Good morning. This is my fourth trip to Alaska since I became Secretary of the Interior, but it seems I focus on your state several times a week. It has something to do with the fact that half of the lands managed by the Interior Department are located in Alaska.

For example, I was just in Homer and Kenai at a centennial celebration for our National Wildlife Refuges. The 16 Alaskan refuges account for 86 % of the refuge lands in the entire country.

Perhaps I should consider getting away from the Washington swamp and moving my office here.

If I can't be here as much as I would like, I'm pleased to rely on Cam Toohey and Drue Pearce to keep me informed.

Alaska is important to the Bush Administration. At the last Cabinet meeting, I found out Secretary of Health and Human Services Tommy Thompson is also here.

I'm enjoying this fantastic visit to Alaska. Weather-and stunning beauty of this great place.

I plan to talk today about Alaska's future-its challenges and difficulties from a national perspective.

I have now seen a lot of Alaska-on my various trips including some time before I became Secretary.

I've been to Barrow to King Salmon, Katmai, Kaktovik, Arctic Village and Juneau.

It is such a wonderful part of America. Being Secretary has given me a chance to see what few Americans get to see.

The job also gives me a unique perspective on attitudes across the country. There is a big difference between Eastern and Western attitudes.

I'm from Colorado-a place where, like Alaska-people are connected to the natural world. Their recreation is hiking, camping, enjoying wildlife and skiing.

Agriculture, mining, and energy are important parts of the economy.

Alaska is even more connected to the natural world than Colorado.

Unfortunately, that connection and understanding of nature has been lost in the increasingly urbanized East.

I've seen it in visitors to parks and wildlife refuges who make mistakes like posing a toddler for a photo next to an alligator in Florida.

[Secretary's examples: buffalo and Bill Horn letter.]

The East vs. West view of nature shows up in Interior issues and Congressional voting patterns.

Take, for example, snowmobiles in Yellowstone. The previous administration proposed a ban on them. Instead we have formed a compromise where we control the numbers of snowmobiles and their speed limits. We confine them to paved roads and we require the newest machines with 4 stroke engines.

The overall philosophy of the Bush Administration is a thriving economy and a spectacular natural world. In Alaska, the spectacular part is truly, phenomenally, spectacular.

We don't believe you have to choose one or the other.

How do we overcome the fact that much of Washington, D.C. doesn't understand this?

The first key is something I call the 4 C's. They are communication, consultation, and cooperation all in the service of conservation. We believe in tapping into local knowledge and finding cooperative solutions.

There is an Interior project on the Deshka River, forty miles northwest of Anchorage.

The Deshka, as you know, is one of Alaska's most popular sport fisheries, hosting one of the largest runs of king salmon in the state. This is an area that is relatively accessible and largely undeveloped, and its recreational use is expanding every year. Angler user days went from almost 4,000 a year in 1977 to more than 30,000 today.

The Matanuska Susitna Borough owns 10,000 acres that stretch along both banks of the river for nearly a dozen miles.

They needed help to restore streambanks degraded by intense angler use and wakes from jet boats.

Two years ago the Borough requested help under the Fish and Wildlife Service's Partners for Fish and Wildlife Program, and a strong partnership began.

The partners reasoned that if you made boat tie-ups more accessible, other areas would not be used for that purpose and could be restored. They built and refurbished docking areas.

They have planted willows, built seven new campgrounds, a mile of new trail to connect campsites and restored existing campgrounds. They have halted degradation and made the area more sustainable for fish, wildlife and recreation.

The partners for the Borough include the State, Interior and private groups.

They didn't need to be told what to do, they needed financial and planning assistance from government entities. The enthusiasm of the community leaders and private landowners was overwhelming.

This story is an illustration of how I see the Interior Department working together with state and local governments, tribes and private landowners for conservation.

It means we don't think Washington has all the answers nor is top-down control the only method of governing that will give us a thriving economy and a spectacular natural world.

The previous administration put money into buying more land. We believe investing in conservation can be more productive if it is done voluntarily. The President's budget request has more than half a billion dollars to fund cooperative conservation programs, like the Partners for Fish and Wildlife and Coastal programs that helped the Borough.

As I focus on Alaska, I continue to learn about a state rich in resources and wildlife. We understand the need to protect all the values inherent in this rich, beautiful, often untamed frontier. Values you want to pass on to your children.

Another key to a thriving economy and a spectacular natural world is technology.

Later this summer, when visitors to Kenai Fjords National Park walk toward the ancient ice of Exit Glacier, they will walk past some of the newest available energy technology.

The National Park Service in partnership with the Propane Education and Research Council, the Alaska Energy Authority, the Denali Commission and others, is installing a fuel cell electrical system that will provide power and heat to the visitor and staff facilities at the popular visitor destination.

The 5-kilowatt solid oxide fuel cell will use propane as its hydrogen source, with the hydrogen in turn being used to generate electricity. The Exit Glacier project is the first time such a system has been used in an area with no other electrical source. By replacing diesel generators, the fuel cell generating system will provide a cleaner, quieter source of power.

Propane is a derivative of natural gas. Increasingly we have turned to natural gas solutions in the Nation to help protect the environment.

But natural gas is a problem at the moment. Demand is increasing and supplies are not. Prices are up and Federal Reserve Chairman Alan Greenspan has told the Congress several times that natural gas shortages could begin to affect the economy.

Because the shortfall between natural gas supply and demand could be 50 percent in 20 years, the President made writing a new energy policy one of the first priorities of his new administration. The President's Energy Plan supports increasing homegrown supplies of natural gas and oil.

As you know, Alaska could solve part of the problem with its supply of natural gas from Prudhoe Bay-with the help of a new pipeline. We are ready to move forward quickly if it is approved.

Alaska could supply a great deal more oil, as well, through the current pipeline-if we can change the minds of a few more Senators on exploring and developing ANWR. The Senate passed last year's version of an Energy Bill last week, which will enable them to go to conference with the House.

As you know, the House bill has an ANWR provision. ANWR is the single largest prospect for oil and gas that we have in this country-more daily production than Texas. The House should prevail.

The Department is not standing still. We are moving forward to develop other domestic supplies of oil and gas in Alaska as well as the lower 48.

The largest single block of public land is the National Petroleum Reserve-Alaska and it contains more than 23 million acres. That is an area the size of Indiana.

The Bureau of Land Management completed land use planning for the northeast corner of the reserve in 1998. Almost 1 and ½ million acres have been leased.

The Bureau announced a few months ago that it plans to amend the northeast environmental impact statement to look at areas currently unavailable for leasing.

State BLM Director Henri Bisson has made it a priority to complete the final Record of Decision for possible changes in the Northeast NPR-A by the end of next year, with a subsequent lease sale to be held in June of 2005.
Experts believe that areas currently off-limits for exploration in the reserve may contain more than two billion barrels of technically-recoverable oil.

Currently the Bureau is preparing a separate land use plan for almost 9 million acres of public lands in the northwest corner. A draft environmental impact statement was released in January this year. More than 96,000 comments were received during the comment period.

We will analyze the comments this summer. The final environmental impact statement and record of decision are expected by late November this year. If the plan identifies areas suitable for exploration, another lease sale could be held as soon as June 2004.

In NPRA areas already leased, ConocoPhillips and Anadarko have submitted a proposal for their Alpine Satellites Development Project and the Bureau of Land Management is well underway in preparing the draft environmental impact statement, The Bureau expects to issue a final environmental statement and record of decision on the project early next summer.

Exploration and development of oil and gas resources in this frontier area are a logistical and economic challenge.

The primary factors contributing to this include: vast distances, severely harsh climate, lack of existing infrastructure, the need to protect significant wildlife habitat and drilling season restrictions. To help compensate, BLM is drafting proposed lease amendment language for royalty gas deferral.

Offshore efforts in Alaska are also moving forward.

About one year ago, the Minerals Management Service came out with its 5-year plan, which included 8 possible sales offshore Alaska. The number one message we heard from the industry up here was that we needed to get back to a reliable and regular offshore leasing schedule.

Too many sales were cancelled or changed greatly in scope in the previous decade. This greatly hindered companies from planning to participate in sales.

John Goll, the Minerals Management Service regional director, and his staff took that to heart and we are on schedule for the initial sales in the Beaufort Sea and in Cook Inlet.

A sale in the Beaufort Sea is scheduled for September, with two more in 2005 and 2007. Two Cook Inlet Sales are slated for 2004 and 2006.

We have proposed royalty suspensions and other economic incentives for the Beaufort. We are considering similar incentives for Cook Inlet. These are patterned after the very successful incentives offered in the Gulf of Mexico over the past five years, and would be our first use of incentives in Alaska.

The Department intends to continue its efforts to move ahead on developing homegrown sources of oil and gas in order to help the natural gas crisis and help alleviate our dependence on foreign oil.

I also want to leave you this morning with two news items and an announcement.

The first has to do with the proposed oil spill respons storage facility in Cordova. In 1992, the U.S. District Court of Alaska approved an agreement and consent decree entered into by Alaska, the U.S. government and the Alyeska Owner companies establishing the Alyeska Settlement fund. Among other things, the fund was for the construction of oil spill response storage facilities and docks at Tatitlik and Chenega, and for the construction of a road from Cordova to Shepard Point where a deep water port was proposed.

At all three sites, oil spill response equipment was to be located. The projects at Tatitlik and Chenega have long since been completed and now the project at Cordova is finally receiving the attention it deserves.

On July 25th, the Bureau of Indian Affairs here advertised for a consultant to prepare the environmental impact statement for an oil spill response facility, access road, and deep water port in the vicinity of Cordova. The plan is to have the final EIS completed by August 2004 and the Record of Decision signed in September 2004.

The oil spill response facility will be adjacent to a proposed deep water port and the access road will connect the port to the existing road system providing a vital link to the only major airport in the area.

The project is needed for rapid and effective oil spill cleanup capability, plus it will have a positive effect on the local economy, which has been hard-hit by the collapse of the fishing industry.

A second news item for you has to do with mining in Alaska.

3809 BONDING

More than 90 percent of the mining operations in Alaska are placer mines. New bonding regulations, finalized in October 2001, require all operations, except casual use, be bonded. Bonding for small mining operations in Alaska is very difficult, if not impossible to obtain from private insurance companies.

The Alaska Department of Natural Resources and the Bureau of Land Management have established a cooperative agreement allowing miners to use the State of Alaska statewide bonding pool to meet federal requirements for adequate financial guarantees.

However, federal regulations allow this arrangement to continue only through January 20, 2004. The Bureau of Land Management is working with the Alaska Department of Natural Resources and the Alaska Miners Association to develop a new cooperative agreement that will allow miners on BLM-administered land to continue to use the pool. This agreement is finalized and is scheduled to be signed after breakfast this morning.

Finally, there is a hearing today on the Alaska land transfer program. For the past 30 years, the Bureau of Land Management in Alaska has been involved in an intensive effort to survey and convey 150 million acres of public lands in Alaska under three statutes: the Native Allotment Act of 1906; the Alaska Native Claims Settlement Act, and the Alaska Statehood Act.

The conveyances are still ongoing and are not expected to be completed until 2020. In March this year, Senators Stevens and Murkowski asked the Department to draft legislation that would finalize the Alaska land conveyances by 2009. In June this year the Department transmitted the draft legislation to the Senators. Sen. Murkowski is holding a hearing on the legislation here in Anchorage at 10 a.m. Additional hearings are expected in Washington in the fall.

The challenge of the project is dealing with cumbersome rules, regulations and overlapping claims that have developed over the past 30 years. Radical changes in the Bureau of Land Management's processes and authorities are needed to meet the challenge of completing this work by 2009.

This agreement was just signed.

I believe all of the issues mentioned today are moving to reality because of the 4 C's approach we have in dealing with contentious issues in the states. We want to be true partners with the states in efforts to solve local natural resource problems.