[Senate Report 105-205]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 400
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-205
_______________________________________________________________________


 
   TO PERMIT THE LEASING OF MINERAL RIGHTS, IN ANY CASE IN WHICH THE 
INDIAN OWNERS OF AN ALLOTMENT THAT IS LOCATED WITHIN THE BOUNDARIES OF 
 THE FORT BERTHOLD INDIAN RESERVATION AND HELD IN TRUST BY THE UNITED 
  STATES HAVE EXECUTED LEASES TO MORE THAN 50 PERCENT OF THE MINERAL 
                        ESTATE OF THAT ALLOTMENT

                                _______
                                

                  June 5, 1998.--Ordered to be printed

_______________________________________________________________________


   Mr. Campbell, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2069]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 2069) to permit the leasing of mineral rights, in any 
case in which the Indian owners of an allotment that is located 
within the boundaries of the Fort Berthold Indian Reservation 
and held in trust by the United States have executed leases to 
more than 50 percent of the mineral estate of that allotment, 
having considered the same, reports favorably thereon with an 
amendment in the nature of a substitute, and recommends that 
the bill, as amended, do pass.

                                Purpose

    The purpose of S. 2069 is to amend the Mineral Leasing Act 
of 1909 to facilitate the leasing of mineral rights within the 
exterior boundaries of the reservation of the Three Affiliated 
Tribes of the Fort Berthold Reservation.

                               Background

    The Fort Berthold Reservation was established for the 
Arikara, Mandan, and Hidatsa Tribes by the Fort Laramie Treaty 
of 1851. While the three tribes were once geographically and 
linguistically distinct and still maintain their separate 
tribal identifies, they function as one tribal entity in terms 
of their relations with the federal government.
    Initial contact of the tribes with non-Indians is estimated 
to be around 1790. At that time, the three tribes lived along 
the Missouri river, hunting buffalo and growing squash, corn 
and beans. Contact brought a devastating smallpox epidemic in 
1837. To escape the disease, a group of Hidatsa moved up the 
Missouri River in 1845 and established the village of Like-A-
Fishhook. Later, they were joined by the other two tribal bands 
and by 1862, formal unification of the tribes had begun.
    Though the Treaty of Fort Laramie established a reservation 
of over 12 million acres for the three tribes, subsequently-
issued Executive Orders and allotments of tribal land reduced 
the reservation to its contemporary size of less than one 
million acres. In 1954, the tribes lost another 152,300 acres, 
along with an abundance of natural resources, because of the 
Missouri River Pick Sloan program, and the filling of Garrison 
Reservoir, now Lake Sakakawea, by the U.S. Army Corps of 
Engineers.
    The flooding destroyed traditional tribal population 
centers, and families who had sustained themselves by ranching 
and farming along the fertile Missouri River bottomlands were 
relocated to dry, windy uplands. The tribal administrative 
center was moved to New Town, an area that was not part of the 
reservation. Though the tribes received approximately $12 
million in compensation for their flooded lands, the value of 
the lost land was later placed at $20 million.
    The three tribes elected to come under the Indian 
Reorganization Act of 1934, forming a representative tribal 
government and adopting a constitution and by-laws, which 
though subsequently amended, remain the tribes' governing 
documents. The Three Affiliated Tribes Business Council serves 
as the governing body, consisting of a tribal chairman, vice-
chairman, treasurer, secretary, and three at-large members. The 
total tribal enrollment is approximately 8,500 members of whom 
5,387 reside on reservation lands.\1\
---------------------------------------------------------------------------
    \1\ The preceding section of the Background was derived in part 
from information contained in ``American Indian Reservations and Trust 
Areas'', a publication of the Economic Development Administration, U.S. 
Department of Commerce.
---------------------------------------------------------------------------
    The reservation is located in parts of Mountrail, McLean, 
Dunn, Mercer, McKenzie and Ward counties. Ownership of the 
surface and mineral estates on the reservation is diverse, 
including tribal, federal, state and private lands. There are 
about 350,000 private acres, and 17,834 state-owned mineral 
acres on the reservation, but the latter are not leased for oil 
or gas exploration.\2\
---------------------------------------------------------------------------
    \2\ Information with regard to oil exploration and production on 
the Fort Berthold Indian Reservation and on lands outside of the 
reservation is derived from a briefing book on S. 1079 prepared for the 
Committee on Indian Affairs by Jim Powers, President, Powers Energy 
Corporation, and Thomas M. Disselhorst, Staff Attorney for the Three 
Affiliated Tribes of the Fort Berthold Reservation.
---------------------------------------------------------------------------
    Through 1996, there have been 245 drilling permits issued 
on the reservation, while statewide, there have been 14,600 
permits issued, with 452 permits issued in 1996 alone. From 
lands located off the tribes' reservation, more than one 
billion barrels of oil have been produced in North Dakota, with 
over 32 million barrels produced in 1996. In contrast, there 
have been 14 million barrels of oil produced from the 
reservation, with less than 52,000 barrels produced on tribal 
lands in 1996.
    Within the Fort Berthold Reservation, Antelope Field is the 
only field with significant production. It was discovered in 
1953, with three of the four producing zones discovered on 
lands located outside of the reservation's boundaries. A total 
of 29 successful non-exploratory oil wells were drilled on 
Indian lands, but 20 of those wells are no longer productive. 
Outside of the Antelope Field, only 13 oil wells have been 
drilled on tribal lands within the reservation, 12 of which are 
no longer producing.
    Fifth-seven oil wells have been drilled on fee lands within 
the reservation, 35 of which are still producing. 353,583 
barrels of oil have been produced from tribal lands within the 
reservation, while 3,684,361 barrels of oil have been produced 
from fee lands within the reservation, or ten times the 
production from tribal lands.
    In the early 1990's, the Three Affiliated Tribes sought to 
explore the potential for oil and gas development on tribal 
lands. In 1995, the tribe approached tribal allottees about making 
their lands available, through leasing, for such mineral development. A 
tribal prospectus was developed and submitted to several hundred 
companies, but few companies responded, citing barriers to development 
that include: (1) too many mineral interests tied up in probate; and 
(2) fractionated heirship problems, which is compounded by the 
requirement of the 1909 Mineral Leasing Act that all persons who have 
an undivided interest in any particular parcel must consent to its 
lease.
    According to testimony received by the Committee on Indian 
Affairs in an October 6, 1997 hearing on S. 1079, an earlier 
but identical version of S. 2069, there are approximately 293 
Indian estates involving lands on the Fort Berthold Reservation 
pending in the process of probate, which may affect as many as 
1,200 tracts of land and as many as 12,000 undivided interests 
in those tracts.\3\
---------------------------------------------------------------------------
    \3\ Testimony of Thomas M. Disselhorst, Staff Attorney for the 
Three Affiliated Tribes of the Fort Berthold Reservation, before the 
October 6, 1997 Hearing of the Committee on Indian Affairs on S. 1079.
---------------------------------------------------------------------------
    The problem of fractionated heirships arises out of the 
General Allotment Act of 1887. As explained by the Deputy 
Solicitor for the Department of the Interior, Edward B. Cohen, 
in his testimony before the Committee on October 6, 1997:

            The purpose of the statute was to accelerate what 
        was at that time termed to be `the civilization of 
        Indians by making them private landowners and farmers.' 
        Many Indians sold their land. A few assimilated into 
        surrounding communities, and in 1934, Congress 
        recognized that this policy was fairly unsuccessful. It 
        resulted in 100 million acres being removed from the 
        Indians land base, and it also left us a legacy of 
        fractionation.
            The cause of this fractionation was that Congress 
        enacted probate laws which provided that as individual 
        Indian owners died, their property descended to their 
        heirs as undivided fractional interests in the land. So 
        if you do the math quickly, if an Indians owner had a 
        160-acre allotment and died and had four heirs, the 
        heirs did not inherit 40 acres each; each inherited a 
        25 percent interest in the 160-acres allotment. When 
        they died, assuming that they each had four heirs, each 
        of the sixteen heirs inherited a 6.25 percent interest. 
        If you take that just one generation more, and assuming 
        that each of the heirs had four theirs, each of the 64 
        owners then had a 1.56 percent share. And this 
        exponential fractionation occurs with each successive 
        generation.\4\
---------------------------------------------------------------------------
    \4\ Testimony of Edward B. Cohen, Deputy Solicitor, U.S. Department 
of the Interior, before the October 6, 1997 Hearing of the Committee on 
India Affairs on S. 1079.

    In 1992, the General Accounting Office (GAO) conducted a 
study of the fraction problem on twelve Indian reservations, 
including the Fort Berthold Reservation. The GAO study found 
that of 2,610 tracts of land on the Fort Berthold Reservation, 
352 had two Indian owners, 999 had three to ten Indian owners, 
675 had eleven to twenty-five Indian owners, 377 had twenty-six 
to fifty Indian owners, 174 had fifty-one to one hundred Indian 
owners, and 33 had from one hundred one to three hundred Indian 
owners.\5\
---------------------------------------------------------------------------
    \5\ ``Indian Programs--Profile of Land Ownership at 12 
Reservations'', Briefing Report to the Chairman, Select Committee on 
Indians Affairs, U.S. Senate, by the U.S. General Accounting Office, 
February, 1992, GAO/RCED-92-96BR.
---------------------------------------------------------------------------
    The Mineral Leasing Act of 1909, 25 U.S.C. 396, provides 
that:

        all lands allotted to Indians in severalty, except 
        allotments made to members of the Five Civilized Tribes 
        and Osage Indians in Oklahoma, may by said allottee be 
        leased for mining purposes for any term of years as may 
        be deemed advisable by the Secretary of the Interior; 
        and the Secretary of the Interior is authorized to 
        perform any and all acts and make such rules and 
        regulations as may be necessary for the purpose of 
        carrying the provisions of this section into full force 
        and effect; Provided, That if the said allottee is 
        deceased and the heirs to or devisees of any interest 
        in the allotment have not been determined, or, if 
        determined, some or all of them cannot be located, the 
        Secretary of the Interior may offer for sale leases for 
        mining purposes to the highest responsible qualified 
        bidder, at public auction, or on sealed bids, after 
        notice and advertisement, upon such terms and 
        conditions as the Secretary of the Interior may 
        prescribe. the Secretary of the Interior shall have the 
        right to reject all bids, whenever in his judgment the 
        interests of the Indians will be served by doing so, 
        and to readvertise such lease or sale.

    The Mineral Leasing Act has been interpreted as requiring 
the Secretary of the Interior to secure the consent of all 
owners who have an undivided interest in a parcel ofland that 
would be the subject of a mineral lease.\6\ Because of fractionated 
heirship problems associated with the manner in which Indian estates 
are inherited or devised, there can be hundreds of owners of an 
undivided interest in a parcel of land.
---------------------------------------------------------------------------
    \6\ Ruling of the United States District Court of the District of 
New Mexico on McClanahan, et al., v. Hodel, et al., No. 83-161-M Civil 
(D.N.M., Aug. 14, 1987).
---------------------------------------------------------------------------
    In contrast, where non-Indian owned mineral acres are 
concerned, most states allow the mineral acres to be developed 
with less than 100 percent consent of all interest holders as 
long as all persons who own an interest in the minerals receive 
an accounting for production from the lease. Partly because of 
the fundamental difference in leasing procedures between 
property held by non-Indians and land held in trust by the 
United States for the benefit of Indians, oil and gas 
exploration companies have been reluctant to pursue the 
potential for oil exploration on many Indian reservations, 
including the Fort Berthold Reservation.
    The Fort Berthold Reservation is an otherwise attractive 
parcel to develop because it falls within the overall 
geological boundaries of the Williston basin, an area in which 
more than a billion barrels of oil have been produced to date. 
The United States holds more than 475,000 mineral acres in 
trust for the Tribes and its members, or roughly half of the 
total land area within reservation boundaries. As outlined 
above, oil has been and is being produced in commercial 
quantities on the lands within the Tribes' reservation that are 
not held in trust by the United States.
    The area of the Williston Basin in which the Fort Berthold 
Reservation is located is geologically complex, however it is 
thought that the area is not likely to contain a single large 
pool of oil that can easily be developed. Thus, the oil and gas 
companies seek access to large blocks of land for detailed and 
thorough exploration to enable both wide-scale and profitable 
exploration and development of the oil and gas potential on the 
lands comprising the Fort Berthold Reservation.
    Acquisition of such large blocks of land on the Fort 
Berthold Reservation is made more difficult because of the 
checkerboard nature of land ownership by the Tribes, tribal 
members and non-tribal members. This is primarily the result of 
the allotments to more than 1,000 tribal members under the 
General Allotment Act of 1887, and the 1910 Act specific to the 
Fort Berthold Indian Reservation, which allowed non-Indians to 
settle on unallotted lands within the reservation. There are 
approximately 3,200 allotments on the Reservation, with each 
allotment representing tracts of land varying in size from a 
few acres to 320 acres. Estimates indicate that 30% of these 
tracts are held by only one individual, but the balance of the 
tracts have an average of about 20 owners. Some tracts are 
owned by up to 200 individuals, all of whom would have to agree 
to lease the allotment in order for mineral exploration to 
occur.
    Unlike other tribes that have been able to develop their 
oil and gas resources, most of the mineral acres held in trust 
which are available for oil and gas development on the Fort 
Berthold Reservation are either held by individual tribal 
members or are located under Lake Sakakawea. Because large 
tracts are needed for successful development, few wells have 
been drilled and little production of oil has taken place 
except in areas directly adjacent to fields off the reservation 
that have already been explored.

                          Legislative History

    S. 2069 was introduced on May 12, 1998, by Senator Dorgan, 
for himself and Senator Conrad, and was referred to the 
Committee on Indian Affairs. An earlier and identical version 
of S. 2069, S. 1079 was introduced on July 29, 1997 by Senator 
Dorgan, for himself and Senator Conrad, and was referred to the 
Committee on Indian Affairs. A hearing on S. 1079 was held on 
October 6, 1997. S. 1079 was reported by the Committee on 
Indian Affairs on October 23, 1997, and passed the Senate on 
November 7, 1997. S. 1079 was passed in the House of 
Representatives on November 12, 1997, with an amendment which 
is unrelated to the substance of S. 1079. The House amendment, 
known as the Quincy Library bill, authorizes a logging 
demonstration project in California. Because of the apparent 
controversy associated with the Quincy Library amendment, the 
Senate has not acted on S. 1079. In an effort to overcome the 
impasse associated with the unrelated amendment to S. 1079, 
Senators Dorgan and Conrad introduced S. 2069.

            Committee Recommendation and Tabulation of Vote

    On May 20, 1998, the Committee on Indian Affairs, in an 
open business session, considered an amendment in the nature of 
a substitute to S. 2069 proposed by Senator Dorgan, and, by 
unanimous vote, ordered S. 2069 to be favorably reported to the 
Senate with an amendment in the nature of a substitute and with 
a recommendation that it do pass.

         Summary of the Amendment in the Nature of a Substitute

    The amendment in the nature of a substitute provides 
authority for the Secretary of the Interior to approve any 
mineral lease or agreement affecting individually-owned Indian 
land, if the owners of a majority of the undivided interest in 
the Indian land which is the subject of the mineral lease or 
agreement consent to the mineral lease or agreement and if the 
Secretary determines that approval of the lease or agreement is 
in the best interest of the Indian owners.
    That determination by the Secretary is governed by 
regulations found at 25 C.F.R. 212.3, which provides that:

          In the best interest of the Indian mineral owner 
        refers to the standards to be applied by the Secretary 
        in considering whether to take an administrative action 
        affecting the interests of an Indian mineral owner. In 
        considering whether it is ``in the best interest of the 
        Indian mineral owner'' to take a certain action (such 
        as approval of a lease, permit, unitization of 
        communization agreement), the Secretary shall consider 
        any relevant factor, including but not limited to: 
        economic considerations, such as the date of lease 
        expiration; probable financial effect on the Indian 
        mineral owner; feasibility of land concerned; need for 
        change in the terms of the existing lease; 
        marketability; and potential environmental, social and 
        cultural effects.

    The effect of the majority owners' agreement and the 
Secretary's approval is to make the lease or agreement binding 
on all owners of an undivided interest in the Indian land, 
including any interest owned by an Indian tribe, and all other 
parties to the lease or agreement to the same extent as if all 
of the Indian owners had consented to the lease or agreement. 
Proceeds derived from the lease or agreement are to be 
distributed to all owners in accordance with their ownership 
interest.
    The amendment also authorizes the Secretary to execute any 
mineral lease or agreement affecting individually-owned Indian 
land on behalf of an Indian owner who is deceased and the heirs 
to or devisees of the interest of the deceased owner have not 
been determined, or if determined, some or all of them cannot 
be located. The amendment further provides that leases or 
agreements authorized for approval or execution under this 
subsection need not be offered for sale through a public 
auction or advertised sale.
    The amendment in the nature of a substitute is intended to 
supercede the Act of March 3, 1909, to the extent provided in 
subsection (1) of that Act.

                         Effect on Existing Law

    The substitute amendment to S. 2069 allows mineral leases 
of lands held in trust or restricted status by the Secretary of 
the Interior for the benefit of individual Indians on the Fort 
Berthold Indian Reservation to be approved by the Secretary 
where persons who hold a majority of the undivided mineral 
interest in a single parcel of land subject to any lease or 
agreement have agreed to the terms of the lease or agreement. 
This applies to all leases or agreements covering lands on the 
Fort Berthold Indian Reservation regardless of whether the 
leases or agreements are presented or approved by the Secretary 
under the 1909 Indian Mineral Leasing Act, 25 U.S.C. 396, or 
the Indian Mineral Development Act of 1982, 25 U.S.C. 2101-
2108, or any other applicable law. The substitute amendment is 
intended to supercede any contrary requirement or 
interpretation of existing law, as it applies to the Fort 
Berthold Indian Reservation, such as that contained in the 
unreported U.S. District Court case, McClanahan v. Hodel, 16 
Indian L. Rep. 3113, Civil No. 83-161-M, Aug. 14, 1987).
    The substitute amendment also changes existing law as it 
applies to the Fort Berthold Indian Reservation, including 
those provisions of the 1909 Act and its regulations, which 
require the Secretary to have a public auction or advertised 
sale in the case of a mineral lease or agreement affecting 
individually-owned Indian lands when the owner is deceased and 
the heirs to or devisees of the interest of the deceased owner 
have not been determined or cannot be located. The substitute 
amendment permits the Secretary to execute a lease or agreement 
in these circumstances without first conducting a sale. The 
substitute amendment is intended to supercede existing law, 
including that contained in the 1909 Act, which would otherwise 
require the Secretary to offer such leases for sale only 
through public auction or advertised sale in these 
circumstances.

                      Section-by-Section Analysis

Section 1

    Section 1 (a)(1) sets forth the definitions of the 
following terms as they are applied in the Act: ``Indian 
Land'', Individually-Owned Indian Land'' and ``Secretary''. 
Section 1(a)(2) addresses the effect of approval by the 
Secretary of the Interior. Section 1(a)(2)(A) provides that the 
Secretary may approve any mineral lease or agreement that 
affects individually-owned Indian land if the owners of a 
majority of the undivided interest in the Indian land that is 
the subject of a mineral lease or agreement, including any 
interest covered by a lease or agreement executed by the 
Secretary under paragraph (3), consent to the lease or 
agreement, and the Secretary determines that approving the 
lease or agreement is in the best interest of the Indian owners 
of the lands.
    For the purpose of determining whether the owners of a 
majority of the undivided interest in the Indian land consent 
to a lease or an agreement, the undivided interest of both the 
Three Affiliated Tribes and the individual owners shall be 
counted. The interests of the Three Affiliated Tribes and the 
individual owners need not be covered by the same lease or 
agreement.
    Section 1(a)(2)(B) provides that upon the approval by the 
Secretary of the Interior under subparagraph (A), the lease or 
agreement shall be binding, to the same extent as if all the 
Indian owners of the Indian land involved had consented to the 
lease or agreement, upon all owners of the undivided interest 
in the Indian land subject to the lease or agreement, including 
any interest owned by the Three Affiliated Tribes, and all 
other parties to the lease or agreement.
    Section 1(a)(2)(C) provides that the proceeds derived from 
a lease or agreement that is approved by the Secretary under 
subparagraph (A) are to be distributed to all owners of the 
Indian land that is subject to the lease or agreement in 
accordance with the interest owned by each such owner.
    Section (1)(a)(3) provides authority for the Secretary to 
execute a mineral lease or agreement that affects individually-
owned Indian land on behalf of an Indian owner if that owner is 
deceased and the heirs to, or devisees of, the interest of the 
deceased owner have not been determined or the heirs of 
devisees referred to in subparagraph (A) have been determined, 
but one or more of the heirs or devisee cannot be located.
    Section 1(a)(4) provides that it shall not be a requirement 
for the approval or execution of a lease or agreement under 
this subsection that the lease or agreement be offered for sale 
through a public auction or advertised sale.
    Section 1(b) sets forth a rule of construction which 
provides that this Act supercedes the Act of March 3, 1909, 25 
U.S.C. 396, only to the extent provided in subsection (a).
    The amendment in the nature of a substitute to S. 2069 
amends the title of the Act to read: ``A bill to permit the 
mineral leasing of Indian land located within the Fort Berthold 
Indian Reservation in any case in which there is consent from a 
majority interest in the parcel of land under consideration for 
lease.''.

                   Cost and Budgetary Considerations

    The cost estimate for S. 2069, as developed by the 
Congressional Budget Office, is set forth below:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 2, 1998.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2069, a bill to 
permit the mineral leasing of Indian land located within the 
Fort Berthold Indian Reservation in any case in which there is 
consent from a majority interest in the parcel of land under 
consideration for lease.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp (for federal costs) and Marjorie Miller (for the impact 
on state, local, and tribal governments).
            Sincerely,
                                 June E. O'Neill, Director.
    Enclosure.

S. 2069--A bill to permit the mineral leasing of Indian land located 
        within the Fort Berthold Reservation in any case in which there 
        is consent from a majority interest in the parcel of land under 
        consideration for lease

    S. 2069 would modify the conditions under which the 
Secretary of the Interior may approve a mineral lease or 
agreement that affects individually owned Indian land within 
the Fort Berthold Reservation in North Dakota. Under current 
law, approval of such leases requires the consent of all of the 
individuals that have an undivided interest in a property. This 
bill would ease that requirement by making the Secretary's 
approval contingent upon the consent of a simply majority of 
individual owners. Once approved by the Secretary, an agreement 
would be binding on all owners of the property, and any 
receipts would be distributed in proportion to each owner's 
interest in the property.
    CBO estimates that implementing S. 2069 would have no 
effect on direct spending or receipts, because any income 
resulting from agreements approved under this legislation would 
be paid directly to the Indian owners or to the Fort Berthold 
tribal government. Hence, pay-as-you-go procedures would not 
apply to the bill. Although the Bureau of Indian Affairs would 
incur additional costs if S. 2069 results in more leasing 
activity on the reservation, we estimate that any effect on 
discretionary spending would be insignificant.
    S. 2069 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments. 
The Fort Berthold tribal government might receive additional 
income if these changes lead to increased leasing activity on 
the reservation.
    On October 30, 1997, CBO transmitted a cost estimate for S. 
1079, an identical bill that was ordered reported by the Senate 
Committee on Indian Affairs on October 23, 1997. The CBO 
estimate for S. 2069 is identical to the estimate provided for 
S. 1079.
    The CBO staff contacts are Kathleen Gramp (for federal 
costs) and Majorie Miller (for the impact on state, local, and 
tribal governments). This estimate was approved by Paul N. Van 
de Water, Assistant Director for Budget Analysis.

                      Regulatory Impact Statement

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 2069 will 
have a minimal impact on regulatory requirements and that the 
enactment of S. 2069 will reduce the amount of paperwork 
associated with the leasing of lands on the Fort Berthold 
Reservation.

                        Executive Communications

    The testimony of Edward B. Cohen, Deputy Solicitor, U.S. 
Department of the Interior, on S. 1079, is set forth below:

 Statement of Edward B. Cohen, Deputy Solicitor, the Department of the 
                                Interior

    Mr. Chairman and Members of the Committee, I am here today 
to present the views of the Department of the Interior on S. 
1079, a bill ``To permit the leasing of mineral rights, in any 
case in which the Indian owners of an allotment that is located 
within the boundaries of the Fort Berthold Indian Reservation 
and held in trust by the United States have executed leases to 
more than 50 percent of the mineral estate of that allotment.''
    We support enactment of S. 1079 if amended. Before 
detailing our proposed amendments, we appreciate the work of 
the sponsors in introducing S. 1079 which is a positive step 
that, if enacted, would complement the Department's current 
legislative proposal dealing with the issue of fractionated 
ownership of Indian trust and restricted lands. The issue of 
fractionated ownership of land is a problem caused by 
peculiarities in Federal Indian law. As each generation passes, 
their heirs continue to own interests in land which are 
undivided; i.e., parcels of land which are not separately 
identified to a specific owner. In 1992, the General Accounting 
Office issued a report profiling the ownership of 12 
reservations, one of which was the Fort Berthold Reservation. 
The Fort Berthold Reservation has the fourth highest number of 
fractionated ownership interests.
    As the number of owners increase in these tracts of land, 
the administration of the land becomes increasingly more 
difficult. Approximately 80 percent of the Bureau of Indian 
Affairs' real estate services budget goes to attempting to 
administer less than 20 percent of the lands under its 
jurisdiction.
    The Act of March 3, 1909 (25 U.S.C. 396) provides that 
consent of all owners of a tract of trust or restricted land 
must be obtained prior to approval of a mineral lease by the 
Secretary of the Interior. As a consequence of this statutory 
requirement, firms engaged in mineral exploration and 
development are less likely to lease Indian lands because of 
the costs associated with locating and acquiring the consent of 
all owners to a parcel of Indian land. The result is that the 
Indian owners do not gain maximum economic benefit from their 
ownership. This 100 percent consent requirement is not found in 
other laws governing the use of Indian lands. For instance, 
rights of way across Indian land can be granted by the 
Secretary when a majority of the interests consent; and surface 
leases, i.e. agricultural, may be granted by the Secretary when 
the owners of the land are unable to agree upon a lease. In 
addition, we cite 25 U.S.C. Sec. 406 which states,

            Upon request of the owners of a majority Indian 
        interest in land in which any undivided interest is 
        held under a trust or other patent containing 
        restrictions on alienations, the Secretary of the 
        Interior is authorized to sell all undivided Indian 
        trust or restricted interests in any part of the timber 
        on such land.'' (Sale of Timber on Lands Held Under 
        Trust)

    While agricultural and timber uses are renewable resources 
in contrast to mineral resources which are not renewable and 
are non-replaceable, the rationale for majority consent still 
applies. The Department believes the 1909 statute did not 
contemplate the ownership of Indian land becoming as highly 
fractionated as it now exists and, unlike other existing 
statutes, it has not been amended since enactment to conform 
with contemporary times.
    Turning to our amendments, first, we believe that the title 
should be amended to read, ``To permit the mineral leasing of 
Indian land located within the Fort Berthold Indian Reservation 
when there is a majority interest in the parcel of land under 
consideration for lease consent.'' Second, Subparagraphs (A) 
and (B) of (a)(1) should be deleted in their entirety and the 
following should be added in lieu thereof, ``The Secretary of 
the Interior may approve any mineral lease affecting 
individually owned trust or restricted land that requires 
approval by the Secretary, if the owners of a majority interest 
in the trust or restricted land consent to the mineral lease 
and the Secretary determines that approval of the lease is in 
the best interest of the Indian owners. Upon such approval the 
lease shall be binding upon the minority interests in the trust 
or restricted land, including any interest owned by an Indian 
tribe, and all other parties to the lease to the same extent as 
if all of the Indian owners had consented to the transaction. 
Proceeds derived from the lease shall be distributed to all 
mineral interest owners in accordance with the interest owned 
by each owner.'' Third, in subsection (a)(2) delete the words 
``ALLOTMENT--An allotment described in this paragraph is an 
allotment that--,'' and in lieu thereof add ``INDIAN LAND.--
Indian land described in this paragraph means land that,'' and 
in (a)(2)(B) delete ``is held in trust by the United States,'' 
and in lieu thereof add ``is held in trust or restricted status 
by the United States.''
    We understand that the government of Three Affiliated 
Tribes of the Fort Berthold Reservation also supports S. 1079. 
The Bureau of Indian Affairs encourages the Committee to 
consult with the allottees of the Reservation.
    This concludes my prepared statement. We look forward to 
working with the Committee to develop the desired changes to 
the bill. I will be happy to answer any questions the Committee 
may have.

                        Changes in Existing Law

    The amendment in the nature of a substitute to S. 2069 will 
establish a new section of Title 25 of the United States Code, 
modifying the manner in which 25 U.S.C. 396 applies to the 
approval by the Secretary of the Interior to leases of Indian 
land on the Fort Berthold Indian Reservation.



                         A P P E N D I X A \7\
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    \7\ ``Indian Programs--Profile of Land Ownership at 12 
Reservations'', Briefing Report to the Chairman, Select Committee on 
Indian Affairs, U.S. Senate, by the U.S. General Accounting Office, 
February, 1992 GAO/RCED-92-96BR.





                                
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