"Alaska: Share the Oil"

by Daniel Henninger

"Alaska: Share the Oil," Daniel Henninger, New Republic, June 28, 1969, Vol. 160, pp. 15-17. Used with permission of the publisher, for educational purposes only.

Last year a lone Atlantic Richfield oil rig drilled into a sea of oil beneath Alaska's Arctic ice. The find is worth billions and has the oil industry aflutter. Humble Oil announced it would spend $39 million to open the legendary Northwest Passage linking Alaska to the East Coast; British Petroleum, with holdings on Alaska's North Slope, obtained Sinclair Oil's East Coast marketing rights from Atlantic Richfield this year for $400 million and recently took over Standard Oil of Ohio. A Fairbanks pharmacist's modest $4,800 land investment on the North Slope returned $2 million recently. The state of Alaska, dependent on federal spending for 36 percent of its annual gross product, should thrive on revenue from the oil leases (California's last competitive oil lease went for about $600 million). But the new jobs and expanded incomes would bypass 178 remote, far-flung Alaskan Native villages, because the capital-intensive oil industry has little use for unskilled, semi-educated Natives. To avoid their exclusion, the Alaskan Federation of Natives, representing 55,000 Eskimos, Aleuts and, Indians filed claim to 250 million acres, asserting aboriginal occupancy.

As Interior Secretary, Stewart Udall felt the Natives had a point and imposed a "land freeze" on unclaimed federal land in Alaska. This "patently illegal act" so nettled Alaska's business-minded governor Walter Hickel that he ordered a suit against the Interior Secretary, hoping to lift the freeze. The state had selected only 18 million of 103 million acres allotted it by the Statehood Act of 1958, so the "freeze" left the Natives sitting, idly, on all that black treasure. Appointed Secretary of Interior, Hickel said bluntly: "What Udall can do by executive order, I can undo."

Now (apart from becoming the subject of his own suit), Hickel is under pressure from the President, Congress, the Natives, and the state to settle the claims. The government's moral obligations to compensate the Natives for their lost land rights is generally conceded, but establishing a precise legal obligation that could determine the terms of a settlement has proved virtually impossible; a solution lies with an act of Congress.

Primary responsibility for the claims legislation falls to the Senate Interior Committee, so committee chairman Henry M. Jackson (D., Wash.) asked the Federal Field Committee for Development Planning in Alaska to make a thorough study of the Alaskan Natives and the land issue. Their 565-page report is a stark account of one of the poorest peoples in America.

In 1968, the Bureau of Indian Affairs and the Public Health Service spent $43 million on the state's 55,000 Natives. Despite the millions, most Native villages resemble Alaska's old gold-rush boom towns (a few actually are crumbling remnants of that period). The Natives live in one- or two-room shacks built of logs, driftwood, sod or plywood when it's available. Arctic winds constantly blow through them. Government inspections of 2,014 Native households found 1,561 without a sanitary water supply. A few villagers have regular flush toilets, some have privies, most use pots or pails indoors and carry them outside to dump on the ground or sea ice. By contrast, federal employees working in village schools or agencies live in well-constructed, functional government housing.

The primitive living conditions afflict the Natives with high incidence of disease: bronchial pneumonia, tuberculosis, influenza. Among Native children earaches become serious ear infections often causing hearing loss because they don't get medical attention. Alcoholism, serious mental disorders and malnutrition are widespread.

Most village children attend either the BIA's 82 village schools or the 62 village schools run by the state. Few schools extend beyond the eighth grade. Between 1955 and 1962, less than 40 percent of the children graduated from grade school and three-quarters of the dropouts were at least five years behind.

Because of a severely limited job market, only one villager in ten holds a full-time job. Commercial fisheries employ Natives for two to four summer months. In the southeast a Native earns $1,000 to $1,500, perhaps as much as $3,000 in a good year; in the southwestern Bristol Bay area, cannery workers make less than $500 for six weeks work. Some Natives find part-time work with the government in school and defense construction or as firefighters and fish and game wardens. During the severe Alaskan winters there is hardly any work at all. If a Native's part-time job does not last a quarter of a benefit year, he cannot get unemployment compensation.

The average Native family with an estimated annual income of $2,000 has one of the country's highest costs of living. A BIA survey found that a Native family may pay $2,000 for necessities that a family in Houston or Washington, D.C., can buy for $1,000.

The large task of settling the claims issue to everyone's satisfaction is under way. In April, Sen. Jackson introduced a bill that would establish a quasi-public Alaskan Native Development Corporation. Four of the nine directors would be Natives elected by the stockholders, the Alaska Natives. The corporation would receive starting capital of $1 million from the Alaska Native Compensation Fund, a special unit established within the Treasury to funnel revenue directly to the Corporation—$100 million a year for ten years. Also, the Corporation would receive ten percent of federal and state revenue from mineral leases. The Corporation would provide loans and grants to Native groups, villages and individuals for home construction, health programs and education, as well as making investments. After ten years the Corporation would continue as a private enterprise paying annual dividends to the Native stockholders.

A poor people's corporation is politically safe because it conforms to popular self-help theories. But the Interior Committee's plan stepped on several sets of bureaucratic toes. Congress normally requests comment from government departments affected by proposed legislation; attempting to avoid the bureaucratic wringer, the Interior Committee drafted its bill without consulting anyone. The Agriculture Department objects to provisions that would turn over some 300,000 acres of National Forest land to the Natives. The Defense Department controls National Petroleum Reserve No. 4 (Pet 4) and there is no indication that it will surrender it to anyone. Commercial exploitation of Pet 4 could alter national and world oil markets. Most important, the Budget Bureau blanches at committing the inflation-obsessed Administration to giving the Natives $100 million a year plus a percentage of the leasing revenues.

On April 28, Secretary Hickel presented the Administration's proposals, (with Budget Bureau imprimatur) for settling the Natives' claims. Interior found Jackson's billion-dollar figure excessive by half—they proposed a $500 million settlement payable to the Corporation (which they sanction) over 20 years. Hickel also thought revenue-sharing "would place on our Natives an uncertain element of risk," a fear that apparently escapes the oil companies preparing to sink billions into tapping the Alaskan oilfields. The Interior Committee proposed an independent Alaska Native Commission to administer the claims settlement; the Interior Department wants the Commission established as an agency within the department. There it would conflict with the BIA.

The Administration and Senate Interior Committee probably will settle on a compensation figure somewhere between the $500 million and $1 billion proposals. Less easily compromised is the critical issue of revenue-sharing. The Interior Department and its Budget Bureau overseers are dead set against appropriating a yearly ten percent of unpredictable revenue income. Actually, the ten-percent figure is little more than a commitment to the revenue-sharing proposal; the Field Committee's chairman, Joseph H. Fitzgerald, admits the figure is only an educated guess. The Interior Committee would resolve the proposal's uncertainty by giving the Natives an annual percentage of the leasing revenue, not to exceed a fixed cash ceiling.

Central to the government's reluctance to embrace high-cost, open-end financing of the Natives' future is a fear of setting precedents. The government fears that other minorities might interpret cutting the Natives in on revenue from federal (and therefore tax-supported) land as a concession, precipitation a flood of similar compensation demands from these groups. Spreading $500 million over 20 years and administering it through the Interior Department would be less likely to set off a reparations revolution. It is less likely to do the Alaskan Natives much good. It would add $2.5 million to the ineffectual $43 million a year they get now; $100 million a, year plus a share in leasing revenues would eliminate poverty among the Alaskan Natives.

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