amendment to it contained in the ASA cannot be used to alter its origins or elevate it to compact status so that it cannot be amended. Section 28 of the ASA, on its face, does not purport to be either a part of the compact between the United States and the State of Alaska or a permanent grant of mineral revenues to the State. In fact, section 28 did nothing more than amend a statute that had already been in existence for over 30 years before the ASA was enacted, and had long been applied to federal lands in all other states. Further, section 28 is but one of several sections added at the end of the ASA to amend existing law to apply it specifically to Alaska. Section 28 (b) in particular was a necessary and timely expedient because Congress wanted to extend to and adapt for Alaska the revenue distribution system already in place in other states. Further, section 28 (b) is very limited in that it is applicable only to lands leased under the MLA, not to other federally owned lands leased under other authority. For example, section 35 of the MLA gave Alaska no share of receipts from the naval petroleum reserves, and Naval Petroleum Reserve No. 4 (now NPR-A), constituting roughly 23 million acres in Alaska, was separately addressed in Section 11 of the ASA. This separate treatment indicates that Congress did not intend, as argued by the State, that the MLA be a vehicle for an irrevocable 90 percent interest in revenues from all federal mineral lands.- This point is 9 All of the contiguous lower 48 states had already been admitted to the Union when the MLA was passed in 1920. The MLA was not "incorporated" into the statehood act of any other state. 10/ The State's argument implies that 90 percent of MLA revenues goes to all states, not just Alaska. This argument appears to be based on an interpretation of the MLA whereby the 40 percent of MLA revenues which is earmarked for the Reclamation Fund ultimately is returned to the states in the form of reclamation projects. This argument has several problems. The assertion that the 40 percent of MLA receipts from states other than Alaska is returned to the generating states is illusory. In fact, any such moneys that are returned to the states arrive there only through an express appropriation from Congress after competing with other appropriations proposals, and there is absolutely no guarantee that such moneys as are appropriated will be proportionately returned to the states from which they were generated. The 90 percent provided to Alaska, however, is distributed directly to the State, to be disposed of as the state legislature directs. To the extent Alaska argues that it has been treated the same as other states in receiving the 90 percent share of MLA revenues, it implicitly admits that equal treatment would allow Congress to change the MLA formula for Alaska, (footnote continued) further supported by a 1981 Supreme Court decision in which the Court found that a 1964 amendment to the Wildlife Refuge Revenue Sharing Act, which included mineral revenues within its 75/25 distribution schedule, was properly applied to oil and gas leasing revenues from wildlife refuges on acquired federal lands in Alaska. Watt v. Alaska, 451 U.S. 259 (1981). Further, section 28 of the ASA did not purport to grant Alaska a 90 percent royalty interest in the minerals themselves. Rather, the section amended an entirely separate statute, the MLA, which itself does not grant the State any interest in minerals, but merely prescribes a formula for the distribution of certain federal oil and gas revenues. We have previously considered the issue of what interest states have in federal oil and gas under the MLA and concluded that they have no economic interest in the oil in place. As stated in Solicitor's Opinion M-36929, 87 I.D. 661, at 664, 665 (1980): States have no pecuniary or legal interest in (footnote continued from previous page) New Mexico v. U.S., 11 because Congress clearly has the power to amend the MLA to affect the royalty shares of the other states. cl. Ct. 429 (1986); affirmed, F.2d No. 87-1210 (1987). 11/ The case cited in the text focused on section 401 of the Revenue Sharing Act, 16 U.S.C. § 715s (c), which after the 1964 amendment provided that 25 percent of the receipts, including mineral receipts, generated by a refuge would go to the county in which the refuge was located and 75 percent to the Migratory Bird Conservation Fund. The Kenai Borough (the county in which the Kenai Moose Range is located), and the State of Alaska, each filed suit to challenge the federal interpretation that this formula applied to oil and gas revenues generated from the refuge. The U.S. District Court, District of Alaska, and the Ninth Circuit Court of Appeals each found in favor of the State of Alaska, that is, that section 35 of the MLA and not section 401 of the WRRSA, controlled the distribution of receipts from Kenai Moose Range. The Supreme Court held that the 1964 amendment clearly covered oil and gas receipts, but also found that it had not been the intent of Congress to amend section 35 of the MLA. Therefore, the court ruled that the WRRSA applied to oil and gas receipts from acquired lands in wildlife refuges, but not to reserved public lands in wildlife refuges. Watt v. Alaska, 451 U.S. 259 (1981). Even though the Court distinguished between acquired lands in refuges and public domain, this decision supports the proposition that Congress is not bound by the ASA to give Alaska 90 percent of oil and gas leasing revenues from all federally owned land. -10 provides for the disposition of federal royalty interest in the oil in place. . . . Therefore, under the amendment of the MLA contained in the ASA, the State receives only a periodic distribution of 90 percent of the revenues produced each year from the leasing and production of minerals under the MLA. Alaska receives no revenues under the MLA until such revenues are produced, and more importantly, receives its MLA royalty distribution only by virtue of the provisions of the MLA, not by virtue of the ASA. Our conclusion must be, then, that Congress was using the amendment to the MLA contained in section 28 not as a vehicle for granting the state a perpetual 90 percent interest in federal minerals in Alaska, but rather as an exercise of its authority under the Property Clause to dispose of and make needful rules for certain federal property, in this case, to set out the distribution scheme applicable to minerals leased under the MLA. Our view that the MLA was not incorporated into the compact between the State and the federal government and that it does not amount to a permanent grant is supported by examples of cases in which Congress has exercised its Property Clause powers to amend the MLA since Alaska gained statehood to the detriment of Alaska's 90 percent interest in revenues from mineral leases. For example, on December 18, 1971, Congress passed the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C., § 1601, et seq., amending the royalty distribution ratio of the MLA to reduce the State's share of royalties and pay a portion to Alaska Native corporations. Section 9 of ANCSA, 43 U.S.C. § 1608, provided in part that a royalty of 2 per centum of the gross value of minerals and 2 per centum of all rentals and bonuses would be deducted from the mineral revenues from public lands and paid to the Alaska Native Fund. Prior to ANCSA, the standard royalty on oil and gas leases was 12.5 percent of production. This meant 1.25 percent went to the U.S. Treasury, and 11.25 percent went to the State of Alaska, whereas after ANCSA these percentages were 1.05 and 9.45, respectively. Similarly, the Crude Oil Windfall Profit Tax of 1980, Pub. L. No. 87-1210 (1987). See also, Solicitor's Opinion M-36929, supra. These examples clearly demonstrate Congress' continuing authority to change the distribution scheme for mineral revenues from federal lands whenever it perceives a need to do so. 12/ In contrast, for example, the ASA explicitly granted Alaska 103,350,000 acres of land, which vested upon enactment. -11 CONCLUSION For the reasons stated, we must conclude that Congress has the authority under the Property Clause of the Constitution to alter the distribution formula set out in the Mineral Leasing Act for oil and gas revenues from the Arctic National Wildlife Refuge. The State of Alaska has not met the heavy burden of persuasion with respect to the argument that those Property Clause powers were terminated by the section in the Statehood Act amending the MLA to include Alaska in the Act's revenue distribution formula. We can find no support in the Alaska Statehood Act for the proposition that the MLA was incorporated into the compact between the federal government and the State. In fact, opposite the proposition, we find other instances in which Congress has amended the MLA in a manner which adversely affected the State's The CHAIRMAN. And the answer will be it is okay to do so? Mr. HORN. I think the answer we have given in the past is that the 90/10 formula is tied to the application of the Mineral Leasing Act, and to the extent Congress chooses the Mineral Leasing Act that would trigger 90/10. However, if Congress adopts new standalone authority, such as it did in leasing the National Petroleum Reserve, Congress then has the right to allocate the revenues in any fashion it sees fit. Senator MURKOWSKI. Mr. Chairman, would you yield on that point? The CHAIRMAN. I think we had better-I think we will let you use your time on that one. Senator MURKOWSKI. I just have one point, and that is I believe that also the Statehood Act provides for 90/10 as well, and I would just request that the record so note. The CHAIRMAN. OK. Would you propose to offer all of the coastal plain of ANWR for leasing at one time? Mr. HORN. I think that is a decision that we think that the authority ought to be to lease the entire 1.5 million acre area, with then, of course, the sequencing and which areas would get leased first, how much acreage gets offered at one time, to be decided pursuant to the NEPA process, much the same way we go through an OCS area and look at the entire study areas and then, based on the analysis, decide which area to offer first and which area to offer second. Our position is that that type of authority be provided to the Department, for that type of very specific decision to be made after NEPA compliance. The CHAIRMAN. OK. Senator McClure. Senator MCCLURE. Mr. Chairman, I have just a couple of questions. I notice on page 4 and 5 you are talking about, of your statement, you are talking about the kind of test that would be applied with respect to adverse impacts. You use the term "reasonable," and of course in your mind you know what reasonable would be; that is what you would apply. In my mind, I know what reasonable is; that is what I would apply. So they might be different. What do you have in mind when you say "reasonable" when you are talking about the kinds of things that might be done to reduce the adverse effects, the kinds of things that might be done to mitigate the adverse effects relative to the costs or difficulty of accomplishing those tasks? Mr. HORN. I think in our mind the general approach of reasonable is to we know that any time we have human activity in a given area, there will be some level of effect. Our report indicated that most of the effects would be the phenomenon of displacement. If we put down a drill pad or an overnight camping type facility, headquarters facility, that area will no longer be occupied and the animals will move off some appropriate distance. So that what we are after here is to make sure that those impacts are kept not only to sort of a minimum level, but they do not interfere overall with general population dynamics and the general |