A dispute between Alaska Native corporations over carbon credit revenue is now in court.
Three indigenous corporations are suing three others, who have earned at least $100 million and are likely selling more carbon credits. The corporations suing say they want their share under a four-decade-old revenue-sharing agreement. The corporations that sell carbon credits say that revenue should be treated differently and is not subject to the agreement.
This is 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 must share the revenue with other corporations whose land under ANCSA does not contain such valuable natural resources. did not have resources. resources.
As Herz puts it, the lawsuit over carbon credits signals a different era of disputes between the corporations.
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The following transcript has been lightly edited for clarity.
Nat Herz: When the law was passed and signed into law, I think everybody just took into account that it was going to be, you know, wood, metals, oil. But as it turned out, initially there were a lot of disputes about, like, how do you calculate this income? Can you deduct expenses? What kind of expenses can you deduct? Basically, for 10 years after the passage of this 1971 law, there were only endless lawsuits and litigation between the indigenous corporations. In 1982, they signed a 120-page agreement that basically laid out in much more detail how the revenue sharing would work. And that agreement really put an end to all the lawsuits for about 40 years, when some of these indigenous corporations started getting into this business of what’s called carbon credits.
Casey Grove: Yes, so how are carbon credits included here? And if you could, just give us a brief summary of what carbon credits even are.
NH: Yes, so carbon credits are a market, essentially, that was developed, in this case as part of a system adopted in California, to tax carbon emissions. And so companies and entities can set aside timberland and promise not to cut it down for 100 years, and then they will be issued credits that can be traded to polluters as part of these carbon markets. There were three of the big local Alaska Native corporations that entered 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 inland along the Copper River Valley. Some of the smaller town corporations also got involved in this business. And while we don’t know the exact amount of money and revenue that was at stake, Sealaska officials said 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 have done deals in the same kind of area and are probably the same size. Such a fairly substantial amount of money is at stake. And what those indigenous corporations decided was that, “Look, we’re not cutting down our trees or selling our trees. So it is not income that comes from the disposal of our natural resources. And this is not income of which we have to share 70% with the other regional corporations.”
CG: Wait, let me guess what those other regional corporations say about that. They think they have to share it.
NH: Yes, good guess. So this is where this kind of legal battle begins. So 2018, the native corporations initially started what is called an arbitration process. It’s kind of like a private, confidential court system that private entities can agree to as a way to keep things out of the court system. And there’s a private arbitration panel of lawyers that basically acts as a court, and there’s a legal case that’s made by both sides. So in 2018, all the big local Native corporations that aren’t Sealaska, Chugach, and Ahtna and other companies that were doing these deals all filed a claim for arbitration and said, “Look, we think this income should qualify.” Over the next three years, delayed by COVID, they went through, you know, oral arguments and briefings on the legal questions. And over the summer, the arbitration panel came back with a unanimous decision saying, “We agree with Sealalaska, Ahtna and Chugach, we don’t think under this 1982 settlement agreement and under prior court precedent, that this revenue should be shared.” And the necessary legal conclusion was that because Sealaska, Ahtna and Chugach did not actually sell or dispose of any interest in the actual timber resources on their land, they agreed to a payment in exchange for not cutting the trees. not cut down.
CG: And I guess that brings us to this point where we’re now talking about this as a lawsuit, right?
NH: Yeah, so the arbitration dispute, I’ve been reporting on Sealaska for the past year and heard about the arbitration dispute. But because the arbitration was private, there were no public documents that would speak to the nature of the dispute at stake. And then finally, in October, there was an actual lawsuit filed as an appeal of the arbitration decision, and that’s where all this stuff finally has to be laid out publicly in documents that a reporter can go look at and pull out of the courthouse and used to inform an audience.