SENATE RESOURCES COMMITTEE February 17, 1999 3:07 P.M. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Pete Kelly Senator Jerry Mackie Senator Lyda Green Senator Sean Parnell Senator Georgianna Lincoln MEMBERS ABSENT Senator Robin Taylor, Vice-Chairman COMMITTEE CALENDAR Overview: Proposed Chenik Institute lease - McNeil River State Game Refuge WITNESS REGISTER Mr. Dick Mylius, Acting Director Division of Lands Department of Natural Resources 3601 C Street, Ste 1130 Anchorage, AK 99707-3645 Ms. Marty Rutherford, Deputy Commissioner Department of Natural Resources 3601 C Street, Ste. 1210 Anchorage, AK 99707-5921 Mr. Rick Thompson, Southcentral Manager Division of Land Department of Natural Resources 3601 C Street Anchorage, AK 99707 Mr. Mike Sullivan Southcentral Region Department of Natural Resources 3601 C Street Anchorage, AK 99707 Mr. Geron Bruce, Legislative Liaison Alaska Department of Fish and Game P.O. Box 25526 Juneau, AK 99802-5526 Mr. Lance Trasky, Southcentral Regional Supervisor Division of Habitat and Restoration Department of Fish and Game 333 Raspberry Rd. Anchorage, AK 99518-1599 Mr. John Hilsinger 3601 Raspberry Rd. #1A Anchorage, AK 99502 Mr. Thomas Walker, Special Projects Manager Cook Inlet Aquaculture Association 40610 K Beach Rd. Kenai AK 99611 Mr. Gary Fandrei Cook Inlet Aquaculture Association 40610 K Beach Rd. Kenai, AK 99611 ACTION NARRATIVE TAPE 99-10, SIDE A Number 001 CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:07 p.m. and said the Committee would discuss the Chenik Institute lease proposal that was written up in the Anchorage Daily News on February 7, 1999. He asked Mr. Mylius, Division of Lands, to give the committee a status report. MR. DICK MYLIUS, Acting Director, Division of Lands, Department of Natural Resources (DNR) said that the McNeil River Game Refuge is not even State land at this point. It is State-selected land and is managed by the federal Bureau of Land Management (BLM). DNR's appropriate action is to comment on what BLM should do. State- selected lands are governed under Section 906(k) of the Alaska Lands Act, he explained. Before BLM does any long-term interest action on State-selected land, they have to get State concurrence. This particular chunk of land has been both State and ANCSA selected since the 1970's. It was selected by the Seldovia Native Association which BLM rejected about 15 years ago. The Seldovia Native Association appealed, was rejected and went to court. Recently both parties decided to settle the issue out of court and the suit was dropped. This means BLM can proceed to convey the land to the State. However, as a general rule, the State does not like to take title to federal lands that have unauthorized uses on them and the current structures at Chenik Institute are not authorized by the BLM. Several years ago, BLM proposed to issue a lease to Mr. Mike McBride who actually built those facilities. At the time, the State said we would not concur with the lease. Now that BLM is about to transfer the land to us, the issue is coming to a head again. In a preliminary decision published in November of 1998, the Department concurred with BLM entering into a lease with Chenik Institute, a nonprofit organization. Public comments were solicited on this proposal, ending in January, and 50 comments were received - 14 or 15 against and 30 or so for the proposed lease. He cautioned that the Department is not going to make a decision based on the numbers of comments on one side or the other. MR. MYLIUS said the comments ranged from relatively insignificant concerns to some new issues. So the Department has now gone back to the drawing board to figure out where to go. They are reviewing the comments, but they haven't heard from ADF&G yet, a big piece of the puzzle since the land is within the McNeil River State Game Refuge. Under the management plan for that land, DNR is the party that is responsible for any decision on leasing, but ADF&G has to essentially approve any proposal as consistent with their management plan. Some of the options, Mr. Mylius said, range from not even taking title to the land, an option they don't feel favorable towards because they feel the McNeil River is appropriate for State ownership, to the Department saying "no" altogether to BLM regarding authorization to lease to the Chenik Institute and asking them to remove the structures. They could consider a short-term BLM authorization and spend a couple of years trying to find a longer term solution. MS. MARTY RUTHERFORD, Deputy Commissioner, DNR, noted that it's important for the committee to know whenever the Department solicits public comment, they found it more successful to give an indicator of what they thought would be an appropriate management strategy. In this case, they said some type of lease to a nonprofit might be appropriate. The Department is not bound by that and there could be another preliminary best interest finding as the situation evolves. One suggestion of the Department is a one-year permit with, maybe, a competitive lease in the future. There are many alternatives. Number 130 CHAIRMAN HALFORD asked if there was a general policy the State has held with regard to trespass entries. MR. MYLIUS answered in this case the issue is that we are just taking title to the land. It's not the State's land yet. The Department's policy is to not take title to lands that have trespass on them. BLM has been asked to resolve it, and the options range from removing the structures altogether to figuring out some way to authorize them. As part of the decision making process, he explained, the Department looks at the management plan for the area. In this area, ADF&G has identified the need for some sort of public facilities. Since a facility already exists, it's possible those buildings could serve some of the purposes that ADF&G intended. The second question is, if they are appropriate there, how does the Department come up with a fair process to decide who should get to run them. CHAIRMAN HALFORD asked how long the facility had been there. MR. MYLIUS responded that it had evolved over the years. MR. RICK THOMPSON, Southcentral Manager, added that it had been in existence for around 20 years. CHAIRMAN HALFORD asked how much it had paid in rent, fees, or license for that 20 years. MS. RUTHERFORD replied that to the best of their knowledge no money has been paid to the BLM. CHAIRMAN HALFORD asked for an explanation of when the BLM asked the State, who replied they expected the BLM to proceed with whatever their trespass actions were to clear the title and clear the land. MR. MIKE SULLIVAN, Regional Office, answered that in 1994 they initially responded to the letter of concurrence unfavorably as a result of comments the Division received from ADF&G. BLM seems to want to avoid doing trespass action and the applicant, at the time, indicated to them he was going to continue to work on the objections at the State government level. So the BLM kind of "held off." There were then some discussions in his office with ADF&G about what conditions would have to exist for approval and if more conditions were needed to make it more palatable to the agencies. That's where they are now. MS. RUTHERFORD inserted that some of the conditions include an unwillingness to let this land go to any entity that is not a nonprofit. CHAIRMAN HALFORD asked if the State's position was that a lease was contrary to the State's best interest as of 1994 or 95. MR. MYLIUS answered that's right, as it was proposed by BLM at the time. CHAIRMAN HALFORD asked if the nonprofit had been formed in an effort to come up with a vehicle to transfer this trespassed land. MS. RUTHERFORD responded that the nonprofit was always in existence, but it was Mr. McBride who applied for the lease to BLM. She said her comments to him have been always her unwillingness to convey to an individual. At that time, he suggested establishing the Chenik Institute as a State-recognized nonprofit as an alternative. She had responded that might be worthy of consideration and, perhaps, if the Chenik Institute were to reach out to other nonprofits, they would have more status in the State. At this point, she knows they reached out to the Nature Conservancy and Audubon Society to see what their levels of interest might be. She had never seen anything in writing, but had gotten calls from both entities asking her questions about it. Number 220 CHAIRMAN HALFORD noted, according to correspondence on Chenik Institute paper, they were incorporated in August 1996. It's Board of Directors are Mr. McBride as President and his wife as secretary. MS. RUTHERFORD said Mr. Sullivan told her that is absolutely accurate. MR. SULLIVAN clarified that it wasn't formed just to run the camp. It was in existence for other reasons. SENATOR MACKIE asked if it was correct that the State does not have title to the land right now and doesn't manage it. MR. MYLIUS replied that is correct. SENATOR MACKIE asked if DNR or its representatives ever indicated to the McBrides that if they did become a nonprofit, that would probably be acceptable and the State would probably be willing to take the land and give them the lease. MS. RUTHERFORD answered that no one ever indicated to the McBrides that they would get a lease under any conditions. The Department said they were interested in seeing a plan of operations and finding whether the McBrides would be willing to amend their application to BLM to reflect a nonprofit, making it slightly more palatable because of the Department's concerns about [indisc] being saved. It was more of an interim discussion about alternatives that might be considered by DNR rather than any commitment that they would find it acceptable. SENATOR MACKIE asked if the list of conditions the Department gave the McBrides was a result of policies currently existing on state lands. He asked if they manage State lands now, if someone wanted to become a nonprofit, were they entitled to lease any land they want from the State. MS. RUTHERFORD responded that is not a policy; but because this land is within a refuge makes it a unique situation. This particular site was built without site control and doesn't have it now. It is an existing problem. SENATOR MACKIE asked if anyone else found a unique site that they wanted to lease and became a nonprofit, were there policies that would allow that to happen. MS. RUTHERFORD answered that they make those decisions on a specific site basis and try to resolve them in the best interests of the State. She noted that a decision had not been made in this instance. They had talked to Mr. McBride about forming a nonprofit, working with other existing nonprofits, or opening it up for competitive lease. SENATOR MAKCIE said his understanding is that the Seldovia Native Association has been after that location for a long time because of ties they have to a village site there - and they have been turned down. He asked if the Chenik Institute was a special instance and didn't have anything to do with DNR's current policies. MR. SULLIVAN answered that Seldovia's interest was that they had a selection under ANCSA. Their selection was rejected and went to court, but there has since been an agreement to drop the lawsuit. For quite a few years both Seldovia and Mr. McBride thought the land would eventually go to Seldovia, so they had a lot of discussions with Mr. McBride trying to work out a lease for his facility with them. SENATOR MACKIE said it seemed ironic if Seldovia had a claim through ANCSA to an old village site and were rejected that someone could get it by "squatting." He wondered if that was the right direction for State policy to go and if DNR was facilitating that to happen. Number 302 CHAIRMAN HALFORD asked if this were DNR land and going to be in State title, the chain of title is that BLM normally clears the trespass before they give it to the State, but if it were accepted by the State and in State ownership, what would the process be for issuing a lease or providing some kind of public facility in that area. MR. MYLIUS answered that normally the process is driven by someone submitting an application and the Department responding to the individual application. As a general rule, they do not use leases to authorize something that's already there in trespass. If there was no development there, they would wait until someone came in the door and asked for an application. The Department would do a best interest finding and if there was going to more than a 10-year lease, it would be opened to competitive bidding. CHAIRMAN HALFORD asked if that would apply on the State game refuge. MR. MYLIUS answered, if it was in the land use plan by ADF&G or if they said it was approved, yes, they could start the process for leasing in a game refuge. The application would have to be determined to be consistent with refuge purposes. ADF&G would have to make some positive determination that it's appropriate to have that kind of proposed facility. They also have the ability, which they have used in the Hatcher Pass ski area, to solicit proposals for a facility for leasing land - a proactive stance. This is one of the options considered for this site. SENATOR LINCOLN said the Chenik Institute's mission is to encourage and actively participate in the protection and preservation of Alaska's coastal wilderness, especially brown bear habitat, working with all national and international efforts to accomplish their mission. She asked if DNR is successful in securing the lands around the area and if the Institute is allowed to continue with their facility, is DNR obligated to fulfill their mission. What if it conflicts with the State's participation in the area, she asked. MR. MYLIUS answered that DNR would not be obligated to carry out Chenik Institute's mission, even though it is fairly similar to the purpose of the game refuge. This is an issue for ADF&G to address. MS. RUTHERFORD added whoever runs the facility, ADF&G would require a plan of operations consistent with the management plan for the refuge. CHAIRMAN HALFORD asked if this place has been operating for 20 years, how much do they charge and how many people have they had come through. MR. SULLIVAN answered that information they have seen indicates they charge a couple of thousand dollars a week and can accommodate up to 16 people, although generally there are a few less than that. The premium bear viewing time is about six weeks in summer. CHAIRMAN HALFORD commented that this is an exclusive trespass activity in the middle of a sanctuary, charging a couple of thousand dollars per week for 16 people at a time, paying the State or BLM $0 for 20 years use of the land and asked if that was right. MR. SULLIVAN answered that essentially that was correct. It started out as a tent camp in 1978. The lodge was built in the mid to late 80's. CHAIRMAN HALFORD commented that he was glad BLM hadn't decided what to do, yet. MR. GERON BRUCE, ADF&G, explained that they do have to make a positive finding that an activity such as this within the refuge would be consistent with the refuge purposes. They have had some discussions about that, as this issue has been around a long time. ADF&G is working on its comments now and will be submitting them to DNR in the near future. SENATOR KELLY asked if they had been paying rent to the BLM for this time, would any of that money have come to the State. MR. BRUCE said he would defer to DNR on that. CHAIRMAN HALFORD asked what happened to revenue from State selected land before conveyance would be the general question. MR. MYLIUS answered that the State would get 90 percent of the revenues from the time our selection was considered valid. Since the selection was in litigation all those years, the BLM may have decided to wait until the litigation was settled. CHAIRMAN HALFORD stated that the most recent correspondence is dated January 1999 from Mr. Trasky to Janet Kowalski. SENATOR MACKIE interjected a question asking Mr. Bruce if ADF&G had a position on this issue yet. MR. BRUCE explained that they had not submitted a finding to DNR yet. CHAIRMAN HALFORD asked if they had a position in the past. MR. BRUCE said they have and that they have had more than one position in the past. CHAIRMAN HALFORD said there was a memo from Marilyn Heiman to the Commissioner requesting ADF&G to reexamine this matter and advise the Governor on a resolution. A previous paragraph in the memo speaks of the ADF&G long-standing opposition. SENATOR MACKIE noted that memo was actually dated 1996 and there was a response back from Commissioner Rue to Marilyn Heiman saying it continues to be the Department's position that, "the State should not agree to any transfer or disposal of lands because that would be in violation of the constitution and/or state law. Over the last several years, Mr. McBride has met with BLM officials and state officials from DNR, ADF&G, Division of Government Coordination on this matter, and the paper trail is extensive. He has now gone to the Governor to secure what has eluded him through proper channels and due process....If the Governor wishes to pursue the issue, we would recommend that he request an Attorney General's opinion regarding the question of equal access under Article 8, Section 17 of the Constitution as it pertains to this issue." He then asked if they ever got an Attorney General's opinion on that. MR. BRUCE responded that he didn't know. SENATOR MACKIE said he would like to see it, if it's available. CHAIRMAN HALFORD requested the 1996 memo and then asked Mr. Trasky to summarize his memo dated January 19, 1999, since his was the most recent statement. MR. TRASKY replied that his memo was in response to a copy of a letter they received in January 1996 referring to the Department's decision recommending against issuing a lease for the structures. Number 437 CHAIRMAN HALFORD said he thought he had an idea of the time-line. In January 1996, the third floor staff asked the Commissioner to reexamine. In the end of January 1996, the Commissioner basically said no and doing so would probably be in violation of the Constitution and he would like an Attorney General's opinion. By November 22, 1996, the Commissioner of ADF&G did exactly what he has said would be in violation of the Constitution in a memo dated January, 30 1996 to Marilyn Heiman from Frank Rue. MR. TRASKY stated that they didn't have the January memorandum and couldn't respond. They had seen the November 22, 1996 decision. CHAIRMAN HALFORD said they would send him a copy. By November, the Commissioner had done what he considered unwise in January and he asked if his current review is requesting him to reevaluate that determination. MR. TRASKY replied that was correct. CHAIRMAN HALFORD asked if the rest of his letter came out of Mr. McBride's chronology which may be at BLM or somewhere else. MR. TRASKY said that was correct. It was explaining why they felt he should reverse his reversal of the 1994 position. CHAIRMAN HALFORD said he wanted to take the Chenik Institute issue up again in two weeks and hoped there wasn't going to be any action on it by ADF&G or DNR in the next few weeks. MR. BRUCE said he spoke to the Commissioner and there wouldn't be any action by ADF&G before the committee discussed it again. SENATOR MACKIE asked if there were any other reasons for the Commissioner reversing his earlier decision. CHAIRMAN HALFORD said they would ask the Commissioner that question when he becomes available. SENATOR MACKIE said he was interested because Seldovia Native Corporation tried to get the land and was refused. He asked if this land came to the State, would there be some consideration given to any other potential users; if there was interest in competing for a lease. MS. RUTHERFORD reiterated that no decision about any action by DNR has been made. One of their options is to put this out to competitive lease. MR. TRASKY said he had a couple of conversations with Seldovia Native Association and they hope to work with Mr. McBride. In fact, one of his letters of support comes from the Seldovia Native Association. CHAIRMAN HALFORD asked what was the status of the November 10, 1998 finding and decision, ADL225906. MR. TRASKY explained that the preliminary decision is what the public comments were taken on and is most likely to change based on other information that has been gathered. There would be further public review before a final decision. CHAIRMAN HALFORD asked how they could make that finding without a response from ADF&G. MR. MYLIUS answered that this proposal is something for ADF&G to respond to. MS. RUTHERFORD added for all of the Department's best interest findings, a preliminary decision is used as a methodology to solicit input from the public and the agencies. SENATOR LINCOLN asked if there was a response to Mr. Trasky's memo of January 19 about selection of an appropriate site for such a facility. MR. TRASKY replied no. SENATOR LINCOLN asked if they had followed up with a telephone call. MR. TRASKY said they had discussed this in the Department, but one of the complications is that regulations for the refuge's commercial facility and structures plan say the structure has to protect fish and wildlife habitat, conserve fish and wildlife populations, and maintain public use opportunities and high quality environment. Permanent commercial facilities will not be allowed in either the refuge or the sanctuary, except that the Commissioner will, in the Commissioner's discretion, allow a permanent commercial facility in the refuge specifically for the purpose of facilitating the brown bear viewing program under appropriate terms and conditions in a manner compatible with the purpose for which the area is established only after a finding of fact indicates the refuge and sanctuary management goals are better served with a commercial facility than without. This has not been done yet, he concluded. SENATOR MACKIE noted that where the memo says the Department should continue to oppose any long-term lease, regardless of who the applicant might be, conflicts with what the Commissioner said in November. MR. TRASKY said he thought there had been some change of thought within the Department. Their purpose was to provide the Commissioner with additional facts he needed to consider in making that decision, to be consistent with his own statutes and regulations. MR. BRUCE added that the Commissioner met with staff in Anchorage and discussed the issue recently, after the memo from Mr. Trasky. There has not been a formal written response, yet, but discussions have been going on within the Department. CHAIRMAN HALFORD asked who has the lead within the Department. MR. BRUCE replied that at this point he knew the Commissioner took the initiative to meet with staff, but he wasn't sure who was taking the lead on the technical stuff. TAPE 99-10, SIDE B Number 570 MR. JOHN HILSINGER testified via teleconference that his main concern was covered by Mr. Trasky regarding the process laid out in the management plan and the fact that to his knowledge, the Division of Wildlife Conservation has not decided that they want a commercial facility in the refuge in order to facilitate the bear viewing program. Doing the finding of fact would be the second step. None of this has occurred, yet. MR. TOM WALKER, Cook Inlet Aquaculture Association, said they have a pen and fish ladder just south of the Chenik Lodge for which they do have a lease which they got by going through DNR, along with a number of other permits that were necessary. They support the Department's earlier decision that it was not necessarily a good idea to permit Chenik. He urged the Committee to stay with that decision. Number 550 CHAIRMAN HALFORD asked if the lands his permit is subject to are also in BLM hands now. MR. WALKER replied that the land they have a lease on is state land. This is not the issue; the issue of bears is relevant to both situations and, in their case, one of their requirements to have that property was that the staff and materials area has to be surrounded by a 10 ft. barbed wire electrified fence - among other things. They don't see those kinds of restrictions even being suggested for this facility. MR. FANDREI, Cook Inlet Aquaculture Association, supported Mr. Walker's comments. MR. ROY HOYT, JR. said his opinion is that someone who has been in trespass for 20 years and has constructed illegal structures should be denied a lease. In fact, they should be denied a lease on any state or federal land from now on. MS. LOIS IRVIN, Homer, asked for maps of the area to help clarify her understanding of the issue. SENATOR MACKIE asked if the Commissioner was going to make the final decision on this. MR. BRUCE replied that was correct, as the law requires, and he was in the process of considering it. SENATOR MACKIE said he wanted a comment on the Commissioner's memo saying it was unconstitutional and needed an Attorney General's opinion. CHAIRMAN HALFORD noted that constitutional protection of everyone else's rights collectively to what is public property is difficult to handle. SENATOR MACKIE said that was his biggest concern. He knows because of issues in his district that it's a complicated issue. SENATOR KELLY noted that in his district there is a similar situation across the Tanana River from Fairbanks where people have made little hunting camps and they are being burned out. CHAIRMAN HALFORD said the committee would take this issue up again soon and adjourned the meeting at 4:06 p.m.