[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 . . .