SB 351-CONVEYANCE OF TIDELANDS TO MUNICIPALITIES    SENATOR ROBIN TAYLOR read the following into the record: For too long, coastal municipalities have been denied control of the land within its own boundaries. SB 351 will correct problems in existing law, giving communities more control over some of its more valuable property. SB 351 makes the transfer of tide and submerged lands to municipalities much easier than is in current law. It requires the commissioner to identify specific land the state may reserve in the public interest or access and transfer the balance to the municipality. From there, local government and the local public can determine how that land is of the most value. In some cases, it will remain wild for its scenic value; in others, it may be developed. In either case, the final decision will be made at the local level. Residents who actually have to live with the results will have easy access and input in the decision making process. SB 351 also allows the municipality to make selections and receive an answer within an acceptable timeline. For many communities, the selection process has been brought to a "hurry up and wait" status because the department has not made a determination. Often, that is because of the department's workload. This bill corrects that problem by providing for a 90-day timeline for response. This time frame gives the department 90 days to review the request. If there is no objection based on the reasons stated in Section 1, the land is conveyed to the municipality. Making decisions for local communities on how they conduct their business should not be up to state government. Communities make the best decisions for their community. The public process always works best on a local level. SB 351 will give local governments the ability to best determine how land within its boundaries can and will be used for its residents. SENATOR TAYLOR said he just received the fiscal note from the Department of Natural Resources and they indicate they are unable to calculate the fiscal impact for the bill. He was sure they would comment further. He said that if a 90-day objection period is not sufficient the department should suggest a timeframe. There are many communities that have never received their land transfers, particularly the tideland transfers. As a policy matter, this situation should be resolved and this is one suggestion. CHAIRMAN TORGERSON said he wasn't sure 90 days would be workable either, but for different reasons such as clouded titles. Extending the 90-day timeframe to 180 days and giving reasons for which the commissioner could extend might be workable. SENATOR PHILLIPS asked Senator Taylor for a specific example from Wrangell or Petersburg and how this could help them. SENATOR TAYLOR replied one of the biggest problems in his area is the cost of surveying. They were looking for a solution so an industrial complex or processing plant that wanted to locate along the beach would be able to do so. The property might have been transferred in essence, but it has never been surveyed and conveyed so it is still literally held within the state's ownership. Additionally, the Legislature has required that recent conveyances can only be made through a lease while in earlier conveyances the communities could actually sell their tidelands. If someone wants to develop tidelands now, the state requires the proposed developer to survey much more land than they need so the cost is so huge it stops the entire process from moving forward. SENATOR PHILLIPS asked whether that is internal policy or state law that is driving the state to require the block surveys. SENATOR TAYLOR thought the reason was that the Legislature had never appropriated enough money for the state to survey the lands. The state put off surveying and is now telling communities they must survey. The new text states that, "Any property conveyed without prior survey must be surveyed and if necessary, resubdivided before its lease, development, or sale." The cost of any required survey and subdivision requirements would be borne by the municipality. He included this language so parcels for a particular project or development could be surveyed without including large tracts that weren't relevant to the project. He thought this would be a way of expediting the process but he too was concerned about the 90 day limit. CHAIRMAN TORGERSON asked whether this came under the municipal entitlement section. SENATOR TAYLOR didn't know whether this would be part of their entitlement acre-for-acre. CHAIRMAN TORGERSON noted that 230 million acres was more than was transferred to local governments in total. SENATOR AUSTERMAN said municipalities are specifically referred to, but he couldn't tell whether boroughs would also be affected. SENATOR TAYLOR replied they would be affected if they owned land. He didn't think associations or villages would qualify if they weren't incorporated. SENATOR AUSTERMAN was concerned about scope because areas without municipalities such as Prince of Wales Island with their mariculture issues could be affected. He wondered whether municipalities could take over the sub leases and deal with those mariculture issues. SENATOR TAYLOR said Wrangell received most of their tidelands through a conveyance by the state and, at the same time, received all the existing leases that were on those tidelands. There were leases for storage facilities and log storage on tidelands that never went dry. Although there's probably opportunity for the community to modify those leases there hasn't been a pattern to do that because it would affect business stability as much as anything. Leases have been transferred and he's not aware of any problems that have occurred at renewal. However, he agreed the question was valid because it is possible that a municipality could dramatically change a lease upon renewal. SENATOR AUSTERMAN then questioned how "municipality" would be defined because on Kodiak Island the uplands are refuge and the lower lands are state waters that are leased from the state to set netters. CHAIRMAN TORGERSON said the city and borough limits are quite well defined. Borough limits might not be completely surveyed but they follow section lines fairly well and city governments follow their own survey lines. He then read, "This section does not enlarge or diminish the general grant land entitlement of a municipality nor is the conveyance of the section counted against the municipalities general land grant." CAROL CARROLL, Department of Natural Resources representative, read the following statement into the record: Existing state law (AS 38.05.825) allows DNR to convey state-owned tidelands and submerged lands to municipalities if they are needed for a specific development project or use. The existing law protects the public's right to use and have access across these tidelands for navigation, recreation and other uses (referred to as the public trust doctrine) after conveyance. The existing law has enabled municipalities to acquire tidelands and submerged lands that are needed for development. Lands have been transferred to Wrangell, Whittier, Anchorage, Lake and Peninsula Borough, Dillingham, Cordova, Valdez, and many other communities under this existing law. DNR is not aware of any particular problem with the existing law and is unsure why the changes are proposed. This legislation modifies AS 38.05.825 by removing the requirements for a demonstrated need and specifically would allow municipalities to sell tidelands and submerged lands. It also requires the commissioner to either approve or disapprove an application within 90 days or it automatically would be approved without any public notice or decision by DNR. DNR strongly opposes this bill as it makes AS 38.05.825, the law allowing conveyances of tidelands to municipalities, unconstitutional and unmanageable. Section 1 of the bill deletes most of the criteria for approval of conveyances in the existing law, including: that the land must be suitable for occupation and development, that the land be appropriately classified by either a state or municipal land use plan, and that there be a need for the transfer for an existing or proposed project. Section 1 also adds a provision that the commissioner can only disapprove a municipal application when the state can identify a specific state use or statutory reservation of the land. The only lands with such reservations would be legislatively established areas such as Kachemak Bay State Park, State Game Refuges and Critical Habitat Areas, state ferry terminals and state boat harbors, and a few other sites. This provision would likely result in the conveyance of virtually all tideland and submerged lands within municipalities, an area DNR estimates to be 20 to 30 MILLION acres. The consequences of such conveyances are staggering. For example, the North Slope Borough could receive title to the surface of all offshore lands in Prudhoe Bay, thereby controlling where and how development occurs on state oil and gas leases that underlay the offshore waters. Many log transfer facilities and aquatic farm sites in Southeast would be under borough, not state, control, with multiple different rules depending on municipal, not state, laws. These are only a few examples. In addition, such massive conveyances to municipalities in Southeast Alaska would jeopardize the existing Quiet Title Action that the State has filed in the US Supreme Court against the federal government that includes tidelands and submerged land in the Tongass National Forest. Section 2 requires DNR to approve or disapprove a conveyance within 90 days, or it is automatically approved. Because this provision allows conveyances to be approved automatically after 90 days without public notice as required by the Constitution, DNR believes this section of the bill is unconstitutional. This section also specifically allows municipalities to sell the tidelands. Under federal law and the Alaska Constitution, tidelands and submerged lands are considered Public Trust resources held by the state for the use and enjoyment of all citizens, and Public Trust resources generally cannot be sold. By specifically allowing for the sale of tidelands and submerged lands, this section of the law violates the public trust doctrine. Because the bill allows virtually all tidelands and submerged lands within municipal boundaries to be conveyed under this bill, shortly after the bill passes, DNR will likely be flooded with applications that it will be unable to process within the 90-day timeframe. In conclusion, DNR believes that existing law AS 38.05.825 allows the state to transfer tideland and submerged lands to municipalities for a specific development project or use. This authority works as presently defined. SENATOR AUSTERMAN asked whether the department would be willing to negotiate on the 90 day limit if the bill were to become law. MS. CARROLL replied she doesn't know what the timeframe would be but it certainly would depend on how many applications were received. She would ask the department what timeframe they could give the committee. CHAIRMAN TORGERSON suggested she talk with the sponsor since he just received the fiscal note and realized there might be problems. SIDE B 2:45 pm SENATOR PHILLIPS asked whether DNR would need additional staff if the bill were to become law. MS. CARROLL said she could provide him with information regarding the current staff levels. The fiscal note is indeterminate because they don't know what kind of response they would get from municipalities. "Twenty to thirty million acres is a lot of land." SENATOR PHILLIPS asked how many conveyances are currently done in a year. RON SCHONENBACH with the Department of Natural Resources Division of Mining Land and Water said in Southeast they have entertained applications from eight municipalities since the current bill was passed in 1995. All the municipalities have full management authority for those tidelands. They have a pending application from the Haines Borough and another from the Ketchikan Borough. All others from Southeast have been processed. SENATOR PHILLIPS asked him to provide the committee with information regarding the rest of the state. MR SCHONONBACH said he would get that information. The staff that deals with the leases for the rest of the state is covered in the resource allocation development section and are also the ones doing the AS 29 conveyances to municipalities along with the tideland conveyances to municipalities. SENATOR PHILLIPS commented some community must have complained. CHAIRMAN TORGERSON announced to bill would be set aside so Ms. Carroll could provide the requested information.