ESTABLISHING THE FRAMEWORK
OF NATIVE AMERICAN LAND OWNERSHIP
Judith M. Dworkin
[email protected] | 480.425.2615
A.
Introduction
Most reservations are made up of a mixture of trust land, land allotted, assigned or
leased to individual tribal members or businesses, and fee simple land. Determining land
status may require a review of treaties, presidential executive orders, congressional acts,
proclamations by the Secretary of the Interior, title records maintained by the Bureau of
Indian Affairs (the "BIA"), and real estate records maintained by the tribe and county
recorders.
B.
Indian Country: What is it?
Indian country, as defined in 18 U.S.C. §1151, means:
(a) all land within the limits of any Indian reservation under the
jurisdiction of the United States Government, notwithstanding
the issuance of any patent, and, including rights-of-way
running through the reservation, (b) all dependent Indian
communities within the borders of the United States whether
within the original or subsequently acquired territory thereof,
and whether within or without the limits of a state, and (c) all
Indian allotments, the Indian titles to which have not been
extinguished, including rights-of-way running through the
same.
The definition of Indian country was intended for purposes of criminal jurisdiction but its
usage is often extended to address civil and regulatory jurisdiction. Generally, and as
further discussed below, a tribe's territorial authority is strongest in Indian country, and
specifically, on land held by the United States for the benefit of a tribe or individual
Indians, land owned by a tribe, or land owned by a tribal member within Indian country.
C.
The Trust Doctrine and Federal Oversight of Indian Lands
The understanding of the trust doctrine and federal oversight of Indian lands
commences with the decisions of the United States Supreme Court, beginning with a
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trilogy of cases decided by the Marshall court.1 Read together, these three nineteenth
century cases establish the federal common law doctrine of tribal sovereignty, the trust
doctrine, general federal oversight, and guide the outcome of many disputes to this day.
The Marshall Court explained that prior to contact with Europeans who invaded
North America, conquered the Indians that they found there, and captured land belonging
to the Indian tribes, the Indian tribes were "distinct, independent political communities"2
qualified to exercise powers of self-government, not by virtue of any delegation of
powers, but rather by reason of their own tribal sovereignty.3 Because the Indian tribes
were considered "conquered," the sovereignty of the Indian tribes became subject to the
overriding legislative authority of the dominant nation – first the European nations and
then the United States. Internal tribal self-government was preserved. A tribe was
"capable of managing its own affairs and governing itself."4 Exclusive authority rested
with the United States in dealings with Indian tribes, to the exclusion of the states.5 The
tribes were under the trust or protection of the United States and held a status analogous
to "that of a ward to his guardian" rendering the tribes as "domestic dependent nations."6
D.
Forms of Tribal Land Ownership: Trust Lands, Fee Lands, Allotments
Most reservations are made up of a mixture of trust land, land allotted, assigned or
leased to individual tribal members or businesses, and fee simple land.
1.
Trust Lands. Title to much land within a tribe's reservation is held by the
United States in trust for the tribe. Under federal law, tribal trust lands generally may not
be sold, taxed or encumbered. However, tribes may be able to lease trust lands and the
lessee or sublessees of such land may be able to grant leasehold mortgages on their
leasehold interests subject to the federal approvals. Individual land rights in trust land
1
2
3
4
5
6
Johnson v. M'Intosh, 21 U.S. 543 (1823); Cherokee Nation v. Georgia, 30 U.S. 1 (1831);
and Worcester v. Georgia, 31 U.S. 515 (1832).
Worcester v. Georgia, 31 U.S. at 559.
United States v. Wheeler, 435 U.S. 313, 323-24 (1978).
Cherokee Nation, 30 U.S. at 16.
Worcester, 31 U.S. at 557.
Id. at 17.
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can also be conveyed by an assignment from the tribe. Home sites to tribal members are a
good example of typical assignments. However, assignments are generally personal
property rights, not real property rights, and vary greatly in duration, scope and
transferability.
2.
Fee Lands. Fee simple land (either Indian or non-Indian owned) within the
reservation can usually be transferred freely and no federal approvals are necessary for its
sale or lease. Tribes themselves normally have no property interest in either allotted or
fee simple land held by individuals but may nevertheless have some control over the
assignment, transfer, encumbrance, disposition and/or development of such property.
Some federal programs and statutes are structured so that tribes can only benefit
from such programs or statutes (e.g., housing and gaming) where the land involved has
been placed in trust by the United States on behalf of the tribe. Further, as discussed
herein, a tribe's authority is strongest where tribal trust land is involved. Therefore, from
time to time, a tribe may request that the Secretary of the Interior place fee land acquired
by a tribe into trust on behalf of the tribe. The transfer of fee land into trust status
removes the property from state and local taxing jurisdictions. Due to concerns about the
proliferation of tribal gaming, fee to trust transfers can be hotly contested by non-Indian
neighbors. Due to the regulatory compliance required to place fee land into trust, these
transfers are extremely protracted (usually one to six years) and the transactional costs
can be very expensive.
3.
Allotments. The General Allotment Act of 1887, known as the Dawes Act,7
authorized the President to allot tribal lands in designated quantities to tribal members.
Title to the allotments was to be held in trust by the United States for 25 years.
Subsequent amendments to the Act permitted the Secretary of the Interior to issue a
patent in fee before the expiration of the 25 year trust period when satisfied that the
allottee was competent and capable of managing his own affairs.8 The allotment policy
was a complete disaster for Indian tribes. In 1887 at the start of the allotment period,
7
8
24 Stat. 388 (codified as amended at 25 U.S.C. 334, 339, 341-42, 348, 349, 354, 381
(2000).
34 Stat. 182, 183 (codified at 25 U.S.C. § 349).
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Indian land holdings in the United States were approximately 138 million acres. When
the allotment period ended in 1934 with the enactment of the Indian Reorganization Act
of 1934,9 only 48 million acres remained in Indian holdings. The loss of approximately
90 million acres: 27 million acres or two-thirds of the total allotted land was transferred
by sale from allottees to non-Indian parties, while 60 million acres were ceded outright or
sold to non-Indian homesteaders and corporations as "surplus" land.10
The Indian
Reorganization Act stopped the allotment of tribal lands, imposed restrictions on the
transfer of tribal and allotment land out of trust and encouraged the development of tribal
governments.
Title to allotment land is held by the United States in trust for the benefit of Indian
owners or allottees. Because beneficial ownership is held by individuals and not by the
tribe, the owners are not immune from suit. Because the land is titled in the name of the
United States, a lien, including a mechanics or materialman's lien, may not be recorded
against the property.
Issues abound when a project involves allotment land.
Each allotment is
relatively small, perhaps only 10 acres or as much as 80 acres. And, while the beneficial
interest to the allotment can pass by a will, most do not, and the deceased allottee's
interest passes by intestate succession. Today it is not uncommon for the beneficial
interest of a single allotment to be shared by as many as a hundred allottees.11
The Indian Land Consolidation Act establishes the procedures by which the Bureau of
Indian Affairs approves agreements that affect allotments.12 The Bureau may approve a
lease or an agreement, if:
(A) the owners of not less than the applicable percentage (determined
under subsection (b) of the undivided interest in the allotted land
that is covered by the lease or agreement; and
9
10
11
12
Act of June 18, 1934, 48 Stat. 984, ch. 576 (codified as amended at 25 U.S.C. 461,
462, 463, 464, 465, 466-70, 471, 472, 473, 474, 475, 476-78 & 479 (2000).
F. Cohen, Handbook of Federal Indian Law, p.138 (1982 ed.)
See, e.g. CANBY, American Indian Law, p.384-88 (2004).
25 U.S.C. § 2218.
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(B) the Secretary determines that approving the lease or agreement is
in the best interest of the owners of the undivided interest in the
allotted land.13
The applicable percentages referred to are as follows:
(A) If there are 5 or fewer owners of the undivided interest in the
allotted land, the applicable percentage shall be 100 percent.
(B) If there are more than 5 such owners, but fewer than 11 such
owners, the applicable percentage shall be 80 percent.
(C) If there are more than 10 such owners, but fewer than 20 such
owners, the applicable percentage shall be 60 percent.
(D) If there are 20 or more such owners, the applicable percentage
shall be a majority of the interests in the allotted land.14
The Secretary is authorized to consent on behalf of the interest of deceased owners whose
heirs have not yet been determined or those heirs that cannot be located.15
E.
Checkerboarding, Fractionation
Checkerboarding and fractionation are both the result of the Dawes Act.
1.
Checkerboarding. Indian lands that were in excess of the acreage within a
reservation necessary to provide allotments to members of the tribe were considered
surplus and sold or transferred to non-Indians but remained within the exterior boundaries
of the reservation. As a result, trust lands, alienated allotment lands, fee lands held by
non-Indians created a checkerboard pattern.
2.
Fractionation. The beneficial interest of a single allotment that began with a
single individual, often the head of household, typically passed by intestacy to that
individuals heirs. Over generations, the interest, initially held by a single Indian, may
now be held by as many as 100 or more individuals. Congress has made several attempts
to resolve this issue but is generally hampered by the Constitutional takings provision.
13
14
15
25 U.S.C. § 2218(a)(1).
25 U.S.C. § 2218(b).
25. U.S.C. §2218(c).
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F.
Jurisdictional Issues: Tribal, Federal and State
Subject matter jurisdiction of tribal, state or federal courts depends in part on
whether the defendant is (i) an Indian or (ii) non-Indian and whether the underlying
action occurred on (i) trust land, (ii) fee land or (iii) rights-of-way. The fact that a court
may have subject matter jurisdiction does not mean that the court has personal
jurisdiction over the tribe or tribal entity. Personal jurisdiction requires an effective
waiver of sovereign immunity. Thus, unless the organizational documents of the tribal
entity waive the immunity of the entity at the outset, it is virtually essential that a
contractual waiver be obtained, even if limited in scope.
As a matter of contractual negotiation and to ensure that there is a method for
contract enforcement, tribes are often willing to engage in alternative dispute resolution
including arbitration and the enforcement of arbitration awards in a court of competent
jurisdiction. Although this may not be the preferred method of enforcing contract rights,
without an alternative dispute resolution provision, an unenforceable forum selection
provision will result in having no forum in which to adjudicate the dispute. Unlike most
other areas of the law, issues related to subject matter jurisdiction in the field of Indian
law will prevent courts from hearing a dispute even if there is no other forum in which
the claim can be adjudicated.
1.
Federal Jurisdiction.
Federal courts do not have jurisdiction merely because a dispute involves a tribe,
tribal entity or tribal trust land. Federal courts are courts of limited jurisdiction and there
are specific guidelines that must be met for a federal court to assert jurisdiction over a
case or controversy. It is unlikely that disputes or remedial actions arising under business
transactions with a tribe or tribal entity will present a question suitable for federal
jurisdiction or will result in diversity of state citizenship (tribes are not citizens of any
state). Therefore, a method for obtaining federal court jurisdiction would not usually be
available. Additionally, parties to a contract cannot, by agreement, simply give a federal
court jurisdiction over a matter.
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2.
State Court Jurisdiction.
State courts are normally without subject matter jurisdiction to hear lawsuits
brought by non-Indians against tribes, most tribally-owned entities and individual Indians
with respect to transactions arising on a reservation when such jurisdiction would infringe
on the right of Indians to make their own laws and be governed by them. Williams v.
Lee, 358 U.S. 217 (1959). Exceptions exist for most civil suits arising in the states of
Alaska, California, Minnesota, Nebraska, Oregon, and Wisconsin, which are commonly
known as "Public Law 280 States." However, even in Public Law 280 States, state courts
do not have jurisdiction to adjudicate the ownership or right to possession of trust
property or any interest therein.
3.
Tribal Court Jurisdiction.
Federally recognized tribes generally have the right to form their own courts
subject to federal but not to state or local law. Most tribes have established courts or
similar tribunals. When the defendant is an Indian, the tribe or a tribal enterprise, for a
contract claim arising on the reservation, the tribal court or tribunal will likely have civil
jurisdiction to hear a suit to enforce the contract, regardless of whether federal and state
courts have overlapping jurisdiction. However, unless a non-Indian defendant consents
to jurisdiction or when jurisdiction is necessary to protect tribal self-government or to
control internal relations, tribal courts will not have jurisdiction over the non-Indian.16 If
the tribal court has jurisdiction over a case or controversy, federal and state courts with
overlapping jurisdiction will often abstain from hearing the case until tribal court
proceedings have been concluded and tribal remedies have been exhausted.17 Therefore,
to conduct business on tribal lands, frequently non-Indians must be willing to accept the
jurisdiction of tribal courts, if available, in at least some actions.
16
17
Montana v. U.S., 450 U.S. 544 (1981).
Iowa Mutual Insurance Company v. La Plante, 480 U.S. 9 (1987); National Farmers
Union Insurance Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985).
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G.
Financing Difficulties
The availability of financing is critical to economic development in Indian
country.
Nevertheless, when compared to financing a transaction outside of Indian
country, a financing transaction in Indian country is likely to be more complex and to
require a longer timeline. In 1994, the 65th Arizona Town Hall focused on "American
Indian Relationships in a Modern Arizona Economy."18 The 1994 Report noted that
"[f]inancial institutions do not have a broad history of dealing with tribal governments,
and continue to exhibit apprehension toward financial arrangements involving tribes and
reservation lands."19 The Report recommended that financial institutions do more to
offer credit services to tribes and that tribes become more proactive in establishing
business relationships. While some progress has been made in the last 20 plus years, the
keys to successful financing transactions in Indian country continue to be perseverance,
flexibility and creativity.
There are a number of options available to a tribe or tribal enterprise depending
on the type of project, the financial status of the tribe and the tribal laws that may govern
the transaction.
1.
Self-financing. One of the more common means of financing a project is
through tribal savings or cash flow. There is no outside party, so no waiver of immunity
is required. Similarly, documentation may be simple and inexpensive.
2.
Grants From Federal Agencies.
Several federal agencies provide grant
funds for on-reservation projects. The most common may be the Native American
Housing Assistance and Self-Determination Act ("NAHASDA") which provides grants
of money to tribes to construct tribal housing consistent with a tribe's Indian Housing
Plan.20 Although there is no repayment obligation, there is a complex set of regulations
18
19
20
Town Hall Report (Oct. 30-Nov. 2, 1994).
Town Hall Report at xxiii.
25 U.S.C. § 4101 et seq.
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with mandatory compliance requirements.21 A number of other federal agencies have
grant programs.
3.
Tax-Exempt Financing. The Indian Tribal Government Tax Status Act of
1982, provides that federally recognized Indian tribal governments and their political
subdivisions will be treated like states or local governments with respect to tax-exempt
financing, with some exceptions.22 The exceptions are that (i) substantially all of the
proceeds must be used for "essential governmental functions" and (ii) private activity
bonds are generally not allowed.
4.
Taxable Financings. Due to the restrictions on tax-exempt financings, many
tribes may decide to finance all or a portion of their commercial projects on a taxable
basis through conventional bank loans. One popular program that can be used with
taxable bank loans is the BIA loan guarantee program. The BIA loan guarantee program
guarantees or insures up to 90% of the principal amount of a commercial bank loan made
to a tribe, tribal enterprise, individual Native American or his or her enterprise. The
Department of Agriculture offers a similar loan guarantee program. By lowering the risk
to the lender, the interest rate for guaranteed loans is much lower than a traditional
taxable loan rate and the lender is not required to count the guaranteed portion of the loan
against its loan limits. Federal guarantees cannot be used in connection with tax-exempt
financings.
5.
The Structure of the Transaction. Key issues in Indian country financing
transactions include what assets are legally available for debt repayment, what dispute
resolution mechanisms are available, whether the borrower has provided a limited waiver
of immunity and what courts may entertain a dispute.
6.
Encumbrance of Indian Land. Because trust land cannot be encumbered,
leases and subleases are critical assets for lenders.
Encumbrances of tribal land,
including tribal trust land and allotted land are generally subject to review and approval
21
22
See 25 U.S.C. § 4161 et seq.; 24 C.F.R. § 1000.
26 U.S.C. § 7871; see also, 26 C.F.R. § 305, 7871-1 and Treas. Reg. § 305, 7871-1.
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23
by the Secretary of the Interior (the "Leasing Regulations"), and are generally limited in
the length of the term with limited renewal options. Some reservations are allowed to
24
lease tribal land for a term of up to 99 years.
The Leasing Regulations have recently
been revised in part to address the significant delays that would result from the approval
requirement.
7.
Dispute Resolution Mechanisms. As a matter of contractual negotiation and
to ensure that there is a method for contract enforcement, tribes are often willing to
engage in alternative dispute resolution including arbitration and the enforcement of
arbitration awards in any court of competent jurisdiction. It is critical to determine the
procedure by which the tribal borrower can agree to the dispute resolution mechanism.
Failure to follow the required procedures may result in the absence of any forum.
8.
Immunity. Tribes enjoy immunity from suit similar to states under the 11th
Amendment to the Constitution. Immunity applies to activities of a tribe both on and off
the reservation and for both governmental and commercial activities. The immunity
extends to agencies of the tribe including tribal enterprises. The extent to which a nonIndian party can enforce an agreement is limited by the scope of the waiver. For
instance, a waiver of immunity that arises from an arbitration agreement is limited to the
arbitration and its enforcement, and does not extend to other kinds of litigation that might
arise from the subject matter of the contract. Similarly, a creditor's right to proceed
against tribal property is limited by the extent of the tribe's waiver of sovereign immunity
with respect to the matter. Without a waiver of sovereign immunity, contracts are
generally unenforceable against tribes and tribal entities.
9.
Limited Waivers.
Tribal law and the borrowing entity's organizational
documents will determine who is authorized to waive sovereign immunity and any
limitations thereon. All waivers should follow the exact form and procedure set forth
therein. One must identify the assets to which one seeks recourse in the event of default,
23
24
25 U.S.C. § 415; 25 C.F.R., Part 162; but, see 25 U.S.C. § 415(e), leases of restricted
lands on Navajo Nation do not require Secretarial approval if executed under tribal
regulations approved by the Secretary.
See, e.g., Hualapai Reservation and San Carlos Apache Reservation, 25 U.S.C. §415(a).
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determine which legal entities have control over those assets and obtain effective waivers
of sovereign immunity from all such entities, tied specifically to the assets so identified.
As part of this process, one should conduct appropriate inquiries to determine the extent
to which assets may have already been pledged or set aside to secure other obligations of
the tribe and which assets cannot be pledged at all.
Generally, waivers should be
included in each resolution required to authorize the transaction as well as in the
agreements themselves.
Additionally, effective waivers must address pre and post judgment enforcement,
may need to include a right of access to permit enforcement, must comply with tribal law,
must be properly authorized by the tribe and should contain language that the waiver
cannot be revoked, contested or modified by the tribe. Similarly, a "no impairment of
contracts" provision should be requested in all contracts with tribes and tribal entities to
discourage them from changing applicable laws and contract terms after the execution
and delivery of final documents. This is particularly important where a change in tribal
leadership results in the tribe's dissatisfaction with previously negotiated financing
agreements.
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