CHAPTER 14 EXPLORATION AGREEMENTS INVOLVING NATIVE LANDS (Hard Minerals—An Industry Viewpoint)

• Jurisdiction: United States

Alaska Mineral Development
(Sep 1978)
CHAPTER 14
EXPLORATION AGREEMENTS INVOLVING NATIVE LANDS (Hard Minerals—An Industry Viewpoint)
Harris Saxon
Ely, Guess & Rudd
Anchorage, Alaska
JJack F. McOuat
WGM Inc.
Anchorage, Alaska

Native lands in Alaska represent a unique and outstanding opportunity for hard mineral exploration. Under the Alaska Native Claims Settlement Act ("ANCSA"),¹ the Native corporations are entitled to acquire approximately 44 million acres² which is more than 10 percent of the land area of the State of Alaska.³ The tremendous amount of land involved is not easy to comprehend. For example, Doyon, Limited, the Native regional corporation with the greatest land entitlement, will be the largest private landowner in the United States when it receives title to its 12 to 13 million acres.⁴ This land entitlement is some 2 million acres larger than the states of Massachusetts, Connecticut, Rhode Island and Delaware combined. At the present time, the Native corporations also effectively control access for mineral exploration and development to an additional 70 million acres of land which they have selected in excess of their land entitlements under ANCSA.⁵ Since the Native corporations will acquire essentially unrestricted title to their lands, a mining company has the opportunity to obtain exploration and development rights to large areas of land and at the same time acquire a type of land security which is not available under the federal or state mining laws because of the uncertainties involved with what constitutes a valid discovery. Of perhaps equal importance to a mining company is the fact that Native lands will not be impacted to the same extent as federal and state lands by the Federal Land Policy and Management Act of 1976,⁶ the Alaska Land Act,⁷ the federal and state environmental laws, and the other increasingly restrictive governmental requirements.

Although there are clear advantages to undertaking hard mineral exploration on Native lands, there are also corresponding problems. The Native corporations acquire their lands under ANCSA pursuant to a complex procedure

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which includes the separation of the surface and subsurface estates of approximately one half of the Native lands. This means that although the Native regional corporations are entitled to the subsurface estate to approximately 40 million acres of land, the surface estate to approximately 22 million acres will belong to the Native village corporations. Super-imposed on this bifurcated ownership are scores of land status complications which tend to cloud the rights of the Native corporations to their lands. In addition to the above, the exploration agreement must be structured so as to fulfill the legitimate objectives of the Native corporations which are not always directly parallel to those of the mining company.

Five of the twelve regional corporations have entered into some form of exploration agreement for hard minerals. Most of these agreements do not involve all the Native lands available to the regional corporations, but rather are limited to specific areas or types of Native lands. Some of the regional corporations have entered into several agreements, and some of the agreements have terminated and are no longer in effect.

The term "Native lands" as used in this paper refers to the lands that the Native corporations acquire pursuant to ANCSA, and does not include any lands acquired by the Native corporations by any other means nor does it include any lands acquired by individual Natives whether acquired pursuant to ANCSA or otherwise.

This paper contains an analysis of the structure of an exploration agreement involving Native lands and the relevant land status complications. It also discusses how the exploration agreement can be adapted to meet the diverse concerns and objectives of the Native corporations, and describes the negotiation process by which such an agreement might be consummated.

Native Lands and Mineral Rights Under ANCSA

In order to negotiate a mineral exploration agreement involving Native lands, or for that matter in order to comprehend such an agreement, it is imperative to thoroughly understand ANCSA and the lands and mineral rights acquired by the Native corporations thereunder. ANCSA is an extremely complicated piece of legislation and a complete analysis of its provisions is beyond the scope of this paper. Although many readers will no doubt be familiar with ANCSA, a brief sketch of the lands and mineral rights acquired by the Native corporations thereunder is set forth below in order

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to enable the reader who is not familiar with ANCSA to understand the issues discussed in this paper.

ANCSA divided Alaska into twelve geographic regions on the basis of the common heritage and interests of the Native inhabitants.⁸ A regional corporation was formed in accordance with the Alaska Business Corporation Act⁹ to represent each region,¹⁰ and the Native residents of each of the approximately 220 Native villages in the State also organized a village corporation.¹¹ Basically, in order to qualify for the benefits under ANCSA, a village had to have a least 25 Native residents on the 1970 census enumeration date, the majority of the residents had to be Natives, and the village could not be of a modern and urban character.¹² The shareholders of the Native corporations consist of the Natives enrolled to the respective region or village in accordance with the procedure set forth in ANCSA.¹³ The term "Native" is defined in ANCSA to mean a citizen of the United States who is one-fourth degree or more Alaska Indian, Eskimo, or Aleut blood.¹⁴

In order to allow the Native corporations to select the approximately 44 million acres to which they are entitled, ANCSA and the Secretary of the Interior withdrew more than 100 million acres¹⁵ from all forms of appropriation under the public land laws, including the mining and mineral leasing laws, and from selection under the Alaska Statehood Act.¹⁶ The basic withdrawals consisted of all the lands within the township in which a Native village was located, all the lands in the ring of townships surrounding the township in which the Native village was located, and all the lands in the ring of townships surrounding the first ring of townships.¹⁷ In theory, the withdrawn lands around each Native village consisted of 25 townships, but in reality it was something less than 25 townships because of survey correction lines, navigable waters, prior valid existing rights, and overlaps with other withdrawals. In addition to the above-described withdrawals around the Native villages, the Secretary of the Interior was directed to withdraw additional deficiency lands where the 25 township blocks were insufficient to permit a village or regional corporation to select the acreage to which it is entitled.¹⁸

The village corporations located in the eleven regions (excluding the southeastern Alaska region) are entitled to acquire the surface estate to 22 million acres of land.¹⁹ During the first round of selections, each village corporation was entitled to select, on or before December 18, 1974, from the 25 township block surrounding the village and any related village deficiency lands, acreage equivalent to between 3 and 7 townships depending on

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the Native population of the village.²⁰ The village corporation was required to select all of the township or townships in which the village was located, and it could not select more than the equivalent of 3 townships of state selected or tentatively approved lands, 3 townships from lands within the National Wildlife Refuge System, and 3 townships from lands within a National Forest.²¹ In general, the village corporation selections had to be contiguous and in reasonably compact tracts and in whole sections and units of not less than 1,280 acres.²² The remainder of the 22 million acres was allocated to the eleven regional corporations on the basis of the Natives enrolled in each region, and the regional corporations were then required to reallocate the acreage among their village corporations on the basis of historic use, subsistence needs and population.²³ Each village corporation was required to make its second round selections of the reallocated acreage from the surrounding 25 township block and related village deficiency lands on or before December 18, 1975.²⁴ It is important to note that the village corporation only acquires the surface estate to the lands it selects; the subsurface estate of the lands is acquired by the regional corporation for the region in which the village is located.²⁵ After the village corporation receives patent to the surface estate of its lands, the village corporation must convey not less than 1,280 acres to the municipal corporation for the village, the land constituting a primary place of residence or business to the occupant, and certain other small tracts to specified users.²⁶

Certain of the regional corporations are also entitled to acquire lands independent of the village corporations. Of the approximately 16 million acres to be acquired by these regional corporations, the amount allocated to each corporation is derived by a complicated formula based upon the total land area within the region and the amount of land selected by the village corporations within the region.²⁷ The selections by these regional corporations had to be made on or before December 18, 1975.²⁸ Each regional corporation was first required to select from the available lands within the 25 township blocks surrounding the villages in the region, but selections were limited to even numbered townships in even numbered ranges and odd numbered townships in odd numbered ranges.²⁹ If a regional corporation did not use up its land entitlement in the 25 township blocks, the regional corporation was authorized to select from the regional deficiency lands set aside for this purpose.³⁰ The...