City of Ketchikan v. Cape Fox Corp.

Citations: 85 F.3d 1381; 96 Cal. Daily Op. Serv. 3611; 96 Daily Journal DAR 5951; 1996 U.S. App. LEXIS 11803; 1996 WL 325829Docket: No. 94-35316

Court: Court of Appeals for the Ninth Circuit; May 23, 1996; Federal Appellate Court

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Eugene A. Wright, Circuit Judge, addressed the interpretation of the land reconveyance provision of the Alaska Native Claims Settlement Act (ANCSA), specifically 43 U.S.C. § 1613(c). The City of Ketchikan is appealing a district court's summary judgment favoring Cape Fox Corporation regarding the conveyance of 38 acres, where the City’s Beaver Falls hydroelectric powerhouse is located. The ANCSA, enacted in 1971, was a legislative compromise aimed at resolving land ownership conflicts in Alaska, awarding Alaska Natives $962.5 million and roughly 40 million acres of land, while extinguishing their aboriginal title claims. The Act established 12 geographic regions with Native Regional Corporations and about 200 Village Corporations, allowing them to select land in compact tracts. Village Corporations received surface estate titles, while Regional Corporations received subsurface estates. Under § 1613(c), Village Corporations must reconvey surface titles to qualifying occupants without consideration, while occupants who do not meet conditions retain occupancy without title. 

Ketchikan Public Utilities (KPU), a city-owned utility, operates the Beaver Falls powerhouse, constructed in 1945 on public land within Tongass National Forest and previously licensed by the Federal Power Commission. The City, having never owned the land, seeks title under two subsections of ANCSA, arguing the powerhouse site qualifies as a primary business location and as a nonprofit organization. The district court ruled against the City, determining neither provision applied, leading to the City’s appeal.

The City claims entitlement to title of the disputed site under 1613(c)(1), which allows for the conveyance of title to the surface estate to occupants as of December 18, 1971, for specific uses including a primary place of business. The determination hinges on whether the power plant qualifies as 'a primary place of business' on that date. Congressional intent is unclear, as the term has not been defined in other statutes, and only one case, Hakala v. Atxam Corp., has addressed its meaning. The City interprets the article 'a' to suggest that multiple primary places of business are permissible; however, the analysis emphasizes that 'primary' implies a singular leading location. Definitions from Black’s Law Dictionary and Webster’s New World Dictionary support this interpretation, asserting that each business can have only one primary place.

Although the City acknowledges that KPU operates three separate businesses—electric, telecommunications, and water utilities—it must determine whether the electric utility's primary place resides at the Beaver Falls plant or the downtown Ketchikan office. Cape Fox suggests using the definition of 'principal place of business' from personal jurisdiction law, which focuses on where a corporation conducts its primary activities. The City concedes that, by this criterion, the power plant is not its primary place of business. However, the opinion notes that while jurisdictional definitions provide some insight, they are not directly applicable, as ANCSA's language differs from that in 28 U.S.C. § 1332(c).

The jurisdictional definition's policy concerns are not applicable to the Alaska Native Claims Settlement Act (ANCSA) context, as diversity jurisdiction's purpose is to shield out-of-state corporations from local biases, which does not relate to Alaskan land selection. The Alaska Supreme Court's ruling in Hakala offers a more relevant analysis, recognizing Congressional intent to protect existing businesses and assist Native Alaskans. The court interpreted "a primary place of business" as the center of activity for a business, avoiding rigid requirements. In applying this test, it was determined that KPU’s downtown office was the nucleus of its electric business in 1971, despite Beaver Falls generating 55% of its power. KPU’s management and customer interactions occurred at the downtown office, with only a small fraction of employees working at Beaver Falls. Consequently, Beaver Falls was not considered the primary place of business.

Regarding the City’s claim for reconveyance as a "nonprofit organization" under subsection 1613(e)(2), the court disagreed with the assertion that KPU qualifies as a nonprofit because it does not generate profit. The court emphasized interpreting statutory language not in isolation but in context, considering the statute as a whole. Any ambiguity in the statute must be construed liberally in favor of Native tribes.

Section 1613(c) delineates specific land conveyances to a limited group of occupants, with subsections (a) through (d) outlining various beneficiaries, including residents, business owners, nonprofit organizations, and municipal corporations. The City of Ketchikan argues it qualifies for conveyances under both nonprofit and municipal corporation categories. However, this interpretation would render subsections (3) and (4) redundant, as it would imply that municipal corporations could receive all occupied land under subsection (2), negating the need for the more specific provisions in subsections (3) and (4). 

Congress did not define 'nonprofit organization' in the Alaska Native Claims Settlement Act (ANCSA) but did define 'municipal corporation' as any general unit of municipal government in Alaska law. The City, organized as a municipal corporation under Alaska statutes, does not meet the criteria for nonprofit status. The City controls Ketchikan Public Utilities (KPU) and operates under the premise of being a municipal corporation. Even if the City were to be viewed as both a municipal corporation and a nonprofit organization, the specific provisions for municipal corporations would take precedence over the general provisions for nonprofits. Consequently, the conclusion is that the City of Ketchikan, operating as KPU, does not qualify for reconveyance as a nonprofit organization under ANCSA.

The City of Ketchikan's attempt to gain surface title to the 38 acres for its Beaver Falls facility is unsuccessful and deemed equitable. The City has benefited from protections under the Alaska Native Claims Settlement Act (ANCSA), including a unique six-mile buffer zone around its boundaries that prevents Native villages from selecting land in that area. Additionally, Ketchikan is safeguarded by reconveyance provisions allowing for land use related to airstrips and has maintained its federal license to operate its power plant despite changes in land ownership over the past decade. The City has never owned the land outright, only leasing it from the federal government, and would need to renegotiate land use rights with Cape Fox after the lease expired. The financial interest in the land now belongs to Cape Fox, but Ketchikan can continue its operations if it compensates Cape Fox appropriately.

The court affirms the summary judgment in favor of Cape Fox, rejecting Ketchikan's argument that its Beaver Falls site constitutes the primary place of business for the entire City or Ketchikan Public Utilities (KPU). The court finds no basis in ANCSA or legal precedent to limit the definition of a primary place of business to a single location within village corporation land. Furthermore, the City did not adequately present this argument in the district court, and comparing the situation to other businesses, such as Wonder Bread or Shell Oil, illustrates the absurdity of Ketchikan's position. ANCSA mandates that village corporations convey surface estate titles for certain community needs and navigation aids, but this does not support Ketchikan's claim to the land.