Resource Revenue Sharing and Native Corporations.

• Author: STRICKER, JULIE
• Position: Brief Article

Under a clause in the Alaska Native Claims Settlement Act, Alaska's regional Native corporations must share 70 percent of their net revenue earned on timber and subsurface developments off lands given to them by the settlement.

Sealaska Corp. has a highly unusual business practice. When its timber subsidiary makes a dollar, it gives 70 cents away to other corporations.

But not by choice.

Under a clause referred to as 7(i) in the 1971 Alaska Native Claims Settlement Act, Sealaska is required to put that money in a fund from which all of Alaska's land-based regional, village and urban corporations draw.

"What do we think about 7(i)?" asks Robert Loescher, Sealaska's president and CEO. "We think it's anti-capitalistic. No other corporations in America have to revenue share on the basis the Alaska Native corporations have to. It puts a large burden of risk on the corporations to develop these resources and then they have to share the revenues with the other regions that do not have to share the same risk.

"The risk is not commensurate with the return," he adds.

Congress drafted ANCSA in 1971 to settle aboriginal land claims in Alaska and clear the way for construction of the trans-Alaska oil pipeline. It created 12 land-based regional corporations, which split nearly $1 billion and 44 million acres of land. A 13th corporation was also created for Alaska Natives out-side the state, but it is excluded from the revenue-sharing clause.

As the ANCSA deadline approached, U.S. Sen. Ted Stevens, R-Alaska, inserted a clause designed to create a common denominator between those regions rich in natural resources and those without. That clause, commonly referred to as Section 7(i), mandated that 70 percent of net revenues received by each corporation as a result of development of timber, oil, gas and mineral resources be redistributed annually among the 12 regional corporations based on shareholder enrollment.

"Stevens realized that anomalies of rich hard rock minerals, and valuable oil fields, and valuable timber were not equally spread across Alaska and there would be 'have' regions and 'have-not' regions," says Loescher.

Those few lines in the mammoth ANSCA agreement have had long-range implications. And despite its intent, it has pitted the "haves" against the "have-nots."

According to Steve Colt, an economist with the Institute of Social and Economic Research in Anchorage, the regional corporations, since 1971, have earned $623 million through the...