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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Southeast Alaska Conservation Council v. State (03/13/2009) sp-6344
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| SOUTHEAST ALASKA | ) |
| CONSERVATION COUNCIL and | ) Supreme Court No. S- 13159 |
| TONGASS CONSERVATION | ) |
| SOCIETY, | ) Superior Court No. 1JU-07- 558 CI |
| ) | |
| Appellants, | ) O P I N I O N |
| ) | |
| v. | ) No. 6344 March 13, 2009 |
| ) | |
| STATE OF ALASKA and | ) |
| UNIVERSITY OF ALASKA, | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Philip M. Pallenberg, Judge.
Appearances: Katharine S. Glover, Thomas S.
Waldo, EARTHJUSTICE, Juneau, for Appellants.
J. Anne Nelson, Assistant Attorney General,
Anchorage, Talis J. Colberg, Attorney
General, Juneau, for Appellee State of
Alaska. James D. Linxwiler, Michael S.
McLaughlin, Guess & Rudd P.C., Anchorage, for
Appellee University of Alaska.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices. [Winfree,
Justice, not participating.]
MATTHEWS, Justice.
I. INTRODUCTION
In 2000 and 2005 the legislature passed two bills
(collectively, the act) conveying approximately 250,000 acres of
land to the University of Alaska. The act directed that the net
proceeds from the Universitys sale or use of the property be
deposited in the Universitys endowment trust fund, an existing
fund from which only earnings may be spent. Southeast Alaska
Conservation Council and Tongass Conservation Society brought
suit challenging the act, alleging that it violates article IX,
section 7 of the Alaska Constitution by improperly dedicating
state funds. The superior court granted summary judgment to the
State and University, holding that the transfer of land and net
proceeds from land under the act does not violate the dedicated
funds clause and, in the alternative, that the University is
exempt from that constitutional provision. The conservation
groups appealed. We hold that (1) the sections of the act
committing proceeds from the granted lands to the endowment trust
fund are unconstitutional under the dedicated funds clause and
(2) those sections are not severable from the remainder of the
act, with the exception of provisions creating a research forest.
II. FACTS AND PROCEEDINGS
In March 2000 the legislature passed Senate Bill 7,1
which allowed the University of Alaska to select 250,000 to
260,000 acres of land over which it would take title.2 All net
income derived from the sale, lease, or management of the land
selected by and conveyed to the University of Alaska was to be
placed and held in the Universitys endowment trust fund (ETF).3
State law mandates that the principal of the ETF be held in
perpetuity4 and that [t]he total return from the [ETF] shall be
used exclusively for the University of Alaska.5
The following month, Governor Tony Knowles vetoed S.B.
7.6 The legislature voted to override the veto by a margin
normally sufficient to do so but below the three-fourths majority
required to override vetoes of appropriation bills.7 We ruled
that the bills provisions did not constitute appropriations, thus
allowing the bill to become law; in so doing, we decline[d] to
address the question of whether S.B. 7 violates the
constitutional prohibition on dedications because the matter was
not fully litigated below.8 On remand, the superior court
refused to permit conservation groups to intervene to litigate
the dedication issue.
In 2005 the legislature passed House Bill 130.9 That
bill amended S.B. 7, rescinding the Universitys right to choose
the land it would receive and instead conveying by quitclaim deed
land identified by the University of Alaska Land Grant List 2005.10
H.B. 130 retained the requirement that net proceeds from the land
be placed in the ETF.11 The bill also established a University
Research Forest on certain parcels of conveyed land to be used
for advancing research into forest practices, ecology, wildlife
management, and recreation.12
Southeast Alaska Conservation Council and Tongass
Conservation Society (collectively SEACC) filed suit against the
State of Alaska and the University of Alaska in the superior
court in April 2007. SEACC argued that the act violates article
IX, section 7 of the Alaska Constitution, which mandates that
[t]he proceeds of any state tax or license shall not be dedicated
to any special purpose.13
Ruling on cross-motions for summary judgment, the
superior court upheld the act. The court first addressed whether
the proceeds from state land are the proceeds of a tax or
licence, and ruled they are not. Despite the substantial
persuasive weight of precedent from this court suggesting a
contrary conclusion, the superior court held that the language
and history of the dedicated funds clause do not support a broad
reading of the text. The court next considered whether the
conveyance of revenue producing land to the University, and
placement of the income from such land in an endowment trust fund
for the University, can be considered a dedication of state
revenues, and concluded, as an alternative reason for upholding
the act, that it is not. The superior court reasoned that
because the University is constitutionally chartered as a body
corporate and explicitly permitted by the constitution to hold
title to its lands,14 it would be illogical to assume the
constitution was intended . . . to divorce management of the land
from the ability to receive financial benefits from the land.
The State moved to reconsider, arguing that the
superior court need not have ruled on the meaning of state tax or
license and should have based its decision solely on the
alternative ground. The State contended that the courts
narrowing of the scope of the dedicated funds clause was legally
incorrect and, as a practical matter, would have a profound
impact on the finances of Alaska. The superior court denied the
motion, noting that its original decision expressly does not
apply to oil or gas royalties and so would not have great
significance for the state budget.
SEACC filed an emergency motion for injunction pending
appeal to this court. A single justice granted that motion on
June 27, 2008, enjoining the State from conveying property to the
University pursuant to the act and enjoining the University from
disposing of property it had already received. Both the State
and the University challenged the order, and, in response, we
vacated the injunction prohibiting the State from conveying
property to the University but left in place the injunction
against the University. We also ordered that SEACCs appeal
proceed on an expedited schedule.
III. STANDARD OF REVIEW
We review decisions granting summary judgment de novo
and will affirm them when there are no genuine issues of material
fact and the prevailing party is entitled to judgment as a matter
of law.15
Questions of constitutional and statutory
interpretation, including analysis of the constitutionality of a
statute, are questions of law to which we apply our independent
judgment.16 We will adopt the rule of law that is most persuasive
in light of precedent, reason, and policy.17 We presume statutes
to be constitutional, and the party challenging the statute bears
the burden of showing otherwise.18
IV. DISCUSSION
A. Article IX, Section 7 Prohibits the Dedication of
Income Derived from Land Conveyed to the University of
Alaska.
This case calls on us to consider once again the scope
of article IX, section 7 of the Alaska Constitution, which
prohibits the earmarking of state funds for predetermined
purposes. The dedicated funds clause reads:
The proceeds of any state tax or license
shall not be dedicated to any special
purpose, except as provided in section 15 of
this article or when required by the federal
government for state participation in federal
programs. This provision shall not prohibit
the continuance of any dedication for special
purposes existing upon the date of
ratification of this section by the people of
Alaska.[19]
We have discussed the origin and purpose of this clause
at some length in our case law. In State v. Alex20 we observed:
The origin of section 7s prohibition of
earmarking can be traced back through the
constitutional convention records to the
Alaska Statehood Commissions studies which
were prepared for the use of the delegates at
the convention. One of the studies noted
that [t]he most severe obstacle to the scope
and flexibility of budgeting results from the
earmarking or dedication of certain revenue
for specified purposes or funds. 3 Alaska
Statehood Commission, Constitutional Studies
pt. IX, at 27 (1955). The study stated that
one of the key reasons for the popularity of
dedicated taxes was that they reduced
taxpayer resistance by guaranteeing that the
tax would be used to benefit those who paid
it. Id.
The study then noted that earmarking
curtailed the exercise of budgetary controls
and simply amounted to an abdication of
legislative responsibility. Id. at 29-30.[21]
In Sonneman v. Hickel22 we reiterated the preservation of
legislative control rationale of the dedicated funds clause and
quoted extensively from the constitutional debates:
The constitutional convention committee
which drafted the prohibition on the
dedication of funds commented that the reason
for the prohibition is to preserve control of
and responsibility for state spending in the
legislature and the governor.
Even those persons or
interests who seek the
dedication of revenues
for their own projects
will admit that the
earmarking of taxes or
fees for other interests
is a fiscal evil. But if
allocation is permitted
for one interest the
denial of it to another
is difficult, and the
more special funds are
set up the more difficult
it becomes to deny other
requests until the point
is reached where neither
the governor nor the
legislature has any real
control over the finances
of the state. In one
Rocky Mountain state the
legislature is free to
appropriate only 17 per
cent of the tax
collections; the rest
are dedicated. In Alaska
at present, 27 per cent
of territorial funds are
earmarked, primarily for
school construction and
roads.
6 Proceedings of the Alaska Constitutional
Convention (PACC) Appendix V at 111 (Dec. 16,
1955).
Without earmarked funds, the
constitutional framers believed that the
legislature would be required to decide
funding priorities annually on the merits of
the various proposals presented. Delegate
Barrie White, the spokesman for the committee
which drafted section 7, stated in the
convention debates:
[t]he Committee feels
that if you accept the
principle of not
earmarking, it puts
everyone in the same
position and that the
legislature will then be
in the position being
able to decide each case
on its merits. If you go
the other route and allow
for earmarking or start
drawing up all the
exceptions that everybody
would want to have drawn
up, you are then back to
the situation that most
states now find
themselves in, where an
ever-increasing
percentage of their
revenues are earmarked
for special purposes and
an ever-decreasing amount
is available to the
general fund.
4 PACC 2364 (Jan. 17, 1956). Delegate White
was then engaged in a colloquy about the
appropriation of funds collected through
licenses to agencies which had collected
them:
Delegate Gray: It doesnt
earmark it but the
talking point that these
organizations have for
the use of this money
that is rightfully
theirs, why, they havent
been precluded, they just
have to sell their
viewpoint to the
legislature and if they
need the money, why they
probably could get it if
they could talk them into
it.
Delegate White: They
have to sell their
viewpoint along with
everybody else.
Id. at 2367.[23]
With this background in mind, we consider first whether
proceeds from land sales and leases are revenues to which the
dedicated funds clause applies, and second whether the University
is exempt from the clause.
1. Proceeds from land are within the definition of
proceeds of any state tax or licence for purposes
of the dedicated funds clause.
SEACC argues that revenue derived from land is
encompassed by article IX, section 7s reference to proceeds of
any state tax or licence. SEACC relies on our opinion in State
v. Alex, quoting our statement that those who wrote the provision
intended it to prohibit not only the dedication of taxes, but
also such revenue as the proceeds from the sale of state lands.24
The University disagrees with that reading of the clause, arguing
that revenue from land is not, according to the dictionary
definitions of tax or license, within its scope.
We reaffirm the reasoning and language of Alex. In
Alex, we struck down a statute authorizing aquaculture
associations to collect assessments from commercial salmon
fishermen because it violated the dedicated funds clause.25 Our
opinion considered the meaning of the word tax and concluded that
the sense in which tax is used in article IX, section 7 of the
constitution must be determined from its context, both in the
text and according to the discussion at the constitutional
convention which adopted the wording.26 We then turned to
constitutional history, noting that the studies on which
Constitutional Convention delegates relied encouraged adopting a
prohibition on earmarking because the dedication of funds
curtailed the exercise of budgetary controls and simply amounted
to an abdication of legislative responsibility.27 We also
remarked that the commissions studies used the terms revenues,
funds, and taxes interchangeably in discussing this issue.28 We
interpreted an amendment to the proposed provision that inserted
proceeds of any state tax or licence in the place of all revenues
as an effort to allow for the setting up of certain special
funds, such as sinking funds for the repayment of bonds, rather
than to exempt some sources of revenue from the prohibition.29
Thus, we held that since the constitution prohibits the
dedication of any source of revenue, the assessments in question
could not be earmarked.30
We see no reason to hold differently now. In addition
to the history described in Alex, the amendment to article IX,
section 7 creating an exception for the Permanent Fund31 indicates
that the prohibition is meant to apply broadly. If only revenue
collected as taxes or license fees were included, there would
have been no need to expressly exempt all mineral lease rentals,
royalties, royalty sale proceeds, federal mineral revenue sharing
payments and bonuses received by the State32 to ensure that
placing those revenues in the Permanent Fund did not violate the
constitution.33
The State argues that the grant of land and proceeds
from it does not violate the dedicated funds clause because the
grant of land and proceeds is not a dedication of revenue but
rather an asset conveyance. The State asks us not to rely on
State v. Alex but to rule that this case should follow what it
contends is the reasoning of Myers v. Alaska Housing Finance
Corp.34 In Myers, we upheld the states sale of future proceeds
from settlements with tobacco companies against a challenge under
the dedicated funds clause.35 The State argues that the situation
here conveying real property and dedicating the proceeds the
property will generate is an analogous situation and thus does
not violate the constitution.36
We disagree. In Myers, we explicitly accepted Alexs
reasoning in determining that revenue from the settlement of a
lawsuit was within the scope of the dedicated funds clause.37
The legislature had authorized the sale of the right to future
proceeds from the settlement for a lump-sum amount based on the
present value of the future proceeds.38 The legislature
appropriated the lump sum in a single year for various purposes.39
No dedicated fund was created nor were revenues placed in a pre-
existing dedicated fund. Accordingly, we concluded that
[b]ecause the legislature sold the tobacco settlement and then
appropriated the resulting income, it did not directly violate
the anti-dedication clause.40 Nonetheless, we were concerned that
the transaction might be contrary to the spirit of the clause;
ultimately, however, we found no constitutional violation.41
Thus Myers neither holds nor suggests that revenue from
state property can be placed in a dedicated fund. Likewise, it
does not imply that there is an exception to the dedicated funds
clause applicable to revenue from state property. Instead, Myers
suggests that the reach of the dedicated funds clause might be
extended to statutes that, while not directly violating the
clause by dedicating revenues, in some other way undercut the
policies underlying the clause.
2. The University is not exempt from article IX,
section 7.
The State would prefer that we affirm the superior
courts holding on the alternative ground that the Universitys
special status means that revenues generated by its lands may be
dedicated. The State and University argue, in effect, that
article VII, section 2 of the Alaska Constitution creates an
implied exception to the dedicated funds clause by authorizing
the University to hold title to real property. Because, the
appellees reason, University lands are not state lands,
University land revenues are not state revenues, and therefore
University land revenues can be dedicated. In addition to
drawing this conclusion from the constitutional text, the
appellees emphasize that the Universitys lands are distinct from
state lands under certain statutes, such as the Alaska Land Act42
and laws regarding public domain land.43
SEACC believes interpreting article VII, section 2 to
permit ownership but deny control of proceeds harmonizes that
provision with the dedicated funds clause without improperly
reading an exception into the dedicated funds clause. Further,
SEACC argues that the University is an instrumentality of the
state for relevant purposes44 and points out that the legislature
controls the Universitys funding. Therefore, SEACC concludes,
University revenues are subject to article IX, section 7.
Our case law establishes that University lands are
state lands. Article VII, section 2 establishes the University,
declares it a body corporate, provides that the University shall
have title to all real and personal property now or hereafter set
aside for or conveyed to it, and states that [i]ts property shall
be administered and disposed of according to law.45 We considered
the meaning of article VII, section 2 in State v. University of
Alaska.46 There, we held that the state could take land that
Congress had granted to the University to be held in trust for it
under the federal 1929 act, but that the state had to compensate
the University with monetary damages or equivalently valuable
land.47 Our opinion emphasized article VII, section 2s command
that property shall be administered and disposed of according to
law,48 and noted that according to law refer[s] to the
legislatures power to make laws.49 Thus, even when the University
has title to land, only the legislature can make laws effecting
the disposal of land, not the Board of Regents.50 We further
observed that [t]he natural resources article of the Alaska
Constitution grants extensive powers to the legislature to
control lands, which makes clear that [the University lands
received under the 1929 act] belong to the state.51 The
conclusion we reached in State v. University of Alaska, that
University land is state land, applies even more readily to the
present case because the University land involved here is not
shielded by a federal trust obligation. Statutory language
treating University lands differently from other state land does
not overcome this constitutionally based conclusion.
Because University land is state land, revenue from
University land is state revenue for purposes of the dedicated
funds clause.52 This conclusion receives additional support from
two historical sources. Governor William Egan, who had served as
President of the Constitutional Convention, vetoed a 1959 bill
that would have given one million acres of land to the
University.53 He wrote:
I am vetoing [the bill], a bill intended
to reserve lands for the support of the
University of Alaska, because I believe it
wrong in principle, inconsistent with
constitutional concepts and not in the public
interest. In so saying, I may add that I
would act similarly on any bill which sought,
as this does, to make special disposition of
the proceeds of public lands in aid of one
public function to the exclusion of others.
. . . .
To return now, by the enactment of [this
bill], to a proposal whereby lands are given
piecemeal earmarking for various state
functions would be a distinct step backward.
If we are to return to the internal
improvement concept of earmarking state
lands, can we in good conscience limit the
practice to the University? . . . Certainly,
this bill invites similar treatment for other
state responsibilities. By this bill the
door would be opened to an unplanned
disposition, or dissipation, of the resource
without regard to relative need and without
regard to the clear constitutional and
congressional intent.[54]
Five years later, Senator Bob Bartlett, who had been Alaskas
delegate to Congress during Alaskas statehood campaign, wrote to
Governor Egan, explaining that the policies that underlie the
dedicated funds clause impelled him to prevent the federal
government from granting to the new state land that was already
reserved for certain purposes:
[A]t many times during the consideration of
the statehood bill, efforts were made to set
aside this amount of land or that amount of
land for the common schools and for other
educational uses. I always resisted these
and, as it turned out, successfully. My
conviction wasand isthat notwithstanding the
possible need for such reservations in the
early statehood bills, the reasons for such
have long since evaporated. . . . [I]f
dedication is made for one institution or one
purpose, what argument could be made against
expanding? None, of course.[55]
B. The Land Grant Provisions of the Act Are Not Severable
from the Dedication of Proceeds Provisions, but the
Research Forest Provisions Are Severable.
The act does not contain a severability clause, but
AS 01.10.030 inserts one into every statute passed by the
legislature.56 We have stated that this general severability
provision creates only a weak presumption in favor of
severability.57 In Lynden Transport, Inc. v. State,58 we described
the two-part test for determining whether, after an
unconstitutional portion of a statute has been severed, the
remainder of the law can stand: the remainder may not stand alone
unless it appears both that, standing alone, legal effect can be
given to it and that the legislature intended the provision to
stand, in case others included in the act and held bad should
fall.59
In arguing that the act should be entirely invalidated,
excepting the research forest provision, SEACC focuses on the
second part of the Lynden Transport test. It argues that the
central and critical intent behind the enactment of SB 7 and HB
130 was the creation of a permanent endowment trust fund for the
University. Because this objective cannot be accomplished, SEACC
argues that allowing the land grant provisions of the act to
stand would result in an entirely different statute than the
legislature enacted. SEACC notes that under the sections that
would remain if we permitted severance, the University would be
the owner and manager of the granted lands but the proceeds from
the sale or use of the land would not be placed in trust under AS
14.40.365(j) and AS 14.40.400(a)(2) and (c).60 Instead, the
proceeds would by default be deposited in the University receipts
fund, which is a non-dedicated account subject to legislative
appropriation.61 Though the source of the funds might give the
University a hope or expectation that the funds would be
appropriated for the University, SEACC argues that this would be
a mere talking point,62 and the legislature would be able to
appropriate the funds for any agency and any purpose. SEACC also
points out that the entire proceeds from the sale or lease of the
lands would be subject to appropriation each year. SEACC reasons
that making all proceeds available to spend would conflict with
the legislative intent that all net proceeds be capitalized and
preserved in perpetuity in the ETF.
The State argues that the land grant provisions of the
act are severable and could be given legal effect. The net
proceeds from the land, the State argues, would have to be
accounted for with the other university receipts instead of with
the endowment trust proceeds. The State contends that the
university still would benefit financially from having the
talking point of increased receipts when making its annual budget
request. The State also argues that the University still would
be required to use the land for development purposes and that use
would contribute to Alaskas economy, even if the land is not
managed as part of the endowment trust. The State does not
address SEACCs argument that the land, or the net proceeds
derived from the land, would not be preserved in perpetuity.
The Universitys argument regarding severance is similar
to that made by the State, but the University addresses SEACCs
argument that net proceeds would be spent under the severed
remainder rather than capitalized and preserved in the ETF. It
contends that the legislature could still achieve its original
purpose of preserving net proceeds by simply appropriat[ing] some
of the University receipts, equivalent to the amount of the
annual proceeds from the HB 130 Lands, into the Endowment Trust
Fund.
The central question before us, then, is the one posed
by the second prong of the Lynden Transport test: whether the
legislature would have passed the act without requiring that net
proceeds derived from the lands be placed and held in the ETF.63
In other words, we consider whether the legislature would have
granted the 250,000 acres of land to the University had it not
believed it was able to dedicate the net proceeds from the land
to the ETF.
One way to determine legislative intent is to decide
whether the valid provisions would still further the main purpose
of the act.64 If the purpose is stated broadly as simply to
improve the Universitys financial status, it would be possible to
conclude that allowing the land grant provisions of the act to
stand would serve this purpose. Under the severed provisions,
net proceeds from the sale or use of the lands would be deposited
in a non-dedicated fund, from which the legislature could make
appropriations to any agency. But given that the source of the
proceeds would be University lands, the University would have a
talking point, that is, a possible advantage over other agencies,
when seeking the funds from the legislature.
But the main legislative purpose underlying the act
cannot accurately be described as to provide a talking point or
indeed even to provide more funding to the University. Instead,
the acts main purpose is to enhance the Universitys permanent
endowment so that the enhanced endowment will provide ongoing
additional income to the University. The difference between
granting land to provide additional funding and granting land to
enhance an endowment to provide additional funding is not merely
semantic. The difference is between providing support both from
capital and income on the one hand, and on the other, preserving
capital and providing support only from income.
The acts findings and purpose section indicates that
the legislature believed that the University, as a land grant
college, was underfunded in terms of its original land grant from
Congress.65 The land grant made under the act was designed to
remedy this deficit. As with respect to the lands granted by
Congress, all net proceeds derived from the sale or use of the
land granted by the act were required to be placed in the ETF.66
Only net earnings of the ETF could be spent.67 In this way, the
legislature sought to contribute to a financially secure state
university system, as a cornerstone to the long-term development
of a stable population and to a healthy, diverse economy in the
state.68
The legislative findings show that the main purpose of
the act was to make a land grant that would operate in a manner
similar to the way that the Universitys federal land grant has
operated since before statehood: the University is partially
supported by net earnings from the ETF, which in turn is funded
by net proceeds from revenues derived from the sale or use of
land grant lands.69 Under the act as passed, the University would
continue to receive only net earnings from the ETF. Proceeds
from the sale or use of the granted land would be capitalized and
placed in the ETF. The capital would not be spent. This long-
term goal is reiterated in statements by S.B. 7s primary sponsor
in committee meetings and floor debates.70
The land grant provisions of the act, if allowed to
stand alone, would not enhance the Universitys endowment. With
only the land grant provisions, the legislature would appropriate
on an annual basis the net proceeds gained from the sale or use
of the land. The appropriation could be directed in whole or in
part to the University or any agency. The appropriated proceeds
would be available for immediate use. They would not be
capitalized and preserved. If the University were to sell the
land, which would be likely given the legislatures goal of
encouraging development, the land could be substantially disposed
of within a few decades. Because the net proceeds from the land
would be spent rather than saved, the benefits from the land
grant, far from lasting in perpetuity, could be dissipated in a
relatively short period of time.
As noted, though the State does not address the
impermanency of the grant that would result if severance were
permitted, the University does. It argues that a permanent
benefit from the lands could be achieved if the legislature were
to appropriate an amount equivalent to the annual net proceeds
from the granted lands and place the amount in the ETF. We think
this argument fails for two reasons.
First, there is a substantial question as to whether
appropriating unrestricted funds into the ETF would in itself
violate the dedicated funds clause. While the dedicated funds
clause is not, of course, violated merely by the fact of an
appropriation for a specific purpose, it would be of concern that
the income generated by the appropriation would be dedicated. We
think that there is sufficient doubt as to the constitutionality
of an appropriation made for the purpose of generating dedicated
income that the Universitys suggestion that this might be done
cannot justify severance.71
Second, under the Universitys proposed solution, the
legislature would have to decide each year whether to appropriate
net proceeds into the ETF. This decision would be made in
competition with the demands of other agencies for funding.
Whether in fact the legislature would appropriate the net
proceeds into the ETF in any given year could not be predicted.
Depending on annual discretionary appropriation decisions would
be a poor substitute for the capital preservation system mandated
by the act. Unlike the severable provisions in Sonneman, the
trust provisions in this case are not a minor part of the overall
act.72
In summary, we conclude that the land grant provisions,
if severed from the provisions requiring proceeds to be placed
and held in the ETF, would not serve the acts main purpose and
would operate strikingly differently from the original act. In
Alaskans for a Common Language, Inc. v. Kritz73 we observed that
the risk involved in severing a statute is that an erroneous
judicial reading of the intent of those who enacted the statute
will result in a statute that no one wanted.74 In light of the
considerations we have discussed above, we believe that there is
a distinct risk that allowing the land grant provisions to stand
without the strict protections the legislature imposed to ensure
that the grant would last in perpetuity would result in a law
that the legislature would not have wanted.
But the provisions of the act creating a research
forest stand on a different footing. They are directly related
to the core education and research function of the University and
not to the objective of enhancing the Universitys endowment. The
section of the act establishing the research forest,
AS 14.40.461(a), starts with its own statement of purpose: For
the purpose of advancing research into forest practices, ecology,
wildlife management, and recreation, a university research forest
is established.75 Although if the research forest provisions
stand, they will not advance the main purpose of the act
enhancing the Universitys endowment that would be the case even
if the whole act were upheld as constitutional. None of the
parties argues that the research forest provisions should be
stricken. We agree because the research forest provisions are so
separate in purpose from the rest of the act as to be sui
generis.76 And since the main purpose of the research forest is
not the generation of proceeds for the University endowment, the
provisions creating it will function when severed primarily as
they would have functioned if the rest of the act were held
constitutional and allowed to stand. For these reasons we
conclude that the research forest provisions are severable.
V. CONCLUSION
As this case illustrates, dedicating funds for a
deserving purpose or a worthy institution is an attractive idea.
Our constitutional founders were aware of the power of the
dedication impulse. They decided that the good that might come
from the dedication of funds for a particular purpose was
outweighed by the long-term harm to state finances that would
result from a broad application of the practice. In accordance
with this belief, they promulgated article IX, section 7 of the
Alaska Constitution, barring the dedication of state funds. We
enforce the considered judgment of the founders in this case. We
do so with full awareness that the University is an important
state institution and that it would benefit from the enhanced
endowment that the legislature intended to bestow.
We conclude that University lands are state lands, that
proceeds from University lands are state funds that are subject
to the dedicated funds clause, and therefore that the act
violates the dedicated funds clause. With the exception of the
land for the research forest, the land grant provisions of the
act are not severable from the dedication of proceeds provisions
because without the dedication provisions the proceeds from the
granted lands would not be capitalized and preserved in
perpetuity as a source of income for the University. Instead, a
grant that was intended to last forever could be dissipated over
time by the consumption of both capital and income. We decline
to order severance because this result differs greatly from the
acts intended operation.
For these reasons the judgment of the superior court is
REVERSED. This case is REMANDED to the superior court with
instructions (1) to order reconveyance to the State of the land
transferred under the act, (2) to order the return of any net
proceeds received from the land, and (3) to enter judgment in
favor of the appellants in accordance with the views expressed in
this opinion.77
_______________________________
1 21st Leg., 2d Sess. (2000). The act, which consists of
Senate Bill 7, passed by the 2000 legislature, as amended by
House Bill 130, passed by the 2005 legislature, see 24th Leg.,
1st Spec. Sess. (2005), is codified in significant part as
AS 14.40.365, 14.40.366, and 14.40.400(a)(2). We set out here
the sections of the act that are relevant to this opinion.
Section 1:
The uncodified law of the State of
Alaska is amended by adding a new section to
read:
FINDINGS AND PURPOSE. The legislature
finds that
(1) as the beneficiary under the
provisions of the Acts of August 30, 1890,
and March 4, 1907, designating the Alaska
Agricultural College and School of Mines as
beneficiary, and of March 4, 1915, 38 Stat.
1214, transferring certain land for its
location and support, the University of
Alaska is a land grant university;
(2) under the Acts of March 4,
1915, 38 Stat. 1214, and January 21, 1929, 45
Stat. 1091, the Congress of the United States
granted to the Territory of Alaska certain
federal land to be held in trust for the
benefit of the predecessor of the University
of Alaska;
(3) the Territory was unable to
receive most of the land conveyed by the Act
of March 4, 1915, before repeal of that Act
by Sec. 6(k) of the Alaska Statehood Act
(P.L. 85-508, 72 Stat. 339);
(4) the Congress of the United
States granted the State of Alaska the right
to select 102,500,000 acres of federal land
under Sec. 6(b) of the Alaska Statehood Act;
(5) the land selection rights
embodied in the Alaska Statehood Act reflect
in part congressional recognition that the
state would need the land to support its
government and programs, and the Congress
assumed that the State of Alaska would in
turn devote some of the land or the income
from it for the use and benefit of the
University of Alaska;
(6) most land grant colleges in
the western United States have obtained a
larger land grant from the federal government
than the University of Alaska has received;
(7) an academically strong and
financially secure state university system is
a cornerstone to the long-term development of
a stable population and to a healthy, diverse
economy in the state;
(8) it is in the best interests of
the state and the University of Alaska that
the university take ownership of a
significant and substantial portfolio of
income producing land in order to provide
income for the support of public higher
education in the state; and
(9) renewable resources should be
managed on a sustained yield basis, taking
into account the total land grant.
Section 2:
The uncodified law of the State of
Alaska is amended by adding a new section to
read:
LEGISLATIVE INTENT. It is the intent of
the legislature that the University of Alaska
(1) receive land under this Act in
an expeditious fashion; and
(2) encourage the development of
in-state value-added industries to the
maximum extent feasible when developing land
conveyed under AS 14.40.365.
AS 14.40.365:
(a) Except as provided in (b) of
this section, before July 1, 2008, the
commissioner of natural resources shall
convey to the Board of Regents in trust for
the University of Alaska, by quitclaim deed,
the state land identified for conveyance to
the university and described in the document
titled University of Alaska Land Grant List
2005, dated January 12, 2005.
(b) As soon as practicable after
June 30, 2055, the commissioner of natural
resources shall convey to the Board of
Regents in trust for the University of
Alaska, by quitclaim deed, the state land
described as the University Research Forest
and identified for conveyance to the
university in the document titled University
of Alaska Land Grant List 2005, dated January
12, 2005.
. . . .
(i) The responsibility for the
management of land conveyed to the Board of
Regents in trust for the University of Alaska
under this section vests with the Board of
Regents in trust for the University of Alaska
on the date of recording of that conveyance.
(j) The Board of Regents of the
University of Alaska is entitled to receive
any income derived from land conveyed to the
Board of Regents in trust for the University
of Alaska under this section accruing after
the date of conveyance, including any income
accruing from an existing lease, license,
contract, prospecting site sale, permit,
right-of-way, easement, or trespass claim.
AS 14.40.366:
(a) Before the conveyance or the
disposal of an interest in the land to a
third party, land conveyed to the Board of
Regents in trust for the University of Alaska
under AS 14.40.365 shall be managed in a
manner that, to the extent practicable,
permits reasonable activities of the public,
including historic recent public uses, that
do not interfere with the use or management
of the land by the university.
(b) For land conveyed to the Board
of Regents in trust for the University of
Alaska under AS 14.40.365, the Board of
Regents shall
(1) seek public comment on
proposals for land development, exchange, or
sale; and
(2) adopt policies that require
the preparation of land development plans and
land disposal plans.
(c) Before the Board of Regents of
the University of Alaska offers a parcel of
land for sale under this section, the board
shall offer first refusal to the closest
municipality.
(d) The Board of Regents shall
adopt policies requiring public notice before
approval of land development plans and land
disposal plans. The policies must require
that the notice be provided not less than 30
days before the proposed action and that the
notice be
(1) sent to local legislators,
municipalities, and legislative information
offices in the vicinity of the action and at
other locations as the university may
designate;
(2) published in newspapers of
general circulation in the vicinity of the
proposed action at least once each week for
two consecutive weeks; and
(3) published on state and
university public notice Internet websites.
(e) In this section, development,
exchange, or sale does not include the grant
of an easement or right-of-way or the
development of a campus facility.
AS 14.40.400:
(a) The Board of Regents shall
establish a separate endowment trust fund in
which shall be held in trust in perpetuity
all
(1) [ALL] net income derived from
the sale or lease of the land granted under
the Act of Congress approved January 21,
1929, as amended; [AND]
(2) net income derived from the
sale, lease, or management of the land
[SELECTED BY AND] conveyed to the Board of
Regents in trust for the University of Alaska
under AS 14.40.365; however, the amount
deposited in the endowment trust fund under
this paragraph resulting from mineral lease
royalties and royalty sales proceeds may not
be less than 25 percent of all such mineral
lease royalties and royalty sales proceeds
received by the university; and
(3) [ALL] monetary gifts,
bequests, or endowments made to the
University of Alaska for the purpose of the
fund.
. . . .
(c) The total return from the fund
shall be used exclusively for the University
of Alaska, as the successor under AS
14.40.030 of the Agricultural College and
School of Mines.
. . . .
(f) In this section,
(1) fund means the separate
endowment trust fund established under (a) of
this section;
(2) total return means the total
earning of the fund, including current yield,
gains, and capital appreciation, less all
costs, expenses, losses, and capital
depreciation.
(Additions made by the act are underlined and deletions are
capitalized and bracketed.)
AS 14.40.461(a):
For the purpose of advancing research
into forest practices, ecology, wildlife
management, and recreation, a university
research forest is established on land
described as the University Research Forest
and identified for conveyance to the Board of
Regents in trust for the University of Alaska
in the document titled University of Alaska
Land Grant List 2005, dated January 12, 2005.
2 S.B. 7 3, 5.
3 Id. 6. The ETF already receives income from land the
University holds under a 1929 Act of Congress.
AS 14.40.400(a)(1). [M]onetary gifts, bequests, or endowments
made to the University of Alaska for the purpose of the fund are
also deposited into the ETF. AS 14.40.400(a)(3).
4 See AS 14.40.400(a).
5 AS 14.40.400(c).
6 Alaska Legislative Council v. Knowles, 86 P.3d 891, 893
(Alaska 2004).
7 Id.
8 Id. at 899.
9 24th Leg., 1st Spec. Sess. (2005).
10 Id. 1-3.
11 Id. 5.
12 Id. 6 (codified at AS 14.40.461). H.B. 130 contains
other changes to S.B. 7 not significant to the issues before us.
13 Alaska Const. art. IX, 7.
14 See id. art. VII, 2 (The University of Alaska is
hereby established as the state university and constituted a body
corporate. It shall have title to all real and personal property
now or hereafter set aside for or conveyed to it. Its property
shall be administered and disposed of according to law.).
15 Alaska Pub. Interest Research Group v. State, 167 P.3d
27, 34 (Alaska 2007).
16 Premera Blue Cross v. State, Dept of Commerce, Cmty. &
Econ. Dev., Div. of Ins., 171 P.3d 1110, 1115 (Alaska 2007).
17 Id. (citing State Commercial Fisheries Entry Commn v.
Carlson, 65 P.3d 851, 858 (Alaska 2003)).
18 Alaska Pub. Interest Research Group, 167 P.3d at 34.
19 Alaska Const. art. IX, 7.
20 646 P.2d 203 (Alaska 1982).
21 Id. at 209 (internal footnote omitted).
22 836 P.2d 936 (Alaska 1992).
23 Id. at 938-39.
24 Alex, 646 P.2d at 210 (citing 3 Proceedings of the
Alaska Constitutional Convention (PACC) 2317-19).
25 Id. at 204-05.
26 Id. at 208.
27 Id. at 209 (citing 3 Alaska Statehood Commission,
Constitutional Studies pt. IX, at 29-30 (1955)).
28 Id. (citing 3 Alaska Statehood Commission,
Constitutional Studies pt. IX, at 27-30 (1955)).
29 Id. at 210. We referred to a well-researched attorney
general opinion from 1975, which carefully and minutely
detail[ed] the debate of the constitutional convention on the
point and concluded that the clause applied to any source of
public revenue: tax, license, rental, sale, bonus-royalty, [or]
royalty . . . . Id. at 210 (citing 1975 Formal Op. Atty Gen. 9,
24 (May 2, 1975)). That opinion quoted a document on which the
convention delegates had relied, noting that the amendment
removing the words all revenues avoided having to make explicit
necessary exceptions to the clause for certain moneys, e.g.,
pension contributions, proceeds from bond issues, sinking fund
receipts, revolving fund receipts, contributions from local
government units for state-local cooperative programs, and tax
receipts which the state might collect on behalf of local
government units. 1975 Formal Op. Atty Gen. 9, 6-7 (May 2, 1975)
(quoting Mem. from Pub. Admin. Serv., Jan. 4, 1956).
30 Alex, 646 P.2d at 210.
31 Article IX, section 7 includes three exceptions: (1) as
provided in section 15 of this article, (2) when required by the
federal government for state participation in federal programs,
and (3) any dedication for special purposes existing upon the
date of ratification of this section by the people of Alaska.
Article IX, section 15 creates the Permanent Fund. The other
exceptions are not applicable to this case.
32 Alaska Const. art. IX, 15.
33 Id. art IX, 7.
34 68 P.3d 386 (Alaska 2003).
35 Id. at 391-93.
36 The University makes a similar argument, contending
that Myers creates an implied exception to the dedicated funds
clause that encompasses the conveyance here.
37 Myers, 68 P.3d at 390-91.
38 Id. at 388.
39 Id. at 387-88.
40 Id. at 394.
41 Id. We stated:
Although selling the tobacco settlement
revenue stream is an indirect method of
producing an effect very similar to the
prohibited dedication of those future
revenues, the anti-dedication clause clashes
with the legislatures appropriation power.
We conclude that the sale of the tobacco
settlement is constitutional because the
legislative appropriation power includes the
power to sell state assets, lawsuit
settlements are not traditional sources of
public revenue, and the legislature has the
responsibility to manage the states risk.
Id.
42 See AS 38.05.965.
43 See AS 14.40.291(a).
44 SEACC provides several examples of other purposes for
which we have found that the University is part of the state,
citing University of Alaska v. National Aircraft Leasing, Ltd.,
536 P.2d 121, 123-25, 127-28 (Alaska 1975) (holding that the
University is protected by sovereign immunity and can be sued
under statutes subjecting the state to suit); University of
Alaska v. Geistauts, 666 P.2d 424, 427-28, 427 n.3 (Alaska 1983)
(holding that meetings of a university committee are subject to
the Public Meetings Act); Carter v. Alaska Public Employees Assn,
663 P.2d 916, 920-21 (Alaska 1983) (holding that the University
must comply with the requirements of the public records statute),
and Ellingstad v. State, Department of Natural Resources, 979
P.2d 1000, 1007 (Alaska 1999) (holding that the Universitys
treatment as a state entity under state law makes transfer of
contractual rights to it distinct from transfer to a private
entity).
45 Alaska Const. art. VII, 2.
46 624 P.2d 807, 814 (Alaska 1981).
47 Id. at 815-16.
48 Id. at 814 (quoting Alaska Const art. VII, 2).
49 Id. at 815 n.10.
50 Id. at 815.
51 Id. The court was referring to and quoting article
VIII, section 2 of the constitution, which states: The
legislature shall provide for the utilization, development, and
conservation of all natural resources belonging to the State,
including land and waters, for the maximum benefit of its people.
See id.
52 Cf. State v. Alex, 646 P.2d 203, 210 (Alaska 1982).
Our conclusion that revenues from University land are subject to
the dedicated funds clause does not, of course, prohibit the
dedication of revenues received from land grants under the 1929
act because such revenues are excepted from the prohibition by
the second sentence of article IX, section 7. See supra note 30.
53 1959 House Journal 1186, 1186-88; Terrence M. Cole, A
Land Grant College Without the Land: A History of the University
of Alaskas Federal Land Grant, A Report to the University of
Alaska Statewide Office of Land Management 18-19 (1993).
54 1959 House Journal 1186, 1186-87.
55 Letter from Bob Bartlett to William Egan (June 8,
1964), in Cole, supra note 53, at 17.
56 See AS 01.10.030 (Any law heretofore or hereafter
enacted by the Alaska legislature which lacks a severability
clause shall be construed as though it contained the clause in
the following language: If any provision of this Act, or the
application thereof to any person or circumstance is held
invalid, the remainder of this Act and the application to other
persons or circumstances shall not be affected thereby. ).
57 Sonneman v. Hickel, 836 P.2d 936, 941 (Alaska 1992)
(citing Lynden Transp., Inc. v. State, 532 P.2d 700, 712 (Alaska
1975)). In Lynden we considered the significance of the
legislatures including a specific severability clause within a
statute as compared to its choosing not to include one. See
Lynden Transp., 532 P.2d at 711-12. We suggested that the
soundest interpretation . . . is that, whereas a specific
severability clause creates a slight presumption in favor of
severability, a general clause creates an even weaker
presumption, although [f]or all practical purposes, the
difference between the two is negligible. Id. at 712-13. More
recently we have concluded that a built-in severability clause
creates a stronger presumption of severability than the general
savings clause of AS 01.10.030. Alaskans for a Common Language,
Inc. v. Kritz, 170 P.3d 183, 213 n.183 (Alaska 2007).
58 532 P.2d 700 (Alaska 1975).
59 Id. at 713 (quoting Dorchy v. Kansas, 264 U.S. 286, 290
(1924)) (internal quotation marks omitted).
60 See supra note 1 (providing the text of these statutory
provisions).
61 See AS 14.40.170(b)(4) (allowing the Board of Regents
to receive university receipts and expend them subject to
appropriation by the legislature); AS 14.40.491(4) (including
receipts from sales and rentals of university property within the
definition of university receipts).
62 This refers to the talking point colloquy between
delegates Gray and White during the Constitutional Convention.
See supra page 14.
63 See Lynden Transp., 532 P.2d at 713 (The crucial
question, then, is what was the legislative intent.).
64 See State v. Alaska Civil Liberties Union, 978 P.2d
597, 633 (Alaska 1999) (upholding severance and noting that
invalidating the unconstitutional sections did not undermine the
structure of the Act as a whole); Sonneman v. Hickel, 836 P.2d
936, 941 (Alaska 1992) (upholding severance and noting that after
deletion the remainder of the act still has the same meaning that
it had with that subsection included); see also Alaska Airlines,
Inc. v. Brock, 480 U.S. 678, 685 (1987) (The more relevant
inquiry . . . is whether the statute will function in a manner
consistent with the intent of Congress.).
65 In particular, see findings 3 and 6, S.B. 7 1, supra
note 1.
66 AS 14.40.400(a)(1) & (2).
67 AS 14.40.400(c) & (f)(2).
68 See finding 7, S.B. 7 1, supra note 1.
69 See Act of Jan. 21, 1929, ch. 92, 45 Stat. 1091, 1092
(1929) ([A] fund shall be established in the Territorial treasury
to carry out the purposes of this Act, and whenever any money
shall be in any manner derived from any of the land granted same
shall be deposited in the Territorial treasury in the fund. The
Territorial treasurer shall keep all such money invested in safe
interest-bearing securities. . . . The income from said fund may
and shall be used exclusively for the purposes of such
Agricultural College and School of Mines.); AS 14.40.400(c) (The
total return from the fund shall be used exclusively for the
University of Alaska, as the successor under AS 14.40.030 of the
Agricultural College and School of Mines.).
70 See, e.g., Meeting of the House Finance Committee, 21st
Leg., 2d Sess. (Mar. 21, 2000) (statement of sponsor Sen. Robin
Taylor, S. Finance Comm.) ([U]nder the legislation the university
would receive an endowment . . . which would provide an economic
base and greater autonomy and reduce the states general fund
support.); Meeting of the House Resources Committee, 21st Leg.,
2d Sess. (Feb. 7, 2000) (statement of Jim Pound, legislative aide
to Sen. Robin Taylor, on behalf of Sen. Taylor) ([T]he purpose of
the bill is to give the University of Alaska the land grants that
it was promised by the federal government prior to
statehood. . . . [T]he money will go into a trust account that
will be drawn on primarily as an interest situation, similar to
the permanent fund, but it will be specifically designed for the
University of Alaska.); Floor Debate on Senate Bill 7, 21st Leg.,
2d Sess. (Mar. 30, 2000) (statement of Sen. Robin Taylor, S.
Finance Comm.) (I sincerely appreciate all the work that has been
put in . . . to pass a bill on to the governor that will provide
for an endowment for our university. . . . What a wonderful
position this legislature might find itself within in the next
10, 15 years if the university no longer has to be funded out of
general funds.); Floor Debate on Senate Bill 7, 21st Leg., 2d
Sess. (May 3, 1999) (statement of Sen. Robin Taylor, S. Finance
Comm.) (I cant think of a greater gift for this legislature to
give future generations of Alaskan students than to provide their
university with a solid, stable, autonomous land base upon which
they may develop and encourage and strengthen our university.).
71 Our cases have not specifically addressed whether
income earned by an agency from appropriated funds is covered by
the dedicated funds clause. A 1982 attorney general opinion
considered this question and concluded that such income likely
would be covered. The opinion discusses policy reasons that
would also apply to appropriating money to dedicated funds:
A difficulty that arises from the view
that the dedicated funds prohibition is not
applicable to interest or investment income
on separate funds is that it permits steadily
increasing amounts of money to be received
and used by state departments and agencies
without legislative control through the
annual budget process. This is precisely the
problem posed by the dedication of revenue
sources which the drafters sought to avoid.
For this reason, while we are not certain
about the likely outcome, we doubt that a
blanket exception for derivative income would
be approved by the courts.
. . . . Although not expressly
addressed by them, the framers were very much
aware of the boom-bust cycle of Alaskas
economy. In fact, a driving force behind
statehood was the desire of Alaskans
themselves to be able to manage the income
derived from those brief periods . . . when
the state may receive enormous sums of money
which are then immediately available for
expenditure or placement, by appropriation,
into a variety of funds and accounts for
various permissible purposes. Depending on
the number and size of those funds and
accounts, the interest earned on the money
placed in them could itself be substantial
. . . . [T]he significance of that interest
income in properly managing the states budget
leads us to the conclusion that our framers
would have considered it to be within the
dedicated fund prohibition.
1982 Formal Op. Atty Gen. 13 at 16-17.
72 See Sonneman v Hickel, 836 P.2d 936, 941 (Alaska 1992).
73 170 P.3d 183 (Alaska 2007).
74 Id. at 210.
75 H.B. 130 6 (codified as AS 14.40.461(a)).
76 The time of conveyance and interim management of the
research forest lands is also distinct. The rest of the land
under the act was to be conveyed by July 1, 2008, but the
research forest is not to be conveyed until 2055. AS
14.40.365(b). Before conveyance to the University, the
Department of Natural Resources will manage the property and may
sell timber rights. AS 14.40.461(c) & (d).
77 The State argues that the doctrine of laches bars the
appellants from requesting that any land already transferred
pursuant to the act be returned to it. We disagree. The
appellants decision to file suit only after H.B. 130 revised
S.B. 7 was reasonable, and the State and University have been
aware of the possibility that the bills would be struck down
since this case was filed. Furthermore, the public interest in
compliance with the constitution is paramount here. We have
previously held that public interest is a factor in considering a
laches claim, see Jackson v. Kenai Peninsula Borough for Use &
Benefit of Kenai, 733 P.2d 1038, 1043-44 (Alaska 1987); Moore v.
State, 553 P.2d 8, 19-20 (Alaska 1976), and thus constitutional
values put significant weight on the side of rejecting the
defense, cf. Gwichin Steering Comm. v. State, Office of the
Governor, 10 P.3d 572, 585 (Alaska 2000) ([A] suit brought to
ensure compliance with statutory and constitutional policies that
concern the public as a whole effectuates strong public
policies.).
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