IB10073: The Arctic National Wildlife Refuge: The Next Chapter

M. Lynne Corn and Bernard Gelb

Resources, Science, and Industry Division

Pamela Baldwin

American Law Division

April 2, 2001

CONTENTS

• SUMMARY
• MOST RECENT DEVELOPMENTS
• BACKGROUND AND ANALYSIS
  • History and Congressional Actions
    • Early History of the Arctic Refuge
    • Exxon Valdez: the Political Spillover
    • ANWR Consideration in the 104^th -106^th Congresses
  • Legislative Choices in the 107^th Congress
    • Oil Export Legislation
    • Oil Revenues and the Budget Resolution
  • Geological Variables, Economics, and Development Options
    • ANWR's Geology and Potential Petroleum Resources
      • Geological Studies, 1991-Present: Understanding the Numbers
      • What the Numbers Mean
    • Economics of Alaskan Oil Production
    • Natural Gas Development on the North Slope
    • World Oil Prices and Foreign Oil
    • ANWR and the U.S. Oil Market
    • Exploration and Leasing Options
  • Pristine and Untrammeled?
  • Refuge Management
    • Refuge Purposes: Plants and Animals
      • Different Listed Species than in 1987
      • Caribou and Other Species
    • Review of 1987 Assessment
    • Areas of Special Environmental Significance
    • Control of Access
  • Environmental Quality Management
    • Advances in Technology
    • Management of Support Services
    • Long-Term Cleanup
  • Subsistence Use and Access
  • Revenue Allocation
  • Legal Issues
    • Ownership
    • Preparation of EIS
    • Revenues
• LEGISLATION
• FOR ADDITIONAL READING
• Footnotes

SUMMARY

The 107^th Congress is considering approving energy development in the Arctic National Wildlife Refuge (ANWR) in northeastern Alaska. ANWR is an area rich in fauna, flora, and commercial oil potential. Shortages of crude oil and natural gas and resulting prices have renewed the ANWR debate for the first time in 5 years; however, its development has been debated for over 40 years. Current law forbids energy leasing in the refuge, but the recent spike in oil prices has led to renewed interest in various responses to high oil prices, including additional U.S. drilling. The election of a President who has spoken out for drilling in the refuge has also invigorated the debate. Few locations stir as much industry interest as the northern portion of ANWR.

Development proponents argue that ANWR oil would reduce U.S. energy markets' exposure to recurring crises in the Middle East; boost North Slope oil production and the economic viability of the TransAlaska Pipeline System; and create numerous jobs in Alaska and elsewhere. They maintain that ANWR oil could be developed with minimal environmental harm. Opponents argue that any intrusion on this ecosystem cannot be justified on any terms; that it should be designated as wilderness; and that oil found (if any) would provide little energy security and could be replaced by cost-effective alternatives.

Some early efforts to allow development of the coastal plain of the ANWR ended with the Exxon Valdez oil spill in 1989, though the 1990-91 crisis in the Persian Gulf aided development arguments temporarily.

In May 1998, the U.S. Geological Survey released new estimates of oil in the refuge. If at least one field big enough to make development worthwhile can be found, the agency estimates that there is a 95% chance that 11.6 billion barrels or more would be present. However, not all oil present could be recovered: the agency estimates a 95% chance that 2.0 billion barrels or more would be economically recoverable at a market price of $24 per barrel, and a 5% chance that 9.4 billion barrels or more would be economically recoverable at the same price. The amount actually recovered would vary with several factors, including cost and market prices for oil. The higher the price, the larger the amount recovered. The Energy Information Administration assumes 7 to 12 years from approval to first production.

The main legislative options can be divided into three categories: (1) authorizing development; (2) designating the area in ANWR as wilderness, which, under current law, usually ends the potential for development (unless Congress specifies otherwise); and (3) taking no action. This third choice also prevents development, since current law requires congressional action for oil development to occur.

Two bills (H.R. 39 and S. 388) to open the area have been introduced as have two bills (H.R. 770 and S. 411) to designate it as wilderness. The House-passed budget resolution (H.Con.Res. 83) did not assume any revenues from ANWR leasing.

MOST RECENT DEVELOPMENTS

Budgetary considerations, the increasing price of oil, and maintaining the investment in the Alaskan oil infrastructure are key considerations in the renewed interest in energy development in the Arctic National Wildlife Refuge (ANWR). Bills have been introduced to open the area to development (H.R. 39 and S. 388), and to designate the area as wilderness (H.R. 770 and S. 411). On March 28, the House passed a budget resolution (H. Con. Res. 83) which did not assume any revenues from ANWR bids.

BACKGROUND AND ANALYSIS

The Arctic National Wildlife Refuge (ANWR) consists of 19 million acres in northeast Alaska. It is administered by the Fish and Wildlife Service (FWS) in the Department of the Interior (DOI). Its 1.5 million acre coastal plain is currently one of the most promising U.S. onshore oil and gas exploration and development prospects. Together, the various fields on this federal land could hold as much economically recoverable oil as the giant 11 billion barrel field at Prudhoe Bay, found in 1967 on the state-owned portion of the coastal plain west of ANWR.

At the same time, the refuge, and especially the coastal plain, is home to a wide variety of plants and animals. The presence of caribou, polar bears, grizzly bears, wolves, migratory birds, and many other species in a nearly undisturbed state has led some to call the area "America's Serengeti." The refuge and two neighboring parks in Canada have been proposed for an international park, and several species found in the area (including polar bears, caribou, migratory birds, and whales) are protected by international treaties or agreements. The analysis below covers, first, the economic and geological factors that have triggered new interest in development, followed by the philosophical, biological, and environmental quality factors that have triggered opposition to it.

The conflict between high oil potential and nearly pristine nature creates a dilemma: should Congress open the area for oil and gas development or should the area's ecosystem be given permanent protection from development? What factors should determine whether to open the area? If the area is opened, how can damages be avoided, minimized, or mitigated? To what extent should Congress legislate special management of the area (if it is developed) and to what extent should federal agencies be allowed to manage the area under existing law? (Basic information on the refuge can be found at the FWS web site, http://www.r7.fws.gov/nwr/arctic; it includes links to a number of other organizations interested in the area. A presentation of development arguments can be found at http://www.anwr.org/, sponsored by a consortium of groups. Opponents arguments can be found at http://www.alaskawild.org/, http://www.protectthearctic.com/, or http://www.tws.org/arctic/ . Maps of the coastal plain showing existing oil development areas on state land can be found at http://www.dog.dnr.state.ak.us/oil/products/maps/maps.htm.)

History and Congressional Actions

North Slope energy resources have raised controversy for decades, from legislation in the 1970s, to a 1989 oil spill, to more recent efforts to use ANWR resources to address energy needs or to help balance the federal budget.

Early History of the Arctic Refuge. Much of what is now ANWR, including the coastal plain, was set aside in December 1960 by Public Land Order 2214; protection of wildlife was named as one of the refuge's purposes. The Alaska National Interest Lands Conservation Act of 1980 (ANILCA, P.L. 96-487, €1003) prohibits oil and gas development in the 19-million-acre refuge unless authorized by Congress. Under €1002 of ANILCA, Congress required DOI to report on the plant and animal resources and the oil and gas potential in 1.5 million acres of the coastal plain portion of ANWR. This region, now called the "1002 area," forms 8% of the refuge. It is where any oil is most likely to be found, and where critical wildlife resources are judged most abundant. This information was presented in DOI's Final Legislative Environmental Impact Statement (FLEIS or 1002 report), in April 1987. While acknowledging significant impacts to wilderness values, wildlife, and water resources in the area, DOI described leasing alternatives and recommended full leasing. The report (like nearly all reports on the 1002 area) drew criticism, in this instance primarily by environmental groups.

Since 1987, many hearings on development proposals and on wilderness designation of the 1002 area have been held, and many bills have been introduced. Issues covered have included the adequacy of the FLEIS, the environmental effects of oil development in ANWR or at Prudhoe Bay, assessments of the need for additional sources of oil, and the biological resources of the coastal plain. Before 2000, peaks of interest occurred in the 100^th, 101^st, 102^nd, and 104^th Congresses. (For the issues and bills considered since 1987, see CRS Report 88-380 ENR, CRS Report 89-266 ENR, and CRS Report 91-325 ENR.) In between, low oil prices dampened enthusiasm for energy development in the refuge. Other exploration opportunities (e.g., the Caspian Sea, parts of Latin America, and elsewhere) have attracted industry attention. Industry has also focused on lease sales held in the National Petroleum Reserve-Alaska (NPRA), to the west of the Prudhoe Bay area. These sales were supported by industry and the Clinton Administration, but not by the environmental community.

Exxon Valdez: the Political Spillover. The grounding of the Exxon Valdez on March 24, 1989, near the southern terminal of the TransAlaska Pipeline System (TAPS) in Prince William Sound played the major role in placing the development debate on hold for several years. Damage at the time included an estimated 300,000 to 645,000 dead seabirds; 4,000 to 6,000 dead marine mammals; and $100 million in other losses. Possible damage awards remain in litigation. Scientific disagreement persists over the legacy of the spill. Environmentalists continue to cite the accident in their recent opposition to ANWR drilling.

ANWR Consideration in the 104^th -106^th Congresses. Congress attempted to authorize the opening of ANWR in the FY1996 reconciliation bill ( H.R. 2491, €€5312-5344), but the measure was vetoed. President Clinton cited the ANWR sections as one of his reasons for vetoing the measure. (For key provisions of that legislation, see Archived Issue Brief 95071.) Key Senate votes occurred on May 24 and October 27, 1995, on motions to table amendments that would have stripped ANWR development titles from the Senate version of the bill (Roll Call #190 and #525, respectively). Both motions succeeded.

In a closely related debate, diminished concerns about the security of oil supply, coupled with new leadership in the 104th Congress, led to renewed interest in lifting the ban on Alaskan oil exports. P.L. 104-58, lifting the ban, was signed by President Clinton on Nov. 28, 1995. As a result, Alaskan oil prices rose to world market levels, and the West Coast crude surplus ended. If oil were found in ANWR, it could legally be exported; however, no oil is being exported now from the North Slope. (See Oil Export Legislation, below.)

While bills were introduced, the ANWR issue was not debated in the 105^th Congress. In the 106^th Congress, bills to designate the key northern portion of the refuge as wilderness, and others to open the refuge to energy development were introduced. Assumptions about revenues from ANWR leasing were included in the FY2001 budget resolution (S.Con.Res. 101) as reported by the Senate Budget Committee on March 31, 2000. An amendment to remove the language was tabled (51-49) on April 6, 2000 (Roll Call #58); however, conferees rejected the language. The conference report on H.Con.Res. 290 did not contain this assumption, and the report was passed by both Houses on April 13. On May 16, 2000, S. 2557 was introduced; it included a title to open the refuge to development. These three roll call votes, all in the Senate, are the only recorded votes on refuge development from the 101^st Congress to the present.

Legislative Choices in the 107^th Congress

Legislative choices can be divided into three categories. One category is passing legislation such as H.R. 39 and S. 388, permitting oil and gas leasing in the 1002 area. These two bills, which are broadly overlapping, both repeal €1003, and create a leasing program for the 1002 area, with specified deadlines for lease offerings (at a somewhat faster pace in H.R. 39), Secretarial designation of up to 45,000 acres of Special Areas for no surface occupancy, a determination that the leasing program is compatible with the purposes for which ANWR was designated, and other similarities. Differences include provisions in S. 388 specifying (a) the adequacy of the FLEIS for compliance with the National Environmental Policy Act (not found in H.R. 39); (b) an apparent 50:50 federal:state revenue split (H.R. 39 does not have this language); (c) specific enforcement provisions for safety and environmental compliance with leases (not found in H.R. 39); and (d) disposition of the federal share of ANWR revenues (not found in H.R. 39), among other things.

A second category is designating the area as wilderness, as in H.R. 770 and S. 411. Wilderness designation, under current law, usually ends the potential for development unless Congress specifies otherwise, which is not the case in these two bills. (For the ramifications of wilderness designation, see CRS Rept. RL30867). Wilderness designation would add a layer of restrictive management, in addition to the provisions of €1003. (Congress could later explicitly allow development, or reverse the designation. Such reversals are quite rare.)

Finally, Congress could choose to take no action. Because current law prohibits energy development unless Congress acts, this choice allows continued management for the purposes for which the refuge is currently designated.

Oil Export Legislation. Until 1995, ANS crude could not be legally exported and the export ban contributed to a West Coast oil glut, reducing the price received by ANS producers. The market effect of the ban, combined with high TAPS and shipping costs, resulted in producer revenues often below $10.00/barrel, according to a Department of Energy study. In 1996, exports began to flow after a lifting of the ban. West Coast prices rose, as did the prices paid for Alaskan crude. (For further details on ANS and the history of the West Coast crude oil pricing and export issue, see CRS Report RS20540, Alaska Oil Exports.) Exports peaked at 7% of production, and have since declined to zero. Some have proposed a return to laws restricting export of Alaskan oil in order to ease oil prices on the West Coast - the primary market for Alaskan crude if foreign sales are forbidden. (See CRS Rept. RS 20540.) In the 107^th Congress, H.R. 660 would prohibit any future export of North Slope crude. Oil companies operating in Alaska oppose such a move.

Oil Revenues and the Budget Resolution. In its Budget Options, issued February 2001, the Congressional Budget Office assumes that there would be revenues of $1.5 billion from bonus bids for ANWR leases in FY2005. (See http://www.cbo.gov/.) It assumes no further ANWR revenues through FY2011. The inclusion of this revenue assumption in the FY2002 budget resolution could be the first legislative test of congressional interest in ANWR oil development. On March 28, 2001, the House passed H.Con.Res. 83; it did not contain assumptions about ANWR revenues.

Geological Variables, Economics, and Development Options

ANWR's Geology and Potential Petroleum Resources. Parts of Alaska's North Slope (ANS) coastal plain have proved abundant in oil reserves, and its geology holds further promise. The oil-bearing strata extend eastward from structures in the NPRA, to the 2 billion barrel Kuparuk River field, past the Prudhoe Bay field (originally 11-13 billion barrels, now down to about 4 billion barrels), and a few smaller fields, and may continue through ANWR's 1002 area. Further east in Canada's Mackenzie River delta, once promising structures have not produced significant amounts of oil. These smaller accumulations include some fields that have produced intermittently and others that are currently noncommercial due mainly to lack of transportation infrastructure. The 1002 area contains one of the most promising undrilled onshore geologic structures with petroleum potential known in the United States; there is no evidence of oil elsewhere in the refuge.

Estimates of ANWR oil potential, both old and new, depend on limited data and numerous assumptions about geology and economics. New geological data from outside ANWR and the interpretation of the old, limited FLEIS information can change estimates of ANWR's oil potential. Another important factor in recovery estimates is the projected price of oil, which the Bureau of Land Management (BLM) in 1987 assumed would increase steadily (excluding inflation) over coming decades. In actuality, except for short intervals of spiking, the price of oil has not risen to the extent assumed by BLM until recently. (Proven world reserves of oil have increased 45% during the same period, primarily early in the interval.) A third factor is falling production cost. As technology improves, once unprofitable structures may become profitable, and this has occurred at Prudhoe Bay.

Geological Studies, 1991-Present: Understanding the Numbers. In 1991, BLM reviewed its 1987 estimate of ANWR's recoverable petroleum resource. The review was based on updated geophysical information and four wells drilled near ANWR, as well as applicable technology used in the development of the Endicott and Milne Point fields on the ANS frontier. Based on this study, BLM increased its estimates. BLM estimated that the smallest field that could be developed economically was 0.4 billion barrels, and that there was a 46% chance of finding at least one such field. It estimated that if such a field is found, the mean estimate of economically recoverable oil would be 3.57 billion barrels, with a small chance (5%) of finding 10 billion barrels or more in the area.

In June 1995, the U.S. Geological Survey (USGS) revisited BLM's 1991 estimates, relying upon several geologic studies and data from one new well, the Tenneco Aurora, at a federal offshore location north of the 1002 Area. USGS reduced its estimates of recoverable oil reserves in the area to between 0.148 billion and 5.15 billion barrels.

The most recent government study of oil prospects in ANWR is a 1998 study by USGS (Open File Report 98-34). USGS scientists gathered new data from nearby fields both onshore and offshore and examined the reprocessed seismic data collected in the refuge in 1984-1985. Table 1 shows some of the results of this study. The results assume that at least one commercial-size field is discovered. (The USGS study does not give a probability that such a minimum field would be found.)

According to USGS, there is an excellent chance (95%) that at least 11.6 billion barrels are present on federal lands in the 1002 area. There is also a small chance (5%) that 31.5 billion barrels or more could be found. With current technology, and if cost were no object, USGS estimates that there is an excellent chance (95%) that 4.3 billion barrels or more is technically recoverable. And there is a small chance (5%) that 11.8 billion barrels or more could be technically recoverable. (If state offshore lands and native corporation lands are included, these numbers become 5.7 and 16.0 billion barrels, respectively.)

However, in the extreme conditions of the North Slope, cost is inevitably an object. Thus, the third question is how much oil can be extracted profitably? The higher the price of crude oil, the greater the proportion that would be economically recoverable. High prices could also provide incentives to improve extraction technology thereby reducing extraction costs. The USGS estimated, at $24/barrel (in 1996 dollars) there is a 95% chance that 2.0 billion barrels or more could be recovered, and a 5% chance of 9.4 billion barrels or more. (For comparison, West Texas crude ranged from $11.35/barrel in late 1998, to $34.34/barrel in November 2000, according to the Energy Information Administration (EIA).)

Table 1. Probability of the Presence of Given Quantities of Oil and the Recoverability of the Oil on Federal Lands in the 1002 Area.
(billions of barrels)

Source: U.S. Geological Survey. The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska. 1999. USGS Open File Report 98-34. Summary, and Table EA4. (Report available on 2 disk CD-ROM.)

The projected price of oil is only one of many factors entering into the decision on bidding for a lease. Efforts to reduce exploration and production costs through new technologies play a key role, for example. Each prospective bidder will do its own analysis of the economic and physical factors of lease offers, and company analyses historically have differed from government analyses. With geological evidence pointing to the presence of recoverable oil and gas, developers are expected to be eager to bid on ANWR leases.

Economics of Alaskan Oil Production. While crude oil prices and production costs affect the economics of ANWR production, transport costs and regional market conditions - unique to North Slope production - also bear on an oil prospect's commercial viability. Over the years, low wellhead prices exacerbated the natural decline in North Slope production by diminishing the incentive to drill more wells and otherwise enhance output from existing reservoirs. Low prices reduced investment in producing reservoirs and caused the abandonment of some exploration and development work outside the Prudhoe Bay and Kuparuk fields. Even so, some development continued, with discoveries as recent as 1998, and development has begun in the eastern portion of the NPRA. The new Alpine field, just outside the NPRA, has already exceeded expectations. The expansion into these areas in the last few years has required capital intensive expansion of the infrastructure, but has also helped offset falling output at Kuparuk and Prudhoe Bay. At the same time, falling investment has meant that this offset is less likely to continue. Production can also be maintained by the improvement of production efficiency at existing sites, and this too has been pursued. Neither alternative can maintain production levels indefinitely.

Industry interest in the 1002 area is based in part on interest in keeping TAPS operating efficiently. Pipeline costs are largely fixed; a smaller flow of crude means higher pipeline rates per barrel. The effect of declining ANS oil output on transportation economics in turn aggravates the negative effect on production. Lower output and rising unit costs could erode the outlook for existing oil fields. Rising oil prices might provide some respite from cost pressures from declining volume, as could cost reductions (e.g., through better technology), or increased volume (whether from the 1002 area or elsewhere in the ANS).

Natural Gas Development on the North Slope. Construction of a pipeline to transport natural gas to North American markets and/or a warm-water port could enhance the commercial prospects of the 1002 Area (and the rest of the ANS). The prospect of being able to sell its abundant gas (now being reinjected) would also enhance Prudhoe Bay economics. Until recently, estimated costs of transporting the gas precluded serious consideration of pipeline construction. However, a recent doubling in the price of natural gas and projections of continued high prices relative to the average of the past 15 years have improved the relationship between market price and the cost of known gas resources in the North Slope. The Alaska state legislature strongly supports proposals for a pipeline to the south.

World Oil Prices and Foreign Oil. In addition to uncertainty about future oil prices, and the complexities confronting ANS development and production, U.S. dependence on imported oil is another important factor in the ANWR debate. Development supporters cite recent oil import levels of 57% of the U.S. market, and project increases to 65% by 2020. While prices were low or falling, little interest was focused on oil potential in the 1002 area. However, in 1999, the Organization of Petroleum Exporting Countries (OPEC), and certain other oil-exporting nations, agreed to cut crude oil production. World oil prices went from $10 to $33 per barrel in 5 months and back down to about $26 per barrel in early 2001. While ANWR development would be one of the longer term responses to the increased price of crude oil prices, interest in Alaskan oil has increased markedly. Recent OPEC production agreements have renewed demand for U.S. policies that might reduce dependence on foreign oil. (For additional information on world oil prices and the OPEC agreement, see CRS Report RS20487 (pdf), OPEC Oil Production - Facts and Figures.)

Supporters cite recent high oil prices and increasing oil imports, as well as $8 billion in annual benefits by the petroleum industry to Alaska's economy in 2000, and declining U.S. and North Slope output among their major reasons for wishing to open the refuge. Many factors contribute to high prices, but domestic and world supplies and increasing demand are central to the issue. While U.S. proven crude reserves have declined, reserves elsewhere in the world grew during the 1980s. Between 1980 and 1990, proven reserves world wide increased from 659 billion barrels to just over 1 trillion barrels, an increase of 52%. But reserves increased less than 1% in the subsequent decade, starting 2000 at 1,016 billion barrels. Those concerned about global oil supply and its effect on prices contend that there have been virtually no net reserve additions during the past 10 years. The opposing view holds that a trillion barrels comprises about 35 years of supply at current consumption levels, and that, as in the past, additional oil in place will be converted into proven reserves as geological information grows, technology improves, and economic conditions change. (For additional discussion of energy policy options, see CRS Report RL30459, Coping With High Oil Prices: A Summary of Options.)

ANWR and the U.S. Oil Market. Crude oil production in the 48 states has declined 50% since its 1973 peak of 9.0 million barrels per day. If ANWR were leased and developed and a significant ANS production increase resulted, how would the nation's energy supply and security situations be affected? ANWR development would constitute a long-term response to current oil supply problems, since, according to EIA, the time from approval to first production for that area is assumed to be about 7 to 12 years. Peak annual 1002 Area production under the assumption that 9.4 billion barrels are economically recoverable at a world market price of $24 per barrel would be very roughly 1.4 million barrels per day (b/d), ⁽¹⁾ compared with projected U.S. oil imports of 15.25 million b/d and petroleum use of 24.26 million b/d in 2015 (according to EIA). If 2.0 billion barrels are economically recoverable at the same price, peak annual production would be roughly 300,000 b/d. (There is a 5% chance 9.4 billion barrels or more will be found and a 95% chance that 2.0 billion barrels or more will be found according to the U.S. Geological Survey. See table 1.)

Exploration and Leasing Options. The main federal law governing leasing and production of petroleum on federal land is the 1920 Mineral Leasing Act. Conventional federal leases permit exploration and, after discovery, usually extend until production ceases entirely. H.R. 39 and S. 388 both direct that leases be conducted under provisions within the bills themselves; they specify procedures, deadlines (slightly longer in S. 388), terms and conditions, and other provisions. (See also Revenue Allocation, below.) To reduce uncertainty about the presence of oil, Congress could authorize exploration, without proceeding automatically to development. In the past, such a strategy was widely opposed by both industry and environmental groups because all sides thought they had something to lose. To date, no such bill has been introduced in the 107^th Congress, although a few analysts have mentioned the possibility.

Pristine and Untrammeled?

For opponents of development, the central issue in the refuge debate is whether the area should be maintained as an intact ecosystem - off limits to any development - not whether development can be accomplished in an environmentally sound manner. In terms that emphasize deeply held values, supporters of wilderness designation argue that few places as untrammeled as the 1002 area remain on the planet, and fewer still on the same magnificent scale. Any but the most transitory intrusions (e.g., visits for recreation, hunting, fishing, subsistence use, research, etc.) would, in their view, damage the "child-like sense of wonder" they see the area as instilling. The mere knowledge that a pristine place exists, whether one ever visits it, can be important to those who view the debate in this light.

Thus, even if a number of measures of biodiversity were to remain stable in the face of development, from their perspective, the nature and peace of the area as a place where a larger truth may be sought would be seriously corrupted. Similarly, when told that the total "footprint" of development (the area actually occupied by drill pads, roads, pipelines, etc.) would be smaller than Dulles International Airport, they note that the infrastructure would be scattered with pads interconnected by pipelines over the entire area, disrupting the terrain, the ecosystem, and the sense of lonely grandeur. They also question the ability of the area to return to its previous state, once energy production is no longer profitable.

Development advocates counter this argument by arguing that the 1002 area is not pristine. They note the presence of the Native village of Kaktovik, the nearby DEWline (Distant Early Warning line, for missile detection) station (both on Barter Island on the coast), and the remnants of former or uncompleted DEWline installations scattered in or near the 1002 area. Together with Kaktovik, the DEW site operates a garbage dump and a runway. Many Natives of Kaktovik (population about 250) add that an argument about the value of pristine nature relegates their village to the margin of the debate.

Taken together, these issues mean that the 1002 debate sometimes takes on a feud-like aspect due to a culture clash: those who believe in wilderness (statutory or otherwise) as a place where "man is a visitor who does not remain" and that any intrusion into the area would spoil its wilderness value, versus those who place a higher value on job creation , domestic oil supply, economic development, or who reject the "pristine" concept for sleighting the natural environment's human dimension. The re-injection of drilling wastes and similar issues is not likely to raise the temperature of the debate higher than these issues.

Refuge Management

Under ANILCA (P.L. 96-487, €303(2)(B)), one of the purposes of ANWR is to "conserve fish and wildlife populations and habitats in their natural diversity...." The other three purposes cite fish and wildlife treaty obligations, subsistence use, and maintenance of water quality and quantity. In the case of ANWR, energy development was specifically forbidden unless authorized by Congress (€1003). Under current law (16 U.S.C.668dd), additional activities are allowed on refuges to the extent that they are compatible with the purposes for which the refuge was designated. ⁽²⁾ Both H.R. 39 and S. 388 declare that energy development is compatible with ANWR's purposes.

Technology has changed impacts considerably since the FLEIS was issued in 1987. Arctic oil exploration takes place in winter, via ice road. (See Advances in Technology, below.) Modern 3-D seismic exploration requires vehicles to leave the thick ice roads and travel in a fine grid across the frozen tundra. Impacts then are an issue for those few species (e.g., musk oxen and denning polar bears) that are winter residents, and for tundra vegetation. Summer impacts would be small at the exploration phase (due to reduced activity), peak during construction, and drop or change during production. Advances in technology result in fewer gravel roads and greater aircraft use and thus would change impacts relative to those considered in 1987. Some of these management impacts are outlined below.

Refuge Purposes: Plants and Animals. Development advocates note that 92% of the Refuge would remain closed to development. Environmentalists counter that, while the 1002 area is only 8%, the 1002 report said it "is the most biologically productive part of the Arctic Refuge for wildlife and is the center of wildlife activity." The importance of these resources (such as caribou, polar bears, grizzly bears, wolves, snow geese, wildflowers, water quality and quantity, etc.) in the debate derives from their value for aesthetic enjoyment, sport hunting and fishing, ecological roles, and/or subsistence take, depending on the observer's point of view. H.R. 39 and S. 388 would authorize a leasing program that would "result in no significant adverse effect on fish and wildlife, their habitat, subsistence resources, and the environment" and provide that leases shall contain terms and conditions relating to these requirements. Section 513 of S. 388 requires the Secretary to enforce the regulations, stipulations, etc., and to hold specified on-site inspections. Lease-holders are required to provide access. Penalties for violations are not specified. H.R. 39 has no similar provisions. (See also Long-Term Cleanup, below.) Both bills authorize the Secretary to select up to 45,000 acres of habitat in which surface occupancy would be prohibited. H.R. 770 and S. 411 address these issues by designating the entire area as wilderness.

Different Listed Species than in 1987. In 1987, when the 1002 report was issued, three species were listed under the Endangered Species Act (ESA): the endangered bowhead and gray whales, and the threatened arctic peregrine falcon. The bowhead is still listed as endangered; according to the report, the development activities most likely to affect it would be summer noise and disturbance offshore, though these effects were not deemed to be serious in the 1987 report. (See Subsistence Use and Access, below, regarding a recent Native lawsuit over effects of offshore activities on this species.) The gray whale population for this area was de-listed on June 15, 1994. The Arctic peregrine was de-listed on October 5, 1994. Two other species have been added as threatened. The spectacled eider (a large diving duck) was listed throughout its range on June 9, 1993; it was once found in the 1002 area, but may not be present any more. Stellar's eider was listed on July 11, 1997. The latter once nested in significant numbers in the 1002 area, but it too may not be present any more. In neither case is the cause of the decline well understood.

Caribou and Other Species. Opponents of development argue that the entire ecosystem of caribou, polar and grizzly bears, wolves, falcons, wildflowers, etc., is worth preserving intact, especially since it represents the least disturbed Arctic coastal area under U.S. ownership, and one of the "wildest" habitats of any type left in the United States. Scientists and sport hunters both stress the importance of the summer habitats on the coastal plain for migratory game birds taken in Canada and the United States. Game birds, especially snow geese, use the area for summer feeding, and some hunters fear that summer development, especially aircraft overflights, could interfere with feeding enough to prevent the geese from gaining adequate weight for migration. In 1987, the 1002 report noted some studies supporting that view and said that this and other possible consequences to birds could be minimized by controlling transportation and siting of facilities. Control could be more difficult if summer air traffic increases to compensate for fewer gravel roads.

The species which has drawn the most attention in this debate is the caribou. The Porcupine Caribou Herd (PCH) calves in or near the 1002 area in most years http://www.r7.fws.gov/nwr/arctic/pchmaps.html , and winters south of the Brooks Range in Alaska or Canada; it is the subject of a 1987 executive Agreement Between the United Sates and Canada on the Conservation of the Porcupine Caribou Herd. In 1994, the herd numbered 152,000 and is currently estimated at 130,000 according to the international Porcupine Caribou Management Board. In both countries it is an important food source to Native people and others - especially since other meat is either expensive or unavailable. Some scientists cite studies that show a reduction in density of cows with calves near roads and developed areas around Kuparuk (Nellemann and Cameron, 1998). They fear that development and production in the 1002 area could cause cows to calve in less desirable locations or prevent the herd's access to sites where they can escape from the voracious insects common in early summer.

Development proponents counter with a comparison to the Central Arctic Herd (CAH) that summers near Prudhoe, whose population grew from about 13,000 when oil was discovered to about 25,000, and in 1995 declined to about 18,000. Environmentalists and some Natives note that the CAH has a much larger area than the PCH in which to calve, that caribou cows with young calves tend to avoid developed areas, and that predators have been controlled in the CAH's area. The effect of oil development on the PCH is likely to remain one of the hotly contested issues in a new round of debate over the refuge.

Review of 1987 Assessment. On August 25, 1995, DOI released a Preliminary Review of the Arctic National Wildlife Refuge, Alaska, Coastal Plain Resource Assessment. Examining especially biological impacts, the report concluded "there would be major environmental impacts from oil and gas development on the coastal plain." (The report noted that it joined the earlier 1987 FLEIS in that conclusion. However, the 1987 report held that most of these could be mitigated and that the energy and security benefits outweighed the negative impacts.) The primary new information was the greater dependence of the PCH on the 1002 area for calving (due to lower calf survival in years when calving occurs elsewhere) and for insect relief after calving. It further noted that if development displaced the herd, calving was likely to shift to areas of higher predation. Muskoxen were reported vulnerable to winter disturbance, when their low, energy-conserving metabolism would make movement difficult. Polar bears, according to both the 1987 and 1995 reports, are vulnerable to disturbance in their maternity dens. The newer report considers revegetation to be a difficult and unproven technique, and notes that a "showcase" effort to revegetate an exploratory well site near Kaktovik still bore a visible scar 8 years later. (For a history of this well on an area of Native inholdings within the 1002 area, see Archived Issue Brief 91011.) The report (like nearly all reports on the 1002 area) drew criticism, in this instance primarily by oil interests.

Areas of Special Environmental Significance. The wildlife debate has focused mainly on the areas important to the migratory Porcupine Caribou Herd. However, some believe other species, such as polar bears, grizzly bears, wolves, or migratory birds, may be at greater risk. Bills in some previous Congresses have included special protection (e.g., wilderness designation, delayed exploration, or a special regulatory regime) of the most important habitats. The areas most often mentioned for some special status include the major calving area of the PCH, the area around Sadlerochit Spring (a warm spring that flows all year), and the overlapping areas near the coast where substantial bird populations occur in the summer and where pregnant female polar bears often make their winter dens. From 1981-1991, 90 dens of female polar bears were found in the latter area, making up about 43% of the dens of this Beaufort Sea population of eastern Alaska and western Canada. H.R. 39 and S. 388 would allow the Interior Secretary to designate up to 45,000 acres in which surface occupancy is forbidden as a response to some of these concerns.

Control of Access. One access issue could be the logistical conflict between the area's management as an oil production site versus its current management as a refuge devoted not only to wildlife conservation but also to recreation (including sport fishing and hunting) and subsistence uses, among other functions. This conflict could become more intense as human populations and road networks increased with development. In contrast to the current open but difficult access at ANWR, access to the state-owned Prudhoe Bay complex is strictly (if not always effectively) controlled. Visitors' and workers' belongings are searched for firearms, alcohol, and drugs, which are prohibited. (None of these requirements now applies to the 1002 area.) Moreover, hunting, even for subsistence, is forbidden at Prudhoe and limited in other developed areas. Similar restrictions are not found in the 1002 area and such restrictions may conflict with the refuge's purposes as currently interpreted. However, with the advent of new technologies, gravel roads could be more scarce in ANWR, even in the production phase, and might be unconnected to the main network at Prudhoe. If the network is unconnected, summer tourism pressure is less likely. The pressure of tourism on the winter ice roads seems likely to be very small. Due to the larger area that can be explored and produced from a given pad, the number of wells is also likely to be fewer than at older fields. (See Advances in Technology, below.)

Environmental Quality Management

Environmental quality management issues can be divided into three categories: resource management, pollution, and waste disposal. Congress could choose to leave these matters to administrative agencies under existing laws. Alternatively, Congress could impose a higher standard of environmental protection because of the area's biological resources or because of the fragility of the Arctic environment. Another issue would be the use of gravel and water resources essential for oil exploration and development; another would be setting fees for and allocating any revenues from exploiting these resources. H.R. 39 and S. 388 do not set specific standards in these areas, but specify the leasing program must be "environmentally sound" and must ensure that there will be "no significant adverse effect on fish and wildlife, their habitat, subsistence resources, and the environment...."

Air and water pollution (whether chronic or acute) may involve questions of subtle, long-term ecological effects. Potential legislative issues include the adequacy of existing standards, research needs, monitoring, prevention and treatment of spills, the adequacy of current waste disposal requirements, the development of alternatives to landfills, and liability concerns that can make consolidation of disposal facilities unattractive to oil companies.

Advances in Technology. If ANWR were opened to development today, many environmental effects would likely be less than in 1987. Among the chief advances are smaller gravel pads to support the wells, greater distances that can be reached from a single pad from a diameter of 2 miles to 8 miles (thereby reducing the number of pads necessary to drain an oil field), the re-injection of drilling wastes (thereby obviating the need for large waste pits), and a reduction in the need for gravel roads. Together, these advances decrease the "footprint" of development. The industry points with pride to the Alpine field, just east of the NPRA. The road between the two pads also serves as a runway, and in summer, only pipelines connect the field to the remainder of ANS development. Heavy equipment needs are met in the winter via ice road. Equipment or personnel arriving in summer are flown in.

In addition, 3-D seismic exploration, 4-D time lapse imaging, ground-penetrating radar, and enhanced computer processing of resulting data on geological structures, and other advanced technologies, have increased the number of successful wells from about 10% to as much as 50%. The higher fraction of successful wells decreases the number of pads and exploration costs. However, in contrast to earlier seismic exploration, a 3-D seismic convoy of vehicles travels a much finer grid across the frozen tundra to obtain the necessary level of detail. Mitigation to avoid an impact on winter residents such as musk oxen or denning female polar bears could be necessary. Damage to vegetation could occur more readily on open tundra than through a thick ice road.

While these developments would mitigate impact, development opponents argue that even so, the "most biologically productive part" of the refuge would no longer be called "pristine wilderness" even under the most optimistic scenario.

Management of Support Services. Activities of the independent support service industry (repair, cleaning, laundry, aircraft supply, etc.) in the Prudhoe Bay area, particularly at Deadhorse, have been widely criticized. At Deadhorse, the state leases land for these independent services. Firms in this industry are generally employed by, rather than part of, major oil companies, and the oil companies have played a role in reducing their impacts. Industry, the state, and environmentalists have agreed in the past on the need to manage and control support facilities. Neither H.R. 39 nor S. 388 place specific conditions on support facilities; each has general provisions on environmental protections.

Section 1003 of ANILCA does not cover the role the 1002 area might play as a land base for state or federal offshore activity. Both the United States and Alaska are proceeding with offshore leasing near the 1002 area. But despite occasional small flurries of interest, no well has been commercially developed offshore from the refuge.

Long-Term Cleanup. Congress may consider various proposals on assuring the long-term environmental quality of the area. Central to any decision on these proposals is determining what the ultimate rehabilitation goal(s) should be. Environmentalists would presumably want strong standards, but would simultaneously argue that complete recovery is nearly impossible. Development advocates would presumably argue that existing and future ANS practices are adequate.

If no commercial quantity of oil were found, recovery of the ecosystem would involve the melting of ice roads and ice pads, as well as recovery from the effects of 3-D seismic exploration over open tundra. In the north, recovery is slowed by the very low growth rate of plants. Plants protected by thicker layers of ice might recover more quickly. If creation of ponds near rivers is required to provide sufficient water for ice roads and pads, recovery in those immediate areas would be lengthened further.

If major oil deposits were found, development would probably last for decades and, if production of associated natural gas became commercially feasible, perhaps even a century. Recovery from the much higher level of disturbance might then take substantially longer in the harsh Arctic environment. Thus, Congress might be debating rehabilitation that would not begin until 2070 or 2100. Furthermore, some types of cleanup might not be desirable or practical: deep gravel production pads, for example, might be impossible to remove without further damage, and thus might necessarily become a permanent feature of the landscape. No existing federal laws (e.g., concerning performance bonds or fees) are known to cover such long terms in planning for a future cleanup, the exact nature of which is unknown.

S. 388 addresses these issues in €509, requiring the Secretary to establish bonding requirements to ensure reclamation of the lease tract. The duration of the lessee's responsibility would continue until the Secretary determines that "there has been compliance with the terms and conditions of the lease and all applicable law." It is unclear how such potentially long-term bonding would work in practice. H.R. 39 has no similar provisions.

Subsistence Use and Access

The village of Kaktovik and the lands of the Kaktovik Inupiat Corporation (KIC) lie along the coast within the refuge and mostly adjacent to the 1002 area. KIC owns significant land (surface rights) along the coast of the 1002 area, and, along with the Arctic Slope Regional Corporation, the subsurface rights to these areas. Current law prevents developing any energy resources that may underlie its lands. Natives of Kaktovik are the major users of the resources in the coastal plain, although they focus significantly on marine resources. (For example, on Dec. 19, 2000, they joined other North Slope native villages in suing Phillips petroleum for a proposed offshore development in the Beaufort Sea, based on new data suggesting possible harm to their subsistence whale hunting.) Kaktovik Natives support ANWR leasing generally. However, they oppose both leasing in the primary caribou calving area in the east-central 1002 area and restrictions on discharging firearms.

In contrast, subsistence hunters in the interior of Alaska and Canada (especially the Gwich'in people who hunt the herd in its winter range) and the Canadian government oppose leasing in the 1002 area, since it is the main calving area of the herd in most years and support wilderness designation. If the area is opened to leasing, Congress may be asked to consider whether the current access or hunting rights of Native users should be restricted to protect pipeline safety; whether subsistence users should have a special voice in new regulations as 1002 exploration or development evolve, and what provision might be made to minimize any harmful impacts of development on Native culture among both North Slope and interior Alaska groups.

Revenue Allocation

If leasing, development, and production occur, ANWR revenues from bonuses, rents, and royalties, as well as from sales of gravel and water, could generate billions of dollars for the federal and native landowners, depending on the amount of oil that is found and on oil prices. Peak annual royalties alone might range from $200 million to $2.5 billion, followed by declining revenues for 30-50 years. The allocation of these revenues between the state and the federal government could be one of the most contentious issues if development legislation were to proceed. Although 90% of the federal share of revenues would be paid to Alaska under the Mineral Leasing Act, H.R. 39 and S. 388 specify an alternative disposition. (See Legal Issues, below.) Additionally, some have suggested using federal revenues from ANWR for various purposes, including land acquisition in Alaska or elsewhere as part of the mitigation for reduced habitat values in a developed 1002 area. (In past years, opponents have said any amount of funding cannot mitigate damage to the refuge.) Although the provisions are ambiguous as to derivation and amounts, under S. 388, a portion of revenues from the leasing of ANWR would be placed in a special Renewable Energy Research and Development Fund to be used for research into wind, solar, biomass, geothermal and hydroelectric sources of energy. Whether options for alternative disposition of revenues are available depends on whether Congress lawfully may make an alternative allocation for the revenues from the Refuge. (See Legal Issues, below.)

Legal Issues

Ownership. For decades, the United States and Alaska disputed ownership of submerged lands within and offshore of ANWR. In 1997, the Supreme Court found that Alaska did not own the lands and resources beneath any navigable waters within the refuge. If the Court had found to the contrary, congressional options for protecting the area from exploration and development would have been more problematic because Alaska would have had control of some of the river beds, gravel, water, and subsurface resources within the Refuge. United States v. Alaska, 521 U.S. 1 (1997) decided several issues related to calculating the shoreline "baseline" for purposes of measuring the territorial sea, and decided that the submerged lands beneath tidally influenced waters within the refuge did not pass to Alaska at statehood; finding that executive actions setting aside the Refuge lands before statehood were sufficient to preserve ownership in the United States, even under the difficult standard set for such actions in Utah v. United States, 482 U.S. 193 (1987).

Preparation of EIS. Some question whether the existing environmental impact statement (EIS), completed in 1987, is adequate to support development, or whether an update or new EIS needs to be prepared. A court in a declaratory judgment action (NRDC v. Lujan, 768 F. Supp. 870 (D.D.C. 1991), held that the DOI should have prepared a Supplemental Environmental Impact Statement (SEIS) at that time (1991) to encompass new information about the 1002 area, in connection with the Department's recommendation that Congress legislate to permit development. Therefore, it seems clear that either an SEIS or a new EIS would have to precede development, unless Congress changes this requirement. Section 505 of S. 388 states that the 1987 EIS is adequate legally and procedurally - thereby eliminating the need to redo it prior to leasing. H.R. 39 is silent on this issue, but € 5(a) directs that regulations be prepared no later than ten months after enactment, a short deadline that a court might conclude obviated the preparation of a new EIS. Both bills would direct that leasing have "no significant effect" on the environment. This language arguably might obviate the need for preparation of an EIS, but might not eliminate all NEPA compliance.

Revenues. Many supporters of ANWR energy development have called for a 50/50 split of revenues between the federal and state governments. Alaska has indicated that the state will dispute any distribution of revenues from ANWR leases that deviates from the 90/10 share to which Alaska is entitled under a 1976 Act and, according to the state, under the Alaska Statehood Act. It can be argued, however, that that split was intended to put Alaska on par with other states' share under the 1920 Mineral Leasing Act, and that Congress has at times prescribed other disposition of revenues, e.g., with respect to the NPRA. A federal court has agreed with the latter interpretation in Alaska v. United States, 35 Fed. Cl. 685, 701 (1996). That case also ruled for the United States on the issue of whether the provision in the Statehood Act resulted in any duty on the part of the United States to develop federal mineral lands in Alaska. S. 388 provides that Alaska would receive the same share that it received under P.L. 96-514, relating to the NPRA (apparently a 50/50 federal/state split). H.R. 39 is silent on the issue, but also states in € 4(d) that that Act is the sole authority for leasing in the Refuge. This may result in an interpretation that all revenues would be deposited in the U.S. Treasury as miscellaneous receipts under 31 U.S.C. € 3302.

LEGISLATION

H. Con. Res. 83 (Nussle)
Budget resolution contains no assumptions on ANWR revenues. Introduced and reported by Committee on The Budget, March 23, 2001 (H.Rept. 107-26). Passed House March 28, 2001 (Yeas 222; Nays 205; Roll no. 70).

H.R. 39 (D. Young)
Repeals current prohibition against ANWR leasing; directs Secretary to establish competitive oil and gas leasing program; specifies that the 1987 FLEIS is sufficient for compliance with the National Environmental Policy Act; authorizes set-asides up to 45,000 acres of Special Areas that restrict surface occupancy; sets minimum for royalty payments and for tract sizes; and for other purposes. Introduced January 3, 2001; referred to Committee on Resources.

H.R. 660 (Hooley)
Prohibits exports of Alaskan North Slope crude oil. Introduced Feb. 14, 2001; referred to Committee on International Relations, and subsequently to the Committee on Resources,

for provisions within the jurisdiction of the committee concerned.

H.R. 770 (Markey)
Designates Arctic coastal plain of ANWR as wilderness. Introduced Feb. 28, 2001; referred to Committee on Resources.

S. 388 (Murkowski)
Title V opens the 1002 area to energy leasing; provides for the timing and size of lease sales; specifies that the 1987 FLEIS is sufficient for compliance with the National Environmental Policy Act; requires posting of bonds for reclamation; requires expedited judicial review; authorizes set-asides up to 45,000 acres of Special Areas that restrict surface occupancy; provides for a 50:50 revenue split with the State; requires on-site inspections, provides for use of any federal revenues; and other purposes. Introduced Feb. 26, 2001; referred to Committee on Energy and Natural Resources.

S. 411 (Lieberman)
Designates Arctic coastal plain of ANWR as wilderness. Introduced Feb. 28, 2001; referred to Committee on Environment and Public Works.

FOR ADDITIONAL READING

Nelleman, C. and R. D. Cameron. Cumulative impacts of an evolving oil-field complex on the distribution of calving caribou. Canadian Jour. of Zoology. 1998. Vol. 76, p. 1425.

Revkin, Andrew C. Hunting for Oil: New Precision, Less Pollution. New York Times. January 30, 2001. p. D1-D2.

U.S. Department of the Interior. Bureau of Land Management. Overview of the 1991 Arctic National Wildlife Refuge Recoverable Petroleum Resource Update. Washington, DC, April 8, 1991. 8 p., 2 maps.

U.S. Department of the Interior. Fish and Wildlife Service, Geological Survey, and Bureau of Land Management. Arctic National Wildlife Refuge, Alaska, Coastal Plain Resource Assessment. Report and Recommendation to the Congress of the United States and Final Legislative Environmental Impact Statement. Washington, DC, 1987. 208 p.

U.S. Department of the Interior. Geological Survey. The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska. 1999. 2 CD set.

USGS Open File Report 98-34.

U.S. General Accounting Office. Arctic National Wildlife Refuge: An Assessment of Interior's Estimate of an Economically Viable Oil Field. Washington, DC. July, 1993. 31 p. GAO/RCED-93-130.

CRS Report RL30867 (pdf). Federal Land Management agencies: background on Land and Resource Management. Feb. 27, 2001. 71 p.

CRS Report RL30815. Natural gas prices: overview of market factors and policy options. Jan. 23, 2001. 10 p.

CRS Report RS20602. Presidential Authority to Create a National Monument on the Coastal Plain of the Arctic National Wildlife Refuge, and Possible Effects of Designation. December 7, 2000. 6 p.

CRS Report RL30459. Coping With High Oil Prices: A Summary of Options. March 9, 2000.

CRS Report RS20487 (pdf). OPEC Oil Production - Facts and Figures. March 8, 2000.

CRS Report RL30290. Domestic Oil and Gas Producers: Public Policy When Oil Prices Are Volatile. Nov. 12, 1999.

CRS Report RL30777 (pdf). Petroleum prices: analysis of supply and demand. Dec. 21, 2000. 9 p.

CRS Report RS20540. Alaska oil exports. Oct. 16, 2000. 5 p.

Footnotes

1. ^(back)The level and timing of peak production would depend upon the rate at which the 1002 Area oilfields are developed.

2. ^(back)According to DOI, oil development, where it now occurs, arises primarily from a pre-existing right in subsurface resources or, in rare cases, from efforts to prevent drainage of the federal estate due to development on adjacent land.

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