Secretary's Report to Congress on the Pribilof Islands as Required Under Public Law 104-91

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

[I.D. 033197C]

Secretary's Report to Congress on the Pribilof Islands as

Required Under Public Law 104-91

AGENCY: National Oceanic and Atmospheric Administration (NOAA),

Commerce.

ACTION: Notice of submission of report to Congress.

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SUMMARY: Public Law 104-91, section 3(c) requires the Secretary of

Commerce to prepare and submit a report on necessary actions to resolve

Federal

[[Page 18317]]

responsibility on the Pribilof Islands. The Report was prepared by the

National Oceanic and Atmospheric Administration and was signed by the

Secretary of Commerce on March 17, 1997. This Notice is intended to

publish the main text of the Report and provide information regarding

its availability.

FOR FURTHER INFORMATION CONTACT: Nancy Briscoe in the Office of General

Counsel, National Oceanic and Atmospheric Administration, 301-713-1393.

SUPPLEMENTARY INFORMATION: On January 6, 1996, President Clinton signed

Public Law 104-91. Under Section 3 of the law the Secretary of Commerce

was directed to undertake certain activities with regard to the

Pribilof Islands, Alaska. Section 3(c) directed the Secretary to

prepare a report for Congress which proposed necessary actions by the

Secretary and Congress to resolve all federal responsibilities on the

Islands.

The Report to Congress on the Pribilof Islands was signed by the

Secretary of Commerce on March 17, 1997. The text of the Secretary's

Report is attached to this Notice. Full copies of the Exhibits to the

Report consist of thousands of pages of documents submitted under the

Report process by local entities and residents. Due to the volume of

the Exhibits, it was not possible to publish them with this Notice.

Full copies of all Exhibits are available at the City Office on St.

Paul (907-546-2331), at the City Office on St. George (907-859-2263),

at the Regional Archives facility of the National Archives in

Anchorage, 645 West 3rd Avenue, Anchorage AK, 99501 (907-463-2408), and

at the Office of General Counsel, NOAA, 1315 East-West Highway, Silver

Spring, MD 20910 #(301-713-1393).

Secretary's Report on the Pribilof Islands as Required by Public Law

104-91

Prepared By: The National Oceanic and Atmospheric Administration for

the Department of Commerce

Final, March 17, 1997.

I. Introduction

The Pribilof Islands of St. Paul and St. George are islands of

volcanic origin that lie 800 miles west-south west of Anchorage, Alaska

in the Bering Sea. Each island has an approximate land area of 44

square miles generally contained by precipitous cliffs. St. Paul, the

larger of the two islands, has a current population of approximately

780 people. The population of St. George is approximately 120 people.

The Pribilof Islands were discovered by Russian navigators in 1786

as a result of their search for the breeding grounds of the North

Pacific Fur Seal (``the fur seal''). The next one hundred years were

marked by intense harvest of the fur seals to exploit Chinese, Russian

and European markets. To harvest the commercially valuable species on

the Islands, the Russians enslaved and relocated Aleuts from the

southeast who were proficient at killing the seals.

When the United States purchased the Territory of Alaska from the

Russians in 1867, responsibility for the welfare of the Pribilovian

Aleuts fell to the Federal Government. Since 1867, the United States

Government has worked to promote the autonomy and self-governance of

the Pribilovian people, and thereby fulfill its obligations to them.

Following decades of progressive change in the Federal Government's

administration of the Islands, Congress in 1983 enacted legislation to

terminate Federal management of the Pribilof Islands.

On January 6, 1996, President Clinton signed Public Law 104-91

(``P.L. 104-91''). Section 3(c) of the law, entitled ``Resolution of

Federal Responsibilities,'' requires the Secretary of Commerce to

submit to the Committee on Commerce, Science, and Transportation of the

Senate, and the Committee on Resources of the House of Representatives

* * * a report proposing necessary actions by the Secretary of

Commerce and Congress to resolve all claims with respect to, and

permit the final implementation, fulfillment and completion of--

(a) Title II of the Fur Seal Act Amendments of 1983 (16 U.S.C.

1161 et seq.);

(b) The land conveyance entitlement of local entities and

residents of the Pribilof Islands under the Alaska Native Claims

Settlement Act (43 U.S.C. 1601 et seq.);

(c) the provisions of this section; and

(d) any other matters which the Secretary deems appropriate.''

This is the Report of the Secretary of Commerce (``Secretary'') as

required under P.L.-104-91.

This Report examines the historical and contemporary relationship

of the United States government to the Pribilovian people to afford the

context for evaluating current circumstances and Federal

responsibilities. The Report is organized as follows: Section II

examines historical Federal involvement; Section III describes the

current economies on the Islands of St. George and St. Paul and the

relationship of the Pribilovian people to the Federal Government;

Section IV describes and categorizes the claims asserted against the

United States by local entities and residents and, where applicable,

provides recommendations for additional Federal action; Section V sets

forth the position of the Department of Commerce (``the Department'')

and its recommendations for resolution of Federal responsibility on the

Pribilof Islands.

II. A History of Federal Involvement on the Pribilof Islands

This Report cannot fully chronicle the complex history of the

Pribilof Islands.1 It is the aim of this Section to provide

an historical overview of Federal involvement with the Pribilof Islands

as they have evolved into independent, self-sustaining American

communities.

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\1\ A Century of Servitude (Jones, Dorothy Knee, University

Press of America, Library of Congress card no. 80-1407--currently

out of print) and Slaves of the Harvest, published by the Pribilof

Island School District--no additional citation available) have been

recommended by the Pribilovian people as guides providing a full

accounting of the Islands from Aleutian discovery to the people's

recent struggle with autonomy.

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A. Origins

The U.S. Government first became directly involved with the

Pribilof Islands and the Pribilovian people in 1867 when the islands

were acquired with the Territory of Alaska. Immediately thereafter, in

1868, the Islands were declared to be a special Federal reserve for

purposes of management and preservation of fur seals and other fur

bearing species.

In the first 40 years of Federal ownership of the Pribilof Islands,

the lives of the Pribilovians were directed by the companies harvesting

the seals under contract with the U.S. Government. During this period,

the Pribilovian people derived their livelihood through employment with

the fur sealing companies and their lives were subject to the dictates

of those companies.

Largely unregulated, the effects of the private, commercial harvest

were devastating on the fur seal population. By 1890, the effects of

over-harvest and pelagic sealing 2 brought the population

close to extinction. At the close of the last private contract in 1909,

it was estimated that only 300,000 fur seals remained worldwide.

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\2\ Pelagic sealing is the practice of killing seals at sea. It

is less selective and less productive than taking seals on land

where surplus adult males can be identified and females and pups may

be protected.

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As a result of the decline in the fur seal population, Federal

attention paid to the Islands increased. Although the Government's

focus remained primarily on management of the fur seal harvest, the

Federal response ensured greater engagement by the United States with

the lives of the Pribilovian people.

[[Page 18318]]

Pelagic sealing and mass, commercial-contract sealing in the United

States was curbed in 1910 when the Sixty-First Congress passed ``An Act

to protect the seal fisheries of Alaska, and for other purposes''

(``the 1910 Act'').3 The effect of the 1910 Act was to

abolish the lease/permit system of seal harvest open to the general

trading public and to replace it with a broader government authority

vested in the Secretary of Commerce and Labor to manage and protect the

seal population. To promote conservation of the fur seal, the 1910 Act

prohibited the killing of seals by anyone other than an officer, agent

or employee of the Federal Government.

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\3\ See Act of April 21, 1910, 36 Stat. 326.

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The 1910 Act further directed that whenever seals were killed or

sealskins taken the Pribilovians were to be employed and were to

receive fair compensation for their labor. To administer the program,

the 1910 Act specified that the Secretary had:

* * * the authority to furnish food, shelter, fuel, clothing,

and other necessaries of life to the native inhabitants of the

Pribilof Islands and to provide for their comfort, maintenance,

education and protection.

Notwithstanding relatively minor amendments made in 1912 to give

effect to the Fur Seal Treaty of July 7, 1911 between the United

States, Great Britain, Japan and Russia, the 1910 Act remained in force

until repealed by the Fur Seal Act of February 26, 1944 (``the 1944

Act'').4 The 1944 Act served primarily to vest control over

the fur seals, salmon, and other fisheries in Alaska in the Department

of the Interior (``DOI''), which administered the program through the

Bureau of Commercial Fisheries (``BCF''). It came on the heels of

Japan's abrogation of the 1911 treaty on October 23, 1941 and

completion of a provisional fur seal conservation agreement between

Canada and the United States which followed in 1942.

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\4\ See 16 U.S.C. Secs. 631a-631q, 58 Stat. 104.

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War between the United States and Japan was declared in 1941 and in

1942, the Japanese launched a surprise attack on Dutch Harbor,

Unalaska. The attack on the Aleutian Chain dramatically exposed the

United States' vulnerability in the Bering Sea and thrust the Pribilof

Islands directly into the war zone. Because of the threat of attack,

the Pribilovians were evacuated from their homes and interned at

Funtner Bay on Admiralty Island, Alaska. Their internment lasted two

years and they returned to the Pribilofs at the close of the war in

May, 1944.

B. The Late 1940s: The Post-War Era

Internment at Funtner Bay lead to familiarity with other Alaskan

natives and in 1948 the Pribilovians joined the Alaska Native

Brotherhood (``ANB''). As a result of the efforts of the ANB on behalf

of the Pribilof Aleuts, the Secretary of the Interior in 1949

designated a group to study living conditions of native communities

around the Bering Sea.5

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\5\ As cited in Slaves, Ibid. at 143.

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The DOI study found that living standards on the Pribilof Islands

were on par with the highest income groups of any native people in

Alaska and that living conditions there were exemplary. The survey

group recognized, however, that the role of the Federal Government as

guardian of their welfare limited the Pribilovian's sense of liberty

and was inconsistent with the status of wage earning natives elsewhere

in the Alaska Territory. To temper this disparity, recommendations were

made to restructure certain operational functions on the Islands. As a

result of the recommendations, a job classification and cash

compensation wage plan was instituted. The plan included annual and

sick leave, retirement benefits and disability insurance. Food,

housing, clothing, health, education and recreation costs continued to

be paid by the government.

Although Pribilovian monetary compensation under the new system

remained below that of their neighbors, a relatively high standard of

living was ensured by the offsets provided through the in-kind

compensation they continued to receive. As demonstrated by the study,

the result was that during this period the Pribilovians enjoyed greater

health, recreational, educational and medical benefits than any other

Alaskan native group.

The survey group also recommended that the St. Paul community

receive a charter, constitution and bylaws in compliance with the 1934

Indian Reorganization Act (``IRA'').6 The St. Paul charter

was established in 1950 and with it the Pribilovian communities of St.

Paul and St. George found a voice in Federal and territorial government

decision-making. They were also given responsibility for handling all

economic affairs of the community and for safe-guarding the peace,

safety and morals of the village.

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\6\ The IRA was developed to help native Americans retain their

identity through the establishment of tribal self-government, the

preservation of religious and cultural freedom, and the prevention

of economic exploitation.

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In 1951, the St. Paul IRA council exercised its new rights by

filing a claim for native land rights and compensation for past

injustices. The land rights were ultimately resolved in 1971 under the

Alaska Native Claims Settlement Act (``ANCSA''), discussed below. The

claim for past injustices was ultimately brought under the Fair and

Honorable Dealings Act, and was settled in 1976.7

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\7\ On August 10, 1988, the President signed legislation

authorizing a $21.4 million trust fund for residents of the Aleutian

and Pribilof Islands. The legislation was intended as compensation

for Aleuts who were evacuated from their homes during World War II.

The compensation is part of a larger reparation of $1.3 billion paid

Japanese-Americans interned during the War.

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Additional changes that marked the post-war era included the

establishment of a voting precinct on the Islands and the agreement of

the Territory of Alaska's Department of Health and Education to provide

technical guidance to the Federal Government on medical and educational

services. In 1948, a fourth class post office was established on St.

Paul and regular mail service connecting St. Paul to the outside world

was instituted by Reeve Aleutian Airways. In 1949 the first tourists

were welcomed to the Islands and regular commercial flights were

instituted. These flights enabled the Pribilovians to travel beyond the

confines of their Islands. In the early 50's, large electrical

generators were installed which were capable of providing electricity

beyond the standard 11:00 p.m. curfew. In short order, modern

electrical appliances became household fixtures on the Pribilof

Islands.

The introduction of modern conveniences, wages and buying power and

the possibility of travel to the outside world, together with the

support services still provided by the government, brought them to a

socio-economic level on par with, if not surpassing, many other

communities in Alaska and the United States (See A Century of Servitude

for a good description of this period). In light of these changes, DOI

began to re-evaluate the role of the Pribilof Island program.

C. The 1950s: Federal Attrition and the Beginning of Autonomy

From 1942 until 1957, the Pribilof fur seals were protected by the

interim treaty executed in 1942. In 1957, the Interim North Pacific Fur

Seal Convention between Canada, Japan, the Union of Soviet Republics,

and the United States was enacted. It established a Fur Seal Commission

comprised of representatives of the four governments to coordinate

research and management of the fur seal resource.

As the United States' international policy regarding fur seals on

the

[[Page 18319]]

Pribilofs continued to evolve toward conservation, BCF realized that

their role and presence on the Islands would diminish. In 1959, BCF

announced that the Pribilof fur seal harvest would, over time, become a

seasonal operation. BCF recognized that this change in policy would

significantly affect the Pribilovian people. They acknowledged that the

local people would need job training and, given the remoteness of the

Pribilofs, recommended off-island relocation.

Preparing for the radical changes that would result from a reduced

Federal harvest, BCF arranged for general skills training in Anchorage

through the Bureau of Indian Affairs (BIA). To encourage participation,

individuals were paid to attend the training. Despite this incentive,

enrollment was low.

While the BCF training initiative was largely ignored, their off-

island relocation suggestions were met with intense and vociferous

opposition. As a result, and recognizing the relative inaccessibility

and geographic inhospitability of St. George, BCF revised its

relocation plan to accommodate habitation on St. Paul only. It was the

opinion of BCF that with the decline in the Federal seal harvest

program, particularly on St. George, the number of houses ultimately

needed for employees should be held in check. In the years that ensued,

the Bureau encouraged the voluntary relocation of St. George residents

to St. Paul by providing new homes on St. Paul to St. George residents

who moved there. In further support of this policy, new home building

on St. George ceased, and all vacant homes there were destroyed.

BCF dropped its outward relocation efforts after disapproval voiced

during Committee on Commerce hearings conducted in 1965. The belief

that the St. George Pribilovians should be relocated, however, would

survive, and would be reintroduced in the next amendments to the Fur

Seal Act.

D. The 1960s: Self-Autonomy

(1) The Federal Wage System

In 1960, BCF appointed Howard Baltzo as the new director of the

Pribilof Island Program. Mr. Baltzo's primary mandate was to improve

the overall living conditions of the Pribilof people in light of

impending program changes. The changes Mr. Baltzo made to the program

are set forth in his May 1963 report entitled Program for

Administration of the Pribilof Island Federal Reservation Embracing

Management of the Fur Seal Resource and Development of the Resident

Aleut Inhabitants. As result of Mr. Baltzo's work, the Federal Civil

Service wage scale was introduced in 1962 for all people on the Islands

working for the Federal Government. With this change, Pribilovian wages

were brought into parity with the rest of the Federal workforce. In

turn, in kind compensation such as free rent and food were

substantially reduced, being provided only to those with insufficient

wages to cover necessities. The Federal Government did, however,

continue to maintain and administer the stores, laundries, houses,

streets, and all public buildings and to fund educational and medical

services for all Pribilovians on both Islands. To preserve Federal

jobs, Pribilovian residents continued to be employed in these services.

While in many ways a boon, the Federal wage-scale system brought

with it the realities of unemployment. Based on civil service job

definitions, many people were newly classified as temporary or part-

time employees. Still others lost their jobs. Although they now had

autonomy and full wages, without the security of in-kind benefits, many

people were caught in the unfortunate position of not being able to pay

their bills. Individual indebtedness to the Federal Government for

rent, food, clothing and fuel began to mount.8 Some

Islanders left to seek work on mainland Alaska. Most, however, stayed.

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\8\ Many of these debts were ultimately forgiven. In 1995,

outstanding municipal debts for fuel and services were settled

through an agreement for in-kind services.

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(2) The Fur Seal Act Amendments of 1966

In 1965, Senate hearings were held regarding the role of the

Federal Government on the Pribilof Islands (``the Bartlett Hearings'').

At these hearings, the Pribilovians testified that they would feel more

secure owning their own homes and managing the affairs of their

villages as self-governed municipalities.

The product of the Bartlett Hearings was the Fur Seal Act Amendment

of 1966 (``the 1966 Act'').9 Amendments to Title I of the

1966 Act incorporated changes that ensured implementation of the

Interim Convention on the Conservation of North Pacific Fur Seals

signed February 9, 1957, and amended by protocol dated October 8, 1963.

Amendments to Title II of the 1966 Act were designed to foster self-

sufficiency and self-governance among the native inhabitants of the

Pribilof Islands.

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\9\ P.L. 89-702, 80 Stat. 1091.

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Recognizing the significant positive changes brought about on the

Islands since 1950, the Committee on Merchant Marine and Fisheries

reported in House Report No. 2154:

During the past 16 years progress has been made in placing the

resident Aleuts on the same basis as other citizens and other

Federal employees. They are now compensated on a wage rate basis

comparable to that in other Alaska communities. They are charged

reasonable rates for housing, household supplies, and community

services provided by the Government. A locally elected community

council manages certain affairs of the community, including the

implementation of local ordinances. The St. Paul Island Community

Council operates a cooperative canteen-store facility, and members

of the Aleut community serve as deputy magistrate, postmaster, and

local law-enforcement officers. A small number of home-operated

restaurants and theater enterprises also have developed.

The Department of Interior and your committee wants to encourage

the development of the Aleut community still further, and significantly

reduce Federal expenditures for the fur seal industry operation.

Accordingly, the Department now plans three gradual changes in its

program for administration of the islands. These involve: first, the

transfer to the Aleut community on St. Paul of greater responsibility

for the administration and management of the village coupled with

increased opportunities for development of new economic activity within

the expanded community; second, the consolidation of the St. George

Island community with that on St. Paul Island on a voluntary basis -as

housing and other facilities on St. Paul increase; and third,

transition from year-round to seasonal fur seal industry operations by

the Bureau of Commercial Fisheries.10

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\10\ House Report, Merchant Marine and Fisheries Commission,

House Report No. 2154, Cong. News, Sept. 29, 1966, p. 3630.

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To accomplish these objectives and give effect to the desires of

the Pribilovian people, section 206 of the 1966 Act authorized the

Secretary of the Interior to set apart land on St. Paul Island for the

establishment of a townsite. The townsite was to be surveyed into lots,

blocks, streets and alleys and the Secretary was to issue a patent for

the townsite to a trustee appointed by him. It was the duty of the

trustee to convey to all individual natives of both islands title to

improved or unimproved surveyed lots or tracts of land within the

townsite. These tracts included plots with government homes on them.

Conveyance was contingent on payment for the property to the

Secretary. Before issuance of the patent

[[Page 18320]]

and any conveyance, the Secretary was required to make a determination

that a self-governing community on St. Paul was in existence, or was

likely to be imminently and successfully established. Adhering to their

policy of consolidation of the Pribilovians on St. Paul Island, no

townsite set-aside was authorized for St. George.

Proceeds from the sale of the lands, together with other available

funds such as tax revenues, were to be given to the established local

governing body on St. Paul to enable it to provide needed municipal

services. In addition, section 206 provided for a sliding-scale 5 year

payment to the community to fund municipal services. The first payment

was in the sum of $50,000.00. At the close of each succeeding 4 fiscal

years, the payments would be $40,000.00, $30,000.00, $20,000.00, and

$10,000.00, respectively. Finally, all unsold property remaining after

5 years and no longer required by the Government was to be conveyed to

the incorporated municipality, together with all surveyed streets and

alleys.

In 1967, just one year after passage of the 1966 Act, a team of

researchers from the University of Alaska came to the islands to study

St. Paul's economy in light of their emerging self-governance. Based

upon available information, the researchers estimated that the average

household income on St. Paul was approximately $9,830, while the

expenditure for living expenses was $1000 less. They concluded that

there was an income and savings base with potential to provide economic

self-sufficiency through responsible local leadership.

The report concluded:

The future of St. Paul rests with the people of the community

regardless of what determinations are made by others or what

development plans may be prepared. It will be up to the local people

to decide whether or not to incorporate as a municipality, and

without a positive vote, the town-site provisions of the Fur Seal

Act will not apply. Likewise, the carrying out of the development

programs, the broadening of the economic base, and other potentials

that exist are all dependant on support by the local population * *

* St. Paul has the potential for emerging as a vital community. In

the long run, however, the future of the Pribilofs rests to a large

degree on the attitudes of the young people. How they see their

future will determine the future of St. Paul.11

\11\ Foote, Dan C., V. Fischer, George W. Rogers. St. Paul

Community Study, Institute of Social, Economic and Government

Research, University of Alaska, Fairbanks, Alaska, 1968, p. 72, as

cited in Slaves, ibid. At 159.

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Over the ensuing five years, the community failed to incorporate as

a municipality. As a result, the Secretary was unable to make the

requisite determination of self-governance to permit the land transfers

and the realization of the people's desire for home ownership was

delayed.

Despite this delay, a number of positive changes were brought to

bear on the Islands as a result of the 1966 Act. Effective in 1966,

responsibility for some community services, including police and fire

protection, were transferred to the local council. The first public

tavern opened its doors on St. Paul the same year, and the community

took over operation of the hotel that summer. Soon, the community

equipped and was operating a maintenance and repair shop and a

recreation hall. St. Paul established two movie houses, four

refreshment stands, and a barber shop. In 1967, the U.S. Coast Guard

Loran Station and the Weather Bureau began to train local residents for

jobs. And for the first time, Pribilovian residents enjoyed private car

ownership as vehicles were sold by departing Federal employees and

construction contractors.

The 1966 Act also served to enhance the retirement benefits of the

Pribilovian people. Under a 1951 ruling, the Civil Service Commission

had advised the Secretary of the Interior that the resident Aleuts

performing services for the Government were considered Federal

employees only as of 1950 when they received compensation in the form

of wages. Under that ruling, elder Aleuts of retirement age would not

receive credit service before 1950. Section 208 of the 1966 Act changed

the administrative ruling of the Civil Service Commission by extending

retirement credit for service prior to 1950. It also eliminated deposit

requirements by those individuals for the accrual of benefits.

E. The 1970s: Self Governance

Effective October 30, 1970, ``Reorganization Plan No. 4 of 1970''

(35 F.R. 15627; 84 Stat. 2090) transferred the functions of BCF to the

Secretary of Commerce. As a result, the responsibilities of the Federal

Government for continued administration of the Pribilof Island Program

were assumed by the National Marine Fisheries Service (``NMFS'') of the

newly organized National Oceanic and Atmospheric Administration

(``NOAA'').

In 1971, a resolution to accept a charter to incorporate St. Paul

was finally passed. On June 29, 1971, the village of St. Paul became a

fourth class Alaskan city and assumed all responsibility to provide

public services to its residents. Meanwhile, the voices of combined

Alaskan native groups had succeeded in bringing about reforms regarding

the status of land ownership throughout the State. On December 18,

1971, Congress moved to resolve all Alaskan aboriginal land claims by

enacting the Alaska Native Claims Settlement Act

(``ANCSA'').12

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\12\ 43 U.S.C. 1601, et seq, 85 Stat. 688, Pub.L. 92-203.

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In 1973, the Fur Seal Commission adopted the United States'

recommendation to establish a major research program for fur seals by

setting aside St. George Island as a research reserve. The goal of the

research was to compare population dynamics and behavior between the

harvested population on St. Paul and an unharvested population on St.

George. As a result, the commercial harvest of seals ceased on St.

George after 1972. Economically, the effect was to further diminish

Federal employment on St. George. The decision was within the

Secretary's authority and lent further support to the administration's

declared policy of relocating the St. George islanders because of the

relative inability of that remote island to support any kind of

economy.

ANCSA required the establishment of Regional and Village native

corporations through which the claims of all entitled natives,

including the Pribilovians, would be settled. The settlement included

the distribution of 40 million acres of land throughout the State and

the payment of $962,500,000.00 over an eleven-year period. Transfer of

title for all ANCSA conveyances was made through the Department of the

Interior, Bureau of Land Management (``BLM'').

To comply with the village corporation provisions of ANCSA, the

people of St. Paul established the Tanadgusix Corporation (``TDX'')

while the people of St. George established the Tanaq Corporation. TDX

received the right to select 138,240 acres of land in the Aleutians,

Alaska Peninsula, and St. Paul. Ultimately, 113,000 acres conveyed to

TDX. Tanaq received the right to select 115,200 acres. 106,000 acres

were ultimately conveyed. A full discussion of remaining ANCSA land

entitlements to be resolved is included in the statement and comments

from the Department of Interior at Exhibit A.

Under sections 1610(b), 1611(a) and 1613(a) of the ANCSA,

conveyances to the native corporations were to include surface rights

to the core township lands where each village was located. ANCSA also

directed that subsurface rights be transferred to the regional

corporations.13 On the Pribilof Islands,

[[Page 18321]]

these provisions created an immediate impasse to the pending transfer

of the townsite under the 1966 Act. Under section 206 of the 1966 Act,

the Federal Government was obligated to sell tracts of Federal property

to Pribilovian individuals as part of the townsite concept. Under

ANCSA, the Federal Government was directed to convey interim title to

the townships and other lands to the native corporations at no cost.

The corporations, in turn, were to transfer title to their

shareholders. In both instances, the property to be transferred

included government housing.

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\13\ The regional corporation for both villages is the Aleut

Corporation, currently ranked as the 32nd largest revenue generator

in the State.

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Faced with a choice of having residents purchase their own land and

homes under the 1966 Act or receiving them at no cost under ANCSA, the

City of St. Paul voted to take the property and houses through the

ANCSA process. Meanwhile, the Department of Interior ruled that the

townsite provisions of section 206 of the 1966 Act were preempted by

the conveyance provisions of ANCSA.14

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\14\ See Alaska District Council of the Assemblies of God, Inc.,

8 IBLA 153, 155 (Nov. 22, 1972), and opinion of February 5, 1975

from the Regional Solicitor to the BLM State Director (attached as

Exhibit 1).

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Having resolved ANCSA as the appropriate mechanism for transfer,

NMFS released the majority of property on St. George and St. Paul for

corporate selection. Under section (3)(e) of ANCSA, the Federal

Government was allowed to retain certain property necessary for its

public mission. Accordingly, the Federal Government retained the fur

seal rookeries and a number of facilities required for the continued

administration of the Islands as a special reserve.

Viewing ANCSA as a guarantee for a more prosperous and secure

future on the Islands, the people found renewed vigor and support for

their desire to remain on St. George and St. Paul. Recognizing the

economic limitations of the ANCSA settlement, the Federal Government

continued to encourage the voluntary relocation of St. Georgians to St.

Paul and the voluntary migration of unemployed Pribilovians to mainland

Alaska and the rest of the United States.

The practical effect of ANCSA and its interplay with the 1966 Act

was to establish six entities competing for limited resources on two

remote islands. While opportunities for economic growth and self-

governance were promoted under both acts, the underlying tensions

between the entities arising in subsequent disputes over money,

facilities, land and land use would create as many problems as it

resolved. That tension would prove to divide the community in enduring

fashion, fostering attitudes that would ultimately diminish the bright

prospect envisioned by the University of Alaska researchers in 1967.

Ultimately, these tensions have affected the ability of the islands to

self-govern efficiently and cooperatively.

F. The 1980s: Termination of Federal Responsibility

(1) The Fur Seal Act Amendments of 1983

With the mechanisms for the transfer of land in place and

operational under ANCSA, and systems of self-government established

commensurate with ANCSA and the 1966 Act, the attention of Congress in

the early eighties turned to the promotion of a self-sufficient and

self-sustaining economy on the Pribilof Islands.

Despite the programmatic decline of Federal involvement on the

Islands, annual funding for the Pribilof program had doubled between

1970 and 1982 to $6.3 million annually. Approximately 95 per cent of

each year's funds were spent in support of social welfare programs.

Recognizing the autonomy of the Pribilovian people and faced with tight

budget constraints and an increasing national deficit, the

Administration's 1983 budget proposed to phase-out Federal support on

the Pribilofs over four years at a cost of $15.8 million.

In a joint effort to derive a better solution than a slow phase-

out, the Secretary of Commerce and the Governor of Alaska formed a

working group composed of State, Island and Federal representatives. At

the first meeting of the work group, State and Island positions

advocated that the Federal Government provide annual appropriations for

5 more years at current levels. Recognizing that continued Federal

appropriations for social welfare programs would do nothing to create a

stable and self-sustaining economy on the Islands, the Administration

proposed that one answer was to build upon the Pribilof's location in

the midst of the Bering Sea fisheries. To capture this potential, the

Secretary suggested the creation of a one-time $20 million trust to

replace the annual appropriations for social welfare and support.

Combined with a commitment by the State to construct harbors on both

Islands, the trust would give the Pribilovians the resources needed to

make the transition to a self-sustaining economy. In addition, the

Secretary proposed the transfer of previously exempt ANCSA properties.

15

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\15\ Under the proposal, responsibility for commercial harvest

of the fur seal remained with the Federal government; subsistence

harvest, however, would continue to be allowed.

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During subsequent meetings, the Administration advanced its

proposal. The State responded by supporting harbor construction on both

Islands. The State also expressed its willingness to assume normal

State functions related to transportation and community services,

including the provision of schools and educational services and

responsibility for airport services. (The State's commitments along

these lines are articulated in correspondence dated May 11, 1982 and

September 28, 1982 from Governor Hammond to Administrator Calio, and in

a Memorandum of Understanding signed by the State dated February 10,

1984. All of these documents are attached at Exhibit 2.)

Over the course of the next several months, the Administration

worked with State and Island leaders to develop a Memorandum of Intent

(``MOI'') describing the concept of a phase-out linked to the Federal

trust appropriation, the transfer of Federal property and State

assistance for the construction of a harbor on each Island. Under the

MOI, all parties acknowledged that the United States desired to

terminate Federal program funding on the Pribilofs under Title II of

the Fur Seal Act (``FSA'') while at the same time maintaining its

Treaty obligations under Title I. (A copy of the MOI is attached as

Exhibit 3.) To ensure that there was no misunderstanding about the

intent of the United States to terminate all Title II Federal

responsibility on the Islands, the MOI and a letter carefully

explaining the Administration's position were sent to every household

on the islands. (A copy of the letter is attached as Exhibit 4).

As a result of negotiations and consultation conducted within the

framework of the MOI, the Administration set forth in draft legislation

its proposal to provide for the orderly termination of Federal

management of the Islands. The bill, H.R. 2840, was based on

legislation presented in the House of Representatives on April 28,

1983. It was supported by all of the parties affected by it.

Recognizing the need to bifurcate responsibility for the provision

of socio-economic welfare development under Title II of the Act from

NOAA's responsibility for protection and conservation of the fur seal

under Title

[[Page 18322]]

I, then NOAA Deputy Administrator Anthony Calio testified to the

Committee on Merchant Marine and Fisheries that:

The principal purpose of amending the Fur Seal Act is to end

Federal administration, as you have indicated, in the Pribilof

Islands, while continuing to fulfill the obligation of the United

States under the Interim Convention on the Conservation of North

Pacific Fur Seals * * * I believe that the conceptual basis of these

amendments is sound and that the time is ripe for the islands to

become independent of Federal control * * * If the funds are

appropriated, the Department of Commerce will seek no further funds

for the Pribilofs other than those needed to maintain an adequate

research and conservation program and to implement the Fur Seal

Convention.16

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\16\ Hearings Before the Subcommittee on Fisheries and Wildlife

Conservation and the Environment of the Committee on Merchant Marine

and Fisheries--Pribilof Islands, H.R. 2840, 98th Congress, House of

Representatives, May 19, 1983, pp. 260-263.

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From the outset, it was the Administration's position that the one-

time trust appropriation be used solely to replace social welfare and

support services on the Islands and that the success of the proposal

was contingent on the commitment by the State for harbor development.

This position was shared by all negotiating entities. The ANCSA village

corporations and the governing entities of both Islands, together with

the Department of Commerce, agreed in the 1983 MOI that:

* * * the State of Alaska's appropriation of the monies

necessary to construct boat harbors on St. Paul and St. George

Islands and the State's assumption of the responsibilities for

airports, roads, and other facilities upon the Islands in accordance

with applicable laws and regulations is an indispensable

contribution to achieving the goal of self-sufficiency on the

Pribilofs.

And, as stated by NOAA during Congressional hearings on the

proposed 1983 amendments:

* * * $20 million was proposed in addition to the $6.5 million

available for fiscal year 1983. We estimate that $4 million is

needed annually to provide for basic community needs on both Islands

during the transition to a self reliant economy. Assuming that the

$20 million is placed in an interest bearing account, the

appropriation should last 5-7 years. We thought this would be ample

time to develop a new economic base.17

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\17\ Ibid. At 290.

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In response to questions raised during those hearings about whether

the $20 million would be used for the development of the harbor

facilities, former NOAA Administrator Anthony Calio stated that:

The purpose of the $20 million was to try to provide some sort

of independence for the islanders, to provide them with some capital

to pay their current expenses and for future development. We would

not try to constrain the use of those funds in any way as far as the

executive branch is concerned. It is essentially a capital fund for

their own use. If they feel that in their best interest that is the

way to utilize that money, we would not put a constraint on it. We

feel that this should not be done, however.18

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\18\ Ibid. at 273.

Legal counsel for St. Paul Island concurred with this position.

Responding to a question concerning use of the trust money for the

---------------------------------------------------------------------------

harbor during the hearings, Attorney Tony Smith stated:

It is our expectation that the $20 million will be used in other

areas, not for the harbor. We have done a careful analysis of just

maintaining the utilities on the island, and on St. Paul it is going

to cost, as best we can determine, about $2.9 million a year during

the transition to maintain the sewer, water, light, power, and

essentially the airport, the roads, the infrastructure. Our analysis

indicates $4.1 million on both islands * * * [The Bill] does not

preclude it [use of the trust for harbor construction], but one of

our concerns * * * is that the infrastructure and the harbor both

need to proceed down parallel tracks. I am very concerned about an

effort to take part of the $20 million to construct the harbor * * *

St. Paul's intention is to maintain the infrastructure and get

the harbor completed, and we have figured out how to do that with a

State appropriation and to have those two run parallel. And

hopefully 3 to 4 years down the road we will have a viable, robust

entrepreneurial endeavor.19

\19\ Ibid. at 335.

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As pointed out by the State during the hearings, development of the

harbors was decidedly in the best interests of the State. As stated by

the Deputy Director of the Alaska's Division of Community Planning:

This is an internationally significant fishery, as you know, and

studies done by the State Department of Commerce confirm that those

two harbors could have the linchpin [sic] of a very successful

fishing industry in the Bering Sea.20

\20\ Ibid. at 299.

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As conceived by engineering firms hired by the islands to consult

on the project, construction of the harbors was to be accomplished in

three phases. Phase I consisted of the building of breakwaters and a

wharf on each island. Phase II consisted of the development of on-shore

processors. Phase III consisted of on-going harbor improvements.

Estimates of the amount of time to complete the projects ranged from

the conservative (8 years) to the optimistic (3-4 years).

As initially presented, the consultants' estimates for construction

of the two harbors was in the range of $24 to $30 million. By the time

of the hearings, the State had already appropriated and committed $7

million. That money was used to start construction of the Phase I

breakwaters. In addition, the State, through the subsequent

administration, had submitted a budget request for an additional $10.4

million.

During the hearings, it was the State's position that any shortfall

between the money they were able to obtain and what was needed would

have to be borne by Federal or private sources. Responding to the

State's position, John Phillips, Special Assistant to Administrator

Calio, stated that when the engineering firms learned of the State

funding limit, their plans had been modified and that even at the $17

million level, harbor completion to Phase I was obtainable. The harbor

consultants also expressed their opinion that once the Phase I

breakwaters were built, private investors would be drawn to the islands

and would prove to be a ready source of private funding for Phase II

and Phase III on-shore development and improvements. In support of this

assumption, they cited private willingness to invest in the development

of fisheries resources which had been achieved at Dutch Harbor and

Akutan, areas considerably more limited in terms of resource proximity.

Satisfied that the State's initial commitment and emerging private

investment would support harbor development, and that the one-time

federally funded trust would be used for infrastructure, the Fur Seal

Act Amendments of 1983 (``the 1983 Act'') 21 was enacted.

Under the 1983 Act, the Department of Commerce's responsibilities with

regard to the Islands were limited to (1) Establishing the one-time

trust (``the Trust'') to be administered by a non-government trustee in

order to promote the development of a stable, self-sufficient, enduring

and diversified economy not dependent on sealing (section 1166); (2)

transferring formerly withheld Federal property to Island entities

under a Transfer of Property Agreement (``TOPA'') (section 1165); (3)

continuing to administer retirement benefits (section 1168), and (4)

continuing management of the rookeries to ensure compliance with the

Fur Seal Convention (Title I and section 1161). The State was given

responsibility for providing standard educational needs (section 1163)

and the Secretary of Health and Human Services was given

[[Page 18323]]

responsibility for providing medical and dental services (section

1164).

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\21\ 16 U.S.C. 1161 et seq.

---------------------------------------------------------------------------

A Master Trust Agreement under the 1983 Act was signed on November

21, 1983. Separate trusts for St. Paul and St. George were established

on March 14, 1984 and March 27, 1984, respectively. In accordance with

his authority, and at the request of people of St. George, the Trust

was divided into two portions. Using a formula devised by the

Secretary, $12 million was allotted St. Paul, $8 million to St. George.

Faced with declining oil revenues in 1985, the Sheffield

administration was ultimately unable to secure the requested $10.4

million it sought to finish the harbors. As a result, despite previous

commitments, no more than the original $7 million was invested by the

State in harbor development in the first five critical years of the

final phase-out.

(2) Harbor Development and Emerging Economies

(a) St. Paul. Using a significant portion of the $7 million

appropriated by the State, St. Paul was able to complete their Phase I

project. The result was construction of a 750 foot breakwater and 200

foot dock by 1986. Over time, the breakwater was susceptible to damage

from overtopping during winter storms. With no available State funding

for harbor improvements, the City turned to the Army Corps of

Engineers. Taking advantage of the newly enacted Water Resources

Development Act (WRDA),22 the City in 1986 applied for

authorization to construct a larger harbor. Their request relied on a

1979 Corps navigability feasibility study that recommended an 1800 foot

breakwater, a 900 foot dock, and a channel dredged to 23 feet below

mean low water. Once completed, the harbor would accommodate nine to

ten 100-foot crab vessels.

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\22\ Public Law 99-662, enacted November 17, 1986.

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The City's request for the harbor was approved under section 204(e)

of WRDA in June of 1988. Following minor modifications to the General

Design Memorandum, the total Federal share for the project in 1989 was

$19,635,200. The City of St. Paul was able to secure matching funds

through State appropriations and local investment. Meanwhile, in 1986,

St. Paul's trustee had begun Phase II processing initiatives by

contacting major seafood processors and seeking their investment in a

diversified fish processing capability. As a result of the trustee's

efforts, St. Paul had drawn four seafood processors to its shores by

1994.

In addition to ensuring the harbor project under WRDA, the City

undertook maintenance of infrastructure needs of St. Paul as envisioned

by the 1983 Act. They also assumed responsibility for a number of

other, non-traditional municipal roles including providing utilities,

selling bulk and marine fuel, and operating a snack and gift shop. In

the late eighties, as a result of committing trust funds to harbor

development following the State's inability to appropriate monies, St.

Paul requested supplemental trust appropriations totaling approximately

$3 million. These funds were used to support City infrastructure needs.

While the City solidified its responsibilities for trust-related

municipal ventures, TDX was able to expand their investments with

outside companies. As a result, TDX built their own 300 foot dock,

leased facilities and land to the processors, and developed a crab-pot

storage facility. They also pursued numerous off-island ventures

including development of hotels in Anchorage and Seattle.

The Corps of Engineers Harbor project was completed in 1990. By

1995, St. Paul had grown to become the number two fishing port in

Alaska. As reflected in shared fisheries and fisheries landing taxes

and fees in the State, St. Paul is second only to Unalaska in

generating revenues. It is also the primary crab processing location in

the Bering Sea.

(b) St. George. With ANCSA and the 1983 Act bolstering their intent

to sustain a foothold in the Bering Sea, the City of St. George

incorporated as a second class city on September 13, 1983. Acting

expeditiously, they obtained State approval and initial funding to

construct a State harbor in 1984. Despite their ambition, they

ultimately received little State support. In 1985, their State grant of

$3 million for harbor development was reduced to $1 million as a result

of budget cuts. To meet ongoing dredging demands, the City of St.

George followed St. Paul's lead and immediately requested assistance

from the Army Corps of Engineers. Because the City of St. George was

unable to raise local or state matching funds, no Army Corps projects

could commence. In 1986, unanticipated site conditions led to the

default of a State recommended harbor contractor and the City had to

take over as general contractor. By 1987, the breakwaters were still

not complete and winter storms threatened much of the existing

structure. That same year the State notified the City that no further

State funding would be appropriated before 1989.

In 1988, Army Corps of Engineers dredging assistance of $4 million

was finally approved. To raise matching funds, the City issued general

obligation bonds in the amount of $3 million, sold $1.2 million of

municipal and construction equipment and borrowed $700,000 from the

Tanaq Corporation. In 1989, with dredging underway, All Alaska Seafoods

Company committed to process on a floating fish-processing plant in the

harbor when dredging was completed. Ultimately, dredging delays in the

narrow channel prevented startup. Meanwhile, local fisheries-related

businesses failed as a result of limited markets and lack of fisheries

infrastructure.

With its Trust nearly depleted, the City of St. George in 1988

requested a $3.7 million authorization from Congress for basic human

needs assistance. They received $1.1 million. In 1990, they requested

$2.6 million. As they requested the second appropriation, the City was

contemplating permanent closure based on significant debt. Their

request explained that their harbor was set to support self-sufficiency

by 1992. Today, the inhospitable shoreline and inclement weather of the

island continues to contribute to the inability of St. George to

complete their harbor.

By 1990, the St. George Trust was nearly depleted. Efforts to

attract private industry to the remote island had failed, and the City

has since survived solely through ongoing funding through State and

Federal construction projects. As stated by Peter Hocson, the trustee

for the St. George trust, in his 1988 annual report to former

Administrator Calio:

The single obstacle standing in the way of a self-sustaining

economy, as envisioned by the Fur Seal Amendment Act of 1983, is the

lack of the State of Alaska's funding to complete the boat harbor.

In 1993, the Army Corps of Engineers contributed an additional $3

million to conduct in-blasting and dredging operations designed to

secure the harbor. Together with the $8 million trust allocation, the

$3 million supplemental needs trust appropriations, the initial Army

Corps of Engineers investment of $4 million and a $1 million facilities

upgrade appropriation, a conservative estimate of the Federal

Government's contribution to St. George's economy since 1983 totals $19

million.

III. The Cities Today

(A) St. Paul

As the continued growth of the harbor brought increasing prosperity

to St. Paul, it also made the resources required

[[Page 18324]]

for a sustained economy more scarce and valuable. The unfortunate

result was that the relationship between the City of St. Paul and TDX

Corporation grew increasingly adversarial. Having assumed

responsibility for so many daily activities through administration of

trust related activities, the City's need for land, particularly

harbor-side, grew. Under ANCSA, ownership and control of available

lands vested with TDX. Frustrated by their inability to obtain lands

from TDX, the City brought a law suit against TDX in 1985 challenging

the distribution of property under section 14(c) of ANCSA. Settlement

was achieved in three years.23

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\23\ The City filed suit on November 21, 1996 against the

Secretary of Commerce and Under Secretary of NOAA to abrogate that

agreement, as well as transfer decisions reached under the 1983 ACT

TOPA. TDX joined the dispute in a parallel proceeding against the

Secretary and Under Secretary filed December 20, 1996. Copies of the

Complaints in each case are attached as Exhibits 5(a) and 5(b).

---------------------------------------------------------------------------

Continually deadlocked in similar disputes over terms and

conditions of land use, TDX and the City have historically blocked each

other from or delayed each other's goals. Today, the continued and

heightened inability of island leaders to share their island's

resources and to work cooperatively has created an atmosphere of

mistrust and divisiveness. During testimony taken on St. Paul in

preparation for this Report, St. Paul citizens repeatedly informed

Commerce personnel that the City's single-minded focus on harbor

construction, TDX's unwillingness to make land and property available

to its shareholders, and the two entities inability to get along as the

source of much resentment and frustration.

In oral statements made for purposes of this Report, St. Paul

citizens and shareholders of TDX referred to incidents of intimidation,

bullying and coercion by TDX officers to influence land dispute

settlement and shareholder proxy votes. Several local citizens and one

TDX representative stated that TDX would not sell any land to local

citizens, and that land use and business development was available only

through leases with TDX. The leases set rental rates on par with those

of industrial properties surrounding the Anchorage Airport. They also

included provisions for mandatory building development and improvements

to be relinquished without compensation at expiration of the lease.

Faced with these terms, local entrepreneurs wait for more reasonable

leases of limited government properties. As a result, the local, small

business economy is effectively chilled by the citizen's own village

corporation. Without these opportunities, unemployment persists and the

costs of goods and services from off-island remain high.24

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\24\ Evidence of these attitudes is reflected in the TDX

newsletter attached as Exhibit 6 which was distributed to all

shareholders and ultimately dispersed across the small island.

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Finally, St. Paul is also experiencing the effects of imported

labor within its local infrastructure. Local residents allege that they

were promised management positions and as a result have refused to work

any front line positions. As a result, vacancies at the processing

facilities have been filled by workers from Asia and the Phillipines.

This foreign labor pool is housed and fed aboard the processors.

Overall, they contribute relatively little to the economy.

Despite these difficulties, evidence of St. Paul's commercial

success is readily apparent. The City's annual operating budget is

roughly $18 million. According to 1990 Census Bureau information, the

median income per family is $49,900.00. The average income as of 1994

was $34,000.00. In the words of St. Paul's former City Manager, success

has outstripped all expectations. In a letter to Trustee Jay Gage at

the termination of the St. Paul Trust, the City Manager and Trust

Advisor wrote:

* * * [W]e wish to * * * put in the record our acknowledgment

and gratitude for your service to St. Paul. In retrospect, had it

not been for your foresight and fortitude in administering the St.

Paul Trust, we may not have the robust economy we have today.

Through your wisdom, you directed most of the Trust funds towards

establishing a port on St. Paul while assuring that our people did

not endure undue economic hardship.

In short, you have accomplished your mission to assist St. Paul

Aleuts achieve [sic] economic independence and diversification away

from seal harvesting above and beyond anyone's expectations. Indeed,

what you have accomplished is nothing short of an economic miracle,

considering that this was all done in less than half a generation

under very adverse circumstances.

(A copy of the City Manager's letter is attached as Exhibit 7)

Increased activity in the harbor and the expanse of the Bering Sea

fishery has prompted the City to explore additional international

markets. They now seek to establish a Free Trade Zone, and look forward

to continued harbor improvements through the Army Corp of Engineers.

Toward this end, and as a result of unprecedented growth, a second

Corps feasibility study was commissioned in 1995. That report caused

Congress in September, 1996 to authorize an additional $18.9 million to

modify and improve the harbor.

Together with the previous $19 million commitment, the $12 million

trust portion under the 1983 Act, the $1 million share of funding for

facilities improvements in 1984, and the $3 million in supplemental

needs appropriations granted the trust in the mid-eighties, a

conservative estimate of the total Federal contribution to St. Paul's

economy since 1983 totals nearly $55 million.

While the last five years have seen a growth in the economy of St.

Paul, they have also seen a decline in fur seals, harbor seals, sea

lions and several species of sea birds throughout the

Pribilofs.25 These declines are particularly alarming on St.

Paul because of the possibility of cumulative effects brought to bear

by rigorous weather conditions, increased opportunity for oil spills,

general marine disturbance, rodent introduction, and effluent

discharges of fish processing wastes. The fur seals are currently

listed as a depleted species under the Marine Mammal Protection Act

(``MMPA'') and the red-legged kittiwake, whose population has declined

to 40-50 per cent of its 1970 level and is being considered for listing

under the Endangered Species Act (``ESA''). Roughly 80 per cent of the

world's population of each of these species make their home on the

Pribilof Islands. Together with the myriad of other wildlife species

that inhabit the Islands, they are the primary reason the Islands are

referred to as ``the Galapagos of the North.''

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\25\ See Final Conservation Plan for the northern fur seal

(Callorhinus ursinus), prepared by the National Marine Mammal

Laboratory/Alaska Fisheries Science Center for the National Marine

Fisheries Service, 1993.

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(B) St. George

While St. Paul has grown and prospered, St. George has struggled.

The Island's rugged topography and foggy climate have effectively

frustrated the provision of goods and services since Russian

occupation. Possessing no natural geography to accommodate a harbor,

shipments by sea have traditionally been limited. Mail service by air

proved equally confounding, and in the 50s and 60s was limited to air

drops due to the risks associated with aircraft landing. Modern

technology has brought only minor advances and treacherous island

conditions continue to contribute to the difficulties of establishing

an independent economy. In November, 1996, after a $6 million State

investment in runway expansion, the FAA ruled the Island's airstrip too

dangerous to permit any plane larger than a six-seater Piper Navajo to

land.

[[Page 18325]]

With no protective shoreline, St. George's harbor continuously

requires major dredging and expansion to fend off the inhospitable and

over-powering Bering Sea. Despite assurances that their harbor would

reach sufficiency and provide a self-sustaining economy by 1992, the

ongoing need for harbor dredging and improvement has instead compounded

existing debt. To complete 1994 dredging and harbor improvements, the

City sold revenue bonds in the amount of $865,000.00. In addition, the

City was forced to draw down its surplus cash, thereby resulting in a

working capital deficiency. To meet their debts, the City has budgeted

reductions in its work force, deferred building maintenance, and

reduced engineering, legal and travel expenses.26

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\26\ Additional liabilities associated with the harbor's

development include delays from inclement weather and unforeseen

site conditions. In the late eighties, the City was named a third

party defendant in a law suit brought by a dredging contractor

against the Army Corps for increased costs associated with

unforeseen site conditions. The contractor prevailed and was granted

a judgement of $1,095,187 for which the Corps now seeks contribution

from the City.

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Having significantly extended its debt, St. George faces an

uncertain economic future. Faced with the need for substantial ongoing,

sustained improvements the St. George harbor remains effectively

unfinished and without significant draw to shore-side fish processors.

As a result, the City continues to need supplemental infrastructure and

human needs assistance.

At the close of 1994, the City's long-term debt was assessed at

$3,081,039. By the start of the year 2000, it is estimated that

$2,802,877 will still be required to clear the City's debt. As stated

in an independent auditor's report dated May 18, 1995:

* * * the City experienced significant costs in excess of grant

revenues in the construction of its harbor dredging and improvement

project in prior years causing a working capital deficiency, which

raises substantial doubt about its ability to continue as a going

concern.27

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\27\ Undependent Auditor's Report: City of St. George prepared

by Mikunda, Cottrell & Co., C.P.A., May 18, 1995.

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IV. The Claims Asserted

The Statements of the State of Alaska and the Department of

Interior required under Public Law 104-91 are attached at Exhibit A. In

addition, the Department of Interior has included its request for

resolution of the Terms and Conditions of its agreement with the

Islands under the Migratory Bird Treaty Act. That claim is included as

part of Interior's submission at Exhibit A.

A copy of all local entity and resident statements of claims is

attached as Exhibit B. The process for collecting the statements is

described in section (I) below. The essence of the information

submitted as claims by local entities and residents may not necessarily

be rights that are enforceable in court but, in some instances can be

more appropriately described as assertions that are inherently

equitable and arise out of the past intergovernmental relationship. The

claims are what the Pribilovians expect from the Federal Government to

resolve alleged harms caused as a result of the United States history

with the Pribilovian people.

We do not interpret P.L. 104-91 as raising a claims process of

potential lawsuits against the United States. Nevertheless, this is the

tenor that was created throughout the process based on the nature and

form of claims submitted. Accordingly, what follows is a general

outline of the types of claims raised by the Pribilovians and the

Department's response. In some cases, the Department has determined

that no further action is necessary and in others, the Department makes

specific recommendations.

Given the magnitude and nature of submissions, an individual

response to each of the over 85 claims was not possible. To focus and

present the Report, local entity and resident claims have been

categorized according to eight broad areas of concern. A summary of the

statement of claims is attached as Exhibit 8. The categories of claims

are: continued economic growth, failed transition, real property, trust

issues, fisheries issues, retirement issues, seals/rookeries issues,

environmental cleanup issues, and P.L.104-91 process issues.

Submissions were also received regarding health care and the settlement

reached under the Fair and Honorable Dealings Act case for past

injustices. Because these areas are outside of the Secretary's

authority, these issues are not addressed in this Report, but have been

referred to the appropriate agency for their review.

Some of the claims submitted seek specific performance; the

majority seek monetary damages. Conservative estimates of the total

claims is roughly $500 million. During an October, 1996 public meeting

to summarize the claims, Island spokespersons indicated that ``amount

to be determined claims'' would likely bring the total to $1 billion.

In the sections below, each category of claim is generally

described, followed by a description of federal activities related to

the claims and the Secretary's response and recommendations. Where

applicable, relevant and applicable laws and regulations are provided,

together with a discussion of the Agency's implementation of the law.

(A) Continued Economic Growth

These claims relate to assertions that the U.S. Government has an

ongoing obligation to ensure the sustained and economic growth of the

Pribilovian people. They include claims for past expenses incurred as

their economy grew (building renovations, upgrades and construction,

housing repairs), as well claims for current costs of maintaining homes

and the municipal infrastructure.

The Secretary has undertaken an analyses of his responsibilities

under Title II of the 1983 Act and has concluded that no ongoing

obligations of the Secretary exist which would direct the Secretary to

seek appropriations for these collective claims. As discussed in

Section III, the $20 million trust established under the 1983 Act was a

one-time payment to ``promote,'' not guarantee, an independent economy

on the Pribilof Islands. The trust funds were to be used to cover

infrastructure expenses (income maintenance, human needs and municipal

services) for approximately 5-7 years as harbor development was pursued

by the State. Accordingly, it is the opinion of the Secretary that

requests for reimbursement of costs associated with successful

municipal growth are without merit.

Because housing repair and municipal infrastructure costs account

for the majority of the ``Continued Economic Growth'' claims asserted,

they are discussed in greater detail below.

(1) Housing

These claims raise the assertion that the U.S. Government promised

to repair, or has an inherent obligation to repair, all homes conveyed

to the Pribilovian people under ANCSA and the 1983 Act.

Under the 1966 Act, townsite properties on St. Paul were to be

purchased by local residents according to a patent issued by the

Secretary (see section III(E)). During discussions with the City of St.

Paul regarding the transfers in 1971, NOAA stated its policy that it

would be incumbent upon the Aleut residents purchasing the homes to

provide for their continued repair and maintenance. NOAA's policy

reflected the intent of Congress that the autonomy of the Pribilovian

people include paying for goods and services previously provided by the

government. The City's ``Community Development Plan of 1971'' prepared

and distributed

[[Page 18326]]

later that year includes a statement articulating NOAA's position.

Ultimately, the transfer of homes was accomplished under the terms

of ANCSA. During negotiations with the TDX and Tanaq Corporations in

1974 regarding the transfer of property under ANCSA, NOAA agreed to

make major repairs to five houses on St. Paul and three on St. George.

Additionally, NOAA agreed to make minor repairs to all houses on both

islands on a priority basis. The provisions for minor repair are

contained in a December 22, 1976, Memorandum of Understanding (``MOU'')

between TDX, Tanaq and the Department of Commerce/NOAA. (A copy of the

MOU is attached as Exhibit 9).

Pursuant to the agreement, NOAA agreed to be responsible for

exterior water leaks, storm windows, means of ingress and egress in the

event of fire, broken or leaky fixtures, the satisfactory operation of

heating units, ventilation, electrical outlets, structural integrity,

cabinetry, and insulation. Areas outside NOAA's responsibility included

remodeling, additions, floor coverings, painting, tile repair and the

finishing of basements. Repair of houses pursuant to the MOU was

completed in 1977.

The policy of Pribilovian responsibility for home repair and

maintenance was announced again by NOAA in a letter to island leaders

on April 22, 1976. (A copy of the letter is attached as Exhibit 10).

Citing the MOU, the letter states that:

The Government will not be responsible for repairs and

maintenance on the houses and other quarters except as noted above

after interim title is granted. In the future there will be a need

and desire to repair, remodel and build homes. The Government does

not intend to act as wholesale or retail supplier nor as contractor

for construction and repair of private homes. We are suggesting that

these functions would be better handled by some individuals or the

Corporations who may wish to set up home construction and building-

supply businesses such as are available in most other communities.

We believe this would be the best way to meet this future need for

both communities.

(2) Code Compliance and Facilities Upgrades

During the State, Federal and local working group meetings held in

1983 to formulate a plan for phase-out under the 1983 Act, NOAA and the

State discussed the need to bring Federal facilities up to code prior

to transfer. Based on requirements set out in a facilities report

prepared by the State in 1982, NOAA spent 1983 Pribilof Island Program

funds to correct minor fire and safety deficiencies which brought the

facilities up to code.

On August 22, 1984, President Reagan signed H.R. 6040, the

Supplemental Appropriations Bill for fiscal year 1984. The bill

appropriated $2 million to NOAA to upgrade Federal property prior to

transfer under the 1983 Act. In the interests of equity, Administrator

Calio decided that the $2 million would be split equally between the

two islands. During subsequent discussions with State and local

entities regarding funding of future upgrades, all entities agreed that

it was incumbent on the State and local government to seek additional

funding to upgrade facilities. The State's commitment is reflected in a

report to then Governor Sheffield summarizing discussions about use of

the $2 million appropriation 28 Department of Transportation

estimates of required funding to upgrade facilities on St. Paul and St.

George at that time were $6.5 million and $4.8 million, respectively.

---------------------------------------------------------------------------

\28\ The report is attached as Exhibit 11.

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To make the best use of the immediately available Federal funds,

the Cities of St. George and St. Paul were asked to prepare priority

lists of upgrade projects. These lists were submitted to NOAA in early

October, 1984. St. Paul's initial list reflected long-term capital

improvements designed to accommodate the Cities impending growth. Its

upgrades list included improvements to the airport and the expansion of

existing sewer, electrical and water distribution systems. The

accompanying report included an analysis of multiple funding sources

including grants, loans and private investment. The City's estimate of

total expenditures required approximated $50 million. St. George's

original upgrades list reflected improvements to existing structures

based on current needs. The St. George project list totaled

approximately $2 million.

During meetings over the following two weeks, priority projects

obligating $1million per island were chosen for funding through

cooperative agreements. Financial assistance awards under the

agreements were issued October 26, 1984.

It is the Secretary's position that the 1983 Act trust and transfer

of property constituted the entirety of the Federal government's

responsibility to promote and foster an enduring economy on the

Pribilof Islands under the Fur Seal Act. The Secretary finds no

additional law, regulation, agreement or implied duty to continue the

repair and maintenance of homes or facilities on the Pribilof Islands.

(B) Failed Transition

These claims assert that the transition from a sealing-based

economy to one independent of sealing has failed as a result of

improper or insufficient government support during phase-out. Examples

of claims include assertions that the Federal Government defaulted on

harbor construction, that the government caused undue economic and

social hardship by infringing on Pribilovian rights to engage in

commercial harvest of seals during transition, that the government

failed to provide income maintenance through the period of transition,

and that the Department failed to properly administer the transition.

It is the opinion of the Secretary that the trust served its

purpose to St. Paul most effectively. Accordingly, it is the opinion of

the Secretary that the transition of the City of St. Paul to an

independent economy has been successful and that any claims to the

contrary are without sufficient basis.

Section 1166(d) of the 1983 Act provided that the trust authorized

could be divided based on the goals and objectives of the Pribilovian

people. That split was not mandatory, but was chosen by the people of

St. George despite practical realities and evidence that a self-

sustained existence was practically impossible given the island's harsh

climate and inhospitable geography.

Evidence indicates that the establishment of a self-sustaining

economy on St. George is an unrealistic venture. It is the Secretary's

opinion that an in-depth evaluation of the possibility of achieving

self-sufficiency is warranted with regard to the Island, but is beyond

the scope of this Report. Accordingly, the Secretary recommends that an

independent economic and cost analysis be undertaken to assess the

viability of continued public support.

(C) Real Property Claims

These claims relate to the distribution of real property under

ANCSA, the 1983 Act and accompanying TOPA and subsequent private

agreements between entities redistributing their allotments. In sum,

the claims collectively seek a complete redistribution of property

amounting to a total abrogation of all that has been accomplished under

pre-existing legislation and associated agreements. It is the

Secretary's opinion that the real property transfers required have

been, or are being, fulfilled in accordance with law and that the real

property claims are without merit. The

[[Page 18327]]

history and status of land transfers on the Pribilof Islands by the

federal government follows.

A Memorandum of Understanding (MOU) dated December 22, 1976, by and

among NOAA, on behalf of the Department of Commerce, St. George Tanaq

Corporation, and Tanadgusix Corporation, was instituted to resolve

conflicts concerning land ownership on the Pribilof Islands, under

ANCSA. The MOU identified 47 tracts of land to be retained in federal

ownership by the Department on the islands of St. Paul and St. George.

Page 3, paragraph (1) of the MOU identified these tracts as ``* * *

land and any improvements thereon to be retained in fee simple by the

Federal Government as the smallest practicable tracts enclosing land

actually used in connection with the administration of a Federal

installation, within the meaning of Sec. 3(e)(1) of ANCSA, 43 U.S.C.

1602(e)(1).'' The MOU thereby constituted a Section 3(e) determination

of the Department of Interior, as defined by ANCSA, designating federal

lands withdrawn from selection under ANCSA, to be retained by the

Department of the Commerce.

Section 205(a) of the 1983 Act authorizes the Secretary of Commerce

to transfer real and personal property held by the Department of

Commerce on the Pribilof Islands, ``[p]rovided, [t]hat such property is

specified in a document entitled `Transfer of Property on the Pribilof

Islands: Descriptions, Terms and Conditions,' . . . .'' (Emphasis in

original.) Section 205(b) further sets forth the contents of the TOPA.

Under authority of the 1983 Act, negotiations were conducted and

agreement was reached between the Department of Commerce, the

Tanadgusix and St. George Tanaq Corporations, the City of St. Paul, the

City of St. George, the Aleut Community of St. Paul, the Aleut

Community of St. George and the State of Alaska on properties

previously retained by the Department of Commerce under ANCSA to be

transferred by the Secretary to the other parties. The TOPA was

executed on February 10, 1984.

To date, nearly all of the transfers specified in the TOPA for

properties on the Island of St. George have taken place. Actual

transfer of title to the properties was performed through the

Department of the Interior's Bureau of Land Management (BLM). The

transfers were effected through BLM based on that agency's experience

in conveying Federal lands under ANCSA and its resources, including

surveying, available for the job.

Most of the parcels on the Island of St. Paul to be transferred

under the TOPA were surveyed by the BLM in 1983. Additional survey work

was conducted by BLM in 1993 and 1994. However, the legal descriptions

of some of the properties are not yet adequate for transfer to occur

and some additional survey work may be required in 1997 to complete the

descriptions.

The Department will continue to work with the Alaska office of BLM

in Anchorage in order to effect the conveyance of title to the native,

municipal and state entities on St. Paul as expeditiously as possible,

in fulfillment of the TOPA.

Section 205(d) of the 1983 Act requires that, within sixty (60)

days of the transfer of property under TOPA, the Secretary transmit a

report to the appropriate Senate and House committees stating the fair

market value of the real and personal property conveyed, as of the date

of conveyance. The Department will timely request that the General

Services Administration, or a contractor qualified to provide property

appraisals, perform a property valuation survey of the St. Paul

property to be transferred, to ensure that the fair market value report

will be ready for transmittal to the Congressional committees within

the 60-day deadline.

(D) The Trust

These claims relate to assertions that the 1983 Act trust was

insufficient, improperly administered, misused or generally

misunderstood. It is the opinion of the Secretary that the trust

responsibilities set forth in the 1983 Act were properly executed by

NOAA, that the trust purposes were effectively met with the funds

appropriated, and that all steps were taken to ensure that the trust

was fully understood by the Pribilovian communities. Accordingly, it is

the opinion of the Secretary that all allegations suggesting that the

trust was misused or poorly administered by the government are without

merit.

The 1983 Act created a $20 million trust (``the Trust'') to ``--

promote the development of a stable, self-sufficient enduring and

diversified economy'' on the Pribilof Islands. 16 USC section

1166(a)(1). The objective of the Trust, as stated throughout

Congressional hearings on the topic, was to end Federal administration

of the Pribilof Islands. It was a logical and sequential step following

the 1966 Act which took the initial step toward Federal phase-out by

promoting municipal self-governance by the Pribilovian people.

Under the 1983 Act, responsibility for establishing and

administering the Trust was given to the Secretary of Commerce. 16 USC

1166(a). To effectuate trust responsibilities, Congress directed that

at least one trust instrument be established by the Secretary to

address matters relating to standards and procedures associated with

the Trust. 16 USC 1166(c). Additionally, Congress provided that the

trust appropriation could be divided between the two Islands and that

two separate trust portions could be set up under the original trust

instrument to reflect individual Island goals and objectives. 16 USC

1166(d). To effectuate St. George's desire for autonomy, the Trust was

bifurcated and two additional documents were created, the St. Paul

Trust Agreement and the St. George Trust Agreement. These documents

governed the duties, obligations and rights of the Trustor, the St.

Paul and St. George Trustees, and all beneficiaries under the

respective trusts.

The primary trust instrument (hereinafter ``the Master Trust

Agreement'') was signed on November 21, 1983. As stated in Article II,

the purpose of the Master Trust was:

``__to promote and foster the transition on the Pribilof Islands

of St. Paul and St. George from welfare and sealing economies to

stable, self-sufficient, enduring and diversified economies. Such

purpose includes but is not limited to the provision of basic and

essential human services * * *''

The St. Paul Trust Agreement was signed March 14, 1984. The

designated Trustee was Mr. Jay Gage. The St. George Trust Agreement was

signed March 27, 1984. Peter D. Hocson was designated Trustee on July

18, 1984.

Varying only in minor detail, both Trust Agreements established the

appointment of a Trust Advisor responsible for recommending

distributions from the Trust. The Advisor was to be appointed by the

Secretary and was to be an entity located and functioning on the

Islands, which, in the opinion of the Trustor, was knowledgeable

concerning the Islands' economies and needs, and which could adequately

represent the interests of the Pribilovians. It was the duty of the

Advisor to provide written recommendations to the Trustee specifying

the projects or uses to which distributions from the trusts should be

made.

Throughout the administration of the Trusts, both Islands had local

representatives as Advisors. The Advisors chosen were, for St. Paul,

the City Manager and for St. George, the Mayor and their respective

staffs. These entities were chosen based on their status as City

leaders and their understanding of the needs of their people.

[[Page 18328]]

The Trustee's obligations under both trust agreements were to

invest the Trust and to direct disbursements. Unless the Trustee was

qualified at investment functions, an Investment Advisor was to be

consulted prior to Trust investments. With regard to disbursements, the

Trustees were responsible for evaluating each Advisor's

recommendations. The Trustees were to approve the Advisor's

disbursement recommendations unless they determined that the projects

or uses set forth in the Advisor's Recommendation were not consistent

with the purposes of the Trust or would not best achieve the goal of

furthering the trust purposes. In determining that the proposed use was

not in the best interest of the purposes of the trust, the Trustees

were granted sole discretion as the ultimate fiduciaries of the trusts.

The Trustees were also responsible for providing annual reports to the

Secretary and Congress regarding the use of the Trusts and progress

being made.

As Trustor, the Secretary's roles and responsibilities were limited

to establishment and oversight of the Trust, including the authority to

remove the Trustee if warranted, and selection of the Trust Advisors.

Both the St. Paul and St. George Trust Agreements contained

automatic termination clauses effective 10 years after initiation

unless extended by consent of all parties. The St. George Trust was

terminated in the Spring of 1994. At termination, the trust corpus had

been fully distributed. The St. Paul Trust was terminated in the Spring

of 1994, with the exception of the distribution of final assets from

the sale of an interest in the fishing vessel Northern Eagle

consummated in December 1996.

It is the opinion of the Secretary that the Federal Government's

responsibilities under the 1983 Act to establish and oversee the Trust

have been completed in accordance with law. Accordingly, it is the

Secretary's opinion that the claims asserted regarding administration

of the trust are without merit. With regard to the sufficiency of the

Trust, it is the opinion of the Secretary that the success of St. Paul

evidences that sufficiency.

(E) Fisheries Issues

The communities of St. George and St. Paul have expressed the

opinion that the fishery resources surrounding the Pribilof Islands

should be set aside for their exclusive use, and that NMFS

inappropriately allocated fisheries resources surrounding the Pribilof

Islands to offshore fleets through the Inshore-Offshore program and to

other Community Development Quota (``CDQ'') communities through the CDQ

programs.

In a May 29, 1996 legal opinion, NOAA General Counsel concluded

that the 1983 Act did not create any specific fishing privileges for

the residents of St. George or St. Paul, and that the North Pacific

Fishery Management Council (``the Council'') and Secretary have

provided fishing opportunities to the Pribilovians through the CDQ

programs. The NOAA General Counsel legal opinion regarding these issues

can be found at Exhibit 12. In essence, the CDQ programs have been

administered by NOAA without privilege or prejudice to any native

entity or tribe. The Pribilovians are no exception to this rule. The

fisheries program in the Bering Sea is administered as follows.

The U.S. groundfish fisheries of the Bering Sea and Aleutian

Islands Management Area (BSAI) in the exclusive economic zone (EEZ) are

managed by the Secretary pursuant to the Fishery Management Plan (FMP)

for groundfish in the BSAI. The FMP was prepared by the Council

(Council) pursuant to the Magnuson-Stevens Fishery Conservation and

Management Act (Magnuson-Stevens Act) at 16 U.S.C. 1801, et seq., and

is implemented by Federal regulations at 50 CFR part 679. General

regulations that also pertain to U.S. fisheries are codified at 50 CFR

part 620.

(1) Pollock CDQ Program

The pollock CDQ program was developed by the Council as part of

Amendment 18 to the BSAI FMP (the Inshore-Offshore program). The final

rule implementing Amendment 18 (57 FR 23321, June 3, 1992) allocated

pollock for the CDQ program only for a temporary period from 1992

through 1995. The amendment allocated seven and one-half percent of the

Bering Sea pollock Total Allowable Catch (TAC) to a Bering Sea pollock

CDQ reserve, plus seven and one-half percent of the Aleutian Islands

pollock TAC to an Aleutian Islands CDQ reserve. Eligible Western Alaska

communities could apply for CDQ allocations from the pollock CDQ

reserves by submitting a Community Development Plan (CDP) to NMFS.

Regulations (57 FR 54936, November 23, 1992) implemented the pollock

CDQ program for 1992 and 1993 by specifying the process for applying

for a CDQ allocation and the required contents of the Community

Development Plans (CDPs). A subsequent regulatory amendment (58 FR

32874, June 14, 1993) implemented the pollock CDQ program for 1994 and

1995.

The Council recommended re-authorizing the pollock CDQ program in

the BSAI for an additional 3 years as part of Amendment 38 to the BSAI

FMP, and NMFS approved this amendment on November 28, 1995. Regulations

implementing the pollock CDQ program for 1996 through 1998, were

published on December 12, 1995 (60 FR 63654, corrected 61 FR 20,

January 2, 1996).

The CDQ program was developed to provide the eligible CDQ

communities with a means for starting or supporting commercial

fisheries business activities that will result in an ongoing,

regionally based, commercial fisheries-related economy. Both St. George

and St. Paul are eligible communities under the pollock CDQ program,

and have participated and benefited from the CDQ program since its

establishment in 1992. St. George is a member of a CDQ group named the

Aleutian Pribilof Island Community Development Association (APICDA),

which includes the communities of Atka, False Pass, Nelson Lagoon,

Nikolski, and St. George. APICDA was allocated 18 percent of the

pollock CDQ reserves for 1992 through 1998.

St. Paul is the sole member of the CDQ group named the Central

Bering Sea Fishermen's Association (CBSFA). CBSFA was allocated ten

percent of the pollock CDQ reserves for 1992 and 1993, eight percent of

the reserves for 1994 and 1995, and four percent for 1996 through 1998.

A description of the CDQ projects that benefit St. George and St. Paul

through APICDA and CBSFA activities can be found at Exhibit 13.

(2) Halibut and Sablefish CDQ Program

St. George and St. Paul also participate in the halibut and

sablefish CDQ program. However, the Council's authority to manage

halibut is not derived from an FMP as is the case with pollock and

sablefish. The domestic fishery for halibut in the BSAI is managed by

the International Pacific Halibut Commission (IPHC) as provided by the

Convention between the United States and Canada for the Preservation

for the Halibut Fishery of the Northern Pacific Ocean and the Bering

Sea (Convention), and the Halibut Act. The Convention and the Halibut

Act authorize the Council to develop regulations that are in addition

to, but not in conflict with, regulations adopted by the IPHC affecting

the U.S. halibut fishery. Under this authority, the Council may

develop, for approval by the Secretary of Commerce, limited-access

policies for the Pacific halibut fishery in the BSAI.

[[Page 18329]]

The Council proposed adding the halibut and fixed gear sablefish

(H/S) fisheries to the CDQ program beginning in 1995, as part of the

Individual Fishery Quota (IFQ) program. The IFQ final rule (58 FR

59375, November 9, 1993) implemented the H/S CDQ program with no

expiration date. St. George and St. Paul are the sole participants in

the CDQ group named Pribilof Island Fishermen (PIF), for the purpose of

harvesting a halibut CDQ allocation. For 1995 through 1997, PIF has

been allocated 50 percent of the halibut that is available in IPHC area

4C. For 1995, this amounted to 385,000 pounds of halibut. Halibut CDQ

harvest in St. George and St. Paul is accomplished by the small local

fishing fleet, and the halibut are sold to local shoreside processors.

Therefore, the benefits from the halibut CDQ fishery in the Pribilof

Islands accrues directly to the local residents.

The community of St. George participates in the sablefish CDQ

program through APICDA. APICDA has been allocated 10 percent of the

Aleutian Islands sablefish CDQ reserve for 1995 through 1997. The

benefits to St. George resulting from participation in the sablefish

CDQ program are described in APICDA's H/S CDP, which is available from

the NMFS Alaska Regional Office (907-586-7228).

It is the opinion of the Secretary that no special or exclusive

fisheries rights have been created for the Pribilovian people under the

1983 Act, the Magnuson-Stevens Act, or any other law or regulation. It

is the further opinion of the Secretary that the Federal government has

properly and legally implemented the requirements of the Magnuson-

Stevens Act, the 1983 Act and all applicable and associated

regulations. Accordingly, the Secretary finds the communities' requests

for specific performance and monetary damages without merit.

(F) Seals and Rookeries

These claims involve complaints and requests regarding subsistence

fur seal harvest and the continued management of the fur seal rookeries

by NOAA, and suggestions from the St. Paul Stewardship Program for the

overall protection of the ecosystems of the Pribilof Islands in a

balanced and integrated fashion.

The Pribilof Islands are a world-class special reserve established

to ensure the conservation and protection of the northern pacific fur

seal and other wildlife species. Perhaps the single most important

aspect of the Islands is their use as the primary breeding and pup

rearing habitat of the northern fur seal. The Fur Seal Act (``the 1983

Act''), Marine Mammal Protection Act, (``MMPA'') 29 and the

Endangered Species Act (``ESA''),30 and their implementing

regulations all require a significant commitment from NOAA for the

protection, conservation and management of marine mammal species

dependent on the Pribilof region.

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\29\ 16 U.S.C. 1361 et seq.

\30\ 16 U.S.C. 1531 et seq.

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On June 17, 1988, NMFS declared the Pribilof Island's stock of

northern fur seals depleted under the MMPA. Amendments to the MMPA

enacted November 23, 1988 (Public Law 100-711) directed the Secretary

of Commerce to develop a conservation plan on northern fur seals

``conserving and restoring the species or stock to its optimum

sustainable population'' (``the Plan''). The Plan was finalized and

approved by the Assistant Administrator for Fisheries in June, 1993. It

serves as the guide for those activities believed necessary to restore

the northern fur seal to pre-depleted levels.

The broad-based objectives of the Plan in achieving pre-depletion

goals are (1) to conduct extensive research on the health, mortality,

physiology, sociology, and habits of the seals and the effects of

disturbances to their habitat and the Pribilof ecosystem; (2) to assess

and avoid or mitigate possible adverse effects of human-related

activities on or near the Pribilof Islands and on other habitat, and

(3) to enforce existing regulations.

Under the Plan, the efforts of the Agency must be coordinated with

the Aleut communities and other resource management agencies and user

groups on each island. Conversely, whenever any significant activity is

proposed, planned or contemplated by the community or any other group,

NMFS input should be obtained to ensure that the actions will not

jeopardize the seals or damage their habitat.

Examples of NMFS coordinated efforts to prevent negative impacts on

the Pribilof fur seal herd and the Bering Sea ecosystem include working

with EPA to develop Clean Water Act Section 402 discharge permits that

will reduce the impact of seafood processing wastes in local waters;

working with the Coast Guard to promote their presence during heavy

fishing seasons, and assisting the Department of Interior with its rat

control program. With regard to coordination with the local community,

NMFS has hired local residents to patrol the rookeries to minimize

disturbance, encouraged the establishment of co-management bodies such

as the Aleut Fur Seal Commission, and participated in St. Paul's

Interagency Work Group established to coordinate economic growth and

development and joint use of island property.

In the path of overwhelming growth on St. Paul Island resulting

from the mandates of Title II of 1983 Act, NMFS' mission of protecting

the Island's resources under Title I of the Act and the MMPA is growing

increasingly difficult. With limited resources, the program faces the

potential inability to effectively monitor and provide input and

guidance on the multitude of plans for development on the Island. The

difficulty that NMFS faces in carrying out the directives of the Plan

are exacerbated by the demands of the local leadership to support

continued growth under the alleged 1983 Act authorities of Title II.

That the tenor of these requests is adversarial further restrains the

Agency's goals of effective coordination among Island entities.

Ironically, the insistence of the Pribilovian people for NOAA's ongoing

commitment to provide economic growth ultimately stands to effectively

impede and interfere with the Agency's statutory responsibilities to

manage the fur seal reserves.

NOAA values the environmental knowledge of the indigenous people of

the Islands and is committed to continued coordination and the sharing

of experience that will help to achieve a balance in the use of the

Islands' natural resources. Toward this end, the Agency appreciates the

Stewardship Program's comments and supports many of the concepts

presented. NOAA looks forward to resolution of the issues underlying

this Report so that viable coordination amongst all entities can be

achieved.

With regard to claims that the fur seal subsistence harvest is

improperly or unfairly administered, it is the opinion of the Secretary

that the program is being conducted properly and legally under the

regulations implemented under section 105(a) of the 1983 Act.

(G) Retirement Benefits

The Pribilovian people have asserted that the Federal Government

has failed to provide sufficient retirement benefits, has improperly

credited those benefits, or has otherwise failed to inform the people

of their benefits.

The first Federal retirement benefits were granted the Pribilovians

in 1950 under the cash compensation and wage plan instituted by the

Department of Interior. Under that system, full time Federal employees

engaged in the commercial fur seal harvest or in support services

received retirement

[[Page 18330]]

benefits for work conducted from 1950 forward. Under the Bartlett Act

of 1966, the retirement benefits bestowed in 1950 were expanded to

include compensation for work performed prior to 1950. Deposit

requirements to accrue pre-1950 benefits were not required.

The provisions of the 1983 Act significantly enhanced and expanded

retirement benefits to the Pribilovian people by extending benefits to

all Pribilovians who had worked for the Federal Government, regardless

of whether they had previous coverage under the Civil Service

Retirement System (``CSRS'') (e.g., temporary or seasonal). These

benefits were granted only to those employees who were on the rolls of

the Federal government on October 28, 1983, and who transferred without

a break in service to one of the six Island entities (The Cities of St.

Paul and St. George, the village corporations, and the IRA councils).

The intent of the Act was to provide continuity of retirement benefits

to those Pribilovians who met this criteria.

For entity employees to be eligible for extended, full-time

benefits, Pribilovian individuals only had to have worked one day in

any calendar year to receive retirement credit for the entire year.

This one day system is both unique and generous. To balance the

inequities posed to pre-1983 retirees with part-time, seasonal, and

temporary service, their benefits were recalculated to give them full-

time credit to enhance their annuities.

In September, 1983, representatives from the NOAA's Western

Administrative Support Center's Human Resources Division (``HRD''), the

Pribilof Program Office of NMFS and participating island entities

negotiated a memorandum of understanding (``MOU'') explaining the Act

and establishing the process by which the program would be

administered. (A copy of the MOU is attached as Exhibit 14.) Under the

MOU, the entities agreed to maintain pay records of each employee

entitled to the transfer of federal employee benefits and to forward

this information to HRD together with a check for the amounts withheld

from the employees' pay. The entities also agreed to provide matching

funds for benefits. HRD agreed to maintain all records of the

employees, to annually certify a master list of eligible employees, to

serve as the liaison between the entities and the Office of Personnel

Management (``OPM''), and to serve as the point of contact regarding

all Federal personnel issues.

In October 1983, HRD and NMFS representatives spent several weeks

on the Islands explaining the new provisions and their impacts to

participating employers. They also assisted the entities in setting up

their reporting systems to ensure that they would comply with and

implement the Act.

In 1984 HRD staff and a retirement program manager from OPM

returned to the Islands to explain the provisions of the Act and the

process for implementing it to the general public. Meetings were held

with residents on both islands. Teleconferences were conducted to

inform off-island recipients.

At OPM's request, HRD returned to the Islands in 1985 to work with

the entities to ensure that all annuity and survivor paperwork was

correctly completed and submitted for recomputation purposes. Since

that time, the MOU continues to work effectively as written.

During NOAA's visit to the Islands in June, 1996, many individuals

questioned the Agency's calculation and crediting of benefits. A list

of individual complaints was subsequently investigated by HRD. HRD

found no instances of improper crediting of retirement service nor any

errors in other benefits calculations. To alleviate specific concerns,

HRD contacted all individuals with specific questions by telephone.

HRD is scheduling a trip to the Islands in the Spring of 1997 to

re-explain the retirement benefits. In the meantime, HRD continues to

resolve benefits issues on an individual, needs-based basis.

(H) Environmental Clean-up

Public Law 104-91 section 3(a) directs that the Secretary ``* * *

cleanup landfills, wastes, dumps, debris, storage tanks, property,

hazardous or unsafe conditions, and contaminants * * *'' on lands

previously owned and administered by NOAA. In addition, the Secretary

is responsible under section 120 of the Comprehensive Environmental

Response, Compensation and Liability Act (``CERCLA'') for the

assessment and remediation of hazardous wastes on any property to be

transferred.

In the summer of 1989, the Alaska Department of Environmental

Conservation (``ADEC'') issued a Notice of Violation against NOAA as a

result of a small oil spill at the Salt Lagoon on St. Paul Island.

Investigations ensued, the site was boomed, and, over time, the seep

was abated. As a result of the incident, TDX notified NOAA that it was

concerned about potential environmental compliance issues on property

being transferred to them under the TOPA. Initial concern surrounded

the underground storage tanks at the gas station and at the power

plant. General concern was later expressed about leaking drums and

potentially contaminated soil. Although all property transfers had been

completed on St. George, public leaders there voiced similar concerns

about property on their island.

In 1992, the United States Environmental Protection Agency

(``EPA'') undertook a preliminary investigation of St. Paul and St.

George to assess potential contamination and liability under the

Comprehensive Environmental Response, Compensation and Liability Act

(``CERCLA'') and the Resource Conservation and Recovery Act (``RCRA'').

EPA determined that site conditions on St. George warranted no further

action and proceeded with an expanded site investigation on St. Paul.

In November, 1994, EPA issued its finding that no contamination posing

a risk to human health or the environment under Federal law existed on

St. Paul. Accordingly, the Agency issued a second ``no further action''

determination.

Despite the EPA's findings, island entities continued to allege

that the United States government had caused and created island-wide

hazardous waste contamination. In response to these ongoing

allegations, NOAA approached ADEC to negotiate a Two-Party Agreement

which would address cleanup of all potential contamination on the

island. The Two-Party Agreement was signed on January 26, 1996. (A copy

of the Two-Party Agreement is attached as Exhibit 15.) Its four corners

effectively establish the basic framework, cleanup objectives and time

lines for NOAA's environmental cleanup of the islands. To date, no

ongoing sampling has revealed contamination posing a threat to human

health or the environment. The majority of work under the Agreement

focuses on the removal of solid waste and debris, and on the closure of

existing landfills.

P.L. 104-91 defines cleanup activities to be achieved under section

3(a) to mean the planning and execution of remediation actions for land

described under the law and the redevelopment of landfills to meet

statutory requirements.31 With the exception of the sealing

plant stabilization, the

[[Page 18331]]

cleanup obligations of section 3(a), including activities related to

the landfills are being met under the terms of the Two-Party Agreement.

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\31\ In the Department of Commerce and Related Agencies

Appropriations Act, 1996, Public Law 104-134, a portion of the

Department's 1996 $10 million appropriation for cleanup was intended

for stabilization of the historic sealing plant on St. George (see

H. Rep. No. 104-378, explanatory statement at p. 132).

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In response to the directives of section 3(d) of Public Law 104-91

requiring, to the maximum extent practicable, the use of local hire to

effect cleanup, the Department published a notice of availability for

Federal assistance in the Federal Register on May 22, 1996. The notice

solicited applications from local entities and residents and explained

the selection process.32 Priority was given to those

projects that were defined in the Two-Party Agreement. To assist the

Pribilovians, the Department also held meetings on the Islands to

explain the grants process. The Department also held a workshop in

Anchorage, Alaska, to provide instruction to interested parties on

preparing the required Federal forms.

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\32\ 61 Fed. Reg. 25632 (May 22, 1996).

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As a result of the solicitation, two cooperative agreements were

implemented with local entities to promote the use of local hire in

achieving cleanup as directed by section 3(d) of PL-104-91. The

agreements, totaling over $5 million, were executed between NOAA and

Tanaq on St. George and the joint venture of Bering Sea Ecotech (a TDX

subsidiary) and Bristol Environmental Corporation on St. Paul. Both

agreements require the removal of surface debris (vehicle hulks and

other assorted solid waste) and the excavation of abandoned underground

fuel storage tanks (``USTs'') and associated petroleum contaminated

soils. Work under the cooperative agreements is being conducted

pursuant to the Two-Party Agreement and is expected to be completed by

June, 1997 on St. George and September, 1997 on St. Paul. All field

work under the Two-Party Agreement is expected to be completed by the

close of FY 1998. The Department also intends to fund an award to

stabilize the sealing plant on St. George Island upon receipt of an

acceptable proposal from any local entity or resident of the Islands.

Other cooperative agreements may also be executed for additional

projects identified in the Two-Party Agreement and other projects

authorized under P.L. 104-91, as the Secretary determines necessary.

The State of Alaska has agreed that satisfaction of the terms of

the Two-Party Agreement will entitle NOAA to certification from ADEC

that all necessary and required work to ensure compliance with

environmental laws has been met. Moreover, completion of work

associated with the landfills and stabilization of the sealing plant

will result in satisfaction of the Secretary's obligations under P.L.

104-91.

Section 3(c)(2) of P.L. 104-91 requires the Secretary to include in

this Report the estimated costs for conducting necessary actions to

resolve Federal responsibility on the Islands. Congress has

appropriated $20.1 million for Pribilof Island activities. Total

project costs under the Two-Party Agreement are estimated to range from

$21.1 to $25.5 million (which includes up to $3.4 million contingency

to accommodate uncertainties associated with unforeseen site conditions

during remediation, variable work seasons based on weather conditions,

and the availability of skilled workers). The FY 1998 budget request

includes no new funds for the Pribilof Islands cleanup. Any

requirements above currently available funds would be accommodated with

funds requested for NOAA in the President's FY 1998 budget.

Further, based on guidance provided by Congress, at least $2.7

million is needed for stabilization of the sealing plant and activities

related to landfills under P.L. 104-91. Should additional projects be

required under P.L. 104-91, or as a result of this Report, funds above

$2.7 million will be required. Funding for P.L. 104-91 projects is not

included in the $20.1 million appropriated for Pribilof Island

activities to date.

With the exception of ongoing administrative costs associated with

processing retirement benefits and completing property transfers under

the TOPA, these costs constitute the entirety of funds required to

finalize current Federal responsibilities on the Islands.

(I) Public Law 104-91 Process

Representatives of the Pribilovians have alleged that the process

for input to this Report has been unfair in that inadequate notice and

funding was provided to permit a timely response.

Section (3)(c) of Pub. Law 104-91 directs the Secretary of Commerce

to prepare this Report proposing necessary final actions to resolve

Federal responsibility on the islands and to include the ``statements

of claims of local entities and residents.'' A description of the

Report purpose and process were set forth in explicit detail, including

an approved form for submission of statements, in the Federal Register

on April 30, 1996. A copy of the Federal Register Notice together with

a letter explaining the notice was sent to every resident of the

islands on April 29, 1996. (The letter and Federal Register notice are

included as Exhibits 15 and 16.)

As set forth in the Federal Register notice, local entities and

residents were initially given three months to submit their statements.

In April, 1996, local entities and residents sought and obtained an

extension for preparation of the Report and for their submission of

claims. As a result, the deadline for submission of statements was

extended from July 6, 1996 to October 6, 1996 and final Report

submission was moved to January 6, 1997. Notice of the extension was

provided through a televised public meeting on the Islands in May,

1996. To accommodate an extremely tight turn around and the practical

difficulties of coordinating the Report through several agencies over

the holiday season, NOAA requested and obtained two additional 30 day

extensions for the Report. Notice of these extensions were provided

counsel to the local entities and in no way prejudiced the rights of

local entities or residents.

In the course of preparing the Report, NOAA personnel conducted

five public meetings on the Islands. In addition, NOAA personnel

conducted informal meetings at the Community Elder Center and at the

TDX annual shareholder's meeting. NOAA also conducted several impromptu

meetings during their visits at the request of island leaders. Written

notice of the formal meetings were provided to all residents. The first

formal meetings, conducted in May, 1996, explained the Report purpose

and process. The second formal meetings, in June, 1996, provided for

the taking of oral statements of local residents. The final formal

meeting in October, 1996, summarized the submissions made by local

entities and residents.

It is the opinion of the Secretary that the Department provided

timely notice and opportunity to submit statements and that the P.L.

104-91 process was executed in compliance with all applicable

principles of due process.

V. Summary and Final Recommendations

The legislation directing this Report resulted from ongoing

discussion between NOAA and representatives of the Islands regarding

the responsibility of the Federal Government to continue to provide for

and guarantee the future of the Pribilovian people. Unable to

articulate specific legal claims or otherwise establish a basis for

continued appropriations through negotiations with NOAA in 1996, this

report mechanism was introduced by the Pribilovian representatives to

give voice to those issues perceived to be

[[Page 18332]]

inhibiting the Pribilovians' ability to arrive at a self-sustaining

economy.

It is the opinion of some of the Pribilovian people that the

Federal Government has not concluded its obligations to the Pribilovian

people. It is the Secretary's opinion that the Federal Government has

fulfilled, or is in the final stages of fulfilling, all obligations to

the Pribilovian people as directed by Congress through legislation

enacted over the last 50 years.

At least one-third of the claims submitted for this Report express

dissatisfaction with the way land or the 1983 Act trust has been

controlled, used or distributed by a competing island entity. An equal

number of claims allege the past or present failure or unwillingness of

the Federal Government to act to resolve these disputes. As this Report

is being written, both TDX and the City of St. Paul have initiated

separate lawsuits against the Secretary of Commerce and the Under

Secretary of NOAA to resolve a land dispute previously resolved in two

distinct settlement agreements. (A copy of the complaints filed are

attached as Exhibits 5(a) and 5(b)).

After several visits to the Islands by NOAA and Department

personnel, including meetings for the taking of the statements of the

local people, and as a result of an analysis of the claims submitted,

it is the opinion of the Secretary that these claims are without

adequate foundation in law, or under any existing policy or agreement.

The debate over administration of ongoing Federal obligations is

also detracting from the Department's ability to meet its

responsibilities under Title II of the 1983 Act. As the Federal agency

responsible for protecting the welfare and habitat of the fur seal

under Title I of the 1983 Act, a role as provider of indefinite and

ongoing support for economic (e.g., commercial) development under Title

II creates an internal paradox. Any interpretation that Title II of the

1983 Act guaranteed the Pribilovian people an unrestrained and

indefinite economy administered through the Department is at odds with

the clear intent of the Act and places the Department in an untenable

and incommensurable position. The depleted status of the fur seal

demands that the Department be permitted to pursue statutory

obligations goals unfettered.

Conditions on St. George are widely divergent from those on St.

Paul and the Secretary recognizes the difficulty of assessing the

struggles of one entity in the shadow of another's success. To ensure

that due consideration is given to the entirety of the Pribilovian

question, the Secretary recommends that Congress authorize and direct

an independent economic assessment of the practical realities facing

the Island of St. George. The Secretary further suggests that such

analysis be undertaken within the parameters of a clearly articulated

economic objective. The Department is unable to estimate the costs of

this analysis.

The Secretary also recognizes that the opinions and positions

presented in this Report will not be widely accepted by those entities

and residents who submitted statements. We do not believe that it was

Congress' intent that the P.L. 104-91 process be used as a claims

process representing potential lawsuits against the United States

government. As set out in the Federal Register notice commencing this

process (attached as Exhibit 17), it was not the intent of the

Secretary that this Report serve as a claims process. Despite repeated

attempts to dissuade the claims concept, the Pribilovian people adhered

to it. It is the Secretary's view that section 3(c) is best understood

as encompassing ``claims'' associated with Pribilof Island land

transfers and grants and cooperative agreements to promote

environmental cleanup. It seems clear that, regardless of Congressional

intent, the larger, well-supported Island entities will persist in

pursuing claims against the United States and the Department. To

minimize the extensive and consuming administrative and transactional

costs associated with the defense of these potential claims, the

Secretary recommends that Congress establish a claims process to be

administered through the United States Court of Federal Claims.

The Department is unable to predict how many of the 85 potential

claims that have been raised under the P.L. 104-91 process will be

actively pursued by Pribilovian representatives in a formal,

adjudicative setting. The Department is therefore unable to estimate

the costs of this recommendation.

This Report was signed by the Secretary of Commerce on March 17,

1997.

Dated: April 1, 1997.

Terry Garcia,

Assistant Secretary for Oceans and Atmosphere, National Oceanic and

Atmospheric Administration.

[FR Doc. 97-9586 Filed 4-14-97; 8:45 am]

BILLING CODE 3510-22-F