The Potential Effects of Sturgeon v. Frost on Alaska Native Corporations.

• Author: Karns, Olivia

1. INTRODUCTION II. BACKGROUND A. The History of Alaska Native Claims to Land B. Alaska Native Claims Settlement Act and the Birth of Alaska Native Corporations C. How the Lack of Sovereignty Affects Alaska Native Corporations III. ANALYSIS A. ANILCA, ANCSA, and Sturgeon v. Frost B. Economic Activities on Lands Held by Alaska Native Corporations Inside CSU's Would Be Halted C. Is ANCSA Living Up to Its Intention? IV. RECOMMENDATION A. Alaska Native Corporations Should File Suit in Federal Court B. Alaska Native Corporations Should Begin an Aggressive Political Campaign V. CONCLUSION I. INTRODUCTION

   The Alaska Native Claims Settlement Act, enacted in 1971, was heralded as a new chapter in Indian Law. (1) It extinguished Alaska Natives' (2) aboriginal claims to land and created a complex mechanism by which Native groups were able to select and eventually own millions of acres of land, the distribution of millions of dollars in an Alaska Native fund, and anticipated profits for Alaska state oil royalties. (3) Rather than vesting these assets in existing tribal governments, Congress created Alaska Native Corporations to manage and develop the assets. (4) Today, almost 50 years after the passage of the Alaska Native Claims Settlement Act, the intentions of the Act have been met with varying degrees of success.

   This Note compares Congress' intentions when it passed the Alaska Native Claims Settlement Act with how past and current case law, including the Ninth Circuit's most recent ruling in Sturgeon v. Frost, have treated Alaska Native Corporations. It will also briefly examine how Alaska Native Corporations compare with their analog in the continental United States, Tribal Corporations. Part II will discuss in detail the history and expectations surrounding the passage of the Alaska Native Claims Settlement Act. Part III will examine the Supreme Court's and Ninth Circuit's most recent decision in Sturgeon v. Frost, and consider the effects the Ninth Circuit's ruling may have on Alaska Native Corporations. It will also discuss how the Ninth Circuit's ruling might compare with the intention of the Alaska Native Claims Settlement Act. Lastly, Part IV recommends a direction for Alaska Native Corporations to take in light of the Ninth Circuit's ruling.

2. BACKGROUND

   Alaska Native Corporations currently comprise some of the biggest economic forces in Alaska and have economic influence throughout the United States. (5) Alaska Native Corporations are owned by over roughly 111,000 Alaska Native shareholders who reside in villages and towns in Alaska as well as outside of the state. (6) Annual per capita payments to shareholders have ranged in value, but have reached as high as $25,000. (7) 8 A 2010 report estimated the combined corporate revenues of Alaska Native Corporations to equal $8.2 billion from their business ventures in Alaska and around the world.

   However, although it is undeniable that Alaska Native Corporations have become a significant economic player, to fully appreciate their role and purpose it is necessary to understand the circumstances that surrounded their creation and the differences between Alaska Native Corporations and other Tribal Corporations found in the continental United States. This Part will discuss first, the history of Alaska Native claims to lands, second, the adoption of the Alaska Native Claims Settlement Act (ANCSA) and the creation of Alaska Native Corporations, and lastly, the difference between Alaska Native Corporations and American Indian Tribal Corporations in the lower forty-eight. (9)

   1. The History of Alaska Native Claims to Land

      The United States acquired Alaska from Russia in 1867 pursuant to the Treaty of Cession. (10) At the time the United States acquired Alaska, the land had been virtually untouched by non-Native people. (11) The Treaty of Cession essentially quitclaimed Russia's interested in the land to the United States (12) and provided that the "uncivilized tribes will be subject to such laws and regulation as the United States may, from time to time, adopt in regard to aboriginal tribes of that country." (13)

      Except for a few unique cases, "the general lesson gleaned from history and disposition of aboriginal claims in Alaska is that, like other indigenous Americans, Alaska Natives held claims to vast tracts of land by aboriginal title." (14) Congress first openly acknowledged Alaska Native claims to lands in the Organic Act of 1884 which stated "[t]hat the Indians or other persons in said district shall not be disturbed in the possession of any lands actually in their use or occupation or now claimed by them but terms under which such person may acquire title to such lands is reserved for future legislation by Congress." (15) However, unlike tribal lands in the continental United States, which were largely taken by force or treaty, (16) because of the vast size of the Alaska territory--a territory larger than Montana, California, and Texas combined--and the general disinterest of non-Natives to live in it during the 19th century and early 20th century, Native claims to land were left relatively unaddressed for a large span of time. (17) However, as the federal government became increasingly aware of the importance of Alaska's strategic proximity to the then Soviet Union and the discovered large oil reserves in the Kenai Peninsula, Alaska's population grew and pushed for statehood. (18) The 1958 Statehood Act acknowledged Native Claims to Land and provided that "all right and title ... to any lands or other property (including fishing rights), the right or title to which may be held by any Indians, Eskimos, Aleuts ... or is held by the United States in trust for said natives ... shall be and remain under the absolute jurisdiction and control of the United States until disposed of under its authority except to the extent as the Congress has prescribe or may hereafter prescribe." (19) On January 3, 1959, Alaska was admitted to the Union as a state. (20)

      Following Alaska's statehood and the continued discovery of oil and other natural resources came increasing pressures to determine the boundaries and legitimacy of Alaska Native claims to land, which gave inspiration to the Alaska Native Claims Settlement Act. (21)

   2. Alaska Native Claims Settlement Act and the Birth of Alaska Native Corporations

      ANCSA, passed in 1971, set out to settle the "immediate need for a fair and just settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land claims." (22) However, Congress also sought to re-envision the way American Indian land claims were resolved, and specifically found that:

      [T]he settlement should be accomplished ... in conformity with the real economic and social needs of Natives, without litigation, with maximum participation by Natives in decisions affecting their rights and property, without establishing any permanent racially defined institutions, rights, privileges, or obligations, without creating a reservation system or lengthy wardship or trusteeship, and without adding to the categories of property and institutions enjoying special tax privileges or to the legislation establishing special relationships between the United States Government and the State of Alaska. (23) The act marked a stark departure from the practices Congress had used to negotiate with tribes in the continental United States. (24)

      In another distinct decision, ANCSA further mandated two tiers of Alaska Native Corporations. (25) First of all, ANCSA mandated the incorporation of twelve Alaska Native regional corporations. (26) The regional corporations were to be "composed as far as practicable of Natives having a common heritage and sharing common interests." (27) An option for a thirteenth regional corporation was also mandated to represent Alaska Natives who were no longer residing in Alaska. (28) These regional corporations were given clear title to approximately 45 million acres of land and $96.2 million dollars from an "Alaska Native Fund" to be distributed in nearly equal portions from royalties from mineral leases in Alaska and congressional appropriations. (29)

      ANCSA also created a second tier of Native Corporations by naming over 200 Native Villages that had at least 25 residents. (30) The village corporations could make additional selections from public lands, which would then belong to their corporations. (31) Furthermore, regional corporations and the federal government possessed the "power to transfer funds, land and other resources to the village corporations after they had incorporated." (32) However, village corporations were not given title to the subsurface estate; rather, those were given to the Regional Corporation that represented the village. (33)

      Unlike tribal corporations in the lower forty-eight, under ANCSA, Regional Corporations are required to be for-profit entities in compliance with Alaska law. (35) Additionally, each Alaska Native alive on December 18, 1971 was to be issued 100 shares of stock in the regional corporation representing the region in which the Alaska Native lived. (36) In order to enact resolutions that would allow the corporations to act in any significant way or to merge with another Regional Corporation, Alaska Native Corporations are bound by the traditional rules of corporate law. (37)

      However, it is important to note that Alaska Native Corporations' corporate structure differs from traditional corporate structure in a few significant ways. (38) First of all, ANCSA initially restricted the alienation of stock in Alaska Native Corporations until December of 1991. (39) ANCSA was later modified to allow Alaska Native Corporations to restrict the alienation of their stock indefinitely, and to date not one has lifted the alienation restriction. (40) Secondly, ANCSA did not require Alaska Native Corporations to comply with the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment...