THE ALASKA NATIVE CLAIMS SETTLEMENT ACT: AN UPDATE

Published by Polar Record, 24(151): 328-329 (1988). Cambridge University Press

Monica E. Thomas

School of Management, University of Alaska Fairbanks, Fairbanks, Alaska 99775, USA

Received April 1985

An article, 'The Alaska Native Claims Settlement Act: conflict and controversy,' which appeared recently in Polar Record (Thomas 1986), discussed the 1971 Native land claims settlement in Alaska and the major problems associated with the agreement. Since the publication of that paper, significant US federal legislation has been enacted altering some conditions of settlement and addressing many of the problems associated with the original act. The purpose of this note is to provide an update on Native claims settlement issues in Alaska resulting both from the new amendments and other activities.

New ANCSA amendments

The original settlement act left three major issues unresolved: stock alienation, the afterborn, and land taxation and protection. The Alaska Native Claims Settlement Act (ANCSA) also left a fourth, unspoken issue in a state of limbo. The three major issues were addressed within the new ANCSA amendments enacted in February 1988 by the US Congress (US Public Law 100-241 1988). The fourth issue, tribal control and sovereignty, was specifically avoided in the new amendments, and the US Congress added a disclaimer to the amendments which states that the amendments are not intended to either validate or invalidate any claims by tribal governments. In May 1988 the Alaska Supreme Court ruled (in a split decision) that Alaska Native groups and communities, except the Annette Island Reserve, do not have tribal sovereignty (Native Village of Stevens 1988). An immediate appeal to the US Supreme Court is expected.

Stock alienation

ANCSA prohibited transfer of shareholder stock, and denied rights to non-Natives who might acquire stock through inheritance, until the end of 1991. At that time, all stock was to be liquidated and new stock issued without voting or sale restriction. Subsequent 1980 amendments permitted Native corporations to amend articles of incorporation until 1991 to deny voting rights to non-Native stockholders and provide corporations with first right of purchase. Despite the 1980 amendments, stock ownership in Native corporations, both regional and village, was very vulnerable to outside take-over beginning in 1992. The new amendments directly address this issue. A defined procedure is established for extending stock restrictions and three specified options are provided for removing or altering these restrictions. Unlike earlier versions of ANCSA, the restrictions on stock alienation now remain in effect until or unless specifically removed by the majority of stockholders in each affected corporation.

The afterborn and other specified groups

To be eligible for ANCSA, a person had to be alive on 18 December 1971, at least one-quarter Alaska Native, and an American citizen. All natives born after 1971 were therefore ineligible for inclusion in the settlement. The afterborns now exceed 35,000. The new amendments allow a majority of stockholders in each affected corporation to decide to issue stock to the afterborns, designated 'new Natives.' These afterborns may receive either restricted or unrestricted stock, and may or may not possess voting rights and receive dividends depending on the wishes of the stockholders. The new amendments also allow for the issuance of additional shares of stock to elders if a majority of stockholders in an affected corporation so wishes. Finally, the new amendments permit the issuance of stock to ANCSA-eligible Natives who missed the original enrollment deadline, subject to the wishes of a majority of corporation stockholders.

Land taxation and protection

Under ANCSA, with subsequent amendments, Native corporation lands were protected from taxation for a limited period of time — 20 years from time of conveyance. A land bank concept was also created in later legislation to provide a trust into which undeveloped land could be placed. No protection against land losses due to corporate debt was provided. The new amendments extend protection against taxation indefinitely if the lands remain undeveloped. Additionally, the new amendments prevent takeovers on undeveloped lands caused by corporate debts or bankruptcy, unless those lands are specifically mortgaged. Exceptions include rights of eminent domain, unpaid obligations under the 70/30 split whereby certain resource revenues are shared by all regional corporations, and tax liabilities to the US Internal Revenue Service.

Other recent ANCSA-related issues

Two important, very controversial issues today have developed from ANCSA legislation and the establishment of Native corporations. These issues are land exchanges and loss sales.

Land exchanges

Several Native land exchanges occurred during the past decade. These included exchanges of US federal lands in Cape Krusenstern National Monument with NANA Corporation lands to permit construction of a road to the proposed Red Dog Mine north of Kotzebue, and exchanges of Arctic Slope Regional Corporation lands in the Arctic National Wildlife Refuge for subsurface rights to other US federal lands on the coastal plain in the refuge close to the village of Kaktovik. An exploratory oil well was drilled on these latter exchanged lands, with results not revealed. While not without critics, these exchanges sustained no serious challenge and easily passed the US Congress.

Recently, the US federal government, in an attempt to secure surface rights to critical wildlife habitat in holdings held by Native corporations in several US federal refuges within the state of Alaska, proposed a major land exchange within the coastal plain of the Arctic National Wildlife Refuge, directly east of oil-producing Prudhoe Bay. Approximately 607,000 hectares on the coastal plain are being sought for oil exploration by the Reagan administration, state of Alaska, and major oil companies, while the environmentalists wish to declare the coastal plain a wilderness area. The rest of the 7,710,000 hectare refuge is not of interest for resource development, and 3,237,000 hectares are virtual wilderness.

In return for 361,000 hectares of Native surface in-holdings within US federal refuges, two regional corporations and four village corporations selected 67,000 hectares of potentially rich subsurface oil lands right in the middle of the coastal plain. These exchanges are currently pending in the US Congress amid heated controversy, and resolution is uncertain. Three additional Native groups have asked for land exchange consideration within the coastal plain, and a fourth group, involved in the current proposed exchange, has asked to expand its potential coastal plain holdings. No action has been taken on these new requests.

Loss sales

A technical amendment in the 1986 Tax Reform Act (US Public Law 99-514 1986) permits Alaska Native corporations to sell net operating losses to profitable corporations which use the losses to reduce their taxes through write-offs. Up to 80% of the tax savings are then funneled back to the Native corporations. This provision was created to aid financially ailing Native corporations, but critics argue that accounting manipulation has created huge paper losses never anticipated by the writers of the legislation. In the past year, Cook Inlet Region, Inc. has sold losses for US$102 million, while Doyon, Ltd expects to earn more than US$50 million. Both of these corporations have been consistently profitable in recent years. This tax break has provided Alaska Native corporations with more than US$400 million to date. A bill has been introduced into the US Congress to end the practice, while Alaska Native corporations rush to complete new loss sales.

Concluding thoughts

While the new amendments and other activities have not solved all of the problems facing Alaska Native corporations and their stockholders, many of the most fundamental problems and limitations of ANCSA have now been addressed. With the new amendments, proposed new land exchanges and current loss sales, the majority of regional corporations, and many village corporations as well, have been provided with new assets and potential new assets, as well as better ways to deal with the critical concerns of stock and land control, and continued ownership.

Since 99% of the remaining land in Alaska is in public ownership, there will be increasing pressure to develop Native lands and pursue cash-generating activities. This pressure will necessarily conflict with the continued concerns over subsistence and cultural identity, as well as the controversial issue of tribal government and sovereignty. Nonetheless, most observers believe that the prospects for ANCSA, and Native self-determination and growth, are now brighter than at any time since passage of the original act.

References

Native Village of Stevens vs Alaska Management and Planning. P.2d-, Op No 3332 (Alaska Supreme Court), 20 May 1988.

Thomas, M.E. 1986. The Alaska Native Claims Settlement Act: conflict and controversy. Polar Record 23(142): 27-36.

US Public Law 99-514. Tax Reform Act, 22 0ctober 1986.

US Public Law 100-241. Alaska Native Claims Settlement Act Amendments of 1987, 3 February 1988.

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