The Board’s research funds are based on the interest earned by the Environmental Improvement and Restoration Fund. This fund was created by Congress and derived from the settlement of the Dinkum Sands case.
The case began in 1979 when the federal government filed a complaint with the US Supreme Court, disagreeing with Alaska over the ownership of submerged lands along Alaska's Arctic Coast.
The Supreme Court agreed to hear the case.The United States disputed the right to offer tracts in the Beaufort Sea for mineral leasing. Alaska counterclaimed, seeking a decision that it held title to coastal submerged lands within the National Petroleum Reserve-Alaska (NPR-A) and the Arctic National Wildlife Refuge (ANWR).
The filing of the complaint satisfied statutory requirements for the state and federal governments to conduct a joint oil and gas lease sale of the disputed tracts on December 7, 1979. High bids for the parcels totaled almost $560 million, which was placed in two interest-bearing escrow accounts pending resolution of the disputes. Four additional escrow accounts were subsequently established to hold funds from later federal Outer Continental Shelf (OCS) lease sales presenting similar issues.
In a settlement of a dispute over distribution of revenues from federal leasing of the OCS within three miles of state-owned submerged lands, Alaska in 1987 received 27% of the escrowed amounts—approximately $323 million. The balances of the accounts remained in escrow earning interest, and in June 1997 totaled approximately $1.525 billion.
The Special Master appointed by the Court released a report in 1996 with recommendations on 15 questions raised by the United States and Alaska regarding ownership of the submerged lands. Exceptions were filed to four of the recommendations and, in a decision released June 19, 1997, the Supreme Court found in favor of the United States for each exception:
Each island has its own three-mile outer limit
Alaska argued that its three-mile submerged lands ownership should start at the outer edge of the barrier islands along the Arctic Coast, with all of the submerged lands between the coast and the islands under Alaska's control. The Master had determined that the islands should be treated separately per the Convention on the Territorial Sea and Contiguous Zone (Convention), each with its own three-mile limit. The result would leave pockets of submerged lands between the coast and the islands under federal control. Alaska was overruled.
Dinkum Sands is not an island
Alaska contended that Dinkum Sands, a gravel and ice formation approximately twelve miles off the coast of the Prudhoe Bay oil field, is an island. The Court ruled that Dinkum Sands does not meet the standard for an island, because it is frequently below mean high water. The Convention suggests that to qualify as an island, a feature must be above high water except in abnormal circumstances. Alaska was overruled.
Submerged lands belong to the United States
Alaska disagreed with the Master's determination that the submerged lands off NPR-A did not pass to Alaska at statehood. Alaska was overruled.
The United States disagreed with the Master's determination that the submerged lands off ANWR belonged to Alaska. The United States' exception to the recommendation was sustained.
The result of the 1996 Special Master’s Report and the subsequent June 1997 Supreme Court decision meant that the approximately $1.525 billion in escrow from the 1979 oil leases belonged to the federal government. Alaska received approximately $4.2 million.
By September 1997 the escrow balance had reached $1.6 billion. At that time Senators Ted Stevens, Frank Murkowski and John McCain proposed an amendment (S. 1231) to the Department of Interior and Related Agencies Appropriations Act, 1998 (HR 2107) to create a fund that would eventually lead to an appropriation for the North Pacific Marine Research Initiative monies. This fund was originally identified as the "National Parks and Environmental Improvement Fund" but the House/Senate Interior Appropriations Conference Committee made several changes to the amendment including the fund title, which became the "Environmental Improvement and Restoration Fund" (EIRF). This was inserted into HR 2107 as Title IV.
The bill was approved November 4, 1997 and signed into law by President Clinton on November 14, 1997 (PL 105-83), thus creating the EIRF and the North Pacific Research Board.