REGIONAL— The recent announcement that state and federal officials have agreed on a strategy to facilitate the sale of 80,000 acres of school trust land is facing opposition from local state Rep. Roger Skraba, R-Ely. That should come as little surprise, given that northeastern Minnesota lawmakers have traditionally opposed a sale of the lands, which were effectively landlocked by the 1978 Boundary Waters Wilderness Act. That law prohibited road building, logging, and mining within the 1.1-million-acre wilderness area, effectively cutting off the state’s access to its school trust lands. Those lands were granted to the state of Minnesota by the federal government at the time of statehood and the state’s constitution requires the lands be managed to produce revenue for the state’s school trust fund.
In opposing a sale of the lands, Skraba, currently in his first term representing District 3A, points to the 1964 Wilderness Act, which indicates that any state or private lands landlocked by the designation of a wilderness shall be acquired by a land exchange of equal value. That would seem to prohibit an outright purchase of the land in question.
Game, set, match? Not exactly, at least according to Tom Hall, the supervisor on the Superior National Forest. Hall doesn’t dispute Skraba’s contention that the 1964 law authorizes land exchange in order to acquire state or private properties isolated within the wilderness, but said that’s not particularly relevant to the question. “We function based on authorities,” said Hall, referring to the U.S. Forest Service. “Our general counsel tells us that the ’64 law authorizes an exchange. But that doesn’t preclude other laws that authorize purchase of lands, such as the Weeks Act,” he said.
The Weeks Act, signed into law in 1911, authorized the acquisition of lands in the eastern half of the country primarily for the protection of watersheds. “It’s one of many different authorities, others including land and water conservation act authority,” Hall added, although he acknowledged he anticipates using authority under the Weeks Act to ensure the purchase passes muster legally.
According to Hall, any final agreement on the proposed purchase would spell out the forest service’s legal position. “That’s incumbent on any proposal we offer,” he said. “We do feel like there are authorities that allow us to move forward.”
Aaron Vande Linde, who directs the state’s office of school trust lands, agreed that the ’64 law states that the forest service “shall” acquire state or private lands in the wilderness through exchange, he notes that it doesn’t expressly prohibit other methods of acquisition. He said had Congress wanted to limit such acquisition to an equal exchange, it could easily have stated so.
He called Skraba’s reading “wrong on the facts and wrong on the law.”
But as a member of the Legislature, Skraba’s interpretation, right or wrong, could potentially stand in the way of an outright sale of the school trust lands. While the Weeks Act does allow the forest service to purchase lands for conservation purposes, the law states that any such transfer shall not occur without the consent of the Legislature of the state in question. That could give Skraba a means to sink any such agreement on a possible sale, as long as he can generate sufficient backing to oppose it.
Differing viewpoints
From Vande Linde’s perspective, the rationale for a sale comes down to maximizing the return to the school trust, which is part of his charge.
While some lawmakers, like Skraba, have argued that an exchange would ultimately yield a better return to the school trust, Vande Linde strongly disputes that suggestion. “It comes down to the time value of money,” he told the Timberjay recently. “The trust will receive cash on the barrel and be able to invest it straight-away.” According to Vande Linde, it would take many decades, likely even more than a century, to generate enough revenue through timber sales on the exchanged lands to even match the original purchase price the school trust will receive once the sale is completed. By that time, through investment, the school trust will have earned many times that amount, thereby meeting the trust’s obligation to maximize revenue generation.
Skraba says that argument comes with assumptions, including that the economy and investments based on it don’t collapse. He argued that by consolidating the ownership of state lands outside the wilderness, both the forest service and the DNR can more efficiently manage their lands and that such efficiency will benefit communities that rely on the resources derived from the lands.
He also argued that the school trust lands within the Boundary Waters are worth more than the current estimated value of $425 an acre. That would generate about $34 million for the state’s school trust were the two sides to agree on that value.
State and federal officials say years of effort to agree on the parameters of one of the largest land exchanges ever attempted in the U.S. proved both costly and ultimately fruitless, and argue that a sale is likely to be far easier to arrange, although it will require several steps, including a condemnation proceeding in state court.
Rather than abandoning the effort, however, Skraba suggests that the parties involved try to work out smaller, less complex exchanges, one at a time, until the lands issue can be fully resolved.
The school trust
As of 2021, the corpus of the state’s school trust was estimated at approximately $1.9 billion, which is invested in a variety of financial instruments as determined by the Minnesota Board of Investment. Over the five-year period ending in 2021, the trust experienced an average annual return of 10.82 percent. At such a rate of return, $34 million would generate approximately $3.7 million in the first year, and larger amounts in each subsequent year as a result of compounding. Over 50 years, at a similar rate of return, the value of that $34 million would grow to approximately $242 million.
But Skraba argues there’s more to the equation than money. He said the resources generated from the newly obtained state lands would help to sustain industries, like wood products, that create jobs in communities in the region. “Maybe it would generate more by selling it now,” said Skraba. “But that shouldn’t be the only goal.”
That’s an argument that’s often made by industry groups, which note that resources like timber and minerals can generate many times their raw value in jobs, income, taxes, and other benefits to communities.