SENATE BILL NO. 55 "An Act instructing the commissioner of natural resources to issue a patent for the remaining interest in certain state land to the owner of the agricultural rights to that land." This was the second hearing for this bill in the Senate Finance Committee. SENATOR TOM WAGONER, sponsor of the bill, testified that the Department of Natural Resources was available to address the question raised at the previous hearing regarding mineral rights on the property intended for transfer. DICK MYLIUS, Acting Director, Division of Mining, Land and Water, Department of Natural Resources, noted that the Division would administer the land transfer if this bill passes. He assured that the State would retain subsurface rights. The bill specifies the sale would be a "land estate", which is differentiated from "mineral estate". Land estate specifies the rights "from the ground up" and mineral estate involves the rights of oil and gas and other resources located below the surface. In addition, AS 38.05.125 provides that in "each contract for the sale, lease or grant to State land" the State would retain mineral rights. Mr. Mylius explained this statute is derived from the Statehood Act provision in which the federal government required that land transferred from federal to State ownership must remain mineral estate. This is enshrined in the Alaska Constitution. Therefore, in any public sale, the State retains mineral rights. Senator Stedman understood that mineral rights are retained by the State on all lands acquired since the Statehood Act. He asked if patented lands from the time Alaska was purchased by the United States from Russia through territorial days were treated differently. Mr. Mylius replied that the Alaska Constitution imposes provisions applying to pre-statehood land grants. The practices of the University of Alaska land trust and the Alaska Mental Health Trust Authority land trust have never included disposal of mineral estate. He was unsure if the "absolute prohibition" applies to these entities. Senator Stedman asked about property that was patented between 1867 and statehood. Mr. Mylius answered that in many cases the federal government granted mineral estate on these properties. Whether the homesteader acquired the mineral rights was a site-specific determination. The federal government is not restricted from granting mineral rights. Mr. Mylius also told of federal mining laws providing that patents could be secured for mining claims on federal lands. Co-Chair Wilken offered a motion to adopt CS SB 55 (FIN), 24- LS0287\F, as a working document. Without objection the committee substitute, Version "F" was ADOPTED as a working document. Co-Chair Green recalled discussion at the previous hearing regarding the fiscal note and whether the amount should be indeterminate rather than zero. A revised fiscal note reflecting this change was submitted. Co-Chair Wilken offered a motion to report CS SB 55 (FIN), 24- LS0287\F from Committee with individual recommendations and new fiscal note. There was no objection and CS SB 55 (FIN) was MOVED from Committee with a new fiscal note dated 1/17/06 from the Department of Natural Resources in an indeterminate amount.