A Business Entity by Any Other Name: Corporation, Community and Kinship

• Publication year: 2017

§ 33 Alaska L. Rev. 353. A BUSINESS ENTITY BY ANY OTHER NAME: CORPORATION, COMMUNITY AND KINSHIP

Alaska Law Review
Volume 33, No. 2, December 2016
Cited: 33 Alaska L. Rev. 353

A BUSINESS ENTITY BY ANY OTHER NAME: CORPORATION, COMMUNITY AND KINSHIP

Christian G. Vazquez ^[*]

"Congress finds and declares that (a) there is an immediate need for fair and just settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land claims; (b) the settlement should be accomplished rapidly, with certainty, in conformity with the real economic and social needs of Natives,without litigation, with maximum participation affecting their rights and property."

Alaska Native Claims Settlement Act, Pub. L. No. 92-203 § 2(a) -(b), 85 Stat. 688 (1971) (codified as amended at 43 U.S.C. §§ 1601-1629h (2012))

"Forty years ago, Natives in Alaska were told they needed to learn politics . . .. So we did. Thirty years ago they were told to learn business, so we have.

John Christensen, former Vice President for the Chenega Bay Indian Reorganization Act (IRA) Council

ABSTRACT

Forty-five years ago, the Alaska Native Claims Settlement Act resolved outstanding land claims between the federal and state government and Alaska Natives. The fund created by the settlement was used as seed money to establish the Alaska Native Corporations. The Native corporations have particular features which make them distinct from other business entities, these differences have been lauded by some shareholders but have simultaneously drawn ire from others. In 2015 the Alaska legislature introduced H.B. 49, a benefit corporation bill that would allow entrepreneurs to pursue both profits and social ends. This note traces the rise of the modern Alaska Native Corporation. It then weighs the merits of each business entity and assesses which is best aligned to improve the lives of Alaska Natives.

INTRODUCTION

Long known for its pioneering spirit, the state of Alaska continued to build on this tradition when it settled land claims with Alaska Natives in a manner unlike any other settlement between a state and indigenous peoples-by using the corporate form. In 1971, the Alaska Native Claims Settlement Act (ANCSA) ^[1] resulted in the formation of the Alaska Native Corporations (ANCs). Ultimately, thirteen regional corporations and over 200 village corporations were created ^[2] with the seed money derived from a one billion dollar settlement with the federal and state governments. Almost forty-five years since the settlement, these entities have undergone numerous readjustments, but, at their core, they strive to improve the lives of Alaska Natives. Since 2010, another corporate entity with a mission not limited to maximizing shareholder profits has come into vogue in the United States-the benefit corporation (also known as a "B Corp") with an emphasis on social and environmental goals. ^[3] Essentially, the B Corp is a distinct entity choice that allows for-profit corporations to function in a middle zone between the non-profit and traditional business model by requiring socially responsible goals in its mission, rather than solely a commitment to profit maximization. ^[4] In 2015, the Alaska House of Representatives introduced a B Corp statute titled "House Bill 49" (H.B. 49) ^[5] which would have introduced a corporate form that might have been more attractive than ANCs.

Corporations are powerful entities-they aggregate capital, talent and labor toward a common goal. Historically, corporations accomplish their goal by making profits for shareholders; this Note will analyze the effects on the corporate form and accountability when goals other than profits are favored. Additionally, this Note will analyze how the experience of ANCs can serve as a reference point for the future of B Corps and vice-versa. Part I will trace the history of the ANCSA settlement, the structure of ANCs as business entities, and attendant legal considerations. Part II will trace the rise of the B Corps, comparing the merits of ANCs and B Corps. This Note will ultimately conclude that both corporate forms are distinct enough that ANCs should be kept as different entities to serve very narrow goals for their sociocultural constituency.

I. The Alaska Native Corporations

"The Native people themselves are often under a misapprehension regarding the land-they think that it is their land, when it is in fact corporate land. If you own stock in General Motors, you can't walk in there and drive off in one of their cars. . . . What it is that our corporation owns the land. Sure, we elect the board of directors. I sit on the board of directors myself. However, there is [sic] certain things that you have to follow in a profitable corporation, and a lot of those rules of the game don't allow you to get involved into the social, political aspects of the Native people that the Native peoples so much expect from a corporation."

Don Standifer, Tyonek Native Corporation ^[6]

"It's like you and I never saw a baseball game in our lives. We'd never seen mitts or bats or baseballs. All of a sudden you were told, 'Here's your mitts.

Here's your bats. Here's your balls. Tomorrow, you play the Yankees.'"

John Hope, a Tlingit and Juneau resident involved in land claims, describing the struggle to fill the business expertise gaps that developed in the years following the ANCSA settlement ^[7]

The formation of Alaska Native corporations (ANCs) has been widely lauded for its innovative approach to settling native claims. Rather than relying on the widely criticized reservation system used elsewhere to deal with the property claims of native peoples, Alaska Natives sought a different solution, through the corporate form. ^[8] However, ANCs have also been criticized for the disconnect between incorporation on the one hand and concepts of Native sovereignty and cultural traditions rooted in subsistence and kinship on the other. ^[9] ANCs are distinctive from other corporations in the manner that they were established-they were created by legislation and mandated by statute. ^[10] In this way, ANCs are a reversal of the traditional process of incorporation wherein a group finds an economic opportunity and organizes itself to exploit and capitalize on that opportunity. ^[11] ANCs are again peculiar because a source other than their owners provided capital. ^[12] Moreover, ANCs, unlike most corporations, did not begin with a business plan or product; instead they were funded first and then urged to create or find economic opportunities afterward. ^[13]

Additionally, the shareholders and management of ANCs are unlike those of most other large corporations. Native shareholders are connected by ties of kinship, culture, and affinity with the very land that the corporations have put into trust. ^[14] ANC corporate management is also distinct. Directors are not required to declare dividends to keep and attract shareholders, and shareholders were assigned by an act of Congress. ^[15] Shares were not tradable for the first twenty years after issue, and regional corporations are required to share revenue with one another. ^[16] All of these differences present both opportunities and obstacles to the core mission of ANCs-improving the lives of Alaska Natives.

A. Native Claims, Sovereignty, and Settlement

Before ANCSA's enactment, the legal status and property claims of Alaska Natives were unsettled. Although Article III of the 1867 Treaty of Cession between Russia and the United States provided that Alaska Natives be treated in the same manner as other Native American tribes, this obligation was rarely observed. ^[17] The treaty was further complicated by the fact that Article VI declared Alaska Natives:

to be free and unencumbered by any reservations, privileges, franchises, grants or possessions, by any associated companies, whether corporate or incorporate, Russian, or any other, or by private parties, except merely private individual property holders. ^[18]

The federal Organic Act of 1884 further complicated the treaty's vagueness regarding the treatment of Alaska Natives because it failed to render a definitive stance on the status of lands claimed by Alaska Natives. ^[19] Ultimately, the Ninth Circuit interpreted Article VI of the treaty to have extinguished communal Native land claims and § 8 of the Organic Act to have recognized Indian title to a relatively small number of land plots. ^[20] In 1955, the Supreme Court disapproved of the Ninth Circuit's reasoning, holding that Native claims were aboriginal, rather than constitutionally compensable property interests. ^[21]

Alaska's admittance to statehood on January 3, 1959 ^[22] began the chain of events that eventually led to the enactment of ANCSA and the formation of ANCs. Pursuant to section 4 of the Statehood Act, the state was required to "forever disclaim all right and title to any lands or other property . . ., the right or title to which may be held by any Indians, Eskimos, or Aleuts." ^[23] Furthermore, section 4 reserved "absolute jurisdiction and control" of such property to the federal government until Congress disposed of it. ^[24] Section 6 of the Statehood Act also allowed the state to select approximately 103 million acres from the "vacant, unappropriated, and unreserved" public lands held by the federal government. ^[25] In October of 1959, the Tlingit and Haida Tribes obtained a judgment from the United States Court of Claims concluding that they held aboriginal title to most of...