ANCSA made only Natives born before December 1971 corporate shareholders. Those born after want change.

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By Nathaniel Herz - Anchorage Daily News

December 30, 2021

[This story was originally published by the Anchorage Daily News on December 16, 2021. Read the original story at the Anchorage Daily News. Republished by Native News Online with permission. This story is fourth in a series. This story is part of a reporting collaboration between Alaska Public Media, the Anchorage Daily News and Indian Country Today on the 50th anniversary of the Alaska Native Claims Settlement Act. Funding for the project was provided by the Alaska Center for Excellence in Journalism.]

UTQIAGVIK — Justin Mitchak Gatten’s Iñupiat ancestors were the original residents of Alaska’s North Slope thousands of years ago, and they once claimed millions of acres of land.

But today, Gatten can’t even find a lot to build a home in the region’s largest community, Utqiagvik. Instead, Gatten, 37, rents an aging Quonset hut outside of town. He lives with his wife and four children.

The home is cozy but comes with inconveniences familiar to rural residents across Alaska: A delivery truck must replenish Gatten’s water supply as often as twice a day, and he has to warn his kids away from the septic tank, which sometimes overflows.

The North Slope’s Indigenous people lost most of their ancestral lands long ago, in a landmark settlement with the U.S. government that turns 50 years old this month, the Alaska Native Claims Settlement Act.

But after its passage, the act did transfer 340 square miles in Utqiagvik’s vicinity to a newly created, locally owned corporation, Ukpeagvik Iñupiat Corp.

In a region long gripped by a housing crisis, where multiple generations often cram into the same home, many younger Utqiagvik residents like Gatten see the corporation’s largely unoccupied land as part of the solution.

That’s because UIC is owned by more than 3,000 Indigenous Alaskans who trace their heritage to the North Slope.

But for now, the owners with the most influence are those born before the settlement’s cutoff: Dec. 18, 1971. Those people each received 100 shares in UIC.

[Read the rest of the series]

Gatten’s generation, and anyone else younger than 50, was left out. The result, he and others say, has denied them a full voice in the elections that set UIC’s leadership and direction, and a stake in their ancestral lands — until or unless they inherit stock from a relative.

UIC has made its original shareholders eligible to receive homesite lots from the corporation. But Gatten, who owns just 10 shares inherited from his mother, can’t access that program yet, and neither can his peers.

[From Indian Country Today: Cheat sheet: Alaska Native Claims Settlement Act 101]

While Gatten has inherited two lots from grandparents, both are cut off from roads. And, he said, when he tried to exchange one with UIC for a more accessible lot, the only ones available were next to Utqiagvik’s sewage lagoon.

Alaska Native corporations have the power, if they choose to exercise it, to issue new shares to “descendants” born after ANCSA’s cutoff date.

But only about a dozen of the roughly 200 regional and village corporations statewide have done so, according to corporate experts. The indecision reflects high stakes that are both cultural and financial, as some Native corporations pay out substantial dividends that could diminish if more shares are issued.

[From Indian Country Today: The next generation of shareholders]

UIC, which paid original shareholders dividends of $2,000 this year, has been studying the problem for years. But it has not yet issued new shares, with its board citing the complexity of the issue.

The same dilemma is playing out across the state. Dozens of Native-owned corporations are contending with the same dynamics as their original shareholders, and descendants, grow older.

In many cases, the conflict has pitted community members and even family members against each other.

“What good is land if you’re not going to develop it?” Gatten said. “It seems quite selfish to me, for them to hold lands with road access, and we have to live in subpar conditions like this.”

UIC leaders didn’t respond to repeated interview requests.

But in newsletters, the corporation says it’s formed a board committee to explore options for issuing new shares to descendants, in response to a successful 2017 shareholder ballot proposal that recommended such a decision.

“The board of directors continues to explore this complex and significant step in the evolution of UIC,” Delbert Rexford, the corporation’s chief executive, wrote in a newsletter last year. “However, because descendant enrollment involves many aspects beyond land rights alone, and because the ballot proposal did not address what other rights should or might be included if a new class of stock were issued, these questions still need to be asked and answered.”

Shares and identity

Some Alaska Native leaders say that issuing shares to descendants is an obvious choice to help preserve Native corporations’ Indigenous character and distinguish them from traditional capitalist businesses.

[Part 1: A historic settlement turns 50, but questions linger over whether it was fair]

[Part 2: Many see the Red Dog mine as an ANCSA success story. What happens when the ore runs out?]

[Part 3: Proposed Ambler project underscores promise and peril of the Alaska Native Claims Settlement Act]

In the early decades after ANCSA’s passage, many Native shareholders looked to their corporations for profits and dividends, and leaders prioritized expansion and growth.

But now, Native leaders say that their younger shareholders place higher value on their culture and see the corporations as a potential source of Indigenous identity and belonging, with responsibilities that extend beyond the fiduciary.

“I think it needs to happen, for that continuation of community feeling,” said Josiah Patkotak, Utqiagvik’s state representative — a descendant and former UIC board member who has inherited a handful of shares. “There needs to be some kind of identity and purpose and meaning.”

Many corporations, though not all, have tried to blunt the divide between shareholders and descendants by making descendants eligible for non-cash benefits like corporate jobs and scholarships.

But economics and politics quickly complicate the discussion about the shares themselves.

One of the biggest obstacles is the potential for “dilution,” or devaluing stock owned by existing shareholders.

[From Indian Country Today: Alaska without ANCSA? Look to Metlakatla]

It’s a math problem: With a finite amount of profits that corporations can pay out as dividends, more shares make those dividends smaller on a per-share basis. And existing shareholders have to approve the issuance of any new shares — meaning that to do so, they may be voting against their own financial interest.

There’s also the question of power. Some shareholders, and well-compensated board members, could find themselves in the minority if descendants were granted equal voting power.

The monetary impact is less significant at UIC, where the corporation’s yearly dividends to original shareholders have exceeded $1,000 only twice in the past six years, according to annual reports filed with state regulators.

But certain other corporations pay much more, and issuing new stock could cause problems for original, older shareholders. Some of them might depend on dividends to cover their expenses, particularly in areas of rural Alaska that lack high-paying jobs and strong cash economies.

“For dividends to go down, it’s just a scary thing, because you have your budget established,” said Hallie Bissett, executive director of the Alaska Native Village Corporation Association.

Another important dynamic cited by those opposed to enrolling descendants is that original shareholders, in some cases, sacrificed early dividends so that their corporations could reinvest profits in new businesses that only paid dividends later.

Afognak Native Corp., whose shareholders have roots in the Kodiak region, has a huge government contracting business, and those with 100 shares now receive yearly dividends of some $20,000.

But Gerad Godfrey, an Afognak shareholder and former board member, said the contracting business was enabled by original shareholders who decided not to pay out their earnings from early timber harvests — unlike shareholders in a different Native village corporation not far away.

“They’ve got cousins that have a brand new outboard, a down payment on a boat, a brand new four-wheeler across the way there,” said Godfrey. “They sacrificed to get us where we are today.”

Godfrey was born in 1972, a year too late to qualify as an original shareholder. And he grew up watching three of his older siblings receive dividends of thousands of dollars before he inherited some of his grandmother’s stock.

In an interview, Godfrey said he remembers returning home from a school event to find his father, who was campaigning for a Native corporation board seat, stuffing envelopes in the kitchen. His father asked him for help, but at that point, Godfrey said, he was feeling “a little resentful.”

“He says, ‘Don’t you want your dad to be elected to your Native corporation?’ ” Godfrey said. “I said, ‘It’s not my Native corporation. It’s Glenn Jr.’s, it’s Valery’s, it’s Jenna’s, it’s yours. So, I’ll take a pass.’ And I went downstairs and turned on the TV.”

Nonetheless, Godfrey has resisted giving shares to his high school-age children, and he still opposes issuing new shares to descendants, largely because of the potential for dilution.

Descendants will still inherit shares eventually, Godfrey said. And growing up without them, he added, made him appreciate it more when he could finally participate — he’s now served on Native corporation boards and worked for them as an employee.

“I may have been more immersed and involved in Alaska Native corporation activities and engagement because I knew what it was to be without,” he said.

Mitigating dilution

Advocates for issuing new shares, meanwhile, say there are ways to mitigate the dilution problem. And they add that the focus on it risks distracting from the benefits of bringing younger people into the Native corporations.

“The one big reason not to do it is because it’s going to dilute the stock. That’s just a very Western, normal-corporation way of thinking — and we’re not regular, Western, normal corporations. We’re Native corporations,” said Joe Nelson, board chair of the Southeast Alaska-based Sealaska Corp. “By definition, we should be thinking about the long term, and making decisions that are in the best interests of the next generations.”

When Sealaska Corp. voted to enroll descendants, in 2007, it also approved issuing an extra 100 non-voting shares to elders, said Nelson.

The idea was to protect those shareholders against the dilution of their original stock, he added.

Other corporations have also reduced dilution by issuing fewer than 100 shares to descendants. And they can delay its effects by adjusting the timing of when shares are issued.

Sealaska doesn’t allow descendants to enroll until they turn 18, while Interior-based Doyon Ltd. issues 30 shares to descendants when they’re born and 70 more when they turn 18. Kuukpik Corp., which is tied to the village of Nuiqsut on the North Slope, recently issued 50 shares to descendants and will issue them five more each year for the next decade.

Some corporations, meanwhile, limit how many descendants can receive stock by maintaining a requirement in the original settlement legislation that shareholders be one-fourth Alaska Native.

Corporations have “levers that can be pulled” to address concerns around dilution, said Nathan McCowan, board chair of the Alaska Native Village Corporation Association.

Another thing that many pro-enrollment corporate leaders say should make dilution less of an obstacle: Younger generations of Natives tend to be less focused on dividends and monetary benefits and more interested in a source of identity.

Bissett, the Native village corporation association’s executive director, has inherited just three shares in Cook Inlet Region Inc. And she said her quarterly dividends sometimes amount to just $20.

But owning those shares, she added, has allowed her to win a seat on CIRI’s board and help shape the corporation’s future.

“It is not about the money for me,” she said. “You hear people talk about when they received their shares, and the first time they were able to attend annual meetings for the company — to have a share in taking care of these ancestral lands that were given to us to manage, forever. And that’s just an incredible feeling.”

‘Conquer and divide’

Supporters of enrolling new shareholders say it’s increasingly urgent for Native corporations to address the divide between elders and descendants, since the sooner descendants can become involved with corporate affairs, the readier they’ll be for leadership roles as original shareholders inevitably age out of them.

Half of Alaska’s 12 larger, regional Native corporations have already issued new shares; others are studying the question. But only a half dozen or so of the more than 150 village corporations, which tend to be smaller, have done so, according to industry leaders.

The relatively small fraction of village corporations to issue new shares is likely a reflection of how technical and expensive the process can be, McCowan said. Shareholder surveys and meetings are involved; consultants, actuaries and attorneys must be hired.

It took six years of debate and discussion before Kuukpik issued its new shares, said Isaac Nukapigak, a board member and former corporate president.

Native corporations’ generational divide was baked into the original 1971 settlement by Congress, which failed to include a mechanism to enroll new shareholders. That decision has since caused so many internal conflicts among Native people that some suspect Congress was trying to provoke them.

“That was their intent,” said Gatten. “Conquer and divide.”

But today, there’s also broad agreement across the Native corporation world that a statewide, congressional fix to the problem isn’t viable. That’s because of the widely varying circumstances at each corporation and, at some, the outright opposition to enrolling descendants.

One suggestion from McCowan: Congress could budget money to support smaller corporations going through the enrollment process, which might otherwise lack the cash to hire the relevant experts.

“We’re byproducts of the public policy process in the United States, governed, like treaties are, by the laws of Congress,” McCowan said. “If there’s a problem that Congress created then, by and large, it’s a problem that Congress has the responsibility to solve.”

But Native groups have not launched any kind of coordinated lobbying effort to push that idea, and no action from Alaska’s congressional delegation appears to be imminent — though U.S. Sen. Lisa Murkowski, whose congressional office was the only one to respond to a question about descendant enrollment, said she’s open to discussion with corporations about how to solve the problem.

“Whatever it is they choose to do, our role here in Congress should be to facilitate the promise of ANCSA, and be responsive to the fact that the world’s changed a little bit in 50 years here,” she said. “If we need to review, we should do that.”

In the meantime, Gatten, in Utqiagvik, remains in his Quonset hut, as his wife nudges him to try for another land exchange with UIC that wouldn’t put his new house next to the town’s sewage lagoon.

Gatten said he understands that issuing new shares can risk diluting dividends for original shareholders, and that his ancestors made sacrifices and grew up without many of the modern comforts that corporations have helped bring to the North Slope.

But as a parent to his own children, Gatten said, he remains confounded by original shareholders who aren’t eager to share in their corporate wealth with their descendants.

“We’re grateful. I’ll shake every single one of those people’s hands that’s still alive, saying thank you. But do you deserve a dollar amount? I don’t think that’s fair,” he said. “I think everyone should get a piece of the pie.”