"Claims Change Made in Secret"

By A. Robert Smith, Washington Correspondent

Fairbanks Daily News-Miner, July 15, 1970, p.2

Washington — The Senate Interior Committee has made a slight change in its final version of the Alaska Native Land Claims bill—hardly worth mentioning to the public perhaps—but worth millions of dollars to a number of oil companies and individuals who hope to make their fortune in new Alaskan oil discoveries.

The change was made in secret, in a meeting of the committee May 13. No mention of this alteration was mentioned after the meeting or in newspaper reports that followed.

The change consisted of deleting Section 17, which would have authorized the Interior Department to issue oil leases on the basis of competitive bids throughout the public land area of Alaska wherever there might be competitive interests seeking leases.

Deletion of this section means that:

1. The Interior Department, under the old mineral leasing act of 1920, must continue to issue oil leases non-competitively except in the immediate area of a known geological field in which there is a producing well. There are only two such fields at present in Alaska—Prudhoe Bay and Kenai.

2. Those persons who file first for such leases will continue to be entitled to lease 2,560 acres by paying a $10 filing fee and $.25 per acre rent per year to the federal government for the 10-year life of the lease. If they—or whoever they sell their leases to—strike oil, they pay a production royalty of 12-1/2 per cent to the federal government. The remaining 87-1/2 per cent is all theirs.

The financial implications of this deletion of 20 lines from the 144-page bill can best be understood by this concise analysis: if the state’s big Prudhoe Bay oil lease sale of last September had been handled in this manner, under the terms of the old mineral leasing act of 1920, the state could have demanded competitive bids on only a third of the acreage put up for sale—and its take would have been only $420 million instead of $900 million in bonus bids.

The state of Alaska, however, did collect $900 million because it could demand competitive bids wherever there was a competitive interest in obtaining leases.

The Senate Interior Committee has seen to it that the federal government won’t be able to make the same demands, much to the delight of certain oil companies and individual oil fortune hunters.

The Nixon administration is on record in favor of competitive federal oil leasing in Alaska. The Interior Department, in its report to the committee, said it considered it "important for the secretary to have specific authority to dispose of all minerals under the mineral leasing laws by competitive bidding."

The Alaska Field Committee, in the so-called Fitzgerald report of March, 1969, recommended competitive leasing by the federal government. The original legislation introduced by Sen. Henry M. Jackson, D-Wash., the committee chairman, provided for competitive leasing. And after a year of committee hearings and closed door discussion within the committee, tentative agreement reached by the committee in April provided for competitive leasing.

During the last week in April and the first week of May the committee and its individual members received a barrage of telegrams and letters objecting to this provision. The objections came form oil interests.

On May 13 the committee met once more. Sen. Clifford Hansen, R-Wyo., reportedly moved to delete Section 17. Chairman Jackson, who had dominated the long struggle to draft a generous, equitable land claims settlement bill, opposed Hansen’s motion.

Hansen won by a vote of 10 to 7.

Sen. Ted Stevens, R-Alaska, voted for the Hansen motion to kill the competitive leasing section.

Sen. Mike Gravel, D-Alaska, voted with Jackson in the unsuccessful effort to retain it.

Stevens argues that non-competitive leasing will result in more exploration and thereafter offers a greater prospect for more oil discoveries in other sections of the state. In the long run, he contends, this would be more beneficial to the government in production royalties.

Stevens defended the prevailing procedure whereby individuals obtain leases non-competitively, put together a large block and offer to sell them to oil companies at a later date.

"If we had all competitive leases, only the large monied interests would hold leases in Alaska," Stevens maintained.

Moreover, Stevens said he didn't see why federal leasing in Alaska shouldn't be the same as anywhere else in the country, where leasing on public lands is under the 1920 mineral leasing act.

"I don’t see why we should single out Alaska for a change in the rules of procedure," he asserted. "I wanted to preserve the mineral leasing act."

Asked who would benefit by dropping the competitive provision of the bill, the GOP senator declared, "I don’t think you can say who’s affected. I don’t know who’s affected. I’m interested only in the policy."

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