Why School Trust Lands Matter & How We Can Achieve Mutual Gains - - PowerPoint PPT Presentation

Why School Trust Lands Matter & How We Can Achieve Mutual Gains

Presentation to the IOGCC Public Lands Committee By Harry Birdwell, President - WSLCA Kathy Opp, Executive Director - WSLCA May 8, 2018

Presentation Outline

• State Trust Lands 101
• Advancing Conservation & Education Act (ACE)
• Doing Business on State Trust lands and the intersect of state

and federal lands  Opportunities for business with states  Common issues and how to avoid them  Exploring ways to work together to unlock federal lands and other collaborations  Who you should know in the states

State Trust Lands 101

Presented to the IOGCC Public Lands Committee May 8, 2018

515 Million Acres in Western States School Land Trusts

The collective holdings of surface, mineral and coastal acres make state school trust lands the second largest land owner in the United States, second only to the Federal Government

Historic and Legal Foundations of State School Trust Lands

The Genius of U.S. Westward Expansion

• Thomas Jefferson had the idea; fund education by using

income from land to supplement public school funding

• The rapid expansion of the nation caused Jefferson’s dream of

rural democracy to evolve

• He increased awareness of the importance of public education

Education for all the children of the United States is the key to creating a strong democracy

A Mission Older Than the States

• The available land for national expansion

grew significantly due to the Louisiana Purchase and upon the conclusion of the Mexican/American War

• An orderly process was needed to bring

new states into the Union as America was expanding westward

• The 1785 General Land Ordinance and the

Northwest Ordinance of 1787 were pivotal to the state trust land movement

The Parties That Created School Land Trusts

• Grantor: Federal Government
• Trustee: State Land Trust Offices
• Trust Declaration:
• Contract that creates a trust

(State Enabling Act and State Constitutions)

• Trust Corpus:
• State trust lands and assets

History of State School Trust Lands

• The 1787 Northwest Ordinance created a system of territorial governments and a

process to become new states. Enabling Acts and state Constitutions contained promises and conditions of statehood, including land grants.

Connecting land to public education was considered critical to the success of the western settlements and emerging states

• State Trust Lands are a misunderstood category
• f public land ownership in the United States,

date back to the earliest decades after the Revolutionary War when Congress granted lands to the newly formed States to support essential public institutions

History of State Trust Lands (cont’d)

• Beginning in the 1800’s state trust lands

were granted to the states upon their entrance into the Union. The sole purpose is generating income for public institutions, particularly schools.

• In 1803, Ohio became the first state to receive Section 16 land
• Partly because the Western states tend to be more arid and less valuable,

Congress later decided to grant greater amounts of land Beginning with section 16…later expanding to 16 and 36…or 2, 16, 32 and 36.

School Trust Lands ARE NOT Public Lands or Parks

• State Enabling Acts and State Constitutions
• ften label all lands as public trust land thus,

leading to confusion regarding purpose, use and benefit of certain types of land.

• State trust lands are not “public lands” in

the same sense as national parks and

• forests. Instead, they are managed by a

board of trustees within each state, and for clearly specified beneficiaries, principally the common schools

Trust Principles Carry Unique Responsibilities

• Fiduciary Relationship
• Sacred duty to act with strict honesty

solely for the beneficiaries

• Trust instrument (Constitutions,

Enabling Act, laws, etc.) contains the “manifestation of the intent of the settler (federal and state governments)

• Common law rule is to be a “prudent

investor” for the beneficiaries

Five Key Elements of State Trust Lands

• Clarity of Purpose
• Undivided Loyalty; cannot divert trust resources
• Accountability; accounts and receipts, official records
• Enforceability; trust doctrine allows the trustee to use

the courts to enforce the terms of the trust

• Perpetuity; a primary goal is to preserve the productive

capacity of the trust. Not all trusts are permanent but perpetuity became a component of school trusts when “permanent school funds” were first established in the 1840’s. As new states were added to the United States, increasingly elaborate provisions were added to protect and supplement school trusts from loss and diversion.

State Trust Lands Managers Must Adhere to Strict Standards of Accountability and Full Disclosure Inherent in the TRUST Documents

• Trust land managers MUST manage the trust productive for a

specific group of beneficiaries, not for the general population.

• State trust land management depends on different authorities

and objectives than Federal land management. The singularity and enforceability of the mandate differs from the enormous discretion of federal land management agencies.

• Comparisons between managing “Trust” lands and the

multiple use language to which several Federal agencies adhere is different.

State Trust Lands vs. Federal Lands

• Today WSLCA member state trust lands total 156 million

surface acres and 177 million mineral acres*, spread across 21 of the lower 48 states, and Alaska, primarily west of the Mississippi River

• State trust lands generate more than seven times the amount

returned to the U.S. Treasury by all federal lands combined.

*(source: 2017 WSLCA state member survey)

Essentials of State Trust Land Management

• Primary beneficiary is public education, including “common schools

(k-12) and public universities

• In each state a specific agency, frequently a land board or the land

commissioner, is responsible for managing the trust land portfolio

• Revenues are generated for beneficiaries by leasing the land or sale of

natural products from the land like forage, timber, minerals, etc.

• Non-renewable revenue like extraction of minerals or oil and natural

gas production, and the sale of land, is invested in a permanent fund

• Financial instruments such as stocks and bonds that are invested

through the permanent fund also provide ongoing revenues supporting beneficiaries

State Trust Land Agency Responsibilities Vary by State

• ALL - manage assets and permanent trusts of land for the benefit of

current and future beneficiaries

• ALL create income while protecting and growing the corpus of the

trust funds

• ALL manage, maintain, improve and lease surface acreage and

assets for beneficiaries

• ALL manage and lease mineral or subsurface assets for beneficiaries
• SOME also serve as managers oversee the resulting financial

investment portfolio, consistent with sound investment policies

How Is Revenue Earned for Beneficiaries?

• Income from agricultural leases
• Income from timber harvest contracts
• Income from commercial leases
• Income from mineral and petroleum

extraction

• Interest earnings from bonds
• Dividend income from equities
• Sale of energy production

Additional Trust Land Uses

• Rights-of-way (pipelines, roadways)
• Water easements for well

placement and water leases

• Saltwater disposal units
• Wind and solar farms
• Recreational & special use permits
• C02 leases and geothermal leases

New Trends in Trust Land Management

• Whole trust management – complimentary land and

financial portfolio of beneficiary assets

• Collaborative planning to improvement land

management

• Encourage land development, particularly commercial

development in fast growing areas

• Support conservation that allow multiple land uses
• Comprehensive reforms that expand flexibility to use

modern real estate tools

Who are State Trust Land Beneficiaries

Each state Constitution prescribes the beneficiaries that receive earnings from trust lands – The largest beneficiary and the majority of all earnings is to common schools (k-12 – In most western states higher education institutions are also beneficiaries and receive revenues from quantity grants

WSLCA Quick Facts

• More than 515 million total acres actively managed
• $140 billion invested in permanent trust funds
• Nearly $3 billion distributed in FY2017
• More than 30,000 active oil and gas wells
• More than 80,000 new homes built annually from

sustainable timber harvest

• 36 million range and agricultural acres owned
• 1,040,124 square miles of navigable waterways
• 22,043,613 students in public k-12 schools served

Please visit our website to learn more about School Trust Lands www.wslca.org

Requesting reauthorization of support for the Advancing Conservation & Education Act (ACE)

WHY is ACE important? The Statehood Bargain is Broken

• Trend in federal management from multiple use to conservation.
• Conflict between federal conservation management and state

mandate for revenue.

• State revenue from captured state trust lands affected by loss of

practical access, economies of scale.

• Federal land exchange process is broken (administrative and

legislative delay).

The Checkerboard Isn’t Just a Problem for the States

IDAHO EXAMPLE

MONTANA EXAMPLE

NEW MEXICO EXAMPLE

RIO GRANDE DEL NORTE / SABINOSO WILDERNESS STATE LAND EXCHANGE

43,000 acres of NM State Trust lands and minerals trapped within the Río Grande del Norte National Monument (Monument) and Sabinoso Wilderness Area. 70,000 acres of scattered parcels of Federal lands have been identified for exchange – lands tagged for disposal by various BLM Offices throughout the State. As an exchange, the transaction is subject to NEPA and extensive collaboration by the public, tribal entities and local governments.

WHAT does ACE legislation do?

• Treats “in lieu” rights as a debt owed to the states – Provides new

authority fashioned after existing selection process in 43 U.S.C. 851 to extricate and replace state lands in federal conservation areas.

• States relinquish title, select replacement lands.
• This is NOT a FLPMA process.
• Allows for annual work within States to free trapped trust lands

and put this value to work for education on more appropriate lands.

• Plan compliance is streamlined.

WHERE are we in the process?

• November 2017 ACE introduced in the House and

Senate with broad bipartisan support.

─ Congressmen Stewart (UT) & Polis (CO) H.R. 4257 ─ Senators Heinrich (NM) & Flake (AZ) S. 2078 ─ IOGCC, WGA, Wilderness Society, Southern Utah Wilderness Alliance, and others

– April, 2018—House Natural Resources Committee Unanimously approved the bill with minor amendments. – Expect House Floor consideration in summer of 2018.

Doing Business with States on Trust land

 Opportunities for business with states  Common issues and how to avoid them  Exploring ways to work together to unlock federal lands and other collaborations  Who you should know in the states

Development and traditional uses can coexist on the landscape

Layers of revenue are optimal -

 Income from agricultural leases  Income from mineral and petroleum extraction  Sale of energy production  Rights-of-way (pipelines, roadways)  Saltwater disposal units  Wind and solar farms  Recreational & special use permits

You are an Important Collaborator

• The state development model is most often ground

leasing – States are NOT in the venture capital business

• States rely on business sector professionals to develop

school trust resources

• State trusts receive production royalty or profit

sharing just like private land owners

How to Nominate and Bid on State Oil & Gas Leases

(see handout of selected states)

• Most state accept nominations at any time

– Low dollar nomination fee

• States generally hold regular auction cycles

– Quarterly or every two months

• Most states have online auction methods with tract

previewing 30 days prior to auction

• Bidding is a bonus bid per mineral acre (min. bid $1+)

Who ‘Ya Gonna Call?

• Team Texas

George Martin, Landman, (512) 475-1512 or george.martin@glo.texas.gov Daryl Morgan, Land Manager, (512) 305-9106 or daryl.morgan@glo.texas.gov

• Team Wyoming

Trust Land Management Assistant Director Jason Crowder at jason.crowder@wyo.gov Mineral Leasing Supervisor Tate Smith at tate.smith@wyo.gov Field Services Assistant Director Ben Bump at benjamin.bump@wyo.gov Field Staff Supervisor Cole Lambert at cole.lambert@wyo.gov Administrative Services Assistant Director Amanda Sewell at amanda.sewell@wyo.gov Royalty Compliance Supervisor Billie Hunter at billie.hunter@wyo.gov

• Team North Dakota

Allisen Bemet, Land Professional, (701) 328-1952 or DtlMinerals@nd.gov

• Team Oklahoma

Ginny Rhodes at Ginny.rhodes@clo.ok.gov

How can we work together for mutual benefit?

 Regionalization of the BLM/Interior in the West  Mitigation strategies  Water conservation ideas and strategies – recycle and reuse to protect and preserve fresh water  Other issues of concern and potential collaboration

Become a WSLCA Affiliate Member

‘Connecting the management of trust lands and assets to funding education’

• Speaking opportunities at WSLCA conferences
• Collaborating on white papers and best practices
• Business opportunity
• Collaborating on leader development and professional,

technical staff training

• Opportunities for professional dialogue and collaboration on

issues of national importance.

Thank You!

Please visit our website to learn more about School Trust Lands www.wslca.org Join us in Duluth, MN on Lake Superior WSLCA annual summer conference July 8 – 12, 2018