Longstanding tensions underlie Arctic Slope Regional Corporation’s withdrawal from AFN

Arctic Slope Regional Corporation’s corporate headquarters in Utqiaġvik, Alaska. (Photo by Ravenna Koenig/Alaska’s Energy Desk)

Long before Arctic Slope Regional Corp. announced its withdrawal from the Alaska Federation of Natives last week, there were signs of a schism between Alaska’s largest Native corporation and most influential Native advocacy group.

At the center of it: oil, ASRC’s responsibilities to its shareholders, AFN’s wider responsibilities to its member groups and growing pressure caused by climate change’s impacts on infrastructure and subsistence.

Tensions between ASRC and AFN appeared to be building in recent years. In a hard-fought U.S. Senate race in 2014, AFN took the rare step of endorsing a candidate: incumbent Democrat Mark Begich, who delegates praised for his connection to rural Alaska and his support for Natives’ subsistence traditions.

[Read more: Arctic Slope Regional Corp. to leave the Alaska Federation of Natives]

Board members of ASRC, meanwhile, endorsed Begich’s Republican opponent, Dan Sullivan, citing his support for “responsible energy development.” And while AFN endorsed Democrat Hillary Clinton in 2016, ASRC’s executives celebrated at the Trump White House a year later, after Congress approved the legislation opening part of the Arctic National Wildlife Refuge to oil development.

ASRC is charged with representing the business interests of some 13,000 Inupiat shareholders. It explained its withdrawal from AFN last week by saying only that the corporation intends to focus on the needs of the North Slope. An ASRC spokesman, Ty Hardt, declined to be interviewed or answer questions about the decision.

Since the corporation’s announcement, some have speculated that the split stems from AFN’s convention in October, where an ASRC leader clashed with delegates who were pushing for more action on climate change.

But ASRC says the decision was under consideration for more than a year. And in fact, North Slope Native organizations have long had a fraught relationship with AFN, stemming in part from members’ unique homeland, which lies atop billions of barrels of oil.

A more complete explanation of ASRC’s decision, according to people who have worked with the corporation, is that global warming has put new pressure on the existing fault lines among the different institutions that look out for Alaska Natives’ well-being.

The 12 regional corporations, including ASRC, are big for-profit businesses, with a relatively narrow focus on generating revenue to support cash dividend payments to shareholders. Tribal governments and nonprofits, meanwhile, are more focused on providing services and supporting Natives’ social welfare.

Climate change threatens to pit those interests against each other in new ways. Tribal governments and nonprofits say they’re being saddled with climate change’s costly impacts, while some regional corporation leaders see greenhouse gas regulations as a potential threat to their bottom line.

“On one side, you have monetary impact, and on the other side you have even greater impact on the planet itself,” said Roy Huhndorf, the former chief executive for Cook Inlet Region Inc., the Native regional corporation for Southcentral Alaska. “I think Native corporations are the same, in a microcosm, as the Exxons and BP’s of the rest of the world who don’t want to abandon oil production now because it hurts them financially. On the other hand, you can understand where the rest of the world is wanting to go.”

Native corporations are some of Alaska’s largest and most influential businesses, with ASRC at the top of the heap.

ASRC’s revenues last year exceeded $3 billion, with dividends of $7,000 paid to each shareholder with 100 shares, according to the corporation’s annual report. It has more than 13,000 employees spread across Alaska and Outside, working in six major areas of business.

Among ASRC’s holdings is PetroStar, which owns oil refineries in Valdez, and near Fairbanks in North Pole. It sold a record 356 million gallons of oil products last year and generated $885 million in revenue. ASRC also owns an oilfield services company, with more than 2,300 workers in Alaska, that does engineering, construction and permitting for some of the world’s largest oil and gas companies, in both Alaska and the Gulf of Mexico.

The corporation also benefits directly from oil development on its own land entitlement of nearly 5 million acres on the North Slope — an area almost the size of New Jersey. It collects royalties from oil production in the Colville River Unit, home of ConocoPhillips’ Alpine field, and reported natural resource earnings averaging $50 million a year over the past three years.

ConocoPhillips’ Alpine facility on the North Slope, which pays oil royalties to Arctic Slope Regional Corp. (Photo by Elizabeth Harball / Alaska’s Energy Desk)

At AFN’s convention in October, when two teenage delegates were pushing for approval of a statement declaring an emergency on climate change, ASRC’s board chair, Crawford Patkotak, pushed back. He asked to add language to preserve Natives’ “rights to the resources,” saying that the declaration risked inviting “unnecessary regulation” with devastating economic effects.

[Read more: Pushed by youth, AFN declares a climate change emergency]

Patkotak wasn’t the only regional corporation leader who was concerned: Gail Schubert, chief executive of the Nome-based Bering Straits Native Corp., also urged delegates to be cautious. Native corporations, she said, “were charged with creating economies, delivering dividends and other benefits to our shareholders.”

“I understand and accept and have said publicly that we are experiencing climate change,” Schubert said. “But I also want to make sure that we don’t do something, as a body, that allows outside groups to come in and basically dictate what we can do and can’t do in terms of both our natural and our subsistence resources.”

Several other delegates argued against Patkotak’s proposed language before it was rejected, including Esau Sinnok, a young man from the village of Shishmaref, on the Chukchi Sea coast in western Alaska. Rising sea levels are forcing residents to consider relocation.

“My one and only home is being eaten by the sea,” Sinnock said. “It’s very important to talk about climate change urgently, right now, because it affects so many indigenous people.”

Diverging interests among regional corporations like ASRC and other Native organizations are not new — they date back to the 1971 Alaska Native Claims Settlement Act, which created the corporations.

But in addition to those institutional fissures, the North Slope is also unique as a region. When AFN voted overwhelmingly to urge President Richard Nixon to sign the 1971 legislation, representatives of the Arctic Slope Native Association vehemently disagreed.

They objected to the settlement because it allowed the state of Alaska — not ASRC — to keep the North Slope’s most valuable oil-bearing lands. And it also required ASRC to share its oil revenues with other regional corporations, though those other corporations would also have to share their resource revenue with ASRC.

“They’ve got a righteous argument in saying they should have been able to select lands that they traditionally used ahead of the state, but they weren’t — the state had already finished selecting the land by the time ASRC had come into existence,” said Huhndorf, the former CIRI executive. “They feel that they were used from all sides.”

ASRC, in its announcement last week, said it intends to focus “on the various needs within Alaska’s North Slope, where there is an increased degree of alignment as well as additional efficiencies related to shared geography and other interests.”

The corporation’s perspective won’t be completely lost from AFN, because some of the corporation’s shareholders will still belong to the federation, as delegates from the North Slope’s regional nonprofit, village corporations and tribal councils.

“They’re still Native people. so it doesn’t end cooperation and talking or working together on things,” said Julie Kitka, AFN’s president. “We don’t second guess them, we don’t attribute motives to them — we take them at face value.”

Karlin Itchoak, an ASRC shareholder who directs the Anchorage office of The Wilderness Society, an environmental organization, said that the urgent challenge posed by climate change makes it an especially important time for Alaska Native organizations to work together.

“Stopping all dialogue at AFN is not being a part of the solution,” he said. “It would be better if folks could just get along and work together and agree to disagree. Stay at the table and continue to have a dialogue on how we can mitigate the adverse environmental impacts of climate change that are directly related to extraction.”

No corporation goes forward with development without considering the environmental consequences and impacts on villages — and without doing everything possible to make sure it’s safe, said Georgianna Lincoln, a board member of Doyon Ltd., the regional corporation for Interior Alaska.

But the debate around climate change will “absolutely” force other Native corporation boards to have similar conversations to the one ASRC’s must have had before its decision to withdraw from AFN, she added.

“We have to reassess where we are,” Lincoln said, “because times have changed.”