The Indian Land Consolidation Plot Thickens

Gabriel S. Galanda
February 23, 2013

There were several revelations from the Department of the Interior during its tribal consultation in Seattle last week. Interior officials successfully conveyed to Indian leaders their best of intentions as to the $1.9 billion Indian land consolidation effort, which they disclaimed as having inherited from the Cobell parties. What became obvious from the session is how difficult, if not impossible, it will be to carry out the agency’s fractionated Indian land buy back program.

Most controversial, is Interior’s stated intent to focus 90% of $1.55 billion allocated for fractionated land acquisition—meaning $1.39 billion—on 40 reservations, because the agency claims that 90% of the “purchasable fractionated interests” are located on those 40 reservations. Interior has compiled a “Top 40” list of tribes. As to the other 110 reservations that Interior says have purchasable fractionated interests, they would be collectively allocated the remaining 10%, or merely $163 million. The rest of Indian Country, as many as 415 tribes, are not listed for federal buy back program funding. Interior should open the program to any tribe whose reservation includes fractionated Indian lands.

If that were not bad enough, some of the “Top 40” tribes are encouraging Interior to restrict the $60 million in Cobell scholarship monies to only those 40 listed tribes. This, despite the fact that the hundreds of thousands of Cobell plaintiffs hail from far more than 40 and in fact hundreds of tribal communities. These issues prompted one Umatilla leader at the consultation to decry that Interior’s entire land consolidation program will, federal intentions aside, yet again divide and conquer Indian Country. She could very well be right. In any event, Interior should allow scholarships for any federally-recognized Indian student.

In response to growing concern about the buy back program as a proxy for tribal government forced sales of fractionated tribal member-owned lands, Interior disclaimed in bold: “There will be NO forced sales.” Still, tribal representatives continued to express skepticism about that fundamental premise, believing that Interior is far too optimistic in thinking that tribal members will voluntarily sell even the most miniscule of an interest in an allotted or restricted land parcel, given the cultural significance of Indian land that has developed since 1887.

When Bureau of Indian Affairs Director Mike Black was pressed, he was forced to admit that the buy back program is specifically designed to bring tribes into at least a controlling 51 percent interest in fractionated allotted or restricted lands—at which time a tribe could then, on its own volition and with its own funding, force the sale of the remaining 49 percent or other minority interest. Make no mistake about it: while Interior’s plan now disclaims that it will facilitate forced sales under 25 U.S.C. 2204, the buy back program will catalyze controversial intra-tribal forced sales.

Interior did not respond to concerns about the conflict of interest it will face during either voluntary or forced sale—meaning how it will simultaneously fulfill its trust responsibility to both a tribal government buyer and a tribal member seller. On the issue of fair market value alone, that conflict cannot be avoided. Even a willing member seller will want the purchase price to be as high as possible, while both the tribal buyer and Interior will want the price to be lower, in the interest of spreading as far as possible the $1.55 billion allocated for land consolidation. Interior must immediately devise a land consolidation/buy back conflict of interest policy, especially for Bureau superintendents to follow. It can no longer be business as usual for Bureau career employees like those in the Pacific Northwest Region who too frequently align with tribal governments in tribe-member land transactions.

Interior proposes mass appraisal, and categorical exemption from any National Environmental Protection Act (NEPA) review, in order to expedite fractionated land buying and selling. The agency says both methods are legally defensible, although both mass appraisal and NEPA exemption seem ripe for legal challenge by any member who does not want to sell his or her ancestral lands. For example, by way of federal approval of any cooperative agreement with a tribe, under which the tribe rather than Interior would administer the buy back program, any related acquisition of fractionated interests could be subject to NEPA review. See e.g. Anderson v. Evans (9th Cir. 2004). Interior might get further legal opinion on these issues.

Several tribes urged Interior to enter into cooperative agreements, but the agency made no firm commitment in that regard. Interior seems lukewarm at best about that possibility, despite a proven record by many tribes of effectively reacquiring land on their own. In this budding era of austerity, the agency should more objectively consider whether tribes can better accomplish fractionated interest consolidation. That said, Interior must remain keenly mindful of tribal forced sales, and the United States’ continued trust obligation to protect members from having their lands improperly taken, under banner of cooperative agreements.

Interior continues to hold steadfast in its position that permanent improvements to any Indian lands are not trust assets. In this context, the agency explains that while the real property that is an allotment or restricted fee parcel—meaning the dirt—can be acquired by tribes through the program, any permanent improvements to the land are ineligible. This is a holdover position from the Cobell era, whereby the agency disclaims that permanent improvements are not trust assets for fear of being sued for mismanagement of those assets. But it is illogical for Interior to maintain that it will help a tribe buy fractionated dirt with federal funds, but leave the tribe and its members to sort out for themselves any acquisition of the permanent improvements. As tribal leaders warned Interior, that bifurcated approach makes no practical sense and spells disaster. Interior should craft a realistic solution to this predicament; it can do so without incurring potential trust liability.

Finally, Interior proposes to send out mass offers to fractionated interest owners but does not seem to appreciate that for each and every potential tribal acquisition of an undivided interest, it must provide notice of that pending acquisition to the other undivided interest owners so that those owners might match the purchase offer. As a U.S. District Court noted, under the Indian Land Consolidation Act a “Tribe's right to match prior to approval of an application to terminate trust status does not equate to a blanket right to purchase without competition. While the Tribe may indeed have the opportunity to purchase trust land at appraised fair market value, this is only true once the sale is advertised, an open bidding process is conducted, and no other offers for the purchase price are made.” Middleton Co. v. Salazar (2009). Interior will need to get its printers ready to issue serial, not solitary, purchase offer notices to the fractionated masses.

No matter your opinion on Interior’s nascent Indian land consolidation plan and buy back program, there is no doubt this latest plotline in the tortured story of federal Indian trust relations will not be dull – or for the faint of heart.

Gabriel S. Galanda is a lawyer with Galanda Broadman, PLLC, in Seattle, and a member of the Round Valley Indian Tribes. These opinions are his own and not those of his tribe or any tribal client.