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House | June 10, 2013 | Committee Room | Conference

Full MP3 Audio File

To the conference committee on house bill 13 Senator Brock and I have decided to do something a little bit different. This is a conference committee but we're going to treat the committee as if it was a just a full standing regular committee. So folks can have input on any sections that they so choose to address. The bill went over to the Senate and there's a new provision that was added in the Senate and so we're gonna just try to get a resolution on what folks wanna do with the bill. Senator Brock do you have anything you'd like to add sir? [Speaker Change] Well I speaking I think with most people on our side, I thought we were gonna go through make sure where we stand on sections 1, 2, then 3 and then find out see where we are, if we're both OK on 1, and 2, and I think 3, before we have the questions. [Speaker Change] We'd like to thank Mr. Bass and Mr. Powell the House Sergeant of Arms. And Mr. Meadows and Mr. Wilson the Senate Sargent of Arms. Any of you all in the back don't feel like you're spectators to normal committee. I'm gonna ask you to sign up and sign in and if you have handouts that you wanna have provided to the committee feel free to do that. We do not intend to resolve this issue today, today we're gonna be taking the input from all of the committee members and those of you who would like to add something. Then we will come back as conference committee and try to resolve once we have all of the information. I'm gonna ask John ?? from the program evaluation division to start us off. There was a study bill that came out of program evaluation and that bill was reviewed by the committee on the 14th day of January, which was the last day that, that committee was able to operate. So therefore there was not a bill drafted that the committee would have scrutinized and debated, and sent forward, we simply ran out of time. So I believe that some of the provisions in this bill are tied to this. So Mr. ?? if you would start there and then we'll back up and go back through the sections that we need to talk about. [Speaker Change] Thank you Madam Chair, Chairman Brock. Jeff Grimes who lead the team on our submerged lands report is going to do a presentation on that report and as Chairman Howard explained we did this report at the direction of a special provision that was added in a technical corrections bill to the appropriations act. And as a result of doing the report we made that presentation to the committee, the committee received the report, the committee endorsed the report, but there were no recommendations made. We provided a number of options for the legislature to consider and at that meeting as Chairman Howard explained the, we were directed, we received instructions from the committee to go ahead and draft legislation. But as she explained that legislation was not, we were not able to get it back to the committee for the committee to do a choose review of it. So in this case that legislation was not recommended by the joint legislative program evaluation oversight committee. But the, so the recommendations dealing with submerged lands, well there was actually options dealing with submerged lands were reflected in that amendment. And Jeff Grimes is gonna go over the findings of our report. And he has a one page handout Madam Chair, Senator Brock. [Speaker Change] Mr. Grimes would you like to come forward and do you have your handouts. [Speaker Change] Yes he's got it. [Speaker Change] He's got it. [Speaker Change] Let the Sargent of Arms to pass those out. Mr. Grimes you can come on up if you'd like to.

I'm Jeff Grimes, the senior program evaluator with the Program Evaluation Division. Today I'm presenting a very brief summary of the report titled "North Carolina Does Not Track Land Submerged Under Navigable Rivers or Know the Extent of Private Claims". State law directed us to study in conjunction with the Department of Administration, the inventory of all state-owned lands, and issue of public ownership of lands submerged under navigable rivers in this state. This report was presented to the joint legislative program evaluation oversight committee on January 14th, 2013 where the report was subsequently accepted by the committee. First, just a quick background on submerged lands. State law defines submerged lands as state lands which lie beneath any navigable waters within the boundaries of this state, or the Atlantic Ocean to a distance of 3 geographical miles seaward from the coastline of this state. Submerged lands can include the beds of navigable rivers, as well as coastal waters. North Carolina gained ownership of its submerged lands through the Declaration of Independence in victory in the Revolutionary War. North Carolina essentially took ownership of these lands from King George III. State - the state owned submerged lands that were navigable at the time of independence. In 1959 state laws said that submerged lands cannot be conveyed away to private parties by the state in fee, however conveyances of submerged lands by state laws have occurred in the past. No list exists of these conveyances, and the extent to which private parties may have legitimate or non legitimate claims to submerged lands is unknown. North Carolina owns lands under navigable rivers, but how navigability is defined is important. State courts have determined the meaning of navigability for purposes of ownership of submerged lands. As determined by case law, navigability for ownership is based on whether the waterway could have been used for commerce and travel by useful vessels at the time of statehood. As defined by case law, travel by useful vessels has included one person craft with a shallow draft, which would be somewhat similar to a jon boat today. The definition of commerce has included floating logs one way down a stream made navigable only due to heavy rains or melting snow. Now, I'd like to talk about how North Carolina tracks ownership of state-owned lands, including land submerged under navigable rivers. North Carolina law states that the Department of Administration is required to prepare and keep current an inventory of all state-owned land. Within the Department of Administration, the State Property Office inventories state-owned land as part of a database it maintains of state property. DOA does not inventory submerged lands as a matter of course. The DOA property database does not track submerged lands in a comprehensive manner because records of ownership do not generally exist. It's important to note the DOA justifies the lack of an inventory of submerged land because it treats all lands submerged under navigable rivers as sovereign land of the state. DOA has granted, in statute, the power to manage and control submerged lands. While DOA has brought authority over the management of submerged lands, the approach it takes is largely passive. While DOA does require easements for utility crossings and some coastal structures, such as piers, larger docks, and marinas, it does not require easements for many other types of structures located on submerged lands such as dams, most water intake and outtake structures, and any other structure that would be affixed to a river bed. In most cases, DOA does not require leases or that royalties be paid for the mining of minerals found on or underneath riverbeds, even in cases where there is active mining taking place. Despite not having records of ownership of submerged lands, North Carolina does have experience in dealing with uncertainty over ownership. The state completed a process to resolve private claims to submerged lands in 25 counties on the coast where there was uncertainty, particularly over shellfish beds. To address this issue, in 1965 law required 25 coastal counties register with the state any grant, charter, or any other authorization to submerged lands by 1970. Those claims not registered were declared null and void. The predecessor agency to the Division of Marine Fisheries and the North Carolina Department of Justice then worked to resolve those claims filed.

anyone claiming submerged land had to demonstrate an unbroken chain of title back to the orginal instrument that conveyed the land. In total there were 14,566 claims filed. Ultimately 256 were recognized as being valid. This process cost an estimated $4.1 million. Taking these issues into consideration, the program valuation division identified two areas where the General Assembly could consider taking action to improve the management of land submerged under navigable rivers. The first set of options would address DOA's management and tracking of submerged lands. The General Assembly could require DOA to create a field in its property database that specifically tracks submerged lands ownership and easemants so that DOA could better report on what submerged lands it does have in its database and what easements it has issued. Next, the General Assembly could require DOA to describe utility crossing easemants in rule making. Though DOA grants these easements currently, the program evaluation division found that there is no description of the process for obtaining a utility easement across submerged lands, or the fee for such an easement. Another option to consider is requiring DOA to work with Deaner to develop and implement procedures for conveying or leasing mineral deposits on submerged lands. Mining is permitted by Deaner, but when it occurs on submerged lands, the State is not obtaining any revenue for these materials mined with the exception of a phosphate lease. Statutes already describe a process for leasing or conveying mineral deposits on state-owned submerged land. But this process has not been implemented for the majority of mining that takes place on submerged lands including all in-stream sand mining. The fourth option is for the General Assembly to direct DOA to require easements for all new structures built on state-owned submerged lands. The program evaluation division found that there are many structures for which the DOA has not been requiring easements. In order to deal with the uncertainty of ownership of lands submerged under navigable rivers, the General Assembly could create a claims process in the 75 counties that were not part of the coastal claims process. Those claiming any ownership interest in land submerged under navigable rivers could be given 2 years to register those claims with the state. Those not registered in that time frame would be declared null and void. The state could then conduct a process to resolve those claims, similar to the process on the coast. The program evaluation division estimates that operating an office to resolve claims would cost approxiamately $550,000 per year until all claims are resolved. The time frame for this process is unknown because it would depend on the number of claims filed, the complexity, and the number of resulting legal challenges. This process may possibly proceed more quickly than the one on the coast due to advances in technology such as online access to county tax records, register of deeds records, and mapping programs that were not available then. To decide whether to initiate a process to resolve ownership, the General Assembly would have to consider the potential benefits and costs. Resolution of ownership of lands submerged under navigable rivers would require a costly and extended process, but the state would be able to identify legitimate claims and all others would be null and void. This information could be used to more activitely manage the lands under navigable rivers and protect the state's ownership interest. I will note that House Bill 13, Section 3, incorporates all options to improve management of lands submerged under navigable rivers discussed in this program evaluation division report. This concludes the summary of my report. The report is available online and includes a response from the Department of Administration. I'd be happy to take any questions at this time. [NEW SPEAKER] Are there questions from any members of the committee? I thank you very much for doing that. Senator Tucker. [NEW SPEAKER] Thank you Madam Chair. I've got a few questions. Would you allow me to ask a series of questions? [NEW SPEAKER] Yes, sir. We sure will. [NEW SPEAKER] Alright, thank you ma'am. If I understand your presentation, there's really been no adequate tracking of these land by DOA? Okay. You mentioned in your presentation minerals? [NEW SPEAKER] Uh huh. [NEW SPEAKER] And that there's no royalty for minerals that are mined, say, in the riverbed of a navigable water? Water is considered a mineral, is that what you're saying as well? Because you didn't mention water and the production of hydropower, just the flowing the water which is not extracted, it's just used to create

I'm just trying to understand that. [SPEAKER CHANGES] We were talking about actual minerals being mined, so there is one phosphate lease the state has, in Beaufort County; that was the only royalties the state's receiving from minerals potentially mined from a riverbed or submerged lands. There were over 30 instances where we found permitted mining for sand from a riverbed, and none of those sites had any leases or were paying any royalties. [SPEAKER CHANGES]Madame Chair follow-up? [SPEAKER CHANGES] Yes [SPEAKER CHANGES] I'm just trying to get my head around, so landowners that have property on a lake that has been flooded by a utility, their property, when it juts out into the water, and you navigate over that property that has had a title to it, the state can, through some sort of reformation of tracking, and by DOA and all can claim that? [SPEAKER CHANGES]You are at liberty to answer all of the questions, please, sir. [SPEAKER CHANGES] So, what the state owns is those navigable rivers at the time of statehood, so in some theoretical case, if somebody's come on and created an impoundment since then, the state would own the original riverbed through that impoundment, potentially, but not all the property along that impoundment. [SPEAKER CHANGES] The other thing, too, if since statehood, since King George reluctantly granted all of this property to us through war, and there's been title to that property on multiple occasions, and then someone chooses, like we're talking about ALCOA, that puts a dam up there and floods that property that had title to, is that property the state's, or is that property ALCOA's? [SPEAKER CHANGES] I can't speak in that particular instance, we looked at submerged lands throughout the state; the answer is complicated, in the sense that the state would own lands under navigable rivers, minus what could have been conveyed in the past, and we don't have records of what may or may not have been conveyed in the past. Most of this submerged land probably doesn't have any title to it in the sense of a deed you would find in a county records. If you look at tax parcels, for example, it's really challenging to determine what could or could not, and that's why we discussed in the report creating a claims process that would help resolve who owns what. [SPEAKER CHANGES] OK, Madame Chair, I'll be trying to move quickly. So, flooded property, that was once dry land, and then it was flooded by ALCOA, Duke, or whoever it might be, that land has no title to the property of the flooded land, or are you just talking about the navigable river that you can get a canoe down?[SPEAKER CHANGES] So, if we're talking about a property that was flooded, there probably was title to that area before it was flooded, and I can't tell you who would own what, other than saying the state would have potential title to the land under the riverbed, not the whole reservoir. [SPEAKER CHANGES] So if it cost $4.1 million to track those, set up the tracking of those submerged lands for the 25 counties, I am to assume that it's going to take another $12 million to try to get a database that DOA can manage this, would that be a fair statement? Or close, I mean it's a guess. I know, but economies of scale doing 75 versus 25, but it's going to take several million dollars, then, based on the cataloging of the submerged lands on 25 counties , we'll have to spend $8-$12 million based on that to get a good database for DOA. Is that correct? [SPEAKER CHANGES] We looked at the process that they followed on the coast, and actually talked with the people who were involved with that process, to come up with an estimate what it would take to run and office that would...

These claims. And that estimate include 7 people to staff that office. And we said it would take $550,000 per year to staff that office. We didn't feel we were in a position to tell you what the full cost would be because there's gonna be differences from that process. One there's better technology now that would potentially allow the state to complete that processing more quickly. On the other hand we don't know how many claims would be filed, or how many claims that are out there in those 75 counties. [Speaker Change] Madam chair one final question. [Speaker Change] Yes sir. [Speaker Change] When you did your program eval and you know, I guess a catalyst for this would be Al Cole because you know, Duke's a public utility Al Cole is a private enterprise, it motivated some of this. Did you take a look? Or did anybody on the legal side take a look at how the Montana case in the state utility and the submerged lands there would impact the Al Cole or Duke, progress that has this same type scenario? Did anybody look at that to see if there was any impact on those particular scenarios? [Speaker Change] Yeah, so we were directed, I think I mentioned a session law before to study the issue of public ownership of land submerged under navigable rivers. So we worked very closely with the research and bill drafting divisions here in the general assembly. Spoke with a number of legal experts both inside and outside of state governments. They did look at the Montana issue and the opinion we got from general assembly council was that the Montana case in most respects did not apply to North Carolina because North Carolina is one of the 13 original colonies. Which means North Carolina got its ownership from the kings. The non 13 colonies got their ownership from the United States government because they came after. And so the legal opinion was that we are different in that respect. [Speaker Change] Thank you Madam Chair. [Speaker Change] Other question from the committee members. [Speaker Change] ?? [Speaker Change] Senator ?? [Speaker Change] Being a history buff that kind of. How are we different? Is this, do we still royalties to the king? Or to the queen now? I mean and if we have that memo from our staff here, I'd like to see the appropriation of that. And is that in the study? [Speaker Change] Yeah if you have a copy of the full report that we issued, it is at the very end of that report. It's on page 16. And as far as the difference the way it’s been explained to me it’s just essentially being an original colony that formed the U.S. government versus being a territory that gained ownership from the United States after it was a government. [Speaker Change] Senator Hartsell. [Speaker Change] I think I can answer that sort of. The issue for non 13 colonies is what they call the equal footing doctrine. That is to say the new states are supposed to be on a equal footing with the old states, however in the case of the 13 original colonies the state of North Carolina has an individual state or colony took title to the navigable rivers at the time of statehood period. And that's Gladstone's commentary, I think it's Gladstone's commentary going back to 1715. However the other colonies, I mean the other areas did not, I mean they were actually in the case of Louisiana purchase or whatever were purchased and that title was held by the federal government for a length and period of time before they became states. So the navigability issue was a federal navigability issue for them when it comes down to it later on. As a consequence when the Supreme Court issued its decision that said you had navigability as a such and such a time or when you had statehood for the state of Montana.

It dealt with the time when Montana became a state but it actually got its title through the federal government. That was not true in the case of North Carolina. The issue then becomes… The legal term is adverse possession. The Supreme Court said you can have adverse possession. Title developed that over time, in the case of those non-13 colonies. They did not say that with regard to the original 13 colonies. The reason the difference comes down to, although there is no specific decisions of the Supreme Court saying that, is because the non-13 colonies obtained their title indirectly through the feds and not by virtue of being originally from the king. That’s … [SPEAKER CHANGES] Just a follow-up. [SPEAKER CHANGES] Senator Brown [SPEAKER CHANGES] Can follow-up on the questioning. Did the State of North Carolina lose that right in 1861 when they left the union? And when they went back into federal control in 1865? [SPEAKER CHANGES] The title… [SPEAKER CHANGES] Senator Hartsell [SPEAKER CHANGES] I would seriously doubt that. We’re talking about a state’s rights. I would think not. I don’t think that would have any impact on anything. The issue is the state had title, period and the navigability determination was the State of North Carolina’s then and frankly still is today. [SPEAKER CHANGES] Thank you. We’re going to back it up and go a different way and see if we can just get a couple of things off the table. House bill 13 passed the house, I believe unanimously and also went over to the senate. I’m going to ask the committee, in looking at the summary of house bill 13, does any committee member or anybody in the audience have any issues with sections one or two? It becomes apparent that it is section three and that is the change that came from the senate that we are here to maintain and try to resolve. Is everybody… [SPEAKER CHANGES] Madam Chair there is also a… [SPEAKER CHANGES] Senator Rucho. Section three and four. Yes sir. We’re starting with section three then move to section four. So it’s apparent that the issues to be resolved we will be dealing with section three and section four. Everybody is comfortable with sections one and two I am assuming. Anyone on the committee that would like to make a comment? If not we’re going to start with the public. Mr. Paul Sherman from the North Carolina Farm Bureau, sir. If you have any remarks we would ask that you leave those with us and please give us your name and title. [SPEAKER CHANGES] Thank you Madam Chair and members of the committee. I’m Paul Sherman of North Carolina Farm Bureau Federation and I just briefly wanted to let you know that our members and the rural landowners are very concerned about section three of the bill. Certainly having some experience in the coastal counties with the process they went through years ago, I’m concerned about the time, the turnaround, the claims process, the calls to surveys and really would just like this particular provision thought out so that we can try not to do any harm especially to those small landowners that don’t have the resources to be able to go through this claims process and help educate them a little better. So if we could possibly try to slow down before we move forward with this so that we can protect those landowners. Thank you. [SPEAKER CHANGES] Mr. Sherman if you could come back just a minute. We’re looking for a resolution here. So do you have a proposal that you would like to offer on behalf of the Farm Bureau, either at this time or in the next 48 hours? [SPEAKER CHANGES] If pressed for now, removal of section three from the bill. Resolution, I’ll certainly try to work on something and have it back to you in the next 48 hours.

Thank you sir. Chuck ??. My friend Chuck ?? from ??. [SPEAKER CHANGES] Madame, Madame Chair? Mister ?? [SPEAKER CHANGES] I don't have this button properly matched to use the term of art. I represent Alcoa, which is interested in this issue There are folks here from a number of counties who are also interested in the issue. One of the points that occurred to me in looking at this bill it basically as I understand the staffs analysis their taking the position that some submerged lands are owned by the state of North Carolina right now and this would be a process to cut off the rights of anybody that might claim it, adverse claim, I recon in that situation since Alcoa’s paid taxes on these lands for about a hundred years or more given under 105381, they’d have a claim to a refund against the counties in that area for the taxes they paid as would anybody else who this legislation would cut off because at the end of the period they wouldn't have a claim in their property they had been paying and the statute allows them to go back for five years. A factor I would think that the committee would want to take in to account. Secondly, any landowner who wanted to vindicate his rights under this theory espoused by Senator Hartsell’s amendment and PED would be confronted without having to go back to 1776 to run the title search do a survey and see what the status of their title was, whether or not they had to take land by grant from King George or from the state prior to the time when the state was still making conveyances. Which would be a mighty substantial expense for a lot of property owners who had been paying taxes on these lands, Alcoa, Duke, progress to one side. And then to what the end do you get out of this? So it strikes us, and there are number of other factors Madame Chair but it’s a lot of expense on a lot of folks, the potential exposure of our counties to substantial tax refund claims if the PED theory is correct and you wonder at the end of the day. What is the benefit of the state from going through this process? Thank you Madame Chair. [SPEAKER CHANGES] Thank you Mister ?? Larry Jones? [SPEAKER CHANGES] Madame Chair, ?? speaker here. [SPEAKER CHANGES] ?? give us your name and who you are. [SPEAKER CHANGES] Yes mam I’m Larry Jones. I live in Salisbury, North Carolina in Rowan County. I have a farm that ?? river and high rock reservoir. I'm very disturbed at this section three being put in their reasonable bill at the last minute. it would incur a lot of damage to me personally to have to file a claim with the state for land I’ve owned for a number of years I have clear title clear deed to it. I pay taxes on it. My land crosses small streams that were there for the lake was formed so by the definition of the presentation made it would apply to my lands so I would be forced to file a claim and I’m sure incur legal bills, survey fees, everything else to pursue it and I don’t see for what benefit to the state going after my few acres of land that lie under the water would be. It’s clear to me that this whole thing comes down to the quest to take over the Alcoa project and I don’t see throwing all of private landowners under the bus to achieve that, and for that reason, I would request that this committee throw out the section three to this House bill and return to its original state, that was passed by the House. Thank you. [SPEAKER CHANGES] Thank you Mister Jones. Ray ?? of APGI. ?? saying here. Our handwriting’s not too good up here. [SPEAKER CHANGES] Madame Chair and the committee I’m with Alcoa. We oppose section 3 were okay with sections 1 and 2 of the bill as it stands; our biggest issue is really the definition of navigability. We consider it a Federal

issue. I think that’s what the PPL Montana vs. State of Montana came down to wasn’t navigability it was a non-navigable river. The Yadkin? River, which has come up in discussion, is a non-navigable by federal law. It has been established by federal law and by the State of North Carolina. They have already established it as non-navigable. You’re putting a bill that has a lot of definitions around navigability that conflicts with federal law. A skiff, a one-man skiff, a jon boat, is not a steamship, which is what the Federal Court has declared determines navigability. That’s why the navigability on the Yadkin River ends in South Carolina, because you cannot get a steamship all the way up the Yadkin River. That’s why the Supreme Court, or the US Court of Army Engineers said you couldn’t, and that’s why it’s not navigable. The bill creates a lot of issues. This claim process would most likely result in some sort of federal lawsuit involving the State of North Carolina and obviously Alcoa if there is an attempt to take claim of our land, which could cost millions, not just 550 thousand dollars. We have been doing a lot of title searches as part of a re-licensing application. Just one other point here real quick. We have gone back to the deeds of King George. King George gave away a lot of the lands, including the river prior to the Revolution. That land was allowed to be maintained by the Revolutionary patriots. Then they sold it and they sold it and they sold it. Alcoa finally acquired it. So we own those claims prior to the Revolution the way it came through. Some of the State lands were sold later by the State. The basis is, it is still non-navigable and the State can sell land and they did in the past. We do have the deeds. We have all of the flood rights. It’s going to be an extreme burden on us to go back. I think the easiest thing for us to reach resolution is just to remove Section 3 and let the bill go forward as originally drafted. Thanks. [SPEAKER CHANGES]: I’m sorry. Yes, please. [crosstalk] Do members of the committee have questions to the presenters and outside speakers. Please feel free to do so. Senator Hardsell. [SPEAKER CHANGES]: I do of Mr. Bond, if I might. [SPEAKER CHANGES]: Mr. Bond, Sir, would you come back. Mr. Bond. [SPEAKER CHANGES]: I’m sorry. Yes, Ma’m. [SPEAKER CHANGES]: Thank you. I believe there are some members of the committee that have some questions for you, please. [SPEAKER CHANGES]: Mr. Bond, we’ve had this conversation on any number of occasions previously with regard to this, but I’d really like…you have advised as long as three years ago that you would provide us with each of these documents that reflect Alcoa’s ownership of the river. Can we get them? [SPEAKER CHANGES]: They’re in six counties throughout North Carolina. You’re welcome to go there as a public member and do your title search and go find them. You’re a lawyer, you must understand what it takes to get one. They are there for the public to read. [SPEAKER CHANGES]: Follow-up, Senator Hardsell. [SPEAKER CHANGES]: The problem is, I have gone there and I can’t find them. I don’t know that there is that title that you’re talking about. When it comes to the issue of navigability, are you aware there’s case law in North Carolina that defines navigability differently, and actually declares the area of the Yadkin River ?? north of, I think it’s…the northern line of Davidson County is navigable anyway? Are you aware of that? [SPEAKER CHANGES]: I’m aware of the different definitions that are out there. I’m also aware of the 1937 ruling by FURK that declared that section of the river to be non-navigable, thus that’s why it became under the Federal Energy Regulatory Commission for licensing. At the same time the State of North Carolina declared it to be non-navigable. If you could provide us with copies of that, that might be useful. [SPEAKER CHANGES]: OK, we can do that. [SPEAKER CHANGES]: I might also add that FURK's jurisdiction over this doesn’t apply unless the river is navigable anyway. [SPEAKER CHANGES]: That’s not correct. There’s many definitions under FURK that they can apply. You have the ability under FURK law to impound and be a licensee if you’re non-navigable river feeds a navigable river. And that is what they found in 1937 under the ruling that the State of North Carolina supported that. The Yadkin River supported down-river, down-stream the Yadkin PD River, which is navigable. That’s why they brought us into the Federal Energy, under the Federal Power Act of 1937. [SPEAKER CHANGES]: If you could provide us with, at least with those documents, that would be useful. We have been trying to get them for years. [SPEAKER CHANGES]: I can get them for you. They’re at FURK

The federal ?? ?? Commission. [SPEAKER CHANGES] Thank you, Mr. ??, Whether or not the issue today circles itself around those documents, the committee will ask that you do present those to our committee for further use. Thank you, sir. Lynn Strong? Mr. Strong, would you again give us your full name and the group that you represent. [SPEAKER CHANGES] Lynn Strong, I am the President of High Rock Lake Association and a resident of Davidson County. We...Okay, Thank you. There are many onerous and I think difficult parts to this. Too many in fact to ennumerate. I would comment that it has been 225 years, and the state can't really tell us who owns what. It's not time for state to catch up. If documentation and contractual law says certain properties are owned, then we should honor that. This whole bill, excuse me, this whole bill amounts to a land grab and a poorly phrased one at that. We sincerely hope the committee [SPEAKER CHANGES] Mr. Strong [SPEAKER CHANGES] ...will turn this down. [SPEAKER CHANGES] Mr. Strong, I am the sponsor of the original bill, and, sir, I can assure you it's not a 'land grab', but if you'll complete your comments for the record, but if we'll try to stay away from the 'he said, she said' stuff that'd be better for us all. [SPEAKER CHANGES] I understand. I encourage the committee to drop sections 3 and 4. [SPEAKER CHANGES] Thank you, sir. Ann Brownley. Ms. Brownley, again if you'll give us your full name and the organization you represent. You'll need to hold that button down, please, ma'am. Continuous. [SPEAKER CHANGES] Hi, my name's Ann Brownley, and I'm from Salisbury, and I'm a historian, which I think is sorely needed in this process. I've heard so many things that make me cringe that I certainly won't have time to go into them all today. And I want to address Section 3. If this were something the State wanted to do, the first thing that they need to do is determine which rivers were navigable, and which ones weren't, because that is something that has never been done. And, it's kind of been glossed over in this bill. I'm not sure what you're going to do, just assume they're all navigable or something? There are going to be a lot of lawsuits on that. The area along the coast that's been long established, but when you get away from the coastal area, this is untested territory. The definition of navigable for the purpose of title determination, is if it was used or susceptible to being used in its natural and ordinary condition as a highway of commerce over which trade and travel were or may have been conducted in the customary modes of trade and travel on water at the time of Statehood, which for North Carolina was 1789. There is a different test of navigability for Public Trust rights to boat, swim, fish, and enjoy recreational activities in the water ?? ??. Let's not confuse the two. I've been studying the Yadkin River, which I think is our key focus, since 1994, and I can tell you there is just a large amount of convincing information that the Yadkin River was not navigable in 1789. Probably the key thing is that in 1887 and 1888 the U.S. Army Core of Engineers, who are the experts on the subject, surveyed the lower Yadkin river from the railbridge near Salisbury to the South Carolina line and found the entire section to not only be not navigable but not worthy of improvement. So, there's not a whole lot else you can say after that. I really could send you a good deal of other information. Is there some way I can e-mail information to you? [SPEAKER CHANGES] Yes, ma'am, absolutely, and we will have the Sargeant of Arms bring you the contact information for our staff.[SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Yes, ma'am. [SPEAKER CHANGES] I just think this is opening up a tremendous can of worms that's not going to net the State much benefit, that's going to have a lot of lawsuits, that's going to inconvenience both the State and a lot of landowners, and just a problem that's not going to be worth what it produces.

Thank you very much, and the Sergeant-at-Arms will be bringing you that information. Fred McClure, I believe Mr. McClure is the Chairman of the Davidson County county commissioners. My friend, Fred. [SPEAKER CHANGES] Thank you, Madame Chair. Fred McClure, Chairman of Davidson County Board of Commissioners. We have concerns, not with one and two sections of this, but with the third section. We have, we charge our friends at ALCOA $1,500 an acre for that land, that's under the water, so does Rowan County, so does Stanly County - with a total of six or seven counties around the lake there's over a million dollars in tax every year. You calculate that, and if you all go ahead with this, and it is so deemed that we owe them a million dollars a year for however many years we have been taxing them, it's going to be a real burden. It's a real burden on the counties now, to have go back and prove ownership of the land that's under the water. I can't see, I've read Section Three, I can't see how this benefits the state in anyway, however it is a detriment to our counties. It just seems that I have been involved with ALCOA since they had the shoreline management plan talks, eons ago, and there have been recently, in recent years, attempts by the State, some people in the State of North Carolina, to take over that property. I'll not mention any names, nor am I going to mention any motives, but this appears to be a further issue of taking over the same property. If you'll excuse the expression, this particular section, Section Three, seems to be a backdoor method to be able to do that. Otherwise, I don't know why we would be looking at having open comments in a session that normally doesn't have them, but I appreciate the time, I appreciate you giving me the opportunity to speak, and if you have any questions that can be answered by a commissioner, I'll be glad to. [SPEAKER CHANGES] Thank you, Mr. McClure. Questions from the committee? George Everett, Duke Energy...George. [SPEAKER CHANGES] Thank you Madame Chairman, and members of the Commission. It's clear to me that this is about as muddy an issue as you can get. The bottom of our lakes and rivers is mud, and that's just what this looks like right now. After hearing this presentation, I think what I heard, but I'm not sure, about Section Three, which is the only piece I'm speaking about, is that the water that we flooded, the land we flooded, when we put dams in place, is not subject to this debate. I think that's what I heard, but it's not clear to me. [SPEAKER CHANGES] I believe you're correct. [SPEAKER CHANGES] We do ,of course, have dams that are put in place on a number of other rivers besides the Yadkin. We own the lakes, and the land beneath those lakes, and we can argue about whether we own the land beneath the river, all along the Catawba River. But if Section Three stays in this Bill, there are going to be a lot of people who lay claim to some of that property that was in the original riverbed. And Duke is going to have to go back 100 years to determine who has that claim, and how we resolve it. The Department of Environmental and Natural Resources and Administration, and the AG's office, are going to have to resolve this claim. And we're all going to be tied up in court, probably for the next 100 years, that we've been in place on the Catawba already. So we oppose Section Three of the Bill. [SPEAKER CHANGES] Members of the committee, do you have questions for Mr. Everett? [SPEAKER CHANGES] One question, Mr. Everett. [SPEAKER CHANGES] Senator ? . Mr. Everett, if you'll come back, sir. [SPEAKER CHANGES] Sorry abut that, George. How many dams do y'all have for Duke? Have any idea how many dams y'all have got? [SPEAKER CHANGES] ? [SPEAKER CHANGES] Follow-up, Senator ? [SPEAKER CHANGES] Just a follow-up, as an example of ...

[SPEAKER CHANGES] You know how many acres that lake is? Speaking about the land underneath the water. [SPEAKER CHANGES] I do not know how many thousand acres it is, but I can look it up in a couple of seconds and get back to you. It's enormous. [SPEAKER CHANGES] Probably about 32,000. [SPEAKER CHANGES] That was my guess. I was going to say 30,000. [SPEAKER CHANGES] The members of the committee, answer Senator Davis. [SPEAKER CHANGES] Thank you madam chairman. Could somebody tell me what section 3 is supposed to fix? [SPEAKER CHANGES] I asked if there was a staff here from research here and apparently they are all tied up with the budget, but I'm going to see if one of our folks here can help us. [SPEAKER CHANGES] Madam chair, I'd be happy to brief those sections as to what its intended to fix. Perhaps Senator Hartsell would want to discuss the policy but just in terms of what the sections do, they do reflection the options presented as part of the PED report earlier this year. So the first section 3A directs the department administration to modify their existing database to included a field to indicate whether or not a property has submerged lands associated with it. The second part of section 3 section 3B provides that no structures may be placed on state-owned submerged lands after the effective date of the act without an easement that would be granted by the department administration. That section also explicitly states that it should not be construed to validate or authorize the structures of any existing structure on state-owned submerged lands. The next section, section 3C directs the Department of Administration to adopt rules to specify the process for obtaining utility easements on submerged lands, and those rules would be due no later than April 15, 2014. The section 3D would direct DOA to develop and implement procedures with veneer to implement a process for disposition of mineral rights that were underlying state lands, or state submerged lands. The final section of section 3 section 3E would set up a submerged land claim process much like Mr. Grimes described was performed in the 70's and late 60's for coastal submerged lands. This would institute a claims process for submerged land s in the 75 remaining counties. And those claims would need to be submitted by December 2015 or the would be declared null and void. I'm happy to answer any questions madam chairman. [SPEAKER CHANGES] Do you want to go ahead and ?? [SPEAKER CHANGES] That was a brief explanation. Senator Davis do you have a follow-up sir? [SPEAKER CHANGES] Thank you madam chairman, if I may. I understand what this does, but I still don't understand what the problem is that it's designed to fix. I'm a simple guy and I just don't see that. Other than being a full employment act for attorneys and surveyors. I would like to ask another question of somebody that would be willing to answer, being a non-attorney. Why is it incumbent upon individual land owners to prove they own land instead of having the state of North Carolina to prove that they don't? [SPEAKER CHANGES] Senator Hartsell? [SPEAKER CHANGES] Let me [SPEAKER CHANGES] This is maybe one that you can [SPEAKER CHANGES] Let me just back up just a moment if I may. One, what the section does is apply to 75 western counties precisely what was applied to the 25 eastern counties. No more, and no less. Water and this, while I'm been blamed for a lot of stuff, and am guilty of most of it, the issue boils down to: do we control our water and the riverbed and the public trust waters in this state? I've been accused of trying

And to take peoples' property. And then that, and others of us in the general, in the Senate, particularly have been accused of that. That's not the issue. Fundamentally, the public trust waters of, and, and the flow over navigable, the navigable river beds are and have been the property of the state since we became a state. This simply asks to be able to inventory that. Now there, people have all sorts of claims. There's all sorts of encroachments and that sort of thing, and they haven't meant a whole lot for a long time, when the next fifty to a hundred years they're gonna mean a lot more. And the Western part of the state where we have very limited capacity to, to utilize surface water because we have very few dams, and we've got more people and they're using more water. So the issue is here, simply, let's find out what in fact we have or don't have. If in fact folks have claimed, and we're only, we're not talking about the fully flooded areas, we're talking about the river beds themselves, the original, the essential, the beds to the high water mark. That's what the state has owned. We've had any number of debates and discussions about whether or not we're getting appropriate revenue or return on state property now. We've got major disputes in this county about whether that's gonna happen. It seems to me extraordinarily incumbent upon us to assess and inventory what is in fact the property of the state. Now, if somebody's got a claim that they own it, then that's fine. Just show the claim. We've been, the issue has come back about Alcoa in particular. We've been trying to get that. They say it. And they've, I've been accused of all sorts of things, in, in fact including today ?? take something. Not trying to take something, we're trying to establish the fact that this was our property. If they have the property, then just show it. No more, no less. But if it is the state's property, it is incumbent upon us to protect the resource. Both the water and the land over which it flows. It's not just incumbent, it's a matter of law, and by the way in 18, sometime in the 1840s in a spring court case in North Carolina, there was a defi, there was a definition of navi, and I'm not talking about just Yadkin, I'm talking about the rest of them. That's true. And, we actually defined what navigability was, and what it wasn't, and where we could do this and where we couldn't. And in the 1880s, the state of North Carolina, and it said essentially the general assembly we could define that. Furthermore, in the 1880s, the state of North Carolina, and by act of this general assembly, declared the areas from the south of the Yadkin itself, South from the Davidson County line, South to South Carolina, as navigable, as, as highways of the state. That's the definition of navigability. There were uses for that at the time. Now, and there have been others, right now, we have a situation where an entity, seen in Greensboro and others, have, they built a dam, and after the dam was built, downstream land, actually dam owners have now tried to collect funds from the folks who built the dam went through the entire process, because their, their, their rate, the rate of flow has been diminished. And yet, I don't know whether they actually have a right to block the river to do it to begin with, nor does anybody in Greensboro, or anywhere else. That's not the Yadkin that's the, that's the deep river. It is incumbent on us to know it because what underlies our ability to control our water is the fact that we own the beds of the rivers. That's the whole justification for our being able to take, and to have control over all these things. I'm just, and I'm kinda rambling on. I have a tendency to do that sometimes

As a lawyer or otherwise. But and I still say that it is incumbent upon us to identify and control the resources that are the states for the benefit of of the people of the state, period. That's what we've done in other circumstances, that's what we're trying to do in this situation. And this particular provision came out of a study that was directed by the general assembly. It essentially recommended that we do for the 75, what was done in the eastern. Now there's another red herring to keep coming up, the prospects of having to refund taxes if they haven't actually gone back and cleared this up and made the claim against the county to begin with, they can't do it. And in fact they have had the utilization of this property that they can't. And there are other rabbits that have been chased, but we can deal with that in other circumstances. [Speaker Change] Representative Burr. [Speaker Change] Thank you Madam Chairman. First I wanna thank you and Senator Brock for having the meeting today, I think it's pretty clear from hearing from the public today that there's a lot of concern with the section that again it kinda goes back to the Al coal issue something that, an issue that the general assembly has been willing to jump head first in, in the past few years. But I think at this point at least for the house side from what I hear there's not even an interest in sticking our little toe in that pool, much less jumping in head first. And I think to address concerns of those that have been brought up. I know speaking for myself I think Representative Brown, Representative Ford who all come from that area where Al Coal is and have dealt with this issue for several years. It's all preference, this section not being included in this bill. We're certainly fine with the other sections that were in your original bill but I just don't think that we want to continue down this path and really it would be in the best interest at this time to pull that section three out of this bill. [Speaker Change] Folks we're not gonna vote, conference committee is not gonna take a position today. We were hear for the purpose of gathering information. Is there anyone else that would like to speak? Or anything else that needs to be added to our amendments? I'm gonna welcome Secretary from The Department of Administration our friend Bill Dockridge. Mr. Dockridge sir, Senate you've got a major part in this bill. Section one and two if there's anything you'd like to share with us we'd be glad to hear from you. Thank you. Representative Ford. [Speaker Change] Thank you Madam Chair. I've heard from the ?? County Commissioners and the towns of Spencer and East Spencer and they are also opposed to section three and would make it official if need be. I suggest that when Ann Brown they send you the information that you go through it. It's pretty interesting and it gives the entire history of what and where and when the river was navigable. 'Cuz we know for instance that the Atkin River was nothing more than a big creek originally, and covered with full of rocks, and stones and etc., etc. So if you get a chance to read that it's very interesting and it'll open your eyes. Thank you. [Speaker Change] Thank you. Seeing no other comments we stand adjourned.