OPINION
DIMOND, Senior Justice.
This case involves the question of who bears the loss resulting from the fire destruction of Chena School.
Chena School is located in Fort Wainwright, a military reservation. Pursuant to a use permit from the United States Department of Health, Education and Welfare (HEW), the Alaska State-Operated School System, an agency of the state, began operating Chena School and other Fort Wainwright schools in 1973.
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