PER CURIAM:
Plaintiffs Tyonek Native Corporation and Cook Inlet Region, Inc., appeal from the district court’s grant of partial summary judgment to defendants, the Secretary of the Interior and the Alaska Native Claims Appeal Board. The court upheld the defendants’ ruling that Tyonek, a village corporation created under the Alaska Native Claims Settlement Act, was not entitled under that Act to select lands that the state of Alaska had selected earlier pursuant to the 1956 Mental Health Act. We reverse.
Congress enacted the Alaska Mental Health Enabling Act, Pub.L. No. 84-830, 70 Stat. 709 (1956), to create resources for mental health care in the territory. The Act granted the territory the right to select up to one million acres of vacant, unappropriated and unreserved federal land within ten years of the effective date of the Act. Land so selected was to be held as a public trust.
When Alaska was admitted to the Union, the territory’s authority to select lands under the Mental Health Act was “confirmed and transferred” to the new state. See Alaska Statehood Act of 1958, Pub.L. No. 85-508 § 6(k), 72 Stat. 339, 343 (1958). In 1960, invoking section 202 of the Mental Health Act, the state selected 10,000 acres of land near the village of Tyonek. The Bureau of Land Management “tentatively approved” the state's selection, but this selection has not yet been patented to the state. Authority to select Mental Health lands ended in 1966.
In 1971, Congress enacted the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629a (1982). The Settlement Act (ANCSA) compensates Alaska Natives for lands taken from them by the United States following the purchase of Alaska from Russia in 1867. In return for the extinguishment of all Native claims to Alaska lands, ANCSA granted Alaska Natives approximately one billion dollars and forty million acres of land.
Tyonek Native Corporation is a Native village corporation formed under the Settlement Act, 43 U.S.C. § 1607 (1982). The village of Tyonek is on the northwest shore of Cook Inlet, across some 50 miles of water from Anchorage. Cook Inlet Region, Inc., is a Native regional corporation formed under the Settlement Act, 43 U.S.C. [1239]*1239§ 1606 (1982). Its boundaries encompass the village of Tyonek. In 1974, pursuant to the Settlement Act, 43 U.S.C. § 1610(a) (1982), Tyonek Native Corporation sought to select 9,800 acres of land located across the Chuitna river and near the village of Tyonek. This land was part of Tyonek hunting and fishing territory but it also was entirely within the 10,000 acres of Mental Health lands that the state had selected in 1960. The Bureau of Land Management rejected Tyonek’s application in 1976 because the state’s inchoate interest appeared to preclude native selection under section 1610(a).
In 1977, on behalf of the Secretary of Interior, the Alaska Native Claims Appeal Board denied Tyonek’s administrative appeal. In Re Appeal of Tyonek Native Corp., No. VLS 76-12 (ANCAB Jan. 10, 1977). Tyonek sought review in the United States District Court for the District of Columbia. The case was then transferred to the District of Alaska, and the State of Alaska intervened as a defendant. In 1986, on cross-motions for partial summary judgment, the district court ruled that the 9,800 acres were unavailable for Native selection because (1) they are not “public lands” within the meaning of section 1610(a)(1), and (2) they are not lands “selected by, or tentatively approved to, but not yet patented to, the State under the Alaska Statehood Act” within the meaning of section 1610(a)(2). Tyonek Native Corp. v. Secretary of Interior, 629 F.Supp. 554, 558 (D. Alaska 1986). The district court entered judgment in favor of the defendants pursuant to Fed.R.Civ.P. 54(b).
Tyonek on appeal argues that the 9,800 acres it seeks were “selected by, or tentatively approved to, but not yet patented to, the state under the Alaska Statehood Act,” and is therefore available for Native selection under section 1610(a)(2).
This case presents two conflicting canons of statutory construction. On one hand, statutes benefiting Native Americans should be construed liberally in their favor. See Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Eng’g, 467 U.S. 138, 149, 104 S.Ct. 2267, 2274, 81 L.Ed. 2d 113 (1984). On the other hand, we owe considerable deference to the interpretation of the Settlement Act by the Secretary of the Interior. See Doyon, Ltd. v. Bristol Bay Native Corp., 569 F.2d 491, 496 (9th Cir.), cert. denied, 439 U.S. 954, 99 S.Ct. 352, 58 L.Ed.2d 345 (1978); see also Monet v. INS, 791 F.2d 752, 753 (9th Cir.1986).
Because we find that the agency’s interpretation is contrary to the language of the applicable statutes, we need not determine the appropriate balance between these conflicting canons. See Fagner v. Heckler, 779 F.2d 541, 543 (9th Cir.1985) (observing that we need not “defer to an agency’s interpretation when there are compelling indications that the agency’s interpretation is wrong”).
In considering the administrative construction of statutes which an agency administers, we first must determine whether “Congress has directly spoken to the precise question at issue.” Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed. 2d 694 (1984). “If the intent of Congress is clear,” we must give effect to that intent. Id. “[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843. Our analysis thus begins with the language of the applicable statutes. United States v. Taylor, 802 F.2d 1108, 1113 (9th Cir.1986), cert. denied, — U.S.-, 107 S.Ct. 1309, 94 L.Ed.2d 164 (1987).
Section 1611(a) of the Settlement Act authorizes Native village corporations to select certain lands located in the vicinity of their villages. 43 U.S.C. § 1611(a) (1982). Section 1610(a)(2) makes available for Native selection “[a]ll lands ... selected by, or tentatively approved to, but not yet patented to, the state under the Alaska Statehood Act;”1 43 U.S.C. § 1610(a)(2) [1240]*1240(1982).
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PER CURIAM:
Plaintiffs Tyonek Native Corporation and Cook Inlet Region, Inc., appeal from the district court’s grant of partial summary judgment to defendants, the Secretary of the Interior and the Alaska Native Claims Appeal Board. The court upheld the defendants’ ruling that Tyonek, a village corporation created under the Alaska Native Claims Settlement Act, was not entitled under that Act to select lands that the state of Alaska had selected earlier pursuant to the 1956 Mental Health Act. We reverse.
Congress enacted the Alaska Mental Health Enabling Act, Pub.L. No. 84-830, 70 Stat. 709 (1956), to create resources for mental health care in the territory. The Act granted the territory the right to select up to one million acres of vacant, unappropriated and unreserved federal land within ten years of the effective date of the Act. Land so selected was to be held as a public trust.
When Alaska was admitted to the Union, the territory’s authority to select lands under the Mental Health Act was “confirmed and transferred” to the new state. See Alaska Statehood Act of 1958, Pub.L. No. 85-508 § 6(k), 72 Stat. 339, 343 (1958). In 1960, invoking section 202 of the Mental Health Act, the state selected 10,000 acres of land near the village of Tyonek. The Bureau of Land Management “tentatively approved” the state's selection, but this selection has not yet been patented to the state. Authority to select Mental Health lands ended in 1966.
In 1971, Congress enacted the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629a (1982). The Settlement Act (ANCSA) compensates Alaska Natives for lands taken from them by the United States following the purchase of Alaska from Russia in 1867. In return for the extinguishment of all Native claims to Alaska lands, ANCSA granted Alaska Natives approximately one billion dollars and forty million acres of land.
Tyonek Native Corporation is a Native village corporation formed under the Settlement Act, 43 U.S.C. § 1607 (1982). The village of Tyonek is on the northwest shore of Cook Inlet, across some 50 miles of water from Anchorage. Cook Inlet Region, Inc., is a Native regional corporation formed under the Settlement Act, 43 U.S.C. [1239]*1239§ 1606 (1982). Its boundaries encompass the village of Tyonek. In 1974, pursuant to the Settlement Act, 43 U.S.C. § 1610(a) (1982), Tyonek Native Corporation sought to select 9,800 acres of land located across the Chuitna river and near the village of Tyonek. This land was part of Tyonek hunting and fishing territory but it also was entirely within the 10,000 acres of Mental Health lands that the state had selected in 1960. The Bureau of Land Management rejected Tyonek’s application in 1976 because the state’s inchoate interest appeared to preclude native selection under section 1610(a).
In 1977, on behalf of the Secretary of Interior, the Alaska Native Claims Appeal Board denied Tyonek’s administrative appeal. In Re Appeal of Tyonek Native Corp., No. VLS 76-12 (ANCAB Jan. 10, 1977). Tyonek sought review in the United States District Court for the District of Columbia. The case was then transferred to the District of Alaska, and the State of Alaska intervened as a defendant. In 1986, on cross-motions for partial summary judgment, the district court ruled that the 9,800 acres were unavailable for Native selection because (1) they are not “public lands” within the meaning of section 1610(a)(1), and (2) they are not lands “selected by, or tentatively approved to, but not yet patented to, the State under the Alaska Statehood Act” within the meaning of section 1610(a)(2). Tyonek Native Corp. v. Secretary of Interior, 629 F.Supp. 554, 558 (D. Alaska 1986). The district court entered judgment in favor of the defendants pursuant to Fed.R.Civ.P. 54(b).
Tyonek on appeal argues that the 9,800 acres it seeks were “selected by, or tentatively approved to, but not yet patented to, the state under the Alaska Statehood Act,” and is therefore available for Native selection under section 1610(a)(2).
This case presents two conflicting canons of statutory construction. On one hand, statutes benefiting Native Americans should be construed liberally in their favor. See Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Eng’g, 467 U.S. 138, 149, 104 S.Ct. 2267, 2274, 81 L.Ed. 2d 113 (1984). On the other hand, we owe considerable deference to the interpretation of the Settlement Act by the Secretary of the Interior. See Doyon, Ltd. v. Bristol Bay Native Corp., 569 F.2d 491, 496 (9th Cir.), cert. denied, 439 U.S. 954, 99 S.Ct. 352, 58 L.Ed.2d 345 (1978); see also Monet v. INS, 791 F.2d 752, 753 (9th Cir.1986).
Because we find that the agency’s interpretation is contrary to the language of the applicable statutes, we need not determine the appropriate balance between these conflicting canons. See Fagner v. Heckler, 779 F.2d 541, 543 (9th Cir.1985) (observing that we need not “defer to an agency’s interpretation when there are compelling indications that the agency’s interpretation is wrong”).
In considering the administrative construction of statutes which an agency administers, we first must determine whether “Congress has directly spoken to the precise question at issue.” Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed. 2d 694 (1984). “If the intent of Congress is clear,” we must give effect to that intent. Id. “[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843. Our analysis thus begins with the language of the applicable statutes. United States v. Taylor, 802 F.2d 1108, 1113 (9th Cir.1986), cert. denied, — U.S.-, 107 S.Ct. 1309, 94 L.Ed.2d 164 (1987).
Section 1611(a) of the Settlement Act authorizes Native village corporations to select certain lands located in the vicinity of their villages. 43 U.S.C. § 1611(a) (1982). Section 1610(a)(2) makes available for Native selection “[a]ll lands ... selected by, or tentatively approved to, but not yet patented to, the state under the Alaska Statehood Act;”1 43 U.S.C. § 1610(a)(2) [1240]*1240(1982). Under the Statehood Act, the state may acquire land through a three-step approval process: first, the state must select a tract of land; second, the Secretary of the Interior must give tentative approval to the selection; and third, the state must obtain a patent from the Secretary. Alaska Statehood Act of 1958, Pub.L. No. 85-508, § 6(g), 72 Stat. 339, 341-42 (1958). Because the state never obtained a patent to the land after obtaining tentative approval, the selection of the land by Tyonek must be approved if section 1610(a)(2) applies to Mental Health Act lands.
The Secretary held — and the district court agreed — that Mental Health Act lands are not covered by section 1610(a)(2) because the lands were not selected “under the Alaska Statehood Act.” Tyonek v. Secretary, 629 F.Supp. at 559.
The district court read the phrase “under the Alaska Statehood Act” too narrowly. Section 1610(a)(2) applies to “[a]ll lands ... that have been selected by, or tentatively approved to, but not yet patented to, the state under the Alaska Statehood Act.” 43 U.S.C. § 1610(a)(2) (1982). The phrase “under the Alaska Statehood Act” modifies the three-step process for land selection set forth by section 6(g) of the Statehood Act, not solely the authority under which the lands were selected. We therefore reject the contention urged by appellees and by the dissent that Congress intended § 1610(a)(2) to exclude lands that were initially granted to the territory of Alaska. If Congress had intended such an exclusion, it could have so stated. Apart from policy views, we may not parse this statute so as to find that the phrase “under the Alaska Statehood Act” applies to the authority for selection but not to the requirements of tentative approval and patenting.
Even if we were to accept the argument that section 1610(a) applies only to lands selected “under the Alaska Statehood Act,” we would still find that the lands at issue here were selected by the state under the Statehood Act. The Mental Health Act of 1956 granted the territory of Alaska the right to select Mental Health Act lands. See Alaska Mental Health Act, § 372(a), 70 Stat. at 711-12. In 1958, the Statehood Act expressly “confirmed and transferred” to the state of Alaska all grants previously made to the territory. See Alaska Statehood Act, § 6(k), 72 Stat. at 343. Because the state of Alaska was authorized to make its initial selection in 1960 of the lands disputed here only because the Statehood Act confirmed that power, we find that these lands were selected by the state under the Statehood Act.2
Appellees’ argument that the tract at issue was not selected under the Statehood Act because the initial unused power to select had been created before statehood by the Mental Health Act thus misses the point. The territory never exercised the power. The state’s selection of the tract in question, after statehood, was possible only because the Statehood Act incorporated the rights created under the Mental Health Act. Indeed, the state has recognized implicitly that the Statehood Act rather than the Mental Health Act now provides autho[1241]*1241rization for the acquisition of Mental Health Act lands; the state sought to acquire the lands at issue here through the three-step process set forth by section 6(g) of the Statehood Act, not the two-step process set forth by section 202(a) of the Mental Health Act, which provides for selection and patent but not for tentative approval.
Appellees argue that Mental Health Act lands should be treated differently than lands selected under other provisions of the Statehood Act because the state’s authorization to select new Mental Health Act lands expired in 1966 and the state thus will be unable to replace lands selected by Tyonek.3 However, we must assume that Congress, when it enacted the Settlement Act, was aware that the state no longer could obtain new Mental Health Act lands and that it knew that the Mental Health Act grant was valid only under the Statehood Act. If Congress had intended to exclude inchoate Mental Health Act lands from native selection, it thus would have done so expressly.4 In the absence of any indication that Congress intended such a distinction,5 neither we nor the Secretary may interpret the statute in the manner urged by appellees regardless of policy concerns that might suggest such an interpretation.
We hold that the state selected the Mental Health Act lands at issue here under the Statehood Act and that such lands are therefore subject to section 1610(a)(2) of the Settlement Act. Because the Secretary’s decision was contrary to the clear language of the applicable statutes, the holding of the district court affirming the Secretary’s interpretation of the statute is reversed.