A ka ka Esk imos
Our senators say they voted for oil drilling in Alaska to help indigenous people. Here's who really wins.
August 04, 2005
After 45 years of federal government protection, extracting oil from the beautiful, pristine Arctic National Wildlife Refuge (ANWR) is now possible. No more will oil drillers and wildcatters have to shake their fists at 19 million acres of unspoiled wilderness.
"[A]ccording to the U.S. Fish & Wildlife Service, the Arctic Refuge coastal plain contains the greatest wildlife diversity of any protected area above the Arctic Circle," stated 1,000 scientists and natural resource managers in a Feb. 14, 2005 letter to President George W. Bush. "We reject any notion that development and its impacts could be isolated into a 2,000-acre portion of the refuge, as has been proposed for development by pro-drilling advocates."
They should have sent their letter to Hawai'i's U.S. Senators Daniel Akaka and Daniel Inouye. On March 16, 2005, Akaka and Inouye made possible a razor-thin 51-vote Senate majority that voted to authorize ANWR drilling (seven Republicans opposed the measure). In a curious twist, the senators immediately offered the novel argument that they voted that way because oil exploitation was best for the indigenous peoples of Alaska.
On July 15, 2005, Senator Akaka wrote a two-page, mostly boilerplate letter explaining his reason for defying the national and Hawai'i State Democratic Party platforms.
"I voted in support of Alaska's indigenous peoples, the Alaska Natives," Akaka wrote in response to inquiries from Jen Russo, Maui Time Weekly's General Manager. "The Inupiat, who live within the boundaries of the coastal plain, are a people with strong cultural values who are deeply in touch with their environment and everything that lives there… I want to provide the Inupiat with the opportunity to provide for themselves and their future generations."
Akaka's rhetoric ignores the complex truth about the Inupiat people and Native Alaskans in general, which number about 98,000, according to the 2000 Census. Far from a simple, aboriginal tribe, the Inupiat today run the largest and richest oil and construction firm in the state of Alaska. Akaka's statement also glosses over the fact that a measly nine percent of the "Alaska Natives" will reap any benefit from extracting oil in Alaska's wilderness.
In his letter, Akaka wrote that his affinity with the Inupiat began 10 years ago when he visited their tiny village of Kaktovik, which lies within ANWR's Coastal Plain about 70 miles from the Canadian border.
Today just 260 Inupiat (sometimes spelled Inupiaq) people live in Kaktovik. No more than 240 lived there 10 years ago when Akaka stopped by. While numerous reports say all Inupiat residents in Kaktovik support ANWR oil extraction, an April 13, 2005, Seattle Times story referred to a recent petition signed by 57 of the village's 150 or so adults opposing drilling.
In any case, it's true that a majority of the Inupiat support ANWR oil drilling. The reason—far from any attachment to "strong cultural values," as Akaka pointed out—is simple: ANWR will make them rich.
Okay, richer. About 9,000 Inupiat people own shares in the Arctic Slope Regional Corporation (ASRC), which is actually the only organization that will make money off ANWR. According to its 2004 annual report, the company brought in $1.3 billion last year. Though the revenues were $300 million more than the previous year, the company ended up posting a $17 million loss, due mostly to one-time costs.
ASRC owns all sorts of subsidiary corporations. There's Petro Star, Inc., a petroleum refining and marketing firm. It owns two civil engineering firms—ASCG and SKW—the latter of which is currently doing missile defense contracting. It also owns Tundra Tours, Inc., which conducts tours of Alaska's North Slope and operates a Barrow hotel. Eskimos, Inc. sells auto parts, snow machines and handles some fuel distribution. They also own a commercial financing firm and a wireless communication company.
Oh, and ASRC also owns 92,160 subsurface acres within ANWR—the same area, in fact, where oil drilling will begin. And therein lies the problem in Akaka's insistence that ANWR drilling will benefit "the Alaska Natives." If there's oil there, all the proceeds go to ASRC and its 9,000 shareholders.
The company enjoys solid political connections. In fact, its corporate headquarters are located in Barrow, Alaska, in a building part-owned by U.S. Senator Ted Stevens (R, Alaska). As a junior senator, Stevens helped pass the 1971 Alaska Native Claims Settlement Act, which sought to redress past injustices by giving newly created Eskimo, Native American and Aleutian-owned and operated corporations like ASRC 44 million acres. In return, Native Alaskan groups ended their claim of ownership over 300 million acres.
Corporations like ASRC hold huge advantages over regular companies. They can get "sole-source"—no competitive bid—contracts from the federal government. While considered minority-owned corporations, they don't have to follow the federal rule mandating a minority CEO. And they can retain their advantageous small business status no matter how large they get.
ASRC took over the ANWR land back in 1983, as part of a controversial deal with the U.S. Department of Interior now known as the Chandler Lake land exchange. Put simply, ASRC gave Interior more than 101,000 acres within Gates of the Arctic National Park in exchange for 92,160 acres of ANWR territory.
In a scathing October, 1989 report, the U.S. General Accounting Office (GAO)—the investigation arm of the U.S. Congress—said the deal "was not in the government's best interest" and Interior "was plainly outnegotiated by ASRC."
According to the GAO, Interior priced the 101,000-acre portion of the deal at $5.1 million, but "initially valued" the 92,160 acres of ANWR at an astonishing $395.5 million. Before the deal was done, the figure mysteriously plummeted to a mere $5.9 million.
So a bunch of wily Native Alaskans hoodwinked the U.S. Government. Just payback for centuries of getting screwed over, right?
On the day of the big 2005 ANWR vote, Senator Stevens took the floor and said that, "every Alaska Native will share in the money that is received by the North Slope people."
In fact, nothing could be further from the truth. According to the 1983 land exchange, which the GAO conceded was perfectly legal, ASRC gets to keep all the money it makes off ANWR oil extraction.
In its 1989 report, the GAO found great fault with a provision in the Chandler Lake exchange that negated the revenue-sharing provisions with other Native Alaskan corporations Stevens was referring to. Those provisions, which were part of the original 1971 Settlement Act, forced companies like ASRC to share 70 percent of all money it earned from subsurface rights with the other 11 regional corporations—spreading the wealth, as it were, to the rest of the native Alaskan community.
But the land exchange ended that—at least as far as ANWR was concerned. In the hunt for ANWR oil, the Arctic Slope Regional Corporation and its 9,000 shareholders will be the only ones to profit. The rest of the 90,000 or so Native Alaskans get squat.
"We included a discussion of this issue in the report because it was a significant element of the exchange and had financially adverse effects on other Alaskan Natives who did not have an opportunity to comment on this element of the exchange," wrote the GAO in a response to comments from ASRC and the Interior Department. "Interior knowingly accommodated ASRC's wishes by structuring the exchange, however legally, in a manner that denied other Alaskan Natives from participating in the benefits of the exchange."
The trouble is, no one really knows how much oil lies in ANWR. Estimates run between 5.7 billion and 16 billion barrels—a substantial amount, even if the reserves end up at the lower end of the scale. ASRC might have an idea, but if they do, they're keeping it to themselves. To date, the company has sunk just one test well into the proposed extraction zone, but under the terms of the Chandler Lake land exchange, the company is allowed to keep the results secret.
ASRC likes to point out that they could lose big if they don't strike oil in ANWR. "If Congress fails to open ANWR, or if ANWR is opened and no oil is discovered on ASRC's lands," wrote the company in response to the GAO's report, "ASRC will suffer a loss as a result of the exchange."
Ironically, the Arctic Slope Regional Corporation had already benefited handsomely from owning the ANWR lands when company officials wrote the above sentence.
"ASRC has already received $30 million (or over 5 times Interior's calculated value of the exchange to ASRC) for the right to conduct exploratory activities and to acquire oil and gas leases in ANWR," reported the GAO in 1989. "[I]f ANWR is opened to oil and gas development, we believe that the benefits of the exchange would be skewed heavily in favor of ASRC, and would be contrary to the best interests of the government."
Thanks to our two fine U.S. Senators, now we get to see if the GAO was right. MTW
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