(a) The acreage of each municipality's land selections for which patent has been issued before July 1, 1978, shall be credited toward fulfillment of the entitlement of that municipality.

(b) All approved selections under former AS 29.18.190 and 29.18.200 for which patent has not been issued to a municipality on July 1, 1978, shall be reviewed by the director within nine months after July 1, 1978. Any approved selection of land that was vacant, unappropriated, unreserved land on the date of selection is valid as of the date of the approval under former AS 29.18.190, 29.18.200, 29.18.201, 29.18.202, and 29.18.203, and a patent shall be issued to the municipality within three months after approval by the director of a plat of survey. The acreage shall be credited toward fulfillment of the municipality's entitlement. A municipality is not entitled to receive patent under this chapter to more than its entitlement determined under AS 29.65.010 - 29.65.030. Any prior approval by the director of municipal selections for land that was not vacant, unappropriated, unreserved land on the date of selection shall be rescinded, and patent may not be issued except when disposal to a third party by sale or lease has occurred. Transfers of land to municipalities under this chapter are subject to AS 38.05.321. Classification actions as reflected on the land status records of the Department of Natural Resources are determinative of land classification status for purposes of this chapter.

(c) The director shall approve or disapprove each selection for patent within nine months of its selection by a municipality. Before a decision is issued, the Department of Commerce, Community, and Economic Development shall review the selection and recommend approval or disapproval of it. The director may disapprove a selection only upon a finding that the public interest in retaining state ownership of the land outweighs the municipality's interest in obtaining the land. If the director determines that the public interest in land selected in satisfaction of an entitlement under AS 29.65.010(a)(13), (14), (15), or (16) can be adequately protected by issuing a patent that is subject to stipulations, conditions, or covenants, and if the municipality agrees to accept the land subject to those stipulations, conditions, or covenants, the director may approve a selection that would otherwise be disapproved and may issue the patent with the stipulations, conditions, or covenants agreed to by the municipality. A patent shall be issued to the municipality for land selected in satisfaction of a general grant land entitlement vested under AS 29.65.010-29.65.030 within three months after approval by the director of a plat of survey.

(d) Before disapproving a selection, the director shall notify the municipality in writing of the decision and set out reasons for it. The municipality may submit a written response within 30 days after receipt of the notice. Within 30 days after the period for responding has expired, the director shall affirm, modify, or reverse the decision and supply the municipality with written notice of that action. If the selection is disapproved, the municipality may file notice of an appeal with the director. The appeal shall be heard under procedures adopted by regulation of the Department of Natural Resources. Before reaching a decision on an appeal the Department of Natural Resources shall request the Department of Commerce, Community, and Economic Development to review the matter and submit a recommendation. After reviewing the recommendation, a decision on the appeal shall be submitted by the Department of Natural Resources to the municipality in writing within 30 days after the notice of appeal was filed with the director. A municipality may appeal an adverse decision to the superior court under AS 44.62.560 - 44.62.570.