How does CIRI pay its resource revenue distributions?
In June, we took a look at what’s meant when someone is designated as an “at-large shareholder.” This month, we explore how CIRI pays out its resource revenue distribution — which depends on the types of shares each shareholder owns.
The lands some of the regional corporations received pursuant to the Alaska Native Claims Settlement Act (ANCSA) were richer in natural resources than others. To even things out, Section 7(i) of ANCSA requires that the Alaska-based regional corporations share a portion of their resource revenues with each other.
Under ANCSA Section 7(i), each of the twelve Alaska-based regional corporations must contribute 70 percent of its net resource revenues to a pool that is then divided among all twelve regional corporations, including itself. Generally speaking, net revenues are derived using a complicated formula that determines the net proceeds of oil, gas, mineral and timber development on ANCSA lands, after the deduction of allowable exploration, development, production and other allowable costs. The percentage of the revenue pool each corporation receives is based on the number of original enrolles that corporation had at the time ANCSA was enacted.
So, CIRI gets a percentage of all regional corporation‘s 7(i) distributions. What happens then? Under Section 7(j) of ANCSA, that money is divided equally between CIRI and the ANCSA village corporations and at-large shareholders in the Cook Inlet region. Thus, CIRI keeps 50 percent for things like shareholder dividends, reinvestment, operating expenses and paying taxes.
The remaining 50 percent is paid out in the form of CIRI’s annual resource revenue — or 7(j) — distribution in two ways, depending on the type of shares owned:
- Payments made in connection with non-village (or “at-large”) shares are paid directly to the shareholder.
- Payments associated with village-class shares are paid to the underlying village corporations. (It’s important to note that although ANCSA requires regional corporations to pay 7(j) amounts associated with village-class shares to the associated villages, it does not require village corporations to distribute those amounts to their shareholders; that’s up to the directors of each individual village corporation.)
Because the annual amount of 7(i) revenue shared by CIRI and the other corporations depends on all corporations’ collective resource activities, the amount of 7(j) monies varies from year to year. That’s why CIRI calculates the amount of its resource revenue distribution every year shortly after its audited financial statements for the previous year are approved. CIRI then publishes that information in the Raven’s Circle and on its website, with the actual distribution made shortly thereafter, typically in early- to mid-April.
