under that bill; however, if the State did put up Point Thomson, it would be known that land had greater potential then the other. He did not think it would be an impediment, but would indicate that the State of Alaska was doing a significant amount to provide land at that value. 4:00:38 PM A roll call vote was taken on the motion. IN FAVOR: Moses, Croft OPPOSED: Foster, Hawker, Holm, Kelly, Stolze, Weyhrauch, Meyer, Chenault Representative Joule was not present for the vote The MOTION FAILED (2-8). 4:01:42 PM Representative Foster MOVED to DELETE language on Page 2, Lines 24-25: "ensure that the University of Alaska's Cooperative Extension Service is adequately staffed to meet the needs of the public". Vice-Chair Stoltze OBJECTED. Representative Weyhrauch explained that the purpose of the bill is to deal with land and resources in the State of Alaska. The Board of Regents is in charge of governing those lands. The agency between public lands and the University is the Cooperative Extension Service. He urged inclusion of that language. Vice-Chair Stoltze added that the language was a good way to remind the University of their obligation to public lands. 4:03:53 PM A roll call vote was taken on the motion. IN FAVOR: Kelly, Croft, Foster, Chenault, Meyer OPPOSED: Hawker, Holm, Moses, Stoltze, Weyhrauch Representative Joule was not present for the vote The MOTION FAILED (5-5). 4:05:17 PM Representative Weyhrauch pointed out that the Committee had received much attention regarding inclusion of Thoms Place near Wrangell. 4:05:52 PM Representative Foster MOVED to report CS HB 130 (FIN) out of Committee, the House Finance Committee Letter of Intent, with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CS HB 130 (FIN) was reported out of Committee with a "no recommendation", a House Finance Committee Letter of Intent, a zero note #1 by the Department of Fish & Game, fiscal note #2 by the Department of Law, fiscal note #3 by the Department of Natural Resources and fiscal note #4 by the University of Alaska. AT EASE: 4:06:41 PM RECONVENE: 4:13:09 PM