[Senate Report 106-132]
[From the U.S. Government Publishing Office]
Calendar No. 244
106th Congress Report
SENATE
1st Session 106-132
======================================================================
AMENDING PUBLIC LAW 105-188 TO PROVIDE FOR THE MINERAL LEASING OF
CERTAIN INDIAN LANDS IN OKLAHOMA
_______
August 2, 1999.--Ordered to be printed
_______
Mr. Campbell, from the Committee on Indian Affairs, submitted the
following
R E P O R T
[To accompany S. 944]
The Committee on Indian Affairs, to which was referred the
bill (S. 944) to amend Public Law 105-188 to provide for the
mineral leasing of certain Indian lands in Oklahoma, having
considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
Purpose
The purpose of S. 944 is to amend Public Law 105-188, an
Act 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, which allows the Secretary of the
Interior to approve leases of allotted lands on the Fort
Berthold Indian Reservation, pursuant to the authority of the
Mineral Leasing Act 1909,\1\ as amended, where more than 50
percent of those owning the mineral estate of an allotment have
agreed to a lease for oil or gas. Under the provisions of S.
944, the Secretary may also approve such leases if they are
lands held in trust as part of the former Indian reservations
of any of the following seven Indian tribes: the Comanche
Indian Tribe; the Kiowa Indian Tribe; the Apache Tribe; the
Fort Sill Apache Tribe of Oklahoma; the Wichita and Affiliated
Tribes (Wichita, Keechi, Waco, and Tawakonie); the Delaware
Tribe of Western Oklahoma; or the Caddo Indian Tribe, all
located in Oklahoma.
---------------------------------------------------------------------------
\1\ Act of March 3, 1909, 35 Stat. 783, 25 U.S.C. Sec. 396.
---------------------------------------------------------------------------
Background
P.L. 105-188 was enacted during the 105th Congress in
response to concerns that current law may require unanimous
approval of all those who own undivided fractional interests in
an allotment before it can be leased, leaving otherwise
attractive parcels of land passed over for oil and gas
development.\2\ The economic and opportunity costs attributable
to this dynamic prove great, particularly for those tribes with
potentially exploitable mineral resources. This was occurring
even though the Fort Berthold Indian Reservation was located in
an area that was subject of significant oil and gas
exploration. The source of this difficulty can be traced to the
now-discredited policy of Allotment. Under the Allotment
policy, approximately 100 million acres of land held in trust
for Indian tribes passed from tribal ownership. Some of this
land was declared surplus and sold directly to non-Indians by
the Federal government. A great deal of this land was conveyed
to individual tribal members in allotments of approximately 160
acres of less. Originally, these lands were conveyed with
restrictions against alienation to protect the equitable owners
of these lands from losing title, and the beneficial use of the
land. However, through sale, fraud, chicanery, and manipulation
of the system that was ostensibly created to protect Indians,
these interests were often lost.
---------------------------------------------------------------------------
\2\ A federal district court in New Mexico issued an unreported
opinion refusing to allow a non-unanimous lease of allotted lands. In
that case, both the process for negotiating the lease and the lease
itself were found to be a breach of the Secretary's trust obligation.
In addition, the case involved more than non-consenting owners, some of
the owners of undivided interests were adamantly opposed to the lease.
McClanahan v. Hodel, 14 Indian Law Reporter 3113 (D. N.M. 1987). As
discussed further, at least two federal statutes provide explicit
authority for the leasing of allotted lands without unanimous approval.
It is fair to say that the full range of the Secretary's authority to
approve leases without the explicit consent of all those owning each
undivided interest in an allotment has neither been fully explored not
definitively resolved.
---------------------------------------------------------------------------
Even where tribal members retain ownership of allotted
lands, problems traced to the allotment policy persist. In
particular, this policy allowed state probate laws to determine
the intestate disposition of allotments, displacing inherent
tribal authority over a tribe's members and their property, and
ignoring tribal culture and traditions. Non-trust property
could be passed to each succeeding generation in a manner
consistent with each tribe's laws, practices, and traditions,
but trust property was conveyed pursuant to state laws that
were often unfamiliar, and which Indian tribes and their
members were unable to alter or affect. As a result,
testamentary dispositions were rarely made for allotted lands.
State probate law governing real estate generally provided that
each successive generation received equal undivided co-
tenancies with no rights of survivorship. As a result, as each
generation passed the undivided fractional interests in each
allotment were further splintered. The Deputy Solicitor for the
Department of Interior, explained:
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 Indian 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-acre allotment. When
they died, assuming that 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 heirs, each of the 64
owners then had a 1.56 percent share. And this
exponential fractionation occurs with each successive
generation.\3\
---------------------------------------------------------------------------
\3\ Sen. Rep. 105-205, quoting the statement of Deputy Solicitor
Edward B. Cohen before the Committee on October 6, 1997.
---------------------------------------------------------------------------
As this statement indicates, fractionation increases
geometrically and as the size of each interest shrinks, the
value of the interest also shrinks. As a result, each new
generation of owners must commit their time and resources
toward keeping track of increasing smaller, and less valuable
interests in lands. The difficulty presented to the economical
use of such lands is obvious. Although the Bureau of Indian
Affairs has a responsibility to provide allotment owners with
information about their interest, it is less likely that these
owners will assist the Bureau of Indian Affairs (BIA) with the
task (for example by keeping the BIA informed of changes in
their address or by engaging in estate planning) if these
fractional interests hold little value. Conversely, the more
Congress and the Department of Interior can do to facilitate
use of these lands, the more valuable these interests will be
and the more likely it will be that the owners of fractional
interests will be in a better position to take control of and
extract value from these lands.
The Need for Legislation
S. 944 is one example of a proposal that is intended to
increase the value of allotted lands by making it possible for
the mineral interests of these lands to be leased if more than
50 percent of those owning the mineral interest approve such a
lease. By making it clear that unanimity is not required, those
interested in developing the oil and gas resources on these
lands will not be dissuaded from considering or moving forward
with these plans simply because it is unlikely that it will be
possible to contact and obtain the approval of each of the
owners of each allotment.
Federal statutes either fail to explicitly allow the
leasing of allotments without unanimous consent or they impose
procedural impediments and limitations for when a lease can be
approved without the consent of every person who owns an
undivided interest. Understandably, this situation makes
potential lessors reluctant to commit resources to trying to
lease allotted lands if their efforts could potentially be
stymied by a party owning less than 1% of the undivided
interest in an allotment. By making it clear that a lease may
be approved by the Secretary even if absolute unanimity is not
achieved, the Committee believes that this significant
impediment will be removed; an impediment which has caused a
number of potential lessors to refuse to even consider (much
less makes bids upon) these alloted lands for development.
Records indicate that land bases of each of the seven
tribes included in S. 944 were extensively allotted to
individual members. In addition, the ownership of the
allotments on these former reservations is highly fractioned.
In such situations, requiring unanimous approval is arguably
equivalent to placing a prohibition on the leasing of these
lands.
A. Prior legislation addressing landowner consent
The approach taken in S. 944 represents a ``second wave''
in addressing consent requirements for allotted lands. The
``first wave'' addressed some situations where those owning
undivided interests had not been determined, could not be
located, or could not reach an agreement on lease.
A 1940 Act is an example of such ``first wave'' approach.
In 1940, Congress enacted 54 Stat. 745, (25 U.S.C. Sec. 380) to
allow for the leasing of allotments without requiring unanimous
consent approval. But this law specifically excluded leases for
``oil and gas mining purposes.'' In addition, the law is only
applicable to two distinct situations: the original allottee
was deceased and either the heirs or devisees were not
determined or the heirs and devisees were not detemined or the
heirs and devisees have been located ``and such lands are not
in use by any of the heirs and the heirs have not been able
during the three months' period to agree upon a lease.'' \4\
Although this provision allows leases without unanimous
approval, it still allows even the smallest minority interest
holder to frustrate the decision of those holdings an
overwhelming majority interest, at least temporarily. In
addition, there is some evidence that some BIA agency or area
offices may still require 100% approval before approving
leases.\5\ Such a practice would violate the terms of federal
statutes and the modern trend of federal policy.
---------------------------------------------------------------------------
\4\ The phrase ``such lands are not in use by any of the heirs'' is
the source of the ``use rights'' discussed in footnote 9.
\5\ See the text accompaning footnote 8.
---------------------------------------------------------------------------
In 1955 Congress added a proviso to the Mineral Leasing Act
of 1909 (25 U.S.C. Sec. 396), which allows for leasing for all
types of minerals, without full consent.\6\ This proviso,
however, was restricted to circumstances where the heirs were
either not determined or could not be located. In another
section of the same Act, however, Congress made Sec. 380
applicable to Sec. 396, but did not remove the provision making
Sec. 380 inapplicable to oil and gas leases. Thus, explicit
authority for the approval of oil and gas leases involving
allotted lands without unanimous consent appears to be limited
to the proviso of Sec. 396. (Other minerals could, of course,
be leased under the terms of Sec. 380.) Specific authority for
non-unanimous leases is necessary in the oil and gas content
for two reasons. First, with the exception of Ft. Berthold,
present law does not specifically authorize the Secretary to
approve leases, if one fractional interest holder fails or
refuses to consent to the lease, even if that person holds only
a very small fractional interest. Also, even if Sec. 380 were
applicable to oil and gas leases, it would require three months
of inactivity before a lease could be approved by the
Secretary, even when the majority of the landowers have reached
an agreement on a lease. This long and cumbersome delay rarely
inures to the benefit of either the majority or minority
interest holders, especially when a working majority has agreed
to a lease, and the Secretary is still responsible for
reviewing leases as a trustee.
---------------------------------------------------------------------------
\6\ Act of August 9, 1955, 69 Stat. 540.
---------------------------------------------------------------------------
The 1994 American Indian Agriculture Resources Management
Act \7\ (AIARMA) and P.L. 105-188 represent the ``second wave''
of legislation, which clarifies that unanimous approval is not
a prerequisite for Secretarial approval of leases, nor are
owners required to wait three months if a majority of them have
agreed to sign a lease. In the Committee report accompanying
the AIARMA, the House Committee on Natural Resources Committee
explained why this policy was necessary:
---------------------------------------------------------------------------
\7\ P.L. 103-177, Act of Dec. 3, 1993.
[The AIARMA] also recognizes that the owners of a
majority interest in trust land may enter into a lease
agreement that binds the other owners if they are
assured fair market value for their land. The Committee
intends this provision to address the issue of highly
fractioned undivided heirship lands lying idle due to
the number of ownerships intersts in one parcel of
land. The Committee has received testimony from the
Comanche Indian tribe of Oklahoma, members of the Fort
Still Apache tribe of Oklahoma, and the Indian Soil
Conservation Association which indicate that a major
problem faced by Indian allottees is the Bureau
ofIndian Affairs requirement that 100 percent of the owners agree to a
negotiated lease agreement. Although the current regulations [25 CFR
162.6(b)] allow owners of a majority interest in the land to bind the
other owners, many BIA Area Offices still adhere to a 100 percent
consent requirement. This is particularly a problem in Oklahoma where
witnesses testified about certain tracts of land with over three
hundred owners. The Committee has included this provision to break the
gridlock and allow individual Indian landowners to bring their lands
into production.\8\
---------------------------------------------------------------------------
\8\ H.R. Rep. 103-367, 103rd Cong., 1st. Sess. (1993).
The purpose of these statutes is to preclude a ``tryanny of
the minority'' that could result if parties owning even less
than 1% of the undivided interests in an allotment could
preclude the leasing of these lands. To be sure, such
legislation has not gone so far as divesting ``heirs and
devisees'' of their ``use rights;'' but neither have those acts
explicitly expanded these rights to those who obtain an
interest in an allotment by conveyance.\9\
---------------------------------------------------------------------------
\9\ The statutory basis for ``use rights'' is 25 U.S.C. Sec. 380,
which appears to condition the BIA's authority to approve the lease of
allotted lands without majority approval upon a finding that ``such
lands are not in use by any of the heirs.'' This requirement is
included in the regulations that prescribe the Secretary's authority to
approve leases. See 25 C.F.R. Sec. 162.2(a) (1997). Presumably, such
``use rights'' have little application in the oil and gas context. In
general, the scope of these use rights has been limited to the direct
heirs and devises of the original allottee. See, e.g., Fenner v. Acting
Billings Area Director, 29 I.B.I.A. 116 (1996) (holding that an Indian
may not acquire use rights through the purchase of an interest in
allotted lands). It is therefore surprising and potentially troubling
that the Interior Board of Indian Appeals interpreted the AIARMA as
conferring use rights on purchasers. Randall Emm and William Frank v.
Phoenix Area Director, 30 I.B.I.A. 72 (1996). Rather than strengthening
the relative authority of landowners when a consensus on leasing is
reached by the majority, this interpretation could (potentially) expand
the number of minority interest holders who could frustrate the wishes
of a working majority. There is no legislative history that supports
such an extension of use rights.
---------------------------------------------------------------------------
Legislative History
S. 944 was introduced on May 3, 1999 by Senator James M.
Inhofe (Oklahoma) and referred to the Committee on Indian
Affairs. On June 16, 1999, Senator Orrin G. Hatch (Utah) was
added as a co-sponsor.
Summary of Provisions
As enacted during the 105th Congress, the definition of
``Indian lands'' in P.L. 105-188 is limited to the Fort
Berthold Indian Reservation, for purposes of the Act. S. 944
would amend that definition to include the following lands
within any of the former Indian reservations of each of the
following seven Indian tribes: the Comanche Indian Tribe; the
Kiowa Indian Tribe; the Apache Tribe; the Fort Sill Apache
Tribe of Oklahoma; the Wichita and Affiliated Tribes (Wichita,
Keechi, Waco, and Tawakonie); the Delaware Tribe of Western
Oklahoma; and the Caddo Indian Tribe, all located in Oklahoma.
S. 944 would also amend the title of P.L. 105-188 to
include ``certain former Indian Reservation in Oklahoma.''
Committee Recommendation and Tabulation of Vote
The Committee on Indian Affairs, in an open business
session on June 16, 1999, by voice vote, ordered the bill
reported to the Senate, with the recommendation to pass S. 944.
Section-by-Section Analysis
Section 1 amends P.L. 105-188 by including the names of
seven Indian tribes located in western Oklahoma: the Comanche
Indian Tribe; the Kiowa Indian Tribe; the Apache Tribe; the
Fort Sill Apache Tribe of Oklahoma; the Wichita and Affiliated
Tribes (Wichita, Keechi, Waco, and Tawakonie) located in
Oklahoma; the Delaware Tribe of Western Oklahoma; or the Caddo
Indian Tribe.
Cost and Budgetary Considerations
The cost estimate for S. 569, as calculated by the
Congressional Budget Office, is set forth below:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 22, 1999.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office, has
prepared the enclosed cost estimate for S. 944, a bill to amend
Public Law 105-188 to provide for the mineral leasing of
certain Indian lands in Oklahoma.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Megan
Carroll.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
S. 944--A bill to amend Public Law 105-188 to provide for the mineral
leasing of certain Indian lands in Oklahoma
S. 944 would modify the conditions under which the
Secretary of the Interior may approve a mineral lease or
agreement that affects individually owned Indian land on
certain former Indian reservations in Oklahoma. 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 simple 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.
Based on information from the Bureau of Indian Affairs, CBO
estimates that implementing this legislation would not
significantly affect discretionary spending. CBO estimates that
implementing S. 944 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 appropriate tribal government. Hence, pay-as-
you-go procedures would not apply to the bill.
S. 944 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 CBO staff contact is Megan Carroll. 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. 944 will
have a minimal impact on regulatory requirements and that the
enactment of S. 944 will reduce the amount of paperwork
associated with the leasing of lands within the seven former
Oklahoma Indian reservations covered by the bill.
Executive Communications
The Committee received a letter from the Department of
Interior, which is reprinted below, providing the views of the
Administration on S. 944.
Department of the Interior,
Office of the Secretary,
Washington, DC, July 27, 1999.
Hon. Ben Nighthorse Campbell,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Chairman Campbell: Two years ago, the Department
provided supportive testimony on S. 1079, the precursor to
Public Law 105-188, which permits the mineral leasing of
individually allotted Indian land within the Fort Berthold
Indian Reservation when there is consent from a majority
interest in the parcel of land under consideration for lease.
We are in support of the enactment of S. 944, a bill to amend
Public Law 105-188 to also provide for similar mineral leasing
of certain Indian lands in Oklahoma. We consider S. 944 a well
intentioned move to make allotted lands competitive in an area
of the country where oil and gas development provides a
significant part of the income that many Indian land owners
receive. We understand that the Oklahoma Tribes included within
this legislation support this legislation.
Although we support enactment of S. 944, we are seriously
concerned about the lack of progress in addressing the issue of
fractionated ownership of Indian lands generally. As you know,
this problem is one of the major impediments to economic
development and prosperity in Indian Country. If it is not
confronted and resolved expeditiously in a constructive manner,
it will undermine all of the efforts we are making to resolve
past mismanagement of Indian trust assets.
Fractionated ownership of land is a problem caused by
peculiarities in federal Indian law. With the passing of each
generation, the heirs of the original allottees continue to
acquire interests in land which are undivided; i.e., parcels of
land which are not separately identified in a specific owner.
As the number of owners increases in these parcels, the
administration of the land becomes increasingly more difficult.
Approximately 80 percent of the Bureau of Indian Afairs' real
estate services budget in used to administer less than 20
percent of the lands under its jurisdiction.
The Administration proposed a broader legislative solution
(H.R. 2743) to fractionated ownership in the 105th Congress. As
referenced in testimony for a joint hearing before this
Committee and the House Resources Committee on H.R. 3782, the
Tribal Trust Fund Settlement Act on July 22, 1998, increased
fractionation of Indian lands is ``one of the root causes of
our trust asset management difficulties.'' Unfortunately, H.R.
2743 was not reported out by the House Resources Committee and
no further action occurred on it in the 105th Congress. Staff
discussions on a similar proposal have been occurring for the
past several months and I understand that your Committee
intends to introduce its own version of a general fractionation
bill shortly. The Administration is very supportive of this
effort and interested in working with you to ensure passage of
a mutually acceptable bill before the end of the 106th
Congress.
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
trust lands. 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 may be granted by the Secretary when the owners of the
land are unable to agree upon a lease. Timber issues likewise
require less than 100 percent participation. Title 25 U.S.C.
Sec. 406 provides:
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.
While agricultural and timber uses are renewable resources
in contrast to mineral reserves which are depletable and thus
non-replaceable, the rational for majority consent still
applies. The Department believes the 1909 statute did not
contemplate the ownership of Indian land becoming as highly
fractionated as now exists, or that the statute would foreclose
mineral development on significant amounts of alloted lands.
Unlike other early statutes, the 1909 provision has not been
amended since enactment to conform with contemporary times.
The Office of Management and Budget has advised that there
is no objection to the submission of this legislative report
from the standpoint of the Administration's program.
Sincerely,
Kevin Gover
Assistant Secretary--Indian Affairs.
Effect on Existing Law
S. 944 will modify the manner in which 25 U.S.C. 396
applies to the approval by the Secretary of the Interior of
leases of allotted land on the former Indian reservations of
the Comanche Indian Tribe; the Kiowa Indian Tribe; the Apache
Tribe; the Fort Sill Apache Tribe of Oklahoma; the Wichita and
Affiliated Tribes (Wichita, Keechi, Waco, and Tawakonie); the
Delaware Tribe of Western Oklahoma; and the Caddo Indian Tribe,
all located in Oklahoma. Like P.L. 105-188, S. 944 is also
intended to supercede any contrary requirement or
interpretation of the Indian Mineral Development Act of 1982,
P.L. 97-82 or any other statute. It also eliminate any
statutory requirement for public auctions or advertised sales
for leases of allotted land for oil and gas purposes.
Changes in Existing Law
In compliance with subsection 12 of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
enactment of S. 944 will result in the following changes in
P.L. 105-188, with existing language which is to be deleted in
black brackets and the new language to be added in italic:
(a) In General.--
(1) Definitions.--In this section:
(A) Indian land.--The term ``Indian land''
means an undivided interest in a single parcel
of land that--
[(i) is located within the Fort
Berthold Indian Reservation in North
Dakota; and]
(i) is located within--
(I) the Fort Berthold Indian
Reservation in North Dakota; or
(II) a former Indian
reservation located in Oklahoma
of--
(aa) the Comanche
Indian Tribe;
(bb) the Kiowa Indian
Tribe;
(cc) the Apache
Tribe;
(dd) the Fort Sill
Apache Tribe of
Oklahoma;
(ee) the Wichita and
Affiliated Tribes
(Wichita, Keechi, Waco,
and Tawakonie) located
in Oklahoma;
(ff) the Delaware
Tribe of Western
Oklahoma; or
(gg) the Caddo Indian
Tribe; and
(ii) is held in trust or restricted
status by the United States.
* * * * * * *
And in the title of P.L. 105-188, by making the following
change: ``An Act to permit the mineral leasing of Indian land
located within the Fort Berthold Indian Reservation and certain
former Indian Reservations in Oklahoma in any case in which
there is consent from a majority interest in the parcel of land
under consideration for lease.''