Arctic Circle's Virtual Classroom: Corporate Strategies & Village Values

Corporate Strategies and Village Values

Arctic Alaska and the Aftermath of the Native Land Claims Settlement of 1971


Note: Background data pertaining to the Alaska Native Claims Settlement Act can be found in the Social Equity and Environmental Justice section of Arctic Circle


Introduction

With the passing of the Alaska Native Claims Settlement Act of 1971, Native claims to almost all of Alaska were extinguished in exchange for approximately one-ninth of the state's land plus $962.5 million in compensation. Of the latter, $462.5 million was to come from the federal treasury and the rest from oil revenue-sharing. Settlement benefits would accrue to those with at least one-fourth Native ancestory. Of the approximately 80,000 Natives enrolled under ANCSA, those living in villages [approximately 2/3rds of the total] would receive 100 shares in both a village and a regional corporation. The remaining 1/3rd would be "at large" shareholders with 100 shares in a regional corporation plus additional rights to revenue from regional mineral and timber resources. The Alaska Native Allotment Act was revoked and as yet unborn Native children were excluded. The twelve regional corporations within the state would administer the settlement. A thirteenth corporation composed of Natives who had left the state would receive monies but not land.

Along with cash compensation, these corporations could also earn income from their investments. However, the drafting of the bill did not clarify whether the corporations were expected to redistribute the proceeds from their investment income to their shareholders or whether they could keep them for further investment. A "shared wealth" provision of the Act [Section 7(i)], stipulated that 70 percent of income received by regional corporations from their resources were to be shared annually with the other corporations. To protect the land from estrangement, no Native corporate shares could be sold to non-Natives for 20 years - until 1991 - at which time all special restrictions would be removed. Then, non-Natives would be elgible to become shareholders, lands would be liable for taxation by the state, and the regionals would be open to the possibility of hostile takeovers.

Under the supervision of the regionals, village level corporations would also select lands and administer local monies received under the settlement act. Although village corporations could choose to be non-profit entities if they so wished, all selected the profit-making category.

With the President's signature on the settlement act, the relationship between the Native peoples of Alaska and the land was completely transformed. No longer was ownership directly linked to Native government. Instead, by conveying land title to the 12 regional corporations and 200 local village ones chartered under the laws of the state of Alaska, all ties to traditional or IRA "tribal" governments were bypassed. With the President's signature, Native Alaskans whose earlier use and occupancy had made them co-owners of shared land, now became shareholders in corporate-owned land.

To what extent did this legislation reflect the hopes and aspirations of Alaska's Native population? At the time of passage, most Native people were unaware of the complexities of the bill, but looked forward to having their own land and additional monies that could be used to improve their low standard of living. Alaska Federation of Native [AFN] leaders were enthusiastic at the large settlement, feeling they had achieved a considerable accomplishment under highly adverse conditions. The limitations in the bill stemmed primarily from pressures placed on them by the government and petroleum industry forcing them to make compromises not of their choosing. They also saw the corporate solution both as a way to remove themselves from the bureaucratic yoke of the Bureau of Indian Affairs and as a new tool in the struggle to maintain their culture.

Not all, however, took an optimistic view. Critics feared that eventually the regionals could become conduits for larger multi-national corporations, enabling the latter to take over valuable lands and resources currently held in Native hands. Loss of this land would then be followed by destruction of Native culture and the rise of new class divisions mirroring those of the larger society. By this means, the government's long term goal of assimilating Alaska's Native population into the larger mainstream would finally be achieved. As summed up by Fred Bigjim, an Inupiat educator from Nome who had once been a close aide of Barrow's first mayor, Eben Hopson, "What is happening to Native people in Alaska is not a new story; it is a new chapter in an old story."

The Problem

The leadership experience gained by Inupiat working in the North Slope Native Association and the AFN was immensely helpful in organizing the Arctic Slope Regional Corporation [ASRC], the North Slope Borough [NSB], and the federally recognized IRA regional "tribal" council - the Inupiat Community of the Arctic Slope [ICAS]. Some Inupiat took on the political task of developing the new borough. Others worked with the recently formed ICAS. Still others concentrated their attention on the long and difficult process of selecting land. Although the ASRC was to be the primary recipient, village corporations were involved as well. Thus, in the spring of 1972, at Barrow and in other villages, members of local Land Selection Committees stood before huge maps on the walls of their elementary schools trying to decide which land to claim. What were the best fishing sites? Where were the caribou most likely to migrate? Locations for harvesting berries? Obtaining coal? Launching an umiaq? And in the back of the people's minds was the issue of whether today's choices would meet the needs of generations yet to come.

Questions of even greater magnitude faced the regional corporation for they were responsible for selecting approximately 4.5 million acres of sub-surface as well as surface lands. This was the entitlement figure allocated to them of the 15 million acres initially claimed by the Arctic Slope Native Association. They immediately recognized two distinct needs: some lands should be selected for their traditional use value; others for their potential wealth in oil, gas, and minerals. Enlisting the assistance of village elders, traditional land selection was begun. For the rest, they needed the input of highly skilled geologists familiar with the region's oil, gas, and mineral potential. Thus, the corporation's new directors soon found themselves working closely with petroleum companies seeking the same resources.

However, large sections of land were exempt from consideration, including the 4 million acre federal National Petroleum Reserve just south of Barrow, the 9 million acre Arctic Wildlife Refuge surrounding Kaktovik, and other lands claimed by the state.

www.ebenhopson.com, "What is happening to Native people in Alaska is not a new story; it is a new chapter in an old story."

The Problem

Such difficulties forced the ASRC to extend its land selection to less familiar locations in the western and south central portions of the region west of Anaktuvuk Pass. This, in turn, brought on years of litigation with other Native corporations applying for the same land - the kind of conflicts which eventually led one Inupiat leader, Oliver Leavitt, to call the whole land claims settlement "a breadbasket for the lawyers."

The $46 million financial settlement to be received by ASRC raised equally complex issues about investment and profit-sharing. Should these funds be used to generate short-term profits? Invest in conservative stocks and bonds? Make local capital improvements? Set up subsidiary corporations that could provide local employment, businesses, and needed services for its shareholders? How much income, if any, should be passed on to these shareholders and how much should be used to generate more profit? As the issues multiplied, so did the conflicts.

At the heart of the matter lay several key questions. One pertained to the relationship between the people and the land. For both the Inupiat and Yup'ik Eskimo, the issue of land ownership had always been one of `relation' rather than possession. That is, the right to use a given site was based on one's relation to previous generations of kin who hunted in the area and the animals located there. In modern times, land continued to be held in common for the benefit of its members. Thus, no villager could sell or otherwise dispose of any portion of that which was collectively shared. Private property with its alienability and inheritability was simply not an issue. As Barrow elder Roxy Ekowana expressed it, "I did not sign up for a [government] allotment because it went against my grain of thought to own a piece of land - even though I did have a hunting area."

Corporate land, on the other hand, is viewed quite differently. Under this arrangement, the corporation owns the land, not the shareholders. Shareholders are owners of the corporation, but each shareholder only owns an interest in it. Furthermore, these individual shares only entitle them to a portion of the equity if the corporation is broken up. Whether the proceeds of a land sale, for example, are passed on to individual shareholders is a decision to be made by the corporation board of directors. Thus, corporations could sell land at fair market value without shareholder approval. Stockholders could then receive or not receive a dividend based on the sale. If the shareholders did not like the sale, all they could do was vote the directors out of office after the fact. While the Settlement Act postponed stock alienability feature until 1991, a fundamental point was clear: Native lands were in serious jeopardy.

Given the value placed on sharing the proceeds of land held in common, the introduction of a corporate form of ownership created enormous tension among the Inupiat. The greatest fear, of course, was that the new corporate structure embraced by ANCSA, might one day become the means of their own destruction. Could the people own land and stock as individual shareholders and still maintain their cultural identity as Inupiat? That is, could a historically cooperative economic system based on sharing, reciprocity, and redistribution through exchange, prevail, when conjoined with one based on competition which concentrated its attention on the accumulation of wealth? Or, as an alternative, was it possible to circumvent limitations imposed by the corporate structure and maintain a committment to the rights and obligations that bound people together through reciprocity?

This latter issue was closely linked to another set of questions. Given the fact that a requirement of the Settlement Act was that ASRC be a profit-making corporation, did it also have an additional social responsibility to its Inupiat shareholders? Legally, once the regional corporation selected the 4.5 million acres of land and received the $48 million allotted to it from the settlement, that land and money became economic assets under state law, to be utilized like any other assets in the furtherance of profit-making. But was that all? Not as far as subsistence-oriented villagers were concerned. To them, financial gain was important, but it was not their bottom line. They wanted to be assured that the land with its subsistence resources and cultural significance would not be jeopardized. Land, rather than financial gain, was the key issue.

Most newly elected regional corporation leaders looked at the contradiction somewhat differently. For them, the primary purpose of the regional corporation was first, to receive and disperse money available to it under the act; second, to select, own, and manage lands available under the act; and third, to conduct business for profit for the benefit of its shareholders. As expressed by Joe Upicksoun, a senior ASRC official, over a decade later:

The Alaska state corporate structure has no governmental powers. It's business, just [like] General Motors and Ford Motors...How does that relate to maintaining our culture and providing our people with their lifestyle, their own original aboriginal lifestyle? We don't have those powers...The framers of the state constitution [said] we wouldn't be stuck with delivering those services which we had no business doing, except make a profit and issue dividends and be the stewards for our stockholders...we can make monies available for scholarship loans and grants for our students to go to college. But we have to make a profit before we can actually make monies available to them."
The newly formed village corporations of the North Slope also chose the for-profit status enabling them to receive income for investments. But in their specific cases, control of the corporations lay in the hands of village-based Inupiat. Since these leaders were intimately involved in local community affairs, they tended to be considerably more sensitive to the views of their constituents - including those which emphasized protecting their subsistence and sharing way of life.

As the Barrow Ukpeagvik Inupiat Corporation [UIC] president put it:

"We are at home with these people; we are not just a paper corporation. We know their problems and have to fight for their rights."

Such efforts included participation in law suits designed to prevent oil development that would threaten subsistence hunting and fishing in coastal areas, and the providing of social, cultural and recreational services for elders. Economic benefits, in addition to those sought from financial investments, included reduced energy costs achieved by undertaking a joint venture with another company to produce liquified natural gas and electrification for the town. By 1980, the UIC had yet to declare a dividend. But due to their taking a coordinated approach which addressed the social needs of the community as well as profit-making, it continued to receive the active support of village shareholders.

There was one other important new institution established on the North Slope at this time - the Inupiat Community of the Arctic Slope [ICAS]. Formed in 1971 as a regional Native government constituted under the amended federal Indian Reorganization Act of 1936, the major purpose of ICAS was to provide a shelter to protect Native lands and to furnish governmental and social services to the region's Inupiat population. Although it did engage in law suits [such as Edwardsen v. Morton, which asked for trespass damages to Native residences, fishing and hunting areas resulting from oil exploration on the Slope], it was only minimally active until 1975. Then, following passage of the U.S. Indian Self-Determination and Education Assistance Act, the BIA provided ICAS with funds not available to the state-affiliated borough. The amount flowing to ICAS from the BIA's health and human services program was small in comparison with state transfer payments to the borough, but it did enable this regional IRA to establish various welfare assistance programs and expand health services.

Far more significant, however, was the potential contained within the ICAS to serve as a federally recognized Native government for the North Slope Inupiat. Given ICAS's political nature, it wasn't long before difficulties arose between it and the NSB. As a Native organization to which only Natives could belong, ICAS, from its beginning, served as a significant political base for those Inupiat holding the view that sovereignty remained the key issue for Alaska's Natives. And to the most militant of these, the North Slope Borough was simply, "the illegitimate child" of the United States and the state of Alaska. As summed up by one activist leader:

"In 1867, the Russians sold to the United States Americans the right to trade with Eskimos, Aleuts and Indians. They could not sell Eskimos, let alone their private property, and most of all the sovereign rights of my ancestors."
Local spending irregularities eventually led to a loss of federal funding for ICAS. However, it's political potential as a legal structure for establishing an Inupiat "homeland" was and continues to remain highly significant. To use a federally recognized, BIA-sponsored institution as a structural base for establishing greater political autonomy may have its ironies. But that is secondary for those who continue to emphasize that the fundamental strength of the regional IRA council lies in its Inupiat control. James Stotts, corporate treasurer of ASRC and ex-Assembly president of the North Slope Borough, put it this way:
IRA councils...are more representative of the Inupiat perspective than the state municipal corporations. The reason is very simple: it's because membership in the village and regional IRA's is restricted only to the Inupiat."

Eventually, differing pathways taken by the regional corporation, the North Slope Borough, the village corporations, ICAS, and subsistence-oriented villagers, led to open conflict. In one such instance, after scrutinizing an Environmental Impact Statement attached to the proposed Joint Federal/State Beaufort Sea Oil and Gas Lease Sale of 1979, the North Slope Borough allied with village corporations from Kaktovik and Nuiqsut, brought suit against the government. Already worried about possible deleterious effects of an oil spill on the fish and sea mammal resources of the mid-Beaufort Sea region, the borough had earlier prepared its own Coastal Management Program to safeguard the subsistence economy on which many residents depended. It was to be accomplished by dividing the coastal areas into four no-development classes based on their importance as wildlife habitats and two development zones based on their suitability for short- and long-term petroleum development.

North Slope elders, too, had expressed deep concern over changes occurring along the Beaufort Sea near Prudhoe Bay. At an annual elders conference held in Barrow, Ernie Frankson, a respected leader of an earlier generation, commented: An oil spill "will devastate our animals if [the oil companies] have an accident." Others, aware of the research then being undertaken on the environmental impact of oil spills, responded in like manner. One example is Waldo Bodfish Sr.,: an Inupiat from the North Slope village of Wainwright:

These White people who were talking, these scientists with much knowledge, their job covers a lot of things; about animals and small living organisms in the ocean...But it is the animals, these fish, the source of our livelihood which are located out east over there which I worry about, thinking they may destroy them.
Not long afterwards, the borough's planning department prepared a zoning ordinance to regulate land and water uses in the area until the Coastal Management Program could be approved.

At the same time the borough was putting forward its plan, ASRC, with most of its land holdings in place, was entering into lease agreements with Chevron, Union-Amoco, Shell, and Texaco - an arrangement that would bring them over $29 million from land rentals and bonuses. Thus, in the spring of 1979, when borough and ASRC officials met in Washington to discuss the lease sale, the latter urged that in view of its business relationship with Chevron and Texaco, both of whom were anxious to bid in the offshore sale, any attempt to block the sale would be against the corporation's best interest.

The borough, on the other hand, saw the sale as compromising the needs of its subsistence-oriented residents. Following the meeting and over the objection of the borough, the ASRC voted 9 to 1 to issue a public statement in support of the sale. The press release appearing on August 17th, 1979, was received with enthusiasm by the petroleum industry and the state. However, when asked to explain the corporation's position at the next Elders Conference, the ASRC president found it difficult to respond satisfactorily to the questions put to him by the frustrated members of his audience.

Later in the year, after the Borough's legislative Assembly had given its conceptual approval to the Mid-Beaufort Coastal Management Program, it was submitted to the state's Alaska Coastal Policy Council for approval. But opposition by the petroleum industry and critical reviews by several state agencies was so pronounced that the Assembly president was forced to withdraw the plan. To continue at that time would have involved lengthy, costly and politically damaging litigation.

As for the tensions between the NSB and the ASRC, the two organizations eventually came to a compromise in which both agreed that since nearshore drilling along the barrier islands could not be stopped, they should undertake a joint effort to control these operations as much as possible. Yet the underlying political and economic forces shaping the struggle remained largely unchanged. The Borough's mayor, Eben Hopson, in a speech given before the Canadian Government's Mackenzie Pipeline Inquiry in 1977, addressed this problem as he saw it at the time.

There will be a tug of war between those of us who want to maximize state oil income for needed investment in our Arctic cities and villages, and those who want to help the oil industry avoid taxation. I do not want to see this tug of war split Alaska's Native leadership as it appears to be doing. I do not believe that letting oil corporations explore our land for oil obliges us to adopt the policies of the oil corporations. This tendency to assist the oil corporations avoid taxes may extend even to the point that our regional Native corporations will oppose the development of home-rule government in Alaska. Rather than fight for local self-determination for our people, the influence of the oil corporations may lead our regional corporations to fight against it.
Thus, in Hopson's view, oil interests desirous of tapping the Arctic's natural resources, would always seek to draw to their side those sectors of the Native leadership most closely linked to the corporate world. For the regional corporation, sensitive to the needs of its shareholders as well as its corporate interests, the contradiction was indeed, difficult to resolve. A senior ASRC officer, seeing the problems that lay ahead for many regional corporations, once commented:
"If the corporations are bankrupted or if the stock is bought up so that it is no longer in control by Native stockholders, then I guess you can say that we have lost it all. Then we will have nothing. We will be worse off than before ANCSA, because when we started, at least we had our land rights intact."
However, the ASRC leadership, viewing the immediate future of their own region, saw no such concern. The corporation's 1979 annual report, listed record earnings of over $29 million, the value amounting to $8.69 per share. Corporation assets increased to $36.9 million. The ASRC also redistributed over $9 million [70 percent of its sub-surface revenue] to the other 11 regional corporations in keeping with the 7[i] "shared wealth" clause of settlement act - funds sorely needed by those regional corporations then facing serious financial difficulties. Finally, the corporation provided a growing number of jobs for its shareholders, while its Arctic Education Foundation presented 75 scholarships to those qualified North Slope Inupiat wishing to pursue higher education within or outside the state.

If the new corporate life of the North Slope was largely controlled by the ASRC, its political life was not. Quite a different kind of structure was needed to address the myrid complexities of political governance in a region where the federal and state government, energy industry, and environmental interests were actively competing to enhance their control over the land's varied resources. In approaching this problem, numerous proposals were put forward. But on one central point, there was complete unanimity: while the land they had claimed was rich in oil and gas, the quality of housing, education, sanitation, and public services of the people was poor. And while the rest of America was relatively poor in oil and gas, the standard of living of its people was far higher. Now, the time had finally arrived when Alaska's most northern Inupiat could throw off this legacy of the past and build a modern Arctic community on the North Slope.


The Assignment

Acknowledging the immense power of the U.S. federal and Alaska State government:

(a)How would you evaluate the success of Alaska Native leaders in protecting their right to lands which they had occupied and used "from time immemorial?"

And second:

(b) What form of property ownership - private allotments; tribally owned lands allocated to defined cultural groups; legislated corporations; or lands "held in trust" for them by the Federal Government - do you think was the wisest course to pursue?

If you wish to undertake a comparative analysis, you can draw on the experience of the Canadian Inuit or Quebec Cree who have chosen a decentralized 'collective' [as opposed to corporate] form of land ownership. See, for example, the Nunavut and their Land Claims Agreement with the Canadian Government; and the Crees of Northern Quebec and their agreement with the Quebec Government.


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