A dispute among Alaska Native corporations about carbon credit revenue is now in court.
Three Native corporations are suing three others, who’ve made at least $100 million and likely more selling carbon credits. The corporations suing say they want their share under a four-decades-old revenue sharing agreement. The corporations selling carbon credits say that revenue should be treated differently and is not subject to the agreement.
That’s all according to reporting by Nat Herz, who writes at northernjournal.substack.com.
Herz says the dispute goes back to the 1971 Alaska Native Claims Settlement Act and a 1982 legal settlement that says corporations that develop valuable natural resources on their land have to share the revenue with other corporations, whose land under ANCSA didn’t have such valuable natural resources.
As Herz puts it, the lawsuit over carbon credits marks another era of disputes between the corporations.
The following transcript has been lightly edited for clarity.
Nat Herz: When the law was approved and signed into law, I think everyone just kind of considered that this was going to be, you know, timber, metals, oil. But as it turned out, there were initially a huge amount of disputes about, like, how do you calculate these revenues? Can you deduct costs? What kind of costs can you deduct? Basically, for 10 years after the passage of this 1971 law, there was just unending lawsuits and litigation between the Native corporations. In 1982, they signed a 120-page agreement that basically laid out in much more detail how the revenue sharing would apply. And that agreement really put a stop to all of the lawsuits for about 40 years, when some of these Native corporations started getting into this business of what’s called carbon credits.
Casey Grove: Yeah, so how do carbon credits factor in here? And if you could, just give us a brief recap of what carbon credits even are.
NH: Yeah, so carbon credits are a market, essentially, that was developed, in this case as part of a system that was adopted in California, to tax carbon emissions. And so companies and entities could set aside timber lands and promise not to cut them down for 100 years, and then they would be issued credits that could be traded to polluters as part of these carbon markets. There were three of the big regional Alaska Native corporations that got into these markets: Sealaska, which is based in Juneau, Chugach, which is kind of along Prince William Sound and the Kenai Peninsula, and Ahtna, which is more in the Interior along the Copper River Valley. Also, some of the smaller village corporations got into this business. And while we don’t know the exact amount of money and revenue that was at stake, Sealaska officials have said that they were paid more than $100 million for their carbon credits. And we know that, you know, they’re two or three other corporations that did deals in the same kind of realm and likely have the same size. So a pretty significant amount of money at stake. And what those Native corporations decided was that, “Look, we are not cutting down our trees or selling our trees. So these are not revenues that are coming from disposing our of our natural resources. And these are not revenues that we have to share 70% of with the other regional corporations.”
CG: Wait, let me guess what those other regional corporations say about it. They think they should have to share it.
NH: Yeah, good guess. So this is where this kind of legal battle starts. So 2018, the Native corporations initially began what is called an arbitration process. This is sort of like a private, confidential court system that private entities can agree to as a way of keeping things out of the court system. And there’s a private arbitration panel of attorneys that basically acts as a court, and there’s a legal case made by both sides. So in 2018, all of the large regional Native corporations that are not Sealaska, Chugach and Ahtna and other companies that had done these deals, all of them made a demand for arbitration and said, “Look, we think these revenues should qualify.” Over the ensuing three years, delayed because of COVID, they went through, you know, oral arguments and briefing of the legal questions. And over the summer, the arbitration panel came back with a unanimous decision and said, “We agree with Seaalaska, Ahtna and Chugach, we don’t think under this 1982 Settlement Agreement and under previous court precedent, that these revenues should have to be shared.” And the essential legal conclusion was that this is because Sealaska, Ahtna and Chugach were not actually selling or disposing of any interest in the actual timber resources on their land. They were agreeing to a payment in exchange for them not cutting the trees down.
CG: And I guess that gets us to this point where we’re now talking about this as a lawsuit, right?
NH: Yeah, so the arbitration dispute, I had been doing some reporting about Sealaska over the past year and had heard about the arbitration dispute. But because the arbitration is conducted in private, there were no public documents that would speak to the nature of the dispute, what was at stake. And then finally, in October, there is an actual lawsuit filed as an appeal of the arbitration decision, and that’s where all this stuff has to finally be laid out publicly in documents that a reporter can go look at and pull from the courthouse and use to inform an audience.