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ANWR Oil Should Be Shared, Three Say

Posted on: Saturday, 9 July 2005, 00:00 CDT

Jul. 8--Three prominent shareholders of Cook Inlet Region Inc. want every Alaska Native -- not just those on the North Slope -- to share the financial rewards of oil produced from the Arctic National Wildlife Refuge.

Robert Rude and Gosta Dagg, directors of the Anchorage-based regional Native corporation, and former state senator and CIRI shareholder Jerry Ward, say ANWR should stay closed to development unless Arctic Slope Regional Corp. is required to share revenue from land it owns inside the refuge.

"We have an obligation to protect our shareholder rights," Rude said this week.

Rude, Dagg and Ward are trying to get Congress to overturn a key provision of a 1983 land trade that gave Arctic Slope 92,160 acres of oil rights within the Arctic refuge and exempted the corporation from sharing with other Natives a portion of the revenue it could earn from oil and gas development. Under the federal law that created them, regional corporations typically share with other Native corporations 70 percent of profits from oil and gas production, mining, logging, and other resource development. It's commonly referred to as the "Share the Wealth" or "Robin Hood" clause.

The three CIRI shareholders want Congress to include in any legislation that lets oil companies onto the refuge's coastal plain language to also end Arctic Slope's revenue-sharing exemption.

With ANWR estimated to contain 10.4 billion barrels of oil, which is now selling for nearly $60 a barrel, Arctic Slope stands to earn a bundle, Rude said.

"It's a staggering amount of money," he said.

Arctic Slope's position is that the oil comes from Inupiat land and its benefits should stay within the corporation and its shareholders. Arctic Slope's exemption from the revenue-sharing requirement was spelled out clearly in the land exchange, said Richard Glenn, vice president of lands for Arctic Slope.

"This issue was decided long ago," he said.

Glenn said Arctic Slope traded surface land for subsurface oil rights and that's what makes it exempt from revenue-sharing. Arctic Slope's position was upheld by the American Arbitration Association in 1989 after two other regional corporations, Aleut Corp. and Bristol Bay Native Corp., challenged the lack of wealth sharing.

That may be, Dagg said. But it's something that has burned him and others for more than 20 years, he said. It's time to revisit the 1983 deal, Dagg said, especially since the possibility of opening ANWR to development has gained momentum in Congress this year. He is talking to as many Natives as he can, including at CIRI shareholder meetings, to raise awareness, he said.

Many people running Native corporations these days weren't in charge in 1983, Dagg said. A lot of Native executives don't even know that Arctic Slope owns land inside the refuge, much less that the Barrow-based company doesn't have to share the fruits of ANWR.

Arctic Slope was exempted from the revenue-sharing requirement under a land trade with the Department of Interior that government auditors concluded in 1989 was a raw deal for most Alaska Natives and American taxpayers in general. Under the land exchange, Arctic Slope traded 101,272 surface acres near Chandler Lake in Gates of the Arctic National Park, valued at $5.9 million, for oil rights under 92,160 acres of ANWR. The value of this subsurface tract was estimated at $395.5 million, according to a government report.

Congress never got to vote on the land transfer. At the time, congressional approval was not required for land trades the interior secretary made with Native corporations. That changed a short time later.

The Government Accountability Office -- then called the Government Accounting Office -- in its 1989 report found that the Interior Department undervalued the refuge land.

The GAO also concluded that the land exchange hurt most Natives because it excluded the revenue-sharing provisions. The public did not have a chance to review and comment on the land exchange before it was done.

Federal and state officials and Alaska Natives told the GAO at the time that had they had the opportunity to comment on the land exchange, they would have objected to many of its provisions, the agency said.

Arctic Slope rejected the GAO's conclusions. As far as sharing the wealth is concerned, Arctic Slope said it acted in good faith and complied with a profit-sharing settlement agreed to by the regional corporations. That agreement exempts profit sharing when surface land is traded for subsurface. The GAO report says Arctic Slope's lawyers were frank about structuring the exchange so it was not subject to profit sharing and was designed to protect the interests of the company and its shareholders.

The CIRI directors and Ward, who was narrowly denied a board seat in a corporate election last month, say it's not too late to right what they see as a historic wrong.

"We want this fixed," Ward said.

Unless things change, more Alaska Natives are going to build alliances with environmental groups opposed to ANWR drilling, Ward said.

In May, Rude sought help from Sen. John McCain, R-Ariz., chairman of the Senate Committee on Indian Affairs, and Rep. George Miller, D-Calif., a member of the House Resources Committee. Miller objected to the land exchange two decades ago and requested the GAO audit.

Rude said McCain responded with a letter saying he would consider the matter. Miller has yet to respond, Rude said.

The three CIRI shareholders said they are acting as Alaska Natives and not on behalf of CIRI.

None of Alaska's three congressional members could be reached for comment.

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Source: Anchorage Daily News

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