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Here's Your Land, Now Make Money

With that message from Congress, Alaska's Natives have become both guardians and exploiters of some of the world's greatest natural resources

  • Lisa Drew
  • Dec 01, 1991
At the kitchen table of a pre-fab plywood house in the Native village of Akhiok at the tip of Kodiak Island, Ralph Eluska is helping his cousin Nick Peterson figure out how to make money from a square mile or so of some of the best bear and salmon habitat in the world. Outside, a cold spring rain lashes the tiny village in the far-north evening daylight of Alaska. In the wilderness beyond the cluster of houses, Kodiak's famed grizzlies are coming out of hibernation, snow is melting in the mountains and lakes are thawing.

Inside, over endless cups of black coffee, shoes left outside the door to avoid tracking the village's ubiquitous slate gravel, the cousins ponder nothing less than the future of their land and their people. For these two men, both Native corporate leaders, bears have become attractions that outsiders will pay to see and hunt, and thawed lakes are places for airplanes to land.

Still, some of the talk in Peterson's kitchen might be familiar to inhabitants of this region over the millennia of their occupation here. There is Eluska's satisfaction at harvesting sea urchins earlier in the day (for their sweet roe, scooped finger-to-mouth out of shells cut open with a knife). And there are the cousins' shared memories of growing up in a one-room log cabin in Akhiok with six other children and their grandparents (waking up, recalls Peterson, "among our grandparents' legs at the foot of the bed").

But when the discussion gets down to business, the two men enter a brave new world. Peterson, president of the Ayakulik Village Corporation, has been stumped by the question of how to profit from land hunted and fished by his forebears since before the time of Egypt's pyramids. And he is dismayed by the mazes of business, law and government bureaucracy. Last year, a lucrative contract for a fishing lodge slipped through his fingers. "It's really discouraging," he says. "I feel like it's a worthless cause."

"Have a plan," says Eluska, chairman of the Alaska Federation of Natives and president of the somewhat larger Akhiok-Kaguyak Village Corporation. "Take it in steps."

"I never thought of it that way," says Peterson. He looks out the window toward eagles circling over the village's small harbor. "This is a new way of looking at things," he says. "How are we to know how to do this? How are we to know?"

How indeed. For thousands of years, the Natives of Kodiak Island have taken what they needed from the land and sea in a subsistence culture. Now they—like almost all Alaska Natives—are adjusting to the bold social experiment shaped by the 20-year-old Alaska Native Claims Settlement Act (ANCSA).

An alternative to the reservation system widely regarded as a failure in the Lower 48, ANCSA gave some 78,000 Alaska Natives 44 million acres of land and almost one billion dollars, resolving a tangle of aboriginal claims. Then it made the participants into shareholders of new village and regional corporations, catapulting the imperatives of profit and loss into the center of the state's Aleut, Indian and Eskimo cultures. This year there is an added pressure: As of 1991, for the first time, not only can the corporations exploit some of the world's greatest reserves of timber, oil, gas, minerals and wildlife, but shareholders can vote to actually sell stock and land—as well they might, for most of the corporations have not thrived.

The notions of resource development and land ownership are radical stuff for Alaska's Natives. At hearings held in the early 1980s by the Alaska Native Review Commission, typical was the testimony of Mary Miller in Nome: "From a corporate standpoint, if we are to pursue profit and growth, and this is why profit organizations exist, we would have to assume a position of control over the land and the resources and exploit these resources to achieve economic gain. This is in conflict with our traditional relationship to the land: We were stewards, we were caretakers."

Suggests University of Alaska economics professor Steve Colt, "Suppose you uprooted a bunch of successful Fortune 500 businessmen, gave them some whale boats, rifles and snowmachines, and said, 'Okay, you have 20 years to make a go of subsistence.' That's the enormity of the gap."

Since 1971, across Alaska, Native o capitalists like Eluska and Peterson have faced Solomonic choices between conservation and potential prosperity. Many have forged ahead with development, and in some cases the environment has been the loser: Native-owned old-growth forest, for example, has been severely clearcut. In some cases, resources are still pristine: On Kodiak, where much of the Native-owned land is paradoxically contained within the Kodiak National Wildlife Refuge, until now corporations have foregone development in favor of trying to return the land to the refuge with a trade or sale.

"Our people do not want to see development here," says Eluska. "We just need an economic opportunity somewhere." But a series of potential trades or sales with the federal government have fallen through, and shareholder patience is wearing thin. Eluska and Peterson now talk with some sadness of bringing to the untouched wilderness airstrips, lodges for hunters and sports fishermen, bear viewing platforms, even resort condos.

When ANCSA passed in 1971, it served as all things to all people. Congress, by settling in one fell swoop the aboriginal claims that had tied up a good part of the state, was able to open the way for the Trans-Alaska Pipeline. Oil developers then were able to proceed with North Slope drilling. The rest of the development community licked its collective chops at the Natives' 44 million acres, which were still potentially open to its purposes. Even conservationists won something, a study provision in the act that eventually led to the landmark Alaska National Interest Lands Conservation Act (ANILCA), which designated some 100 million acres of new national parks, preserves, refuges, wild and scenic rivers and wilderness. And, of course, Natives got not only money and land, but a chance to prosper.

But by 1990, Alaska Business Monthly reported, "By all accounts, this experiment has been heartbreaking and almost incalculably costly, in both financial and human terms." Though a few corporations have prospered, many are failing. Most have spent huge amounts of money on legal fees, administrative costs and bickering among one another. Economic support for the Natives has come largely from government assistance programs and the state's oil wealth, not corporate success.

Part of the problem has been the wrenching change from subsistence to profitmaking, from communal life to private ownership. As recently as 25 years ago, money was not needed in many villages. In Southeast Alaska, the more a man could give away as host of a potlatch celebration, the more status he had. The shift to corporate values has contributed to serious social problems. One sad statistic: Alaska Native men commit suicide ten times more often than other Americans.

Then there has been the vagueness of the corporate identities. Unlike most businesses, ANCSA corporations started with no specific products—though Congress's intent was clear. "Promoting the use of natural resources was the idea behind the experiment," says Uwe Gross, president of Koniag Regional Corporation, umbrella corporation for Kodiak's village shareholders. Even conservationists, says Jack Hession, Alaska representative for the Sierra Club, "fully expected development would take place."

What no one foresaw was the scale of some of the resulting environmental devastation, notably from logging, mining and oil development. Nor was it clear that doing business with Natives could become, as Colt puts it, "a socially correct umbrella under which to conduct a development agenda"—helping set the stage, for example, for controversial oil drilling in the Arctic National Wildlife Refuge.

It's anyone's guess whether the same resources would have been at risk of exploitation without ANCSA. Perhaps state ownership would have led to similar development. Perhaps conservationists would not have gone on to win ANILCA. "The one thing you can say," says Colt, who has studied the corporations' economic health, "is that it's hard to find a case where there's less development because of the claims settlement act."

Kodiak is one of the exceptions. If you ask Ralph Eluska whose land lies beyond Akhiok's 40-odd buildings, he will answer, "Bear land." He might as well call it salmon land. Or eagle land. Or river otter land. The Kodiak National Wildlife Refuge is home to 250 species of mammals, fish and birds, including the highest known density of the largest brown bears in the world. There are as many as 3,000 bears on the refuge, one per square mile. The huge beasts, the world's largest land carnivores, stand as high as 10 feet, weigh as much as 1,600 pounds and can run 35 miles per hour.

The question of ownership in the vast system of glacial valleys, wetlands, mountains, rivers and lakes—crisscrossed by grizzly trails visible from the air—seems absurd. Yet 40 miles northwest of Akhiok, Larsen Bay villagers have put up for sale several 10-acre plots on Larsen and Uyak bays, asking price around $30,000. And Akhiok-Kaguyak's shareholders, who own 138,000 acres, are asking, says Eluska, "Where's mine? What is Ralph doing for me today?"

Meanwhile, in the city of Kodiak at the other end of the island, refuge manager Jay Bellinger is acutely aware of each new infringement on territory set aside in 1941 by President Franklin D. Roosevelt to preserve the habitat of the island's enormous brown bears and other wildlife. "It seems a shame to me," says Bellinger, "that one of the few places in the world set aside for brown bear has to get carved up and whittled away."

The key so far to the preservation of the island wilderness paradise has been the Catch 22 of ANCSA—appropriately labeled Section 22(g) —that makes Native lands within refuges "subject to the laws and regulations" that govern the refuges. In other words, on Kodiak, the bears come first. That, say the island's Natives, is unfair. "Somebody got hoodwinked," says Eluska. "Most other Native corporations can do what they want to with their land."

Unfair or not, so far 22(g) has helped keep the land pristine. "No one wants to test 22(g) because no one knows what it means," says Koniag's Gross. "If it means the Natives can't develop their land, Congress didn't give them anything. That's a big question mark."

In Akhiok, sitting in the living room of a modest pre-fab house, with a view of the ocean meeting the tip of the windswept island, Eluska asks, "At what point do you determine you're broke?" He gestures west toward the tidal flats. "Out there you got clams," he says. He motions east toward glacial valleys, snowcapped mountains and winding rivers. "And out there are bears. If you starve, it's your own fault."

Meanwhile, "in a corporate sense, we're broke," he admits. "At the point the corporation can give a dividend every year, at the point people won't come say, 'Where's mine?'—then maybe we'll be money rich." As a start, he has contracted with bear guides who buy access to Ahkiok-Kaguyak's prime land. And last summer, a guide contracted to open the region's first fishing lodge at Horse Marine Lagoon on Olga Bay. So far, no refuge has taken Natives to court for violating 22(g).

The closest Kodiak's Natives have come to arranging for their land to revert to the refuge was a proposed trade, backed by the U.S. Department of the Interior, in the late 1980s for land in the Arctic National Wildlife Refuge. The villages would have remained on Kodiak, as they have for millennia, but their land allotments would have switched to potentially oil-rich land in the arctic refuge. Controversy over the fate of the arctic refuge helped kill that exchange, which also included other Native corporations.

Then, last year, Congress considered, but rejected, coughing up the money—as much as $190 million—to buy the Native land outright. Another possibility, at least according to Native leaders, is a trade for abandoned federal property, such as army bases, elsewhere in the country.

As wild as that idea may seem, it has plenty of precedent. One of the most successful Native corporations, Cook Inlet Regional Corporation, had a problem claiming its ancestral lands: The city of Anchorage had enveloped them. So Congress gave Cook Inlet vouchers to spend on federal property. Cook Inlet now owns a range of unlikely properties across the country. One example: the Torpedo Factory on the Potomac River in Alexandria, Virginia, once a federal facility and now a posh condominium development.

But most of the corporations have had to work with their land and natural resources—in some cases with disastrous environmental effects. Probably the most objectionable has been clearcut logging in Southeast Alaska. In the last ten years, Native corporations in the Panhandle have clearcut tens of thousands of acres of an ecosystem that has evolved for thousands of years, the northernmost extension of the temperate rain forest.

Because the timber was on private land, which was only minimally regulated until just last year, the logging practices have been ruthless. Stream banks have been shaved, silt has spilled into waterways, treeless areas are enormous. "There are places that have been skinned alive," says the Sierra Club's Jack Hession. The logging is now moving north into Prince William Sound, still recovering from the 1989 Exxon Valdez oil spill. It has also hit Afognak Island, north of Kodiak Island. Kodiak refuge manager Bellinger calls the clearcutting there "a real sickening mess." Naked hillsides now take the brunt of legendary Gulf of Alaska storm winds, and thin buffer strips of trees along streams have collapsed in storms.

Other environmental problems have resulted from mining. In northwest Alaska, the Red Dog Mine on Native land, one of the top zinc producers in the world, in 1990 poisoned a stream feeding into a major spawning and wintering river for Dolly Varden char and chum salmon. After miners chopped off the top of a mountain to get at the ore, the permafrost below warmed up and "metal levels in the creek below skyrocketed," according to Matt Robus of Alaska's Department of Fish and Game—including levels of cadmium and lead, toxic to people as well as to fish. The problem was alleviated last winter with a $10 million creek bypass. But concerns remain about how the water problems have affected fish—and about air pollution from powder concentrate.

Then there is the proposed oil development on the coastal plain of the Arctic National Wildlife Refuge, which has pitted Natives against Natives. Inupiat Eskimo stockholders in Arctic Slope Regional Corporation will likely become wealthy if Congress approves the drilling (now folded into the energy 5 bill wending its way through Congress). But Gwich'in Athabascan Indians on the other side of the Brooks Range, one of two Native groups that opted for a reservation rather than participate in ANCSA, say that oil development will directly interfere with the calving of the Porcupine caribou herd (named for a river the animals cross during migration—a charge disputed by the oil industry. The caribou are at the center of the Gwich'in subsistence lifestyle. "This is not just an environmental issue," Gwich'in Sarah James told a Senate committee last spring. "It's about the survival of an ancient culture."

In the early 1980s, the arctic refuge was briefly opened to oil exploration through a land swap similar to the larger one proposed a few years later. Under Interior Secretary James Watt, the government gave Arctic Slope Regional Corporation a piece of the refuge in exchange for less promising land in Gates of the Arctic National Park. Conservationists then watched in dismay as Chevron drilled a single, now-famous test well, with results that have become a well-guarded proprietary secret. "There's an example," says Hession, "of using Natives as a stalking horse to get industry into the refuge."

The General Accounting Office later concluded the exchange was "not in the government's best interest." The government lost the lands with the best oil and gas potential. And no one now has access to the invaluable data from the test well. So why did the trade go through? And why did Interior try in 1988 to do the larger land exchanges (stopped by Congress, which now must approve exchanges involving the arctic refuge)? Certainly part of the reason was to save the home of Kodiak's bears and other habitat. But it was also widely acknowledged, says Colt of the University of Alaska, to be "James Watt's great plan, to turn the Natives into the battering ram to open the arctic refuge."

Politics aside, Kodiak refuge manager Bellinger draws a simple, disheartening conclusion from the failed trades: "Kodiak is being developed," he says grimly. In the refuge headquarters, he displays an overlay map. ANCSA lands are orange blotches at protected bays and the heads of major rivers. "All the best bear systems are on Native land," he says. A good bear system means a source of salmon, and that means a fishing paradise—which in turn means "the people want to be in the same place the bears want to be."

Though the number of bears that can be hunted is strictly controlled, Bellinger is troubled by how easily the bears' habits and habitat can be disturbed. The first bears affected by fishermen at prime salmon runs are likely to be dominant boars, which claim the best fishing spots. Once boars are displaced, they might start a chain reaction of displacement of other bears. Then there is the possibility of encounters between people and what Bellinger calls "teenagers," subadults that are "on their own but don't really know where they're at in the big picture, with other bears or with people." Most worrisome is the acclimation of the bears to people.

Back in Ahkiok, at Peterson's kitchen table, Eluska makes a grim prediction: "Forty years from now, this land will be subdivided. There'll be buildings here. The opportunity to prevent it is now" Peterson nods, gazing inscrutably out the window at the gray daylight. And Eluska adds, "The claims settlement act is a fact of W. The corporations are a fact of life. They aren't going to go away."

Senior Editor Lisa Drew visited Native leaders in Alaska to report this story. 

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