SB 340 - INCREASE LAND GRANT TO UNIV. OF ALASKA CHAIRMAN HALFORD brought SB 340 before the committee as the next order of business. RALPH BENNETT, staff to the Senate Judiciary Committee read the following sponsor statement into the record: "The provisions of SB 340 allow the University of Alaska to select 250,000 acres of state land subject to approval by the Legislature. Land approved for transfer would include interests in minerals and to oil and gas subject to certain limitations. Also lands subject to a coal lease or where a lease application is pending are not available for selection. The University would bear the costs of selection, platting, surveying and conveyance. All land selections must be made by December 31, 2012. Twenty percent of income derived from selected lands must be used at the campus closest to the income generating parcel(s). All lands conveyed under this program are exempted from municipal taxation. SB 340 is compatible with Senator Murkowski's S.660, the legislation, pending in Congress, that will convey additional public lands to the University of Alaska. "The University of Alaska system was created under federal authority as a land grant institution to provide for the higher education requirements of Alaska's people in perpetuity. Most colleges established under the land grant program were endowed with sizable land bases from which to generate income to be used for operating purposes. Unlike most institutions in the Lower 48 states, the University of Alaska does not have the relatively larger population base and proximity to other support services that are so beneficial. The University of Alaska also suffers from a smaller pool of alumni and other normal sources of endowment income which many institutions rely on to help support operations, especially subsidies for teaching positions. "In the past decade several legislators have introduced legislation allowing the University of Alaska to select additional lands from the State. The purpose of all legislative attempts to provide more land for the University statewide system has been to provide more income producing assets where monetary resources are becoming scarcer and unpredictable. This bill continues the effort to give the University of Alaska a larger, more productive land base. The bill also provides clear expectations that land conveyed is to be used for the development of value added industries where appropriate." MR. BENNETT informed the committee that Senator Murkowski's legislation has been reported out of the last committee of referral and is headed to the floor for a vote. MR. BENNETT also presented a section-by-section analysis of SB 340. He noted there was a proposed committee substitute, which makes a simple change to Section 5, the section that deals with the new land selections. The coal industry pointed out that coal leases in lease applications for coal were not included in the draft, so the committee substitute would include coal leases and the land for which a coal lease application is pending that would not be available to the University for selection. CHAIRMAN HALFORD asked what happens if the University gets the land and does nothing with it. SENATOR TAYLOR said like him he wants to see somebody producing something on it. Number 261 SENATOR GREEN referenced page 9, line 22, which is basically the beginning of a reversionary clause, and she said questioned why get back into reversionary clauses after spending two years getting out of one. MR. BENNETT related that S.660 would grant the University 250,000 acres of federal land, and in order to receive this land, the University must relinquish 11,852 of valuable inholdings in Alaska. The University would be eligible to receive an additional 250,000 acres of federal land on a matching basis with the state for a total of 500,000 additional acres. CHAIRMAN HALFORD questioned what happens if we don't want them to give up the only state land owned in those federal enclaves. MR. BENNETT responded that was a legislative call. SENATOR TORGERSON said in Section 6, it says the net income goes into the endowment trust fund, and he asked how the endowment works. WENDY REDMAN, Vice President, University of Alaska, explained that, by statute, the money goes into a land grant trust fund, and the earnings of the trust fund are what is extended. SENATOR GREEN referenced subsection (c) on page 10 and commented that you can't get to the money, that 20 percent of the income derived from the management of land selections for use on the closest campuses because, by law, all the proceeds go into the University trust fund. MS. REDMAN stated the University would not support that kind of amendment for a lot of reasons, primarily because the purpose of the natural resource fund is to support natural resource programs in Alaska. She said they try to expend the money where the faculty and staff exist. MS. REDMAN said this is the fourth version of this type of legislation that has been introduced over the years, and it is probably the cleanest version. However, she said there were a couple of things that were dropped in subsequent bills, and she had some amendments for the committee's consideration. There are two issues that are very important to the University. The first one is on proprietary information. The University is not covered the same way that the state is for the protection of proprietary information for people who wish to do leasing, etc., with them, and they would like to have that protection written into the bill. The second issue is tort immunity, and they feel it is important for them to have some sort of immunity while people are out doing their customary and traditional things on their land. Returning to Senator Green's reference to a reversionary clause on page nine, MS. REDMAN said that unless there was some strong reason for keeping that section in the bill, she would encourage that it be removed. She said they believe the University can get those lands into a productive and appropriate development for the state of Alaska. Number 498 SENATOR TAYLOR said he likes the provision in there to either "use it or lose it." He said he wants the University motivated to harvest the resources or else it might as well go back to the feds. MS. REDMAN said she thought the University's history of managing land is a lot better than DNR's history of managing land. CHAIRMAN HALFORD commented the fact is that the University has a strong constituency for preservation, and, if they are given the land without some kind of a push, they are probably not going to generate much money. Generating money takes active management, and it takes dealing with conflicts, it takes exploration, it takes access, numerous things that some people in the University's constituency don't like. MS. REDMAN said she didn't think he would see that if he would look at what the University has been doing in the last 10 years since they have had possession of their lands. Number 537 SENATOR LEMAN said if the University had a plan in place for use of the land, he didn't think the reversionary clause would be as much of a burden as was suggested. TAPE 98-37, SIDE B SENATOR LINCOLN moved an amendment to page 2, line 20, to delete "to the maximum extent practicable" so that it just says that the University of Alaska shall manage the land in a manner that permits customary and traditional uses of the resources of that land. SENATOR TORGERSON proposed as an amendment to the amendment to delete "manage" and insert "grant the use of" in its place. SENATOR TAYLOR proposed to delete after the word "shall" the phrase "manage the land in a manner that permits" and to insert the word "allow" in its place. SENATOR GREEN, speaking against the amendment, said on the one hand we're saying to take this land, develop it and make money, and on the other hand, we're saying they can't refuse letting anyone on the property for any reason. MS. REDMAN suggested that if that section was going to be left in the bill, she thought the way it was currently worded worked the best. CHAIRMAN HALFORD stated Senator Lincoln's motion to delete "to the maximum extent practicable" was before the committee. SENATOR GREEN objected. A hand vote was taken and the amendment failed on a 1-5 vote. Number 514 MS. REDMAN requested that the committee consider a conceptual amendment to subsection (c) on page 10, which provides that 20 percent of the income derived goes to the campus that is located within the closest proximity. She said it is a very troubling section to the University, however, she thinks they might be able to live with it if it were broadened to say "to support resource development within the region of the campus." SENATOR TAYLOR voiced his objection to the amendment. SENATOR LEMAN moved to adopt a confidentiality amendment in the bill. Hearing no objection, the amendment was adopted. SENATOR LEMAN moved to adopt an immunity amendment to include the language in AS 09.65.200. Hearing no objection, the amendment was adopted. Number 432 SENATOR GREEN stated she was still uncomfortable with the reversionary clause language. She moved as an amendment to page 9, beginning on line 22, to delete paragraph (1) in its entirety. CHAIRMAN HALFORD called for a show of hands on Senator Green's amendment, and by a 1-4 vote, the amendment failed. CHAIRMAN HALFORD stated the amendments adopted by the committee would be incorporated into a Resources CS. SENATOR TAYLOR moved CSSB 340(RES) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.