becomes a State. Now is the best time to obtain liberal treatment for the citizens of Alaska.

Senator ANDERSON. I wish Senator Cordon were here to comment on that, as far as this section is concerned, but if we go to section (j) on page 14, which is we cut, incidentally, the old provision (i) which provides the Federal Government to keep a sort of accounting of the proceeds of the fisheries-we did come to this section (j). Section (j) was not in any of the original bills, but the Department of the Interior was asked to prepare a sort of schedule under which this might become effective. They presented a schedule which stated that all lands authorized to be granted in quantity to the State of Alaska by this act shall be selected by the State in such manner as its laws may provide, and in conformity with such regulations and subject to such supervision as the Secretary of the Interior may prescribe.

This has been pretty substantially changed to say, "any lease, license, or contract"-I believe this is section (k). Then it is not (j) that we are so worried about here as it is (k). In section (j) there was a provision that wiped out the veterans' preference, and we put that back in because it did seem desirable that veterans should have a chance to settle in Alaska if they wanted to.

The (k) provision, which now becomes (j), the old (k) provision said that no lease, permit, license, or contract-I am skipping some language-shall have the effect of withdrawing the lands subject thereto from selection by the State of Alaska. It was our feeling on this that the existing leases that were granted would not be subject to selection by the State because you would get into pretty difficult provisions. They do not cover a tremendous area, but there are existing coal leases where there has been development, and where people have expended money under the Coal Leasing Act, under its provisions, and it seemed that those lands might be left as they are.

Then we said if you left those as they are, we would add a sentence that

All grants made or confirmed under this act shall include mineral deposits. The grants of mineral lands to the State of Alaska under subsections (b) and (c) of this section are made upon the express condition that all sales, grants, deeds, or patents for any of the mineral lands so granted shall be subject to and contain a reservation to the State of all of the minerals in the lands so sold, granted, deeded, or patented together wtih the right to prospect for, mine, and remove the same.

This relates only to mineral lands, at the time the patent is issued. If there is an area not known to be mineral and selected by the State, and patents issued on it, the State has complete patent on that.

There is a great deal of land that is known to be mineral or believed to be. There is an area with oil leases already made upon it, and it would seem that just as is the case of Colorado, Utah, Nevada, California, New Mexico, Arizona, in those areas the Federal Government has retained that domain, and has given the State a percentage of the leases. The State would get its percentage of the lease money from all those lands, but all the other lands, the 100 million acres of land would be open for selection, and the State would get the mineral on every bit of it, but they could not just go out and make disposition of it.

It is a pretty hard thing, I think, for a State coming in that would have a little more than one-sixth of all the area of the United States

to suddenly decide what its leasing policy was going to be, and how it was going to handle these various resources. As you know, when a State comes into being, there is a period of what I might class temptation for folks to rush in and get control of a political office, and it seemed worthwhile to preserve the rights to these minerals so that the State could take its time in deciding what a proper policy might be.

The CHAIRMAN. Do you not think, Senator Anderson, if the committee should adopt the policy that I suggest however, that it might be a little easier to get situations corrected in New Mexico, Utah, and Arizona, and the other Western States that are so largely held now by the Federal Government?

Senator ANDERSON. All I would say is that if we had the same policy there that is being suggested for Alaska, we would not have anything to save in New Mexico, because the areas that finally produced oil were the old worthless sections of our lands, supposedly lands that nobody would take, and because they had no value, the State did not lose the mineral to them and held onto them and finally they are the things which are building our State university, and taking care of our common schools.

I think the same thing might happen here. As I say, I wish Senator Cordon were here, because he surely agreed with that point of view, that it was a pretty serious thing to turn over 100 million acres of land to a State and let them sell lands that were known to be mineral in any way they wish. I believe the State of Texas reserved all of its minerals, did it not?

Senator DANIEL. That is right. It reserved all the minerals after a certain year, and for a long period of years, maybe 20 years. Then it was found there was so many differences and antagonism between the surface owner and the leases of the minerals from the State, and in some cases even failure of lessees to bid for the minerals because of the trouble they would have with the surface owners, that the State then passed a law relinquishing to the surface owners a half interest in all the minerals under the surface.

Our Supreme Court held that was invalid to a certain extent, but they did uphold it to the extent of permitting the surface owner to act as agent for the State, and the surface owners now own those lands. They make the leases and pay the State one-half of the bonus money, rentals, and royalties. The State actually owns the mineral sold under those terms.

Our latest policy is to sell the surface and fifteen-sixteenths of the minerals, keeping one-half of the usual one-eighth royalty. That is our present policy. Really I wish we were keeping more. I wish we were keeping a straight half of the minerals on all of our sales of public lands in the State today.

Senator ANDERSON. Under what we have here the State of Alaska could follow exactly that same sort of policy.

Senator DANIEL. I do not know. Texas set up her policy herself, and I do not know whether we ought to leave it to Alaska to decide on what is the wise policy, or whether Congress should in some way determine it. I will tell you this: It would be a shame if the land was turned over to Alaska, and Alaska sold all of it without retaining anything for the school funds. No one sells land today where there is a chance of minerals without holding out for the royalty.

Senator ANDERSON. I sold some land and sold it with reservation of minerals. When I tried to sell it 3 or 4 years ago, there was no lawyer in that area that had the faintest idea of what to do. I sent them up a form, and they said you are absolutely silly. Nobody would reserve the minerals on a South Dakota farm when they sold it. I said we want to and we will not sell it unless we do reserve a half of them.

Now as oil has been discovered in North Dakota and the drilling program is starting to move down to South Dakota, everybody is starting to reserve the mineral when they sell.

The CHAIRMAN. That is common practice in Nebraska. I think that any officials elected to represent the State of Alaska when they get in power will certainly see to it that the interests of Alaska are looked after the same way.

Senator DANIEL. I would vote for an amendment to this bill which would say that provided in such sales the new State shall retain a sixteenth royalty interest for its permanent school fund, with the proper wording that would dedicate it to the school fund. I have always thought that in any future grants that we might make to the Western States, since the land belongs to the Federal Government, that it would be perfectly proper for Congress to say that at least a certain portion of this we require you to dedicate to your school fund. The CHAIRMAN. Involved with the suggestion for amendment I made is the naval petroleum reserve. I thought that we had agreed to include a proviso for canceling that reservation the last time we met. If it was canceled, the area would automatically revert to the public domain from which the State of Alaska would make part of its selection. I think you have a different interpretation of that, haven't you? You omitted that proviso canceling the reservation, did you not?

Senator ANDERSON. Yes.

The CHAIRMAN. It was put in, I thought, after a thorough understanding here in the committee.

Senator ANDERSON. No.

The CHAIRMAN. If the Navy is willing to withdraw and they apparently are, because they sent a letter up and it is in the record to that effect, I think we should take advantage of the opportunity to make that public lands from which Alaska can make its choice if it wants to, 49 million acres, about the size of the State of Nebraska. It may never amount to anything or it may.

Senator ANDERSON. It is a developed oil area. It certainly will amount to something. It is priceless because the Government has spent millions of dollars in the development, core drilling, analysis of the area; it knows the oil is there. I think it is pretty dangerous to say we will turn it loose, even if the Navy says it will not object to it, if we decide to do it. What does the Navy letter say? I have not seen it.

The CHAIRMAN. It is down partway in the letter:

The Navy would interpose no objection to returning the reserve to the public domain under the administration of the Interior Department. This, however, is a policy matter for the determination by the White House, and the Congress through the Senate and Armed Services Committees. Insofar as the oil potential of this Territory is concerned, the Navy's primary interest is in its ultimate economical development, whether by private or Government interests.

Senator ANDERSON. But, you see, there is quite a difference between turning this area over to the State of Alaska and turning it over to the Department of the Interior to hold. That is the very question that

arose.

The CHAIRMAN. I do not think our proposal was to turn it over to the State of Alaska, but make it possible for the State of Alaska to select therefrom, if the reserved area were a part of the public domain.. Senator ANDERSON. That does turn it over to them because they would be silly not to take that 49 million acres as the first thing they grabbed onto. But the whole question of the reservation of this, the Department of the Interior, if it were turned back to it, could hold it as a reserve for the Navy or for the Armed Forces, or anyone else.. But realize that the Navy now is building its pipeline from Haines all the way up to Fairbanks, and then has to depend on the transportation of oil up a narrow passageway. If one ship was sunk there, the source of oil supplies in that extremely critical area would be cut off.

The CHAIRMAN. Alaska will not be without any oil supplies if the oil is there because private capital will certainly go in and develop it. I think Alaska will be developed much more rapidly if private enterprise is permitted in there to develop it.

Take, for instance, the million acres that Phillips Petroleum has under lease; how long has that been lying undeveloped? It has been under the control of the Interior Department and others.

Senator ANDERSON. They not only developed it at one period, but they had a refinery built there. They had oil being produced from it right along. It was only when they decided it was easier and simpler to operate a refinery somewhere else that they stopped production on it.

My only point on this area is that they spent millions of dollars in the development of that naval reserve, and it would seem to me to be strange to make it wide open to leasing at once by the new State of Alaska, which if it had the right of selection

The CHAIRMAN. We can provide that this naval reserve shall become a part of the public domain. Then there would still be a lot of formality for anybody to go through, either the State or private enterprise, to actually get a lease and start developing it.

Senator ANDERSON. No, if you take out this provision which holds that area for the State, and then take the naval reserve back, the Legislature of the State of Alaska could give permission to the land commissioner that is elected, the first one, to sell it, and he could sell it for $1 an acre if he wants to.

The CHAIRMAN. On the same theory, if you want to develop any one of those tremendous hydroelectric powers up there, immediately you should reserve all of the area there around it and say that it is not eligible to become a part of the State of Alaska. I do not see how we are ever going to have a successful State of Alaska if you tie a string around their throat on every one of the potential natural resources as would be in this case.

Senator ANDERSON. I think there is some difference again. I am out of my element now. I think there is some difference in the case of a navigable stream where you want to develop waterpower. The Federal Government does have rights to come into a navigable stream and take over a waterpower site.

The CHAIRMAN. You have to get a license from the Federal Power Commission to construct it.

Senator DANIEL. If it is in connection with flood control or navigation, as an incident to flood control or navigation project, does not the Federal Government have the right to go in just for power alone? I doubt it.

Senator ANDERSON. I thought there had been an extremely recent Supreme Court decision that they do.

Senator DANIEL. If the Federal Government is going into the program of building the improvements and all, does that come under the navigation and food control powers of the Federal Government? Mr. SLAUGHTER. Yes.

Senator ANDERSON. My only point is that we sat around and discussed the amendments along with the bill, and we reported out the amendments to go in. This amendment was not agreed upon, and I do not understand how we get it before us now.

Senator DANIEL. Back to the other question, the right of the Federal Government to grant licenses before you build a private project goes back to their power control and navigation. In other words, to keep it open for navigation.

Mr. SLAUGHTER. The licensing provisions of the Federal Power Act apply in two situations, one where navigable streams are involved, and, secondly, where public lands are involved.

Senator DANIEL. Yes, I was thinking only about the navigable waters. Where are we on this proposition, Mr. Chairman? You want to cancel out the naval reserve in this act?

The CHAIRMAN. Yes.

Senator DANIEL. That is going to make it difficult to pass.

The CHAIRMAN. I thought we had agreed on that the other day when this letter from the Navy was read into the record. There was a lot of discussion about it. I may not recall exactly, but certainly it was my understanding that what we intended to do was to revoke the reservation orders.

Senator ANDERSON. Was the letter read into the record? I do not recall it. I have gone through that record pretty carefully. Is the letter in the record?

The CHAIRMAN. The letter is in the record.

Senator ANDERSON. Is it in the record? I do not recall it.

The CHAIRMAN. I am reasonably certain that I read the letter into the record.

Senator SMATHERS. We can put it in, but I do not remember us discussing the possibilities of taking away that naval reserve, however. I thought we had agreed that there was plenty of land aside from that that we would let them have and we were going to keep it.

The CHAIRMAN. The letter was put into the record and the tenor of the discussion was that that would add 49 million acres to the public domain from which the State could select, if it wished to do so.

Senator DANIEL. I am just afraid that will give some people more opportunity to oppose this bill. I might be looking for such opportunities myself, but I hate to do it on that ground. I know some people would oppose taking all that away from the Navy. If you are thinking about the bill that the Senate will accept, if you are like

me