HB 120-STATE LAND SALES AND LEASES; RIVERS  2:02:38 PM CHAIR PATKOTAK announced that the final order of business would be HOUSE BILL NO. 120, "An Act relating to state land; relating to the authority of the Department of Education and Early Development to dispose of state land; relating to the authority of the Department of Transportation and Public Facilities to dispose of state land; relating to the authority of the Department of Natural Resources over certain state land; relating to the state land disposal income fund; relating to the leasing and sale of state land for commercial development; repealing establishment of recreation rivers and recreation river corridors; and providing for an effective date." [Before the committee was the proposed CS, Version 32-GH1634\G, Bullard, 4/22/22 ("Version G"), adopted as the working document on 5/2/22.] 2:03:11 PM REPRESENTATIVE FIELDS moved to adopt Amendment 1 to Version G of HB 120, labeled 32-GH1634\G.2, Bullard, 5/5/22, which read: Page 1, lines 1 - 7: Delete "relating to access roads; relating to  state land; relating to contracts for the sale of  state land; relating to the authority of the  Department of Education and Early Development to  dispose of state land; relating to the authority of  the Department of Transportation and Public Facilities  to dispose of state land; relating to the authority of  the Department of Natural Resources over certain state  land; relating to the state land disposal income fund;  relating to the leasing and sale of state land;  relating to covenants and restrictions on agricultural  land;" Page 1, line 10, through page 13, line 19: Delete all material. Page 13, line 20: Delete "Sec. 17" Insert "Section 1" Renumber the following bill sections accordingly. Page 15, line 16: Delete all material. Renumber the following bill section accordingly. CHAIR PATKOTAK objected for the purpose of discussion. 2:03:21 PM REPRESENTATIVE FIELDS explained Amendment 1 would delete all the land sale language in the bill, leaving intact the Alaska Native Vietnam veteran land exchange provision, which has a sense of urgency and a broad appeal. He maintained the bill is two bills combined in one: a very broad land sale bill kind of tied to a Vietnam veteran land exchange. One part of the bill is somewhat controversial with lots of important policy questions, he stated, which is very different in nature from the Vietnam veteran land exchange. He said his preference is that the Alaska Native Vietnam veterans land exchange be advanced rapidly and to leave the thorny land sale issues for later consideration. 2:04:58 PM BRENT GOODRUM, Deputy Commissioner, Office of the Commissioner, Department of Natural Resources (DNR), responded that DNR believes all the provisions within the bill are important issues dealing with state land. He said DNR agrees that the Alaska Native Vietnam veteran portion is an important part of this bill, which is why the administration put it forward, but DNR believes that all the provisions are appropriate to go forward. 2:04:54 PM CHAIR PATKOTAK removed his objection to Amendment 1. REPRESENTATIVE RAUSCHER [objected to Amendment 1]. 2:06:11 PM A roll call vote was taken. Representatives Fields, Hopkins, Hannan, and Schrage voted in favor of Amendment 1 to Version G of HB 120. Representatives McKay, Cronk, Rauscher, Gillham, and Patkotak voted against it. Therefore, Amendment 1 failed to be adopted by a vote of 4-5. 2:06:54 PM The committee took an at-ease from 2:06 p.m. to 2:10 p.m. 2:10:30 PM REPRESENTATIVE FIELDS moved to adopt Amendment 2 to Version G of HB 120, labeled 32-GH1634\G.3, Bullard, 5/5/22, which read: Page 1, line 1: Delete "relating to access roads;" Page 1, lines 2 - 3: Delete "relating to the authority of the  Department of Education and Early Development to  dispose of state land;" Page 1, line 10, through page 3, line 31: Delete all material. Page 4, line 1: Delete "Sec. 3" Insert "Section 1" Renumber the following bill sections accordingly. CHAIR PATKOTAK objected for the purpose of discussion. 2:10:49 PM REPRESENTATIVE FIELDS explained Amendment 2. He recounted that in a previous hearing the committee discussed the different land disposal processes for the Department of Education and Early Development (DEED), the Department of Transportation & Public Facilities (DOT&PF), and DNR. He said Version G would authorize DEED, DOT&PF, and DNR to sell land through some new processes, and he is concerned because these proposed processes are not the same for each department and will not produce the same degree of competitiveness in disposal of property and therefore return to the state. He said the proposed processes also have differences in terms of degree to which the public feels like it has notice and input on disposal. The concept in Amendment 2, he explained, is that if land is going to be disposed more quickly, it should be via a consistent process through DNR. Under Amendment 2, he continued, the expedited land disposal process would remain the same for DNR as is contemplated in Version G; however, land disposals for DEED and DOT&PF would be done through DNR, which is consistent with what happens now. He said it's important the public get a good return on the high value parcels held by DEED and DOT&PF, and that is more likely to be had through DNR. He stated that he doesn't want to have inconsistent land disposal processes across departments. 2:12:33 PM KRISTIN "KRIS" HESS, Deputy Director, Division of Mining, Land and Water (DMLW), Department of Natural Resources (DNR), responded that DEED has a written process, goes through a public process, and gets the most value for its properties. She said disposals must be evaluated and approved by the [Alaska State Board of Education & Early Development]. So, she continued, DEED has a process similar to DNR's process for selling or disposing of land that is no longer necessary to meet their needs. Regarding roads, she related that DNR worked with the Alaska Municipal League (AML) and received support for that process. 2:13:46 PM REPRESENTATIVE FIELDS offered closing comments on Amendment 2. He said he knows DNR manages a lot more land than do the other agencies, but that the lands under DEED and DOT&PF could be very high value parcels because of their proximity to roads and other infrastructure. He stated he wants to ensure these lands are used for the best public purpose and, if that is private commercial development, then there should be public input and best yield received for that asset. CHAIR PATKOTAK removed his objection to Amendment 2. REPRESENTATIVE RAUSCHER objected to Amendment 2. He said there are other moving pieces to the processes. CHAIR PATKOTAK requested Ms. Hess to provide further detail regarding AML's support and the provisions outlined on pages 1-3 regarding the DEED and DOT&PF disposal process. 2:15:16 PM MS. HESS answered that DNR worked with AML to develop language that was satisfactory regarding construction standards and maintenance. She said DNR has two letters from AML in support of Version G, Section 2, and what it does for DNR in terms of having to construct roads for subdivisions. Regarding DEED's ability to sell its own land, she stated that DEED would seek the input of stakeholders and other agencies before going out to the public, and then it would follow a public process. She related that DEED is supportive of keeping the provision in the bill that would allow DEED the flexibility to sell land that is no longer necessary for the agency's purposes. REPRESENTATIVE FIELDS asserted that local governments supporting consistent construction and maintenance standards is different from supporting a land disposal process within a specific department. He offered his understanding that Ms. Hess was speaking to the maintenance standards of access roads, not whether DOT&PF can directly dispose of property. MR. HESS agreed she was speaking to the construction standards rather than DOT&PF being able to dispose of land by itself as the state agency. She explained that DOT&PF already has that ability for its roads under Title 19, but the agency's public facilities are under Title 35 and this provision in Version G makes it all consistent for DOT&PF to dispose of land that is no longer necessary for road purposes as well as to dispose of land that is no longer needed for public facilities. 2:17:56 PM HEATHER O'CLARAY, Statewide Right-of-Way Chief, Division of Statewide Design and Engineering Services, Department of Transportation & Public Facilities (DOT&PF), confirmed DOT&PF does have independent authority to dispose of land. She further confirmed that DOT&PF's rules are different for properties that are considered public works or facilities that were acquired under AS 35, which this bill addresses, then they are for AS 19, which this bill does not address, or AS 02 Aviation, which this bill also does not address. She added that because of the way AS 35 is currently written, DOT&PF does not have regulations to do disposal under AS 35. REPRESENTATIVE FIELDS stated that, given this clarification, he has less concern about this provision in Version G. He withdrew Amendment 2. 2:19:46 PM REPRESENTATIVE HANNAN moved to adopt Amendment 3 to Version G of HB 120, labeled 32-GH1634\G.7, Bullard, 5/8/22, which read: Page 1, line 6: Delete "relating to the leasing and sale of state  land;" Page 7, line 20, through page 11, line 14: Delete all material. Renumber the following bill sections accordingly. CHAIR PATKOTAK objected for the purpose of discussion. 2:19:51 PM REPRESENTATIVE HANNAN explained Amendment 3 would remove the entirety of Section 13, a provision which she believes sidesteps nearly a half century of planning processes that have been in law. She said Section 13 would allow de facto noncompetitive sole source leasing on sales of state land without having to comply with state area land management plans for processes, which are painstakingly public, exhaustive, and a mainstay of why Alaskans believe the state's land management is adequate. Section 13, she added, would open the strong potential for sweetheart deals. While the department has no intent to do that, she continued, intent does not carry forward on that level once someone has nominated a piece of land which he or she found attractive for a business that may have previously been excluded because of an extensive public process of a land management area plan. She said deleting Section 13 relieves many of her concerns with the bill and ensures that state land disposals go through and comply with the area land management process, a completely public process from start to finish so there is no opportunity for a sweetheart deal and manipulation of what has been a sound practice in Alaska. MS. HESS responded that individuals could nominate land for either lease or sale, but if it is not properly classified for disposal, DNR would still have to go through that public process and reclassify it so that it would be available for either lease or sale. The bill as currently written, she said, also allows the commissioner to consider those nominations but maybe not take them up. So, she continued, DNR feels there is a public process as it would consider the area plans and the planning process, and it would go through that same public process if it needs to be classified so that it would be available for disposal. 2:23:00 PM MS. HESS, responding further to Representative Hannan, stated that in application, she is an attorney. REPRESENTATIVE HANNAN noted that Ms. Hess used the terms "can consider" and "could." Previous explanations she has received from the department, she related, were that the commissioner is to "consider" the land management plan, but it is not restricted to that, so the commissioner "could" decide to take an action that is in direct conflict with an area land management plan because the commissioner is to [consideration is not a mandate]. She expressed her concern that while this administration does not have the intent to do that, a situation would be set up where the mandate for an area land management plan becomes subjective language of "may." She asked whether she is correct that this would therefore mean a public process prescribed in law would now say that the department and its commissioner could decide to do something different, and the law would allow it. MS. HESS answered that that is not the way the department interprets this provision of Section 13. She said the commissioner can consider a nomination to lease or sell the land; the commissioner doesn't have to consider that, but if the commissioner chooses to consider that nomination then it would have to go through the area plan process for amending an area plan if it's proper depending on weighing a bunch of factors. That would go through a public process of classifying or changing the classification if it's appropriate; there may be times when it is not appropriate to change a classification, such as for a highly mineralized area. So, Ms. Hess continued, a nomination is what the commissioner "can consider." If the commissioner chooses to consider that nomination for either a lease or sale, she said, then the area plan is going to come into play because it must be properly classified to move forward with that lease or sale, and that would be a full public process by DNR that takes in public comment. 2:26:30 PM REPRESENTATIVE FIELDS agreed with Representative Hannan's assessment that the department "could" ignore these plans. He put forth the Hatcher Pass Land Use Plan as an example of a plan that had years of public input from multiple user groups, and he expressed his concern that under Section 13 a key piece of land could be liquidated because this section would allow the department to ignore all that public input. He maintained that Section 13 would enable liquidation, for example, of a public access that would be contrary to the public interest, which troubles him. He said Section 13 is inconsistent with maximum benefit from development of a resource. 2:28:25 PM CHAIR PATKOTAK requested a refresher on the mechanics of the bill as it relates to sole sourcing versus competitively bid lands put up for sale. He offered his understanding that when a piece of land is appealed to be sold, the department is going to consider the best return for the state. He inquired about what triggers the determination that it is an outright sale versus a competitively bid process. MS. HESS replied that currently leases under 10 years do not have to be competitive, but leases longer than 10 years must be a competitive process. She said the area plan must properly classify the land to be available for either lease or disposal. She stated that DNR considers its area plans all the time and there are many reasons why area plans are amended or changed for a specific purpose. But, she continued, it would still follow the public processes for changing that classification of an area plan for a specific purpose for a specific need such as lease or sale if it is not currently classified like that. 2:30:09 PM CHAIR PATKOTAK posed a scenario in which a sale has occurred where an organized city or borough controls the permitting process locally, and he offered his understanding that it would still have to meet that bar. He related that during his time serving on the North Slope Borough, the borough exercised Title 19 powers that everything is a conservation district, and anyone interested in commercial aspects must come before the assembly through a long and critical process to change the land use plan for that area from a conservation district to a multi-use, recreational, or industrial district. He surmised that this bill would not undermine any municipal authorities or powers that a potential private landowner would have to go through. MS. HESS confirmed that that is correct. She said that once land is sold from state ownership to private hands, if the now private property is in a municipality or borough with zoning and powers, the private landowner will have to follow that municipality's rules and regulations regarding classification needs for permitting for that borough or municipality. 2:32:01 PM REPRESENTATIVE GILLHAM asked how someone with a cabin on leased state lands could buy that land. MS. HESS answered that currently a person can nominate land to be sold because the department has that ability under current state statutes. She said the owner of a cabin on a state lease could come to the department and nominate it for a sale, and the area plan is going to have to allow for that to happen. REPRESENTATIVE GILLHAM related that this question was brought up to him by cabin owners who want to buy the land. He said the cabin owners are paying property taxes on land they don't own, and they want to know how to buy that property and whether it is DNR that they would approach. MS. HESS responded that the cabin owners are probably paying taxes to the local municipality on the improvements that they own because the lease/permit holder doesn't own the underlying land. If the cabin owners want to buy the underlying land, and assuming it is not in a legislatively designated area, she continued, they could nominate it and ask the department to sell it to them. Like what is in Section 13, she added, anybody can ask the state to sell a piece of land and then the department evaluates and goes through that public process as to whether it is appropriate to sell the underlying land. Responding further, she confirmed the prospective purchaser would come to DNR. CHAIR PATKOTAK thanked Ms. Hess for underlining Section 13 leases and sales of land on commercial developments. 2:34:49 PM REPRESENTATIVE HANNAN, regarding Section 13, recalled that Ms. Hess had earlier assured her that if a parcel was nominated for commercial development, DNR couldn't just redo the process if the area management plan didn't allow it. Representative Hannan maintained, however, that Section 13 does allow the commissioner to classify or reclassify the land and that that process of classification is substantially less than what it takes to redo a management plan to say that the parcel could be sold for commercial development. She asked whether Ms. Hess knows what the differences are between reclassifying something within the management plan and redoing the management plan. MS. HESS answered that AS 38.05.300 and AS 38.04.065 lay out the processes for classifying land or reclassifying land, and either way it must go through the public process. She said all the factors that current state statutes require must be weighed in terms of balancing those needs and determining whether it can be properly classified to be sold out of state ownership. REPRESENTATIVE HANNAN said the description given to her is that that reclassification public process is substantially less than what a management plan process is. Although Ms. Hess is saying that there is still a public process, Representative Hannan said she presumes that the notification is not very extensive and can be done in one meeting, one hearing. She asked how similar this proposed process is to the extensive and exhaustive area management plan process that involves all entities. MS. HESS confirmed that DNR's area plans take considerable time to develop from start to finish and include public input, meetings, and talking with local landowners and stakeholders. She said the same thing also happens with DNR's reclassification process. She said DNR looks for public input and weighs a bunch of factors that are required under state statutes. She stated that it might be a discrete portion of the area plan that DNR is looking to change but it doesn't de minimize the public process that DNR must follow and the input that DNR receives before determining if it's appropriate to reclassify those lands. 2:38:17 PM REPRESENTATIVE FIELDS expressed his concern about notice to adjacent landowners in [Section 13]. He posited that a significant piece of public property with public access and huge public benefits that has been through a 10-year management plan process could be disposed of through, say, a mailing to three people, an online public notice during hunting season when no one is paying attention, and notice in a local newspaper that few people read, and therefore no one might notice. He stated that important public lands need to go through a rigorous public process. However, Section 13 is designed to dispose as quickly as possible with minimal public input, and this public notice issue gets at the problem with Section 13, he argued. 2:39:58 PM REPRESENTATIVE MCKAY called the question. 2:40:08 PM REPRESENTATIVE HOPKINS opined that ensuring there is good and proactive public notice is the right direction for making certain that all the affected property owners and users know what is happening in an area. He said he will be supporting Amendment 3 to ensure Alaskans are not left out of the process. CHAIR PATKOTAK removed his objection to Amendment 3. REPRESENTATIVE RAUSCHER objected to Amendment 3. He stated that the auction process isn't good for someone obtaining a loan. 2:41:00 PM A roll call vote was taken. Representatives Schrage, Hannan, Hopkins, and Fields voted in favor of Amendment 3 to Version G of HB 120. Representatives Gillam, Rauscher, Cronk, McKay, and Patkotak voted against it. Therefore, Amendment 3 failed to be adopted by a vote of 4-5. [HB 120 was held over.]