[House Report 104-40]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-40
_______________________________________________________________________
SETTLEMENT COMMON STOCK OF COOK INLET REGION
_______________________________________________________________________
February 21, 1995.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 421]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 421) to amend the Alaska Native Claims Settlement Act to
provide for the purchase of common stock of Cook Inlet Region,
and for other purposes, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
The amendment (stated in terms of the page and line numbers
of the introduced bill) is as follows:
Page 6, strike line 12 and all that follows through line
17, and insert the following:
``(ii) Neither Cook Inlet Regional Corporation nor a member
of the board of directors or officers of Cook Inlet Regional
Corporation shall be liable for damages resulting
Purpose of the Bill
The purpose of H.R. 421 is to amend the Alaska Native
Claims Settlement Act to provide for the purchase of common
stock of Cook Inlet Region, and for other purposes.
Background and Need for Legislation
Congress enacted the Alaska Native Claims Settlement Act
(ANCSA) in 1971 (Public Law 92-203) to address claims to lands
in Alaska by its Eskimo, Indian and Aleut Native people. Lands
and other benefits transferred to Alaska Natives under the Act
were conveyed to thirteen corporations formed under the Act.
Alaska Natives enrolled to each of these corporations were
issued shares in the corporation. Cook Inlet Region, Inc.
(CIRI) is one of the corporations formed under ANCSA and has
approximately 6,262 Alaska Natives enrolled, each of whom were
issued 100 shares of stock in CIRI as required under ANCSA.
ANCSA stock (unlike most corporate stock) can not be sold,
transferred or pledged by the owners of the shares. Instead
transfers can only happen through inheritance or in limited
cases by court decree. The ANCSA provisions restricting the
sale of stock were put in place to protect Native shareholders
from unscrupulous transactions, and to allow the corporations
to grow and mature to provide long-lasting benefits to its
shareholders.
The original authors of ANCSA initially believed that a
period of twenty years would be a sufficient amount of time for
the restrictions on the sale of shareholder stock to remain in
place. The restrictions originally were to expire on December
31, 1991.
As 1991 appropriated, bringing with it the impending change
in the alienability of Native stock, the Alaska Native
community grew concerned about the effect of the potential
stock sale. The Alaska Federation of Natives, a statewide
organization representing the State's 90,000 Alaska Natives,
spearheaded a legislative initiative to address the 1991 stock
sale issue. Many of the Native corporations, including CIRI,
actively solicited their shareholders' views on this critical
matter, through meetings, questionnaires, polling and formal
votes. In 1987, Congress amended ANCSA to reform the mechanism
governing stock sale restrictions in a fundamental way. Under
the 1987 amendments, the restrictions on alienability continue
automatically unless and until the shareholders of a Native
corporation vote to remove them. The 1987 amendments also
provided several procedural mechanisms to bring such a vote,
including action by the corporate Board of Directors and
petitions by shareholders.
To date, no Native Corporation has sought to lift the
alienability restrictions because Native shareholders continue
to value Native ownership of the corporations and Native
control of the lands and other assets held by them.
CIRI has conducted a number of continuing surveys, focus
groups and special shareholders' meetings to ascertain the
views of its shareholders regarding the alienation restrictions
on CIRI stock. Two results have consistently stood out in these
assessments.
First, the great majority of CIRI shareholders favor
maintaining Native ownership and control of CIRI. These
shareholders see economic benefits in the continuation of
Native ownership, and also value the important cultural goals,
values and activities of their ANCSA corporation.
Second, a significant percentage, albeit a minority of
shareholders, favor accessing some (or all) of the value of
their CIRI stock through sale of that sock. These shareholders
include elderly shareholders who have real current needs, yet
doubt that the sale of stock will be available to them in their
lifetimes; holders of small, fractional shares received through
one or more cycles of inheritance; non-Natives who have
acquired stock through inheritance but without attendant voting
privileges; and shareholders who have few ties to the
corporation or to Alaska (25 percent of CIRI shareholders live
outside Alaska).
Under current law, these two legitimate but conflicting
concerns cannot be addressed, because lifting restriction on
the sale of stock is an all or nothing proposition. To allow
the minority of shareholders to exercise their desire to sell
some or all of their stock, the majority of shareholders would
have to sacrifice their important desire to maintain Native
control and ownership to CIRI.
CIRI believes this conflict will eventually leave the
interests of the majority of its shareholders vulnerable to
political instability. CIRI recognizes that responding to the
desire of those shareholders who wish to sell CIRI stock is a
legitimate corporate responsibility. More importantly, CIRI
believes that there is a way to address the needs and desire of
both groups of shareholders so that the sale of stock will not
compromise the ``Nativeness'' of the company, and will not
jeopardize the economic future of the company for those who
choose not to sell. H.R. 421 authorizes a third option for
CIRI. The Board of Directors of CIRI may propose an amendment
to it's articles of incorporation which would authorize a
board-approved plan allowing CIRI to purchase common stock from
its shareholders on a voluntary basis. All stock would be
immediately canceled by the corporation upon purchase. Approval
of the amendment by the shareholders would require a 50-
percent-plus-one majority vote of all outstanding stock that
carries voting rights. This option applies only to CIRI and
does not apply to any other ANCSA corporation.
Committee Action
H.R. 421 was introduced by Congressman Don Young of Alaska
on January 4, 1995, and referred to the Committee on Resources.
The bill was identical to H.R. 4665 introduced in the 103rd
Congress, was the subject of hearings held by the Subcommittee
on Oversight and Investigations of the Committee on Natural
Resources on September 22, 1994, and part of a bill ordered
reported by the Committee on Natural Resources on September 27,
1994.
On February 8, 1995, H.R. 421 was considered by the
Committee on Resources. At that time, Congressman George Miller
offered an amendment to clarify liability for the CIRI Board of
Directors or corporate officers in relation to the sale of the
CIRI stock. The amendment was adopted by voice vote. The
Committee ordered the bill favorably reported, as amended by a
voice vote, in the presence of a quorum.
Section-by-Section Analysis
Section (1)(a) amends section 7(h) of ANCSA by inserting a
new paragraph (4). New paragraph 4(A) defines ``Cook Inlet
Regional Corporation''. New paragraph 4(B) of ANCSA allows
CIRI, by amendment to its articles of incorporation, to
purchase common stock from its shareholders. New Paragraph 4(C)
allows the shareholders to sell their shares to CIRI. New
paragraph 4(D) requires the prior approval of the CIRI Board of
Directors before any sale or purchase of the shares. New
paragraph 4(E) authorizes the Board of Directors to recognize
the different rights that accrue to any class or series of
shares of common stock.
New paragraph 4(F) provides that any shareholder who
accepts an offer shall receive consideration for his or her
share of common stock and a security for the non-resident
rights that attach to such share. New paragraph 4(G) authorizes
the issuance of a non-voting security. New paragraph 4(H)
provides that any shares purchased by the corporation shall be
cancelled and provides how distributions shall be calculated.
New paragraph 4(I) excludes certain persons from participating
in an offer by the corporation to purchase shares. New
paragraph 4(J)(i) provides that the Board of Directors may
determine the terms of an offer to purchase shares and that in
determining the terms of a purchase offer, CIRI can rely on the
good faith opinion of any firm or member of a firm of
investment bankers or valuation experts. New paragraph 4(J)(ii)
provides that the CIRI Board of Directors and officers of CIRI
cannot be held liable for damages resulting from an offer made
in connection with the sale of any stock if the offer was made
in good faith, in reliance on a good faith opinion of a
recognized firm of investment bankers or valuation experts, and
otherwise in accordance with paragraph (4). New paragraph 4(K)
provides that consideration to purchase shares may be in the
form of cash, securities, or a combination of cash and
securities. New paragraph 4(L) provides that the sale of
settlement common stock shall not diminish a shareholder's
status as an Alaska Native for the purpose of qualifying for
government programs and further provides that the proceeds from
the sale of stock shall not be excluded in determining
eligibility for any government needs-based program.
Section 1(b) of H.R. 421 is a conforming amendment to
section 8(c) of ANCSA which provides that ANCSA section 7(h)(4)
shall not apply to village, urban and group corporations.
Committee Oversight Findings and Recommendations
Pursuant to clause 2(l)(3) of rule XI of the Rules of the
House of Representatives and clause 2(b)(1) of rule X of the
Rules of the House of Representatives, the Committee's
oversight findings and recommendations are reflected in the
body of this report.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that the
enactment of H.R. 421 will have no significant inflationary
impact on prices and costs in the operation of the national
economy.
Cost of the Legislation
Clause 7 of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in carrying out
H.R. 421. However, clause 7(d) of that rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
Compliance with house rule XI
1. With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, H.R.
421 does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
2. With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 421.
3. With respect to the requirement of clause 2(l)(3)(C) of
rule XI of the Rules of the House of Representatives and
section 403 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R. 421
from the Director of the Congressional Budget Office:
congressional budget office cost estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 15, 1995.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed H.R. 421, a bill to amend the Alaska Native Claims
Settlement Act to provide for the purchase of common stock of
Cook Inlet Region, and for other purposes, as ordered reported
by the House Committee on Resources on February 8, 1995.
H.R. 421 would provide the Cook Inlet Regional Corporation
in Alaska, one of twelve Nagtive corporations created by the
Alaska Native Claims Settlement Act of 1971, additional
flexibility in handling its corporate stock. Based on
information provided to us by the Department of the Interior,
we estimate that enactment of this bill would not affect the
federal budget or the budgets of state or local governments.
Because enactment of H.R. 421 would not affect direct spending
or receipts, pay-as-you-go procedures would not apply to the
bill.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Theresa
Gullo.
Sincerely,
Robert D. Reischauer, Director.
Departmental Reports
The Committee received a report on H.R. 421 from the
Department of the Interior on February 8, 1995. No reports have
been received on H.R. 421.
U.S. Department of the Interior,
Office of the Secretary,
Washington, DC, February 8, 1995.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: This is to provide views of this
Department concerning two bills, which are expected to be
marked up in the near future by your Committee. They are H.R.
402, ``To amend the Alaska Native Claims Settlement Act, and
for other purposes,'' and H.R. 421, ``To amend the Alaska
Native Claims Settlement Act to provide for the purchase of
common stock of Cook Inlet Region, Inc., and for other
purposes.''
These bills were considered in the 103rd Congress but were
not passed. The bills represent areas where a great deal has
already been accomplished through informal discussion and
cooperative efforts of the Committee and the progress that has
been shown in this legislation to date. While we do have some
concerns with the bills, a substantial amount of agreement has
been achieved on them through the cooperative efforts.
H.R. 402
We will consider first H.R. 402. The bill would amend
vaious provisions of the Alaska Native Claims Settlement Act
(``ANCSA'') (43 U.S.C. Sec. 1601 et seq.) and would otherwise
provide for certain conveyances of land or interests therein.
We reported on the predecessor bill in the 103rd Congress, H.R.
3612. Several of the provisions of the bill have been removed
and are not included in H.R. 402 because agreement has been
reached and/or because the Alaska Federation of Natives (AFN)
has withdrawn them. Most of the provisions in H.R. 402 reflect
suggestions this Department made to H.R. 3612.
Comments are as follows:
Section 1. Ratification of certain Caswell Creek and Montana Creek
conveyance
In 1974, Montana Creek Native Association, Inc. (MCNA) and
Caswell Native Association, Inc. (CNA) withdrew their
applications for village status then pending before the
Department. Instead of applying for a withdrawal and selecting
lands, the two groups and Cook Inlet Region, Inc. (CIRI)
entered into an agreement. CIRI conveyed 11,520 acres to each
group. Under the Department's regulations, each group would
have been eligible for a maximum of 7,680 acres. CIRI has
requested that the conveyances from it to the groups be
ratified by Congress and that the groups' lands be treated as
lands conveyed pursuant to ANCSA. This amendment would make the
lands eligible for fire protection under section 22(e) of
ANCSA, 43 U.S.C. Sec. 1621(e) and eligible for a land bank
status under section 907 of the Alaska National Interest Lands
Conservation Act (ANILCA) (43 U.S.C. Sec. 1636, as amended).
The Department supports the ratification of CIRI's transfer. We
note that two changes were made to the bill last year based on
Interior's comments, and those changes have been retained in
H.R. 402. They are included at page 2, lines 8-17.
We do have an additional amendment which we believe is
necessary in connection with the earlier changes. In the second
sentence, page 2, the reference to section 14(h)(2) of ANCSA
(43 U.S.C. Sec. 1613(h)(2)) should be deleted, and the
reference to Sec. 1613(h)(2) in line 4 should be changed to
simply Sec. 1601 et seq. The lands should be deemed as ANCSA
conveyances in order to have all the protection of Sec. 21 of
ANCSA (43 U.S.C. Sec. 1620) and Sec. 907 of ANLICA). Without
the deletion, it could be argued that 23,000 acres must be
deleted from lands available to other regions under
Sec. 14(H)(8) of ANCSA (43 U.S.C. Sec. 1613(h)(8)), which would
be inconsistent with the agreed goal of making these lands
available to the other regions.
2. Mining claims after lands conveyed to Alaska regional corporation
When lands were patented to the regional corporations under
the provisions of ANCSA sections 11(a)(1), 11(a)(2) and 16,
they were conveyed ``subject to valid existing rights.'' This
included valid mining claims. Under the holding in Alaska
Miners v. Andrus, 662 F.2d 577 (9th Cir. 1981), miners were not
compelled to file for patent on such claims, but by failing to
apply for a patent in the time permitted by ANCSA, mining
claimants lost the right to obtain a patent to their mining
claims from the federal government. Accordingly, BLM has taken
the position that after the transfer of title it cannot accept
FLPMA filings on such mining claims, nor has BLM been willing
to accept annual rental payments. This has created confusion
about mining regulatory authority over these mining claims.
The purpose of this amendment is to clarify who has mining
regulatory authority over these claims. Under the amendment,
the regional corporations are explicitly given the authority to
regulate the mining claims under the mining laws of the United
States, as such laws are amended. Adoption of this legislation
would have the desire effect of bringing clarity to the
relationship between the miner/inholder and the Regional
Corporation.
The Department supports an amendment to ANILCA on this
subject. We proposed substitute language last year to that
which was proposed in H.R. 3612. That proposed substitute
language, which more clearly gives management authority to the
Regional Corporations, has now been adopted in H.R. 402. We
endorse this section with the new language.
3. Settlement of claims arising from hazardous substance contamination
of transferred lands
Native corporations have selected and the United States has
conveyed lands which contain contaminants. The nature of the
contamination may come in various forms including residue from
abandoned upstream mining operations, and in many cases
substances now considered contaminants were not so considered
at the time of the transfer. AFN contends that it is unfair for
the regional corporations to shoulder the entire burden of
cleaning up contaminated sites where the contamination is not
the fault of the Native corporations. However, we have
insufficient information at this time to address this issue. We
support the provision for a study to develop recommendations on
how to deal with the problem. We appreciate that the current
provision represents a substantial change from settlement
provisions in earlier versions of the bill which we strongly
opposed.
While we support the basic terms of the section, we
recommend refinements which we believe are important to the
effectiveness of the provision. We believe the section should
be consistent with terms in the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) (42 U.S.C.
Sec. 9601, et seq.). Two different terms are used in the
operable portion of the study, ``contaminants'', which is
defined in the proposed revision to ANCSA subsection 40(a)(1),
and ``hazardous substances'', which is not defined. Since both
terms are already defined and understood in environmental law,
it make sense to adopt those definitions for both terms.
Subsection (a)(1) should read:
``(1) The term ``contaminant'' means hazardous
substance(s), pollutants, or contaminants as defined in
Public Law 96-510, Title I, Sec. 101, Dec. 11, 1980, 94
Stat. 2767, as amended, 42 U.S.C. Sec. 9601 (14) and
(33).''
Subsection (b) should be amended, for consistency and
because the required report must address contaminants and not
just hazardous substances, to replace the term ``hazardous
substances'' on page 5, line 4, with the term ``contaminants.''
We recommend the definition of term ``lands'' be deleted in
section 40(a) on page 4. We believe it is unnecessary and
potentially confusing because the word ``lands'' is fully
described in subsection 40(b), and subsections 40(b) (1)-(4)
refer back to that description through the use of the term
``such lands''.
Section (b)(2) should be amended by adding the word ``on''
after ``existing information''. This small but important word
makes a big difference in terms of personnel time and money.
With the word, the report is required to state where the
information is located. Without the word, the statutory
directive will be to list all available information in the
report, wherever it may exist.
Subsection (b)(2), page 5, line 12, should be amended by
changing the term ``amelioration'' to ``remediation'', since
``remediation'', like ``removal'', is a term used in CERCLA,
while ``amelioration'' is not.
4. Authorization of appropriations for the purpose of implementing
required reconveyances
ANCSA section 14(c) requires village corporations to
reconvey certain land within their patented selections. The
problems associated with the reconveyance of lands to
individuals and municipalities within the village patents are
complex and technically difficult.
This proposed amendment would constitute an authorization
for appropriations to provide technical assistance to villages
for section 14(c) reconveyances.
The Department notes that the provision has been amended
substantially as suggested by the Department in its report of
last year. It is our understanding that AFN concurs with these
changes.
5. Native allotments
Two native allotments in the National Petroleum Reserve--
Alaska (NPR-A), totalling less than 240 acres, are surrounded
by lands conveyed to the village corporation of Nuiqsut. The
subsurface estate under Nuiqsut village lands has been conveyed
to Arctic Slope Regional Corporation (ASRC) pursuant to Section
1431(o) of Alaska National Interest Lands Conservation Act. In
the absence of this amendment, the United States is expected to
own the oil and gas estate under the two allotments.
This amendment would permit conveyance to ASRC of the
federally owned oil and gas estate under the Native allotments
for the purpose of consolidating subsurface interests in the
area and eliminating isolated tracts of public land. Any oil
and gas recoverable from the Native subsurface would, in all
likelihood, have only a limited market in Nuiqsut. The lands
have not been deemed valuable for coal. The State of Alaska has
consented to the transfer of the reserved minerals to the
Corporation. Furthermore, this amendment would not result in a
net loss of subsurface estate to the United States. We support
this technical amendment. As we suggested in our report of last
year, the bill has been amended to delete the words ``a
Village'' and substitute the word ``Kuukpik'' (the name of the
ANCSA corporation at Nuiqsut) in the first sentence of proposed
Section 1431(o)(5).
6. Report concerning open season for certain Native Alaskan veterans
for allotments
The Alaska Native Allotment Act of 1906 was repealed by
ANCSA on December 18, 1971. During 1970 and 1971, a concerted
effort was made by the Bureau of Indian Affairs, Ruralcap and
Alaska Legal Services to notify as many Alaskan Natives as
possible of the upcoming repeal and the need to apply for an
allotment. Individuals who were otherwise entitled to apply for
an allotment but who were on active military duty during 1970
and 1971 may have been deprived of an opportunity to apply for
such allotments.
We note that the bill has been amended from last year's
bill to reduce the eligible parties and to provide for a report
on the problem and suggested solutions. We believe this is far
preferable to the original provision in earlier bills, and we
support the provision. However we strongly recommend that the
time for the report be extended to 12 months. We do not think
it can be done in 6 months.
7. Transfer of Wrangell Institute
The Wrangell Institute was originally withdrawn in 1956 for
the administration of Native Affairs. That use terminated with
the passage of ANCSA. The property was excessed by BIA to GSA
in 1975 and subsequently 31 acres were transferred to the city
of Wrangell. In 1977 CIRI requested that the remaining 140
acres be made available for selection. CIRI was issued a
revocable license on May 11, 1977. In August 1978, this land
and the buildings thereon were the subject of an interim
conveyance to CIRI.
This amendment would cause ten acres of that conveyance
together with the structures to be returned to the United
States. The section would also hold CIRI harmless for any and
all claims arising from either federal or CIRI ownership of the
land prior to its return to the United States. CIRI is seeking
a credit to its property account in the amount of $382,305, the
estimated worth of the property. In addition to the costs of
supplementing the CIRI property account, the U.S. would have to
assume the liability for the clean up of the property which
could include the destruction and removal of all buildings on
the property which have deteriorated since the cessation of
maintenance by CIRI.
Asbestos products were properly used in construction of the
buildings and were properly maintained at the time of
conveyance; and this fact is not unique to CIRI. It is
specifically the Department's position that the asbestos was
not considered a pollutant at the time of transfer, and it was
not friable. CIRI had the option of containing the asbestos as
opposed to abandoning the building, but did not do so. It is
our understanding that the asbestos became friable after the
building was abandoned.
Furthermore, CIRI had specifically requested that the
property be made available for selection and had the fullest
opportunity to evaluate the Wrangell property prior to
selecting it, having held a revocable license to the property
for over one year prior to conveyance, for this purpose.
The Department cannot support the relief sought for CIRI.
Under the facts we do not believe CIRI is entitled to the
relief sought, and to do so would require relief for others
similarly situated. We are not in a position to assume that
very extensive liability at this time. It is the Department's
understanding, for example, that there are over 200 other
conveyed buildings which contained non-friable asbestos. We do
not believe that as a matter of law the United States must
reimburse CIRI for its investment or hold them harmless for the
time of their ownership. Moreover, it is not feasible to
reimburse all entities to whom the United States has conveyed
buildings that contained non-friable asbestos or who may not be
satisfied with their land. We do not support this amendment. It
is our understanding that GSA also opposes this amendment for
similar reasons.
We have serious concerns with the section, both on the
facts of the particular case, and because of the precedent it
would set.
Although we do not support section 7, the Department does
support reviewing the Wrangell Institute situation in the
context of the section 3 contamination study discussed earlier
in these comments. The section 3 study will provide a
comprehensive review of the problem of the presence of
contaminants on conveyed lands. We believe that this is the
more appropriate course of action under the circumstances, and
it would place CIRI in the same position as other Alaska Native
corporations with respect to consideration of the circumstances
involving the presence of any contaminants, and identification
of possible remedies.
8. Shishmaref Airport amendment
This section of the bill would allow the Department of
reacquire Shishmaref Airport, originally conveyed to the State
of Alaska, and to immediately transfer it to the Shishmaref
Native Corporation. The bill attempts to apportion fairly any
potential liability for cleanup of hazardous or solid wastes on
the property.
We recommend the following amendment to section 8,
beginning at line 13: delete all after ``airport.'' on line 13,
through ``and,'' on line 15, and revise to read follows: ``* *
* airport. The Administrator of the Federal Aviation
Administration is hereby directed to exercise said reverter in
Patent No. 1240529 in favor of the United States within 12
months of the date of enactment of this section. Upon revesting
of title, notwithstanding any other provision of law, the
Secretary shall * * *.''
This is a preferable means of executing the transfer, and
the Secretary is not called upon to reacquire the land.
With this amendment, the Department supports the section.
With the amendments proposed above, including the deletion
of section 7 as written, the Department supports the enactment
of H.R. 402.
H.R. 421
H.R. 421 would amend the Alaska Native Claims Settlement
Act to provide for the purchase of common stock of the Cook
Inlet Corporation.
In 1971, the Alaska Native Claims Settlement Act (ANCSA)
was enacted to settle and resolve the claims of Alaska Natives
to most of the State of Alaska. The settlement recognized title
to 44 million acres of land to be held for Native Corporations
and approximately $1 billion in monetary compensation for the
loss of the remaining lands. Under ANCSA, 12 geographic regions
were created with five incorporators authorized under each
region. Each regional corporation was formed under the laws of
Alaska to conduct business for profit and was managed by a
board of directors. Alaska Natives, living on the date of
enactment, were issued stock in the corporations and the right
to vote in elections for the board of directors and on other
issues of importance to the stockholders.
ANCSA provided that for a period of 20 years Native
corporation stock could not be sold, transferred, pledged,
subjected to a lien or judgment execution, assigned in present
or future or otherwise alienated; and could only be transferred
through inheritance or in limited cases of court decree. In
1987, Congress amended the restrictions on stock sale, instead
of expiring at the end of 20 years (1991), the stock
restrictions on alienability would continue automatically until
the shareholders of a Native corporations voted to remove them.
H.R. 421 amends ANSCA, authorizing the Cook Inlet Regional
Corporation, with approval of the shareholders, to offer
shareholders a repurchase of corporation stock from those who
want to sell their stock to the corporation.
Our understanding is that the Cook Inlet Regional
Corporation has conducted a poll of its shareholders and found
them to be in favor of this action. Once legislation is passed,
the bill provides that the issue will be put to a formal vote
of the shareholders for their approval. In light of this, we
have no objection to the passage of H.R. 421. We do have two
recommendations, however.
Paragraph (J)(ii) on page 6 would hold harmless any
director of Cook Inlet Regional Corporation and any firm or
member of a firm of investment bankers or valuation experts who
assist in the determination of the terms of an offer to
purchase, from damages for terms made in an offer. We are
opposed to this provision. As to directors we do not believe
that we should change through a federal act the terms of state
law as to the standards of responsibility for directors of
corporations, particularly as to Native corporations in which
shareholders cannot as easily shed their interests as
shareholders in most corporations can do. We should not weaken
the protections afforded shareholders. Moreover, we fail to see
the rationale for absolving bankers and valuation experts from
responsibility for doing precisely what they are hired and well
paid to do, and we believe this holds unnecessary risks to the
shareholders.
Paragraph (L) on page 7 provides that proceeds from sale of
stock shall not be excluded from eligibility determinations for
needs-based government programs. We approve of the provision,
but would defer to the views of other agencies more directly
affected. We recommend, however, the inclusion in line 13,
after the word ``Proceeds'', the following, ``. . . in excess
of $2,000 received by any individual stockholder . . . '' This
would exclude from eligibility determinations the first $2,000
received by a shareholder. The purpose of this provision is
simply to clarify that the bill is consistent with the
provision and policy enacted by the Congress in section 15 of
the 1991 Amendments to section 29 of ANCSA (43 U.S.C. 1607(c)).
This concludes our comments.
The Office of Management and Budget advises that it has no
objection to the presentation of this report from the
standpoint of the Administration's program.
Sincerely,
George T. Frampton, Jr.,
Assistant Secretary,
Fish and Wildlife and Parks.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
ALASKA NATIVE CLAIMS SETTLEMENT ACT
* * * * * * *
regional corporations
Sec. 7. (a) * * *
* * * * * * *
(h)(1) * * *
* * * * * * *
(4)(A) As used in this paragraph, the term ``Cook Inlet
Regional Corporation'' means Cook Inlet Region, Incorporated.
(B) The Cook Inlet Regional Corporation may, by an
amendment to its articles of incorporation made in accordance
with the voting standards under section 36(d)(1), purchase
Settlement Common Stock of the Cook Inlet Regional Corporation
and all rights associated with the stock from the shareholders
of Cook Inlet Regional Corporation in accordance with any
provisions included in the amendment that relate to the terms,
procedures, number of offers to purchase, and timing of offers
to purchase.
(C) Subject to subparagraph (D), and notwithstanding
paragraph (1)(B), the shareholders of Cook Inlet Regional
Corporation may, in accordance with an amendment made pursuant
to subparagraph (B), sell the Settlement Common Stock of the
Cook Inlet Regional Corporation to itself.
(D) No sale or purchase may be made pursuant to this
paragraph without the prior approval of the board of directors
of Cook Inlet Regional Corporation. Except as provided in
subparagraph (E), each sale and purchase made under this
paragraph shall be made pursuant to an offer made on the same
terms to all holders of Settlement Common Stock of the Cook
Inlet Regional Corporation.
(E) To recognize the different rights that accrue to any
class or series of shares of Settlement Common Stock owned by
stockholders who are not residents of a Native village
(referred to in this paragraph as ``non-village shares''), an
amendment made pursuant to subparagraph (B) shall authorize the
board of directors (at the option of the board) to offer to
purchase--
(i) the non-village shares, including the right to
share in distributions made to shareholders pursuant to
subsections (j) and (m) (referred to in this paragraph
as ``nonresident distribution rights''), at a price
that includes a premium, in addition to the amount that
is offered for the purchase of other village shares of
Settlement Common Stock of the Cook Inlet Regional
Corporation, that reflects the value of the nonresident
distribution rights; or
(ii) non-village shares without the nonresident
distribution rights associated with the shares.
(F) Any shareholder who accepts an offer made by the board
of directors pursuant to subparagraph (E)(ii) shall receive,
with respect to each non-village share sold by the shareholder
to the Cook Inlet Regional Corporation--
(i) the consideration for a share of Settlement
Common Stock offered to shareholders of village shares;
and
(ii) a security for only the nonresident rights that
attach to such share that does not have attached voting
rights (referred to in this paragraph as a ``non-voting
security'').
(G) An amendment made pursuant to subparagraph (B) shall
authorize the issuance of a non-voting security that--
(i) shall, for purposes of subsections (j) and (m),
be treated as a non-village share with respect to--
(I) computing distributions under such
subsections; and
(II) entitling the holder of the share to the
proportional share of the distributions made
under such subsections;
(ii) may be sold to Cook Inlet Region, Inc.; and
(iii) shall otherwise be subject to the restrictions
under paragraph (1)(B).
(H) Any shares of Settlement Common Stock purchased
pursuant to this paragraph shall be canceled on the conditions
that--
(i) non-village shares with the nonresident rights
that attach to such shares that are purchased pursuant
to this paragraph shall be considered to be--
(I) outstanding shares; and
(II) for the purposes of subsection (m),
shares of stock registered on the books of the
Cook Inlet Regional Corporation in the names of
nonresidents of villages;
(ii) any amount of funds that would be distributable
with respect to non-village shares or non-voting
securities pursuant to subsection (j) or (m) shall be
distributed by Cook Inlet Regional Corporation to
itself; and
(iii) village shares that are purchased pursuant to
this paragraph shall be considered to be--
(I) outstanding shares, and
(II) for the purposes of subsection (k)
shares of stock registered on the books of the
Cook Inlet Regional Corporation in the names of
the residents of villages.
(I) Any offer to purchase Settlement Common Stock made
pursuant to this paragraph shall exclude from the offer--
(i) any share of Settlement Common Stock held, at the
time the offer is made, by an officer (including a
member of the board of directors) of Cook Inlet
Regional Corporation or a member of the immediate
family of the officer; and
(ii) any share of Settlement Common Stock held by any
custodian, guardian, trustee, or attorney representing
a shareholder of Cook Inlet Regional Corporation in
fact or law, or any other similar person, entity, or
representative.
(J)(i) The board of directors of Cook Inlet Regional
Corporation, in determining the terms of an offer to purchase
made under this paragraph, including the amount of any premium
paid with respect to a non-village share, may rely upon the
good faith opinion of a recognized firm of investment bankers
or valuation experts.
(ii) Neither Cook Inlet Regional Corporation nor a member
of the board of directors or officers of Cook Inlet Regional
Corporation shall be liable for damages resulting from terms
made in an offer made in connection with any purchase of
Settlement Common Stock if the offer was made--
(I) in good faith;
(II) in reliance on a determination made pursuant to
clause (i); and
(III) otherwise in accordance with this paragraph.
(K) The consideration given for the purchase of Settlement
Common Stock made pursuant to an offer to purchase that
provides for such consideration may be in the form of cash,
securities, or a combination of cash and securities, as
determined by the board of directors of Cook Inlet Regional
Corporation, in a manner consistent with an amendment made
pursuant to subparagraph (B).
(L) Sale of Settlement Common Stock in accordance with this
paragraph shall not diminish a shareholder's status as an
Alaska Native or descendant of a Native for the purpose of
qualifying for those programs, benefits and services or other
rights or privileges set out for the benefit of Alaska Natives
and Native Americans. Proceeds from the sale of Settlement
Common Stock shall not be excluded in determining eligibility
for any needs-based programs that may be provided by Federal,
State or local agencies.
* * * * * * *
village corporations
Sec. 8. (a) * * *
* * * * * * *
(c) Applicability of Section 7.--The provisions of
subsections (g), [(h)] (h) (other than paragraph (4)), and (o)
of section 7 shall apply in all respects to Village
Corporations, Urban Corporations, and Group Corporations.
* * * * * * *
ADDITIONAL VIEWS OF REPRESENTATIVE GEORGE MILLER
This legislation could significantly impact 6,500 Alaska
Native shareholders of the Cook Inlet Region, Inc. (CIRI) if
the authority to buy-back shareholder stock is exercised.
H.R. 421 would authorize CIRI's board of directors to
propose a plan to purchase settlement common stock from
shareholders of the corporation. CIRI's management argues that
this is a preferable alternative to voting to remove all
restrictions on selling CIRI stock, allowing CIRI to remain a
Native-owned and controlled corporation while at the same time
allowing some disgruntled shareholders to cash out.
While I am not enthusiastic about H.R. 421, I did not
oppose the legislation because: (1) there is no congressional
mandate that CIRI amend its articles of incorporation or
exercise authority to purchase stock from its shareholders; (2)
the CIRI shareholders must vote to approve a buy-out plan
adopted by the board; and (3) the buy-out option does not apply
to any Alaska Native corporation other than CIRI.
I'm concerned, however, that the bill favors the interests
of CIRI management over the shareholders. As introduced, H.R.
421 provided immunity from ``notwithstanding any other
provision of law'' for CIRI, its board, and ``any firm or
member of a firm of investment bankers or valuation experts''
involved an the offer to purchase shareholder stock if they act
in ``good faith.''
Clearly, terminating participation in the corporation
established pursuant to the Alaska Native Claims Settlement Act
would be a major decision for the CIRI shareholders. CIRI is
among the most financially successful Alaska Native
corporations, with real estate and other investments across the
nation. Valuation of its assets for purposes of a shareholder
buy-out could be a complex endeavor. At a minimum, each
shareholder needs to know whether a stock buy-out offer
reflects its full and fair value.
To better protect the shareholder, I offered an amendment
which was accepted by the Committee to eliminate the
``notwithstanding any other provision of law'' language and
also to delete the immunity from damages for outside investment
bankers or valuation experts. As a matter of Federal law, the
board and officers of CIRI may act in ``good faith'' reliance
on advice from investment bankers or valuation experts. By
eliminating the reference to ``notwithdtanding any other
provision of law,'' the amendment assures that standards of
care applicable under Alaska law will continue to apply to CIRI
and its board's activities.
In enacting H.R. 421, it is important to note that the
Committee is not endorsing the adoption of any buy-out plan nor
concluding that selling stock would be in the long-term best
interests of CIRI or its shareholders.
George Miller.