Opinion ID: 2518074
Heading Depth: 3
Heading Rank: 5

Heading: The Legislature Has Expressly Granted Authority to DNR To Require Upland Owners Who Wharf Out To Enter into Leases.

Text: The first Alaska state legislature enacted the Alaska Land Act [56] pursuant to the mandate of article VIII, section 2 of the Alaska Constitution that the legislature provide for the utilization, development, and conservation of all state land. Alaska Riverways argues that the Alaska Land Act and its subsequent amendments do not grant DNR statutory authority to lease shorelands to riparian owners. We disagree and conclude that the Alaska Land Act as first enacted in 1959 authorized DNR to require riparian owners to enter into leases for exercising their common-law right to wharf out.
DNR argues that AS 38.05.070, which was enacted as part of the Alaska Land Act, [57] authorized it to charge riparian owners rent and abolished any common law right to wharf out. [58] Alaska Riverways argues that this statute instead grant[ed] DNR authority to lease shorelands to anyone but riparian landowners.  [59] (Emphasis in original.) When it was enacted upon statehood in 1959, AS 38.05.070 provided: All lands, including any tide, submerged or shore lands, to which Alaska holds title or to which Alaska may become entitled, may be leased ... in the manner provided in this Article. The lands to be leased would be determined by the director of the Division of Lands of DNR, along with limitations and conditions that shall attach to the lands and the terms that shall accompany the lease. [60] The leasing would be conducted at public auction to the highest qualified bidder unless the total appraised value of the transaction was $250 or less per year, in which case DNR could negotiate the lease directly without advertisement. [61] The text of AS 38.05.070 and the other leasing provisions make no reference to riparian owners, let alone explicitly state that DNR cannot lease shorelands to riparian owners. The statute authorizes DNR to negotiate leases of up to five years whose total appraised value is $250 or less per year, imposing no limitation on the identity of the lessee. The statute further authorizes DNR to hold public auctions to lease lands it has selected. There is nothing in the statute that prevents a riparian owner from submitting a bid for adjacent shoreland. If AS 38.05.070 did not grant DNR authority to lease shoreland to riparian owners, as argued by Alaska Riverways, DNR would either have to reject such a bid, or else be unable to put any shoreland (or tide or submerged land) adjacent to private property up for auction in the first place. Alaska Riverways' construction of AS 38.05.070 would thus exclude the parties who would be most interested in leasing state-owned lands, the adjacent land owners, from the leasing program or substantially undercut DNR's ability to exercise its statutory authority. We find this construction to be untenable. Consistent with article VIII, section 16 of the Alaska Constitution, the Alaska Land Act also granted explicit rights to those who had constructed wharves or other substantial permanent improvements on tide and submerged lands for any business, residential or other beneficial purpose prior to statehood. [62] Such occupants were given a preference right to acquire the tide and submerged land either from a municipality, if such land was transferred from the state, or directly from the state. [63] If the improvements were constructed prior to September 7, 1957, the occupant could acquire the land for the cost of surveying and transferring title; if the improvements were constructed after that date and prior to statehood, the occupant could acquire the land for its appraised value, plus appraisal, administrative, and transfer costs. [64] Occupants had two years from the date the municipality or DNR began accepting applications to apply for preference rights, or else they would be lost. [65] The provision did not differentiate between occupants who owned adjacent upland property, nor did it grant any rights to those constructing improvements after statehood, whether owners of adjacent land or not. Reading these two provisions together, a legislative framework emerges. Persons who had constructed improvements on tide and submerged land prior to statehood were granted special preference rights to purchase or lease these occupied lands, but those rights would expire if unused. DNR was authorized to enter into leases with all other parties, including upland owners, for their occupancy of state lands either directly if the lease was appraised at $250 or less, or after public auction. To this extent, AS 38.05.070 restricted the common-law right to wharf out when it was passed in 1959. [66] The DNR lease application forms used by Alaska Riverways in 1979 are consistent with this statutory construction and suggest that DNR since at least that time has interpreted its statutory authority to include leasing to upland owners. [67] If the applicant was not the upland owner, the application requested the names and addresses of the upland owners in addition to adjacent land owners. The application further gave notice to the applicant that the applicant may have to provide a deposit to cover the cost of advertising a public auction, which would be returned [i]f advertisement of this land is required and the land is leased to another party. The application thus contemplated the possibility that DNR would conduct a public auction to lease shoreland, tideland, and submerged land adjacent to upland owners and ensured that DNR had the names of the landowners most likely to be interested in participating or otherwise affected.
The Alaska Land Act was substantially revised in 1984, including changes to the leasing program. [68] A provision was added under which an upland owner would be entitled to acquire a lease for the [adjacent] tide and submerged land without competitive bidding regardless of the value of the lease if DNR made certain determinations. [69] This modification to the leasing program was proposed by an executive of the Sealaska Native Corporation who testified before the Senate Resources Committee. [70] After noting that the development of Sealaska's 1,000 miles of coastal property was dependent on access to state-owned tidelands, the witness suggested that the creation of an upland owner's preference would facilitat[e] transportation and commerce from adjacent uplands, which is vital to upland economic development. [71] The provision was presented and adopted at the next meeting of the Resources Committee. [72] The provision, proposed by an owner of a large amount of land bordering tideland and submerged land, was meant to expand the rights of littoral owners by entitling them to noncompetitive leases for adjacent property, not to restrict their rights by authorizing DNR to lease tideland and submerged land to them when they could not do so before. Support for this interpretation of AS 38.05.075(c) and DNR's authority to enter into leases with upland owners prior to its enactment can be found in the Senate Resources Committee files. The text of the provision proposed by Sealaska, which specifically related to upland owner leases, was circulated among committee members prior to its adoption with the following note from committee staff: Leases for tide and submerged lands are currently available through the competitive bidding process. Under current statute, any lease for a term of less than 5 years and valued at less than $250 annually may be negotiated. [73] After the amendment had been adopted by the committee, a summary of major provisions of the amendments to the Alaska Land Act described it as [p]rovid[ing] a mechanism for DNR to negotiate leases for tide and submerged lands with upland land owners without competitive bidding, whereas under the former leasing procedures, [l]easing is made at auction to the highest qualified bidder. [74] In 1997, AS 38.05.075(c) was amended to authorize DNR to grant preference rights to riparian owners leasing adjacent shorelands in addition to owners leasing adjacent tidelands and submerged lands. [75] In its current form, the provision states: The owner or lessee of land that fronts on shoreland, tideland, or submerged land of the state may be granted a preference right to a lease for the shoreland, tideland, or submerged land without competitive bidding if the director makes certain determinations. Alaska Statute 38.05.075(c) clearly authorizes DNR to directly negotiate leases of any value with upland owners who construct wharves. [76] We therefore reject Alaska Riverways' argument that DNR is not authorized by statute to require it to enter into a lease for its exclusive use of state-owned shoreland.