cover that their rights had been abrogated because of overriding national or other interests. This type of historical conduct, strewn with the corpses of Indian hopes based on the utmost good faith of the U.S. Government, has led to suspicion and distrust and will continue to do so if not corrected.

I have some difficulty with the legislation if, in effect, it merely places one additional Federal agency between the American Indian and the party responsible. From my observation of many agencies charged with being a "watchdog" for individual rights, it appears that they often end up as buffers between the individual and the responsible agency. Under such circumstances, in order to obtain any action you then have to overcome another hurdle placed before you.

I appreciate the fact that the legislation attempts to eliminate this problem. The legislation provides in section 8: "The Authority with the consent of an aggrieved Indian ***." This section appears to make the use of the Authority discretionary. I suggest that this be spelled out with a greater degree of specificity to insure its use is optional and to insure that any aggrieved party may proceed in his or its own behalf with the same rights as the Authority could exercise. This would eliminate any possibility that the Authority could be used to insulate any department.

The basic difficulty with the legislation as far as the Alaska Native is concerned, is that as drafted it is only applicable to those instances wherein there is a trust responsibility owing to the Indians by the United States. The Alaska Native Claims Settlement Act, as you are aware, effectively eliminated as to natural resources, land and the other categories listed in the proposed Trust Authority legislation, any continuing trust responsibility by the Department of the Interior, with the possible exception of implementing the Claims Act. The proposed Trust Authority legislation could easily be amended so as to allow the use of the Authority in assisting Alaska Natives in implementing the Settlement Act. Such an amendment would be beneficial as we have many of the same problems in implementing the act as are present when trust property is generally concerned.

In our continuing efforts to implement the Settlement Act, we have found ourselves dealing with the Department of the Interior or other Federal agencies who, when making decisions which affect our property, are apparently balancing the "so-called" national interest against Native interest, thus creating an abvious conflict of interest situation which this legislation is designed to eliminate. We currently find ourselves in the same position as a baseball batter facing a pitcher, who is also the umpire.

As an example, the drafting of the land selection regulations led to what could properly be called an open confrontation between the Department of Interior and the Alaska Natives. The Department in a period of 1 year proposed two sets of regulations, either of which if adopted would have substantially reduced, if not eliminated, many of the benefits obtained under the Settlement Act. Only after continuous, hard-hitting efforts by the Native leaders and their regional corporations, and national counsel who pointed to the patent illegality of many of the provisions of the proposed regulations, were we able to have them rejected.

Mr. Chairman, I asked the Department of the Interior representatives, during the drafting of the land selection regulations, why rul

ings could not be made in favor of the Natives when there was no legal barrier to such a favorable ruling. I asked why both initial drafts of the selection regulations were so contrary to the spirit and intent of the Alaska Native Claims Settlement Act. I asked who the champion of the Alaska Natives was when agencies of the U.S. Government sought restrictive rulings on pending issues concerning implementation of the Claims Act.

I received no answer.

The final set of regulations required extensive and often heated negotiations with the Department over the initial step of obtaining native participation in drafting the proposed regulations. This occurred in spite of the clear language of the Settlement Act, which provides in section 2(b):

"The settlement should be accomplished rapidly... with maximum participation by natives. ..

Once consent was reluctantly obtained to our participating in the drafting, it became quite apparent during the drafting process that the Department of the Interior was not totally concerned with the effect of the regulations on the Alaska Natives. Rather, the Department appeared to be balancing the effect on the natives and the "national" interests. This obviously is a classic conflict of interest which the Trust Authority is designed to eliminate and hopefully will eliminate, if passed.

We still find ourselves at odds with the Department of the Interior and possibly with other Federal agencies over the implementation of the act. We have not yet received requested opinions from various other Federal agencies as to certain issues. Thus, in some areas we may or may not ultimately experience difficulty. I would like to mention basic areas where it appears we may experience difficulty, and which may ultimately require legislation to correct the act so that it is implemented consistent with the same criteria and spirit under which it was passed.

Let me turn to one of the basic unresolved issues. Section 11 of the Claims Act authorizes the qualification of what are called "unlisted villages," so that these villages are eligible for land benefits under the act. An unlisted village is one not specifically named in act but which does meet certain criteria such as having over 25 Natives who constitute the majority of residents of a community, which community is not modern or urban in character. We have heard various rumors, not yet confirmed, that villages in southeast Alaska, even though they meet the necessary criteria for an unlisted village, cannot qualify. Although it now appears that we may have such unlisted villages, which fact is well known to the Department of the Interior, personnel of the Department have unofficially and informally raised a question as to whether villages in southeast Alaska are entitled to qualify as unlisted villages. In reading the Claims Act, it is our opinion that there is no question that villages in southeast Alaska which meet the necessary criteria are eligible for land benefits under the act. The Department of the Interior has not at this point in time committed itself one way or the other.

Another possible area of difficulty has reference to the taxation of the regional village corporations. As you are aware, under the Claims Act the regional corporations must distribute 50 percent of all funds

received, including net income, to individual stockholders and to the respective village corporations. A mandatory requirement that a percentage of income be distributed is unique to business corporations and raises serious tax considerations. The effect of applying the normal tax rules to the mandatory distribution requirement under the Claims Act can best be exemplified by an example.

Assume a regional corporation earns $100 in net income. A corporate tax of approximately 50 percent would reduce this to $50, which amount would then be available for distribution. Under the mandatory distribution formula, 50 percent of their pro rate share must go to village corporations. Assume a specified village gets $25 as its share. If the distribution is treated as a dividend to the village corporation, the village corporation would then be required to pay the the appropriate tax on the income received. If the village corporation distributes what is left to its stockholders, they could be treated as receiving a dividend which would then be taxable to them.

I agree generally that the concept of the claims legislation is that the various corporations should not receive special tax considerations. However, it appears that we may, if taxed as normal business corporations, be discriminated against. The act should be rewritten to reflect a fair tax situation wherein only the ultimate recipient of a mandatory distribution is taxed on those proceeds or, in the alternative, the Act could be amended so as to provide that the mandatory distribution by regional corporations be considered as business expenses under the Internal Revenue Code. Similar to the unlisted village problem, we have yet to receive a definitive answer from the Internal Revenue Service as to how they intend to treat us on this issue. An adverse ruling may well require later legislation.

The third area which may cause major concern is the so-called hardship selection of Sealaska Corp. The Claims Act under section 14(h) set aside 2 million acres of land to be used to satisfy various categories, such as selection of historical and cemetery sites and selection of 23,040 acres by the Native groups of Sitka and Juneau. The balance of the 2 million acres not used for the various categories is allocated under section 14(h) (8) to the regional corporations on the basis of population. The regulations set aside specific amounts of land for each category.

I have no quarrel with the formula for the distribution of the acreage. It was largely formulated by the regional corporation representatives. It is a fair method of allocation and eliminates competition between regional corporations. Absent the formula set forth in the regulations, you could have regional corporations competing in attempting to qualify for as much of the land in their respective regions as possible. The formula eliminates this problem as it provides:

A. Under section 14 (h) of the act, a total of 2 million acres may be selected for cemetery sites and historical places, Native groups, corporations formed by the Native residents of Sitka, Kenai, Juneau, and Kodiak, for primary places of residence, and for native allotments approved as provided in section 18 of the act. Selections must be made within 4 years from December 18, 1971. Of this total amount:

1.500.000 acres will be set aside to be used by the Secretary to satisfy applications filed pursuant to sections 14(h) (1),(2) and (5) of the act. The 500,000 acres will be allocated by:

(a) Dividing 200,000 acres among the regions, based on population; and

(b) Dividing 300,000 acres equally among the regions.

2. 92,160 acres will be set aside for possible allocation by the Secretary to corporations formed by the Natives residing in Sitka, Kenai, Juneau, and Kodiak.

3. 400,000 acres will be set aside to be used by the Secretary to satisfy Native allotment applications approved prior to December 18, 1975, under the act of May 17, 1906 (34 Stat. 197), supplemented, and the act of June 25, 1910 (36 Stat. 863). Any Native allotment applications pending before the Bureau of Indian Affairs or the Bureau of Land Management on December 18, 1971, will be considered as "pending before the Department." Those allotment applications which have been determined to meet the requirements of the act cited herein and for which survey has been requested before December 18, 1975, shall be considered "approved" under section 14 (h) (6) of the act, and shall be charged against the acreage.

B. After subtracting the number of acres used in accordance with allocations in paragraphs (a) (1), (2) and (3) of this section from 2 million acres, the remainder will, after December 18, 1975, be reallocated by the Secretary among the regional corporations in accordance with the provisions of section 14 (h) (8) of the act.

Under the allocation formula of the regulations, Sealaska has an opportunity to select up to 200,00 acres of land. This would be our pro rata share of the surplus of the 2 million acres after the various categories previously listed have been satisfied. The 200,000 acres selection is the only selection right which Sealaska Corp. has under the act. As you are aware, the village corporations in southeast Alaska were allocated only 23,400 acres per village regardless of size, whereas villages in the remainder of Alaska received the right to select up to 160,000 acres.

Additionally, the regional corporations, except the one from southeast, may select substantial acreage. This distinction was ostensibly justified in the act because of a previous claims settlement received by the Tlingit and Haida Indians in 1968.

As a matter of interest, the judgment works out to about 75 cents an acre when compared to the loss of land that presumably could have received under the act but for the $8 million judgment.

It is the potential selection of a possible 200,000 acres allocated under 14(h) (8) of the Settlement Act which is of concern to Sealaska. After all, it is the only selection right we have. To clarify, the only selection right to be with respect to the cemetery rights and historical places. In making a selection of land allocated under 14(h) (8), the regulations provide:

Section 2653.3(b). After December 18, 1975, selection of the lands allocated pursuant to 2653.1(b), shall be made from any lands previously withdrawn under Sections 11 or 16 of the Act which are not otherwise appropriated. If the public lands withdrawn within the region pursuant to Sections 11 or 16 of the Act, and not otherwise appropriated, are insufficient for the selection of the full entitlement of the regional corporations pursuant to 2653.1(b), then three times the amount of the entitlement which cannot be satisfied from lands previously withdrawn pursuant to Sections 11 or 16 of the Act will be withdrawn pursuant to Section 14(h) of the Act.

According to our interpretation of this provision of the regulations, we will be able to make selections in the national forests and within the areas withdrawn by section 16 of the Settlement Act. Section 16 is that portion of the act listing certain villages in southeast Alaska as being eligible for land benefits and authorizing them to select one township from the nine townships withdrawn around the villages. We hear rumors that in spite of the express language of the regulations requiring selection in the section 16 withdrawal areas, such a selection right within the section 16 withdrawals will be contested. It is important that we be able to make our selections within the nine townships withdrawn from the southeast villages, and from within the national forest. Incidentally, all except one of the section 16 withdrawals are within the national forests so it makes little sense to authorize selection in section 16 withdrawals but to be told that they cannot be made in the national forests.

I have attached a map of the Tongass National Forest. The map basically covers the area of the Southeast Regional Corp, with minor exceptions. Colored in orange are the areas in southeast which are available for selection if Sealaska's selection must be made from areas outside the national forest. The areas available primarily consist of the ice fields in southeast Alaska and of high mountain crags suitable at best for goat pasture. There is one area near the water available for selection. This area is not shown on the map but consists of a small fringe of trees in front of the Malaspina Glacier west of Yakutat, Alaska. As can be seen, absent a right of selection within the national forest, the sole selection right of Sealaska is meaningless, a consequence not intended under the act.

A more fundamental reason, which goes to the basic premise of the Settlement Act, dictates that our selection be made in section 16 withdrawal areas. The act, as I visualize it, intends to furnish the Native people sufficient land and property not subjected to rigid controls so that they may carefully plan and shape their future. One of the worthwhile possibilities in southeast Alaska would be to create some type of industry in each of the small Native villages. Industry could furnish employment in villages which have exceedingly high unemployment. Industry could furnish a tax base on which the municipal government could increase the standard of living by having funds available to install sewers, water, fire protection, and other related municipal functions. Industry could return in the form of dividends to the Native people funds so they can raise their individual standards of living. One of the areas which is obvious for industrial development by each village corporation in southeast Alaska is the timber industry, such as sawmills. However, preliminary investigations indicate that when operating on a sustained-yield basis using only 23,040 acres, which is the total land entitlement of any southeast Alaska village, a sawmill may be at best a marginal operation.

However, if Sealaska is able to exercise its hardship selection adjacent to the village selections, visible industries may be created in the villages, our selections could make additional timber available to any industry and possibly eliminate marginal operations.

Second, the land the regional corporations and village corporations select could be located in close proximity to each other, thus facilitating effective land management. This would appear to be a more desirable