January 23, 2020

Practice Tips: Licensing Tribal Trust Land Avoids Conveyance Issues and Bureaucracy

Andrew W. Baldwin and Kelly A. Rudd

Unique rules and considerations apply to properties within Indian Country. Tribes may own real property (1) in fee simple, (2) in trust, or (3) in “restricted” status (lands with specific restrictions against alienation). Trust and restricted lands are held by the United States for the benefit of the tribe, and federal statutes and regulations govern conveyances of such lands. For example, those lands may be leased (25 U.S.C. § 397), rights of way for railroads may be granted (25 U.S.C. § 312), rights of way for telephone lines may be authorized (25 U.S.C. § 319), public highways may be established (25 U.S.C. § 311), and other rights of way may be established (25 U.S.C. § 321). Regulations governing land conveyances are generally found in 25 C.F.R. Subchapter H (Land and Water) and Subchapter I (Energy and Minerals).

Careful research is needed before entering into transactions involving the conveyance of tribal trust land. But many uses of these lands are lawful when the use is not a conveyance of real property rights at all, but merely permissive. Parties are not required to use the Bureau of Indian Affairs (BIA) regulations for “rights of way” or “leases” of tribal lands held in trust by the United States. 25 U.S.C. § 81 allows tribes to issue licenses under a tribal permit system without the regulation, interference, or delay imposed by the BIA. Several tribes have embraced this opportunity in order to promote business development and avoid the burdens of a federal bureaucracy.

Authority to Issue Tribal Licenses

For years, utility companies and others obtained “rights of way” for power lines and access across tribal trust lands pursuant to 25 C.F.R. Part 169, which requires the consent of both the Tribe and the BIA. Cell phone and other companies have obtained “leases” for towers or other uses of land pursuant to 25 C.F.R. Part 162. However, more recently, tribes have begun issuing licenses for power lines, cell towers, and other purposes. Tribes often prefer licensing as a mechanism to create the right for third parties to use reservation lands because the right created does not encumber the land and, as a result, BIA approval is not required. 25 U.S.C. § 81 was amended in 2000 to ensure that Indian tribes will be able to engage in a wide array of commercial transactions without having to submit those agreements to the BIA as a precaution. S. Rep. 106-150 at 9.

Under the express language of section 81, agreements that do not encumber the trust land (or do not encumber it for more than seven years) do not require BIA approval, a rule that has been affirmed by the federal courts. See Gasplus L.L.C. v. U.S. Dept. of the Interior, 510 F. Supp. 2d 18 (D.D.C. 2007). A contract that “encumbers Indian lands” is one that, “by its terms, provides a third party with a legal interest in the land itself . . .” Id. at 29. Mortgages and other liens on real property are examples of such “encumbrances.” Id. at 28 (citing U.C.C. 9-102(a)(32)). In Gasplus, the tribe entered into an agreement for the company to manage the tribe’s gasoline distribution business, located on trust land. According to the BIA, the agreement gave the company “nearly exclusive proprietary control over tribal land” and therefore required BIA approval. Id. at 22. The court disagreed, however, saying the BIA’s “conclusion does not follow as a matter of law or logic.” Id. at 30. Nothing in the agreement explicitly or implicitly gave the company “a legal right attached to the real property.” Id. Because the agreement created no encumbrance on the land, it was not subject to BIA approval.

Tribal licensing agreements can expressly provide that they “do not constitute or create an encumbrance upon lands pursuant to 25 U.S.C. § 81 . . .” By contracting with third parties who wish to use the tribe’s land through licenses, rather than leases or “rights of way,” a tribe is able to enjoy the protections that are afforded by keeping its land in trust while avoiding the bureaucratic entanglements that can result from BIA administration of leases and rights of way.

While a prospective licensee might be initially cautious about entering license agreements, Tribes that commit to a licensing approach can quickly overcome this by explaining the legal underpinnings of the licensing approach, and, where necessary, by defending their licenses.

Some tribes have aggressively protected their licensees from interference by the BIA. In Northern Arapaho Tribe v. Superintendent of the BIA, 06-CV-0271-J (D. Wyo. 2007), the BIA interfered with the right of a third party to cross tribal lands under a tribal permit. The United States later conceded “in unequivocal terms” that the BIA could not interfere with tribal licenses that did not encumber trust lands, or did not encumber them for more than seven years. The Court then dismissed the suit as moot, saying “future litigation may be brought [against the BIA] if the facts and the need arise.” Id. at 19 (Aug. 30, 2007 slip opinion).

Sometimes, the BIA’s myopic view sees its regulations as the entire universe of lawful options for tribes and their economic partners. To be sure, section 81 does not override other statutes or regulations involving conveyances of tribal lands that might otherwise apply to the transaction. See Chemehuevi Indian Tribe v. Salazar, 2012 WL 13047522 (C.D. Cal. 2012). But in light of modern federal policies reflected in section 81, tribes and private parties should not hesitate to look beyond standard BIA forms of agreement.

In many states, utility companies provide service to customers across lands controlled by the state through the use of licenses. The Wyoming Department of Transportation, for example, issues licenses for power lines, not rights of way. As a result, the license approach is familiar to most companies that routinely require access across another’s property.

Conclusions

  • Licenses do not, by their terms, encumber trust lands of the tribe, nor encumber them for more than seven years; by contrast, “rights of way” do and “leases” might encumber trust lands (depending on their terms).
  • The issuance of licenses by tribal government is a positive exercise of tribal sovereignty.
  • Eliminating BIA approval avoids unnecessary delay and costs involved in the bureaucratic process.
  • Direct negotiations with licensees can establish a better relationship between the tribe and economic developers, who communicate without the interference of the BIA as intermediary.
  • License agreements reflect actual market value for the access across tribal lands; we have seen the BIA recommend fees that are one-tenth what a tribe can and has obtained through direct negotiations.
  • License agreements allow tribes and their licensees the flexibility to draft specific terms for specific uses, rather than staying within the framework provided by BIA forms.

Andrew W. Baldwin and Kelly A. Rudd

The authors focus their practice on federal Indian law. They represented the Tribe in Northern Arapaho Tribe v. Superintendent of the BIA, cited in this article, and can be contacted through Baldwin, Crocker & Rudd, P.C., (bcrattorneys.com). An earlier version of this article was published in the Wyoming Lawyer (Dec. 2019).

 

Andrew W. Baldwin began his career on a poverty law fellowship award, served as Executive Director of Wind River Legal Services on the Wind River Indian Reservation, and later as in-house counsel for the Northern Arapaho Tribe. He has represented the Tribe for over thirty years and is a founding partner in the firm of Baldwin, Crocker & Rudd, P.C. 

 

Kelly A. Rudd is managing partner in the law firm of Baldwin, Crocker & Rudd. He is a graduate of the Northwestern School of Law at Lewis and Clark College, and holds an M.B.A. in Business and Government Management from the Atkinson School of Management at Willamette University. He was selected by peer review for inclusion in the 22nd Edition of The Best Lawyers in America in Native American Law and designated by Thomson Reuters as a Superlawyer. Mr. Rudd handles a wide array of litigation and business matters, often involving questions of federal Indian law.