[Senate Report 104-20]
[From the U.S. Government Publishing Office]
Calendar No. 41
104th Congress Report
SENATE
1st Session 104-20
_______________________________________________________________________
PURCHASE OF COMMON STOCK OF COOK INLET REGION
_______
March 27, 1995.--Ordered to be printed
_______________________________________________________________________
Mr. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 444]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 444) 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, reports favorably thereon without amendment and
recommends that the bill do pass.
Purpose of the Measure
The purpose of S. 444, as ordered reported, is to amend the
Alaska Native Claims Settlement Act (ANCSA) to authorize Cook
Inlet Region, Inc. (CIRI), an Alaska Native regional
corporation, upon approval of its shareholders, to conduct a
``buy-back'' of CIRI stock from those shareholders who desire
to tender their stock to the company.
Background and Need
Congress enacted ANCSA in 1971 to address claims to lands
by Alaska's Eskimo, Indian and Aleut Native people. Lands and
other benefits transferred to Alaska Natives under the Act were
conveyed to corporations formed under the Act. Natives enrolled
in these corporations were issued shares of stock in the
corporation. CIRI is one of the corporations formed under
ANCSA. At the time of incorporation, CIRI had approximately
6,300 Alaska Natives, each of whom was issued 100 shares of
stock in the corporation as required by ANCSA.
ANCSA stock (unlike most corporate stock) could not be
sold, transferred or pledged by the owners of the shares.
Rather, transfers could only happen through inheritance (or in
limited cases by court decree). The ANCSA provisions
restricting sale of stock were put in place to protect the
Native shareholders and to allow the corporation to grow and
mature in order to provide long-lasting benefits to its
shareholders.
The Congress initially believed that a period of 20 years
would be a sufficient amount of time for the restrictions on
sale to remain in place. Therefore, the restrictions originally
were to expire 20 years after the passage of ANCSA on December
31, 1991.
As 1991 approached, the Alaska Native community grew
concerned about the effect of the potential sale of Native
stock. In 1987, Congress enacted legislation which reformed the
mechanism governing stock sale restrictions in a fundamental
way. Under the 1987 Amendments, instead of expiring
automatically in 1991, the restrictions on alienability
continue automatically unless and until the shareholders of a
Native corporation vote to remove them. (The 1987 Amendments
provided several procedural mechanisms to bring such a vote,
including action by the board of directors and petitions by
shareholders.) To date, no Native corporation has sought to
lift the alienability restrictions.
Since the 1987 amendments were enacted, CIRI has discovered
that the majority of its 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.
On the other hand, a significant percentage, albeit a
minority of shareholders, favor accessing some (or all) of the
value of their CIRI stock through sale of that stock. These
shareholders include but are not limited to elderly
shareholders who have real current needs, yet doubt that sale
of stock will be available to them in their lifetime; 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 of Alaska).
Under current law, in order 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 of CIRI.
This legislation seeks to address this problem by employing
a mechanism that other companies routinely use: the ``buying
back'' of its own stock which would then be canceled. Thus,
those who wished to sell could do so (with some limitations)
while the corporation would clearly remain in Native control.
Legislative History
S. 444 was introduced by Senators Murkowski and Stevens on
February 16, 1995. A companion bill, H.R. 421, was introduced
in the House of Representatives on January 4, 1995, and
subsequently passed the House on March 14.
At the business meeting on March 15, 1995, the Committee on
Energy and Natural Resources ordered S. 444 favorably reported,
without amendment.
In the 103rd Congress, similar legislation was introduced
as S. 2249, by Senators Murkowski and Stevens on July 29, 1994.
A Subcommittee hearing was held on August 4. At the September
21, 1994 business meeting, the Committee on Energy and Natural
Resources ordered S. 2249, as amended, favorably reported.
Committee Recommendations and Tabulation of Votes
The Committee on Energy and Natural Resources, in open
business session on March 15, 1995, by a unanimous vote of a
quorum present, recommends that the Senate pass S. 444, without
amendment.
The roll call vote on reporting the measure was 18 yeas, 0
nays, as follows:
YEAS NAYS
Mr. Murkowski
Mr. Hatfield *
Mr. Domenici
Mr. Nickles *
Mr. Craig
Mr. Thomas
Mr. Kyl *
Mr. Grams
Mr. Jeffords *
Mr. Burns
Mr. Campbell
Mr. Johnston
Mr. Bumpers
Mr. Ford
Mr. Bradley
Mr. Bingaman *
Mr. Akaka
Mr. Wellstone
* Indicates voted by proxy.
Summary of Major Provisions
The legislation ensures that any repurchase plan must be
put to a shareholder vote and approved by the shareholders as
an amendment to the articles of incorporation of CIRI.
The decision to sell stock to CIRI by individual CIRI
shareholders will be strictly voluntary.
The company will be required upon repurchase of the stock
to cancel the stock.
The offer to repurchase will be made by CIRI on the same
terms to all holders of the same class or series of stock.
There will be no repurchase allowed except those purchases
conducted by the company. No individual, shareholder, director,
or member of management will be allowed to purchase stock. In
this way, native ownership and control of CIRI will be
maintained, and no individual shareholder will be allowed to
amass stock that has been purchased from other shareholders.
No director or officer of the company will be allowed to
tender stock for sale to the company.
Stock held by custodians, guardians, trustees or other
similar persons will not be subject to repurchase.
Distributions that are set out in ANCSA that are based on
shareholder count (such as section 7(i)) will remain unaffected
by the sale of stock.
In determining the terms of any purchase officer, CIRI will
be required to obtain the opinion of a recognized firm of
investment bankers or other valuation experts, and will be
entitled to rely on those good faith opinions.
Cost and Budgetary Considerations
The following estimate of costs of this measure has been
provided by the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 17, 1995.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed S. 444, 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 Senate Committee on Energy and Natural Resources on
March 15, 1995.
S. 444 would provide the Cook Inlet Regional Corporation in
Alaska, one of twelve Native 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
S. 444 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, who can be reached at 226-2860.
Sincerely,
James L. Blum
(For June E. O'Neill, Director).
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 444. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 444, as ordered reported.
Executive Communications
On March 21, the Committee on Energy and Natural Resources
requested legislative reports from the Department of the
Interior and the Office of Management and Budget setting forth
Executive agency recommendations on S. 444. These reports had
not been received at the time the report on S. 444 was filed.
When these reports become available, the Chairman will request
that they be printed in the Congressional Record for the advice
of the Senate.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill S. 444, as ordered 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):
Public Law 92-203 92d Congress, H.R. 10367 December 18, 1971
AN ACT to provide for the settlement of certain land claims of Alaska
natives, and for other purposes
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That this
Act may be cited as the ``Alaska Native Claims Settlement
Act''.
* * * * * * *
Sec. 7. * * *
* * * * * * *
(h) Settlement Common Stock
* * * * * * *
(4) COOK INLET REGIONAL CORPORATION.--(A) In this
paragraph:
(i) The term ``Cook Inlet Regional
Corporation'' means Cook Inlet Region,
Incorporated.
(ii) The term ``nonresident distribution
right'' means the right of owners of nonvillage
shares to share in distributions made to
shareholders pursuant to subsections (j) and
(m).
(iii) The term ``nonvillage shares'' means
shares of Settlement Common Stock owned by
stockholders who are not residents of a Native
village.
(iv) The term ``nonvoting security'' means a
security, for only the nonresident rights that
attach to a share of Settlement Common Stock,
that does not have attached voting rights.
(B) 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 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
Settlement Common Stock of the Cook Inlet Regional
Corporation, to the Corporation.
(D) No purchase or sale 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 purchase and sale
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 nonvillage 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) nonvillage shares, including nonresident
distribution rights, at a price that includes a
premium, in addition to the amount hat 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) nonvillage 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 nonvillage 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 nonvoting security.
(G) An amendment made pursuant to subparagraph (B)
shall authorize the issuance of a nonvoting security
that--
(i) shall, for purposes of subsections (j)
and (m), be treated as a nonvillage share with
respect to--
(I) computing distributions under
those subsections; and
(II) entitling the holder of the
share to the proportional share of the
distributions made under those
subsections;
(ii) may be sold to Cook Inlet Regional
Corporation; and
(iii) shall otherwise be subject to the
restrictions under paragraph (1)(B).
(H) A share of Settlement Common Stock purchased
pursuant to this paragraph shall be canceled on the
conditions that--
(i) a nonvillage share with the nonresident
rights that attach to such a share that is
purchased pursuant to this paragraph shall be
considered to be--
(I) an outstanding share; and
(II) for the purposes of subsection
(m), a share of stock registered on the
books of the Cook Inlet Regional
Corporation in the name of a
stockholder who is not a resident of a
Native village;
(ii) any amount of funds that would be
distributable with respect to a nonvillage
share or nonvoting security pursuant to
subsection (j) or (m) shall be distributed by
Cook Inlet Regional Corporation to the
Corporation; and
(iii) a village share that is purchased
pursuant to this paragraph shall be considered
to be--
(I) an outstanding share; and
(II) for the purposes of subsection
(k), shares of stock registered on the
books of the Cook Inlet Regional
Corporation in the name of a resident
of a Native village.
(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 nonvillage
share may rely upon the good faith opinion of a
recognized firm of investment bankers or valuation
experts.
(ii) Notwithstanding any other law, Cook Inlet
Regional Corporation, a member of the board of
directors of Cook Inlet Regional Corporation, and any
firm or member of a firm of investment bankers or
valuation experts who assists in a determination made
under this subparagraph shall not 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 the 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 a 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 Natives and Native Americans. Proceeds from
the sale of Settlement Common Stock shall not be
excluded in determining eligibility for any needs-based
program that may be provided by a Federal, State, or
local agency.
* * * * * * *
Sec. 8. * * *
* * * * * * *
(c) The provision of subsections (g), [(h)] (h) (other than
paragraph (4)), of Section 7 . . .