CHAPTER 14 COOPERATIVE DEVELOPMENT: MANAGING AND OPERATING ISSUES
| Jurisdiction | United States |
(Nov 2014)
COOPERATIVE DEVELOPMENT: MANAGING AND OPERATING ISSUES
Partner
Stoel Rives LLP
Seattle, Washington
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MICHAEL O'CONNELL is a partner in Stoel Rives LLP's Environment and Natural Resources Practice Group, in the Seattle, Washington office. Michael assists linear and other project development clients regarding cultural resources and historic properties, natural resources, energy, water rights, and Indian law matters. In Indian law matters, Michael assists parties engaged in business or other transactions with Indian tribes, including negotiation of leases, rights-of-way, and waivers of tribal sovereign immunity. He regularly speaks at seminars on environmental, natural resources, and Indian law. Michael holds a law degree ('77) from the University of Denver College of Law and a B.A. in political science ('69) from Brockport State College.
This paper focuses on cooperative development - broadly speaking -- in the operations and management of energy and mineral resource development projects and other business transactions (collectively, "Transactions") by and with an Indian tribe or its various entities and their business partners. The phrase "business partners" includes both non-Indian and tribal or Indian-owned or controlled entities because increasingly there are Transactions - not a majority concededly - where two or more Indian tribes or tribal controlled entities engage in Transactions with one another. "Cooperative development" as used in this paper includes a range of transactional business arrangements limited only by the law generally and the "Law of Economics" more specifically. Cooperative development is not a panacea that suspends the Law of Economics and the usual run of business experience and risk, but it is a good place to start.
This paper begins with a look at what it describes as the "Old Model" of Transactions with Indian tribes, Indian self-determination as a response to the Old Model of Transactions with Indian tribes, federal legislation reducing or removing legal barriers restricting contracts by and with Indian tribes and tribal entities, including proposals for legislation removing such barriers, and other keystones to cooperative development.
I. The Old Model of Transactions with Indian Tribes
In what might be called the "Old Model" of Transactions, Indian tribes were passive participants, particularly after transactional documents were executed. In the Old Model, a developer would have a project proposal that the developer would undertake on Indian land or using Indian resources. The negotiation generally was about how much the Indian landowner would get paid and when it would get its land back, with weak provisions protecting the reservation environment and vague promises of some jobs for Indians.
The Old Model has roots in the Indian Commerce, Treaty, War Power and Property Clauses of the U.S. Constitution, federal legislation dating from the 1790s regulating conveyances of tribal land1 and trade with Indian tribes and individual Indians,2 executive actions, and a multitude of
The views expressed in this paper are those of the author in his individual capacity and not necessarily those of Stoel Rives LLP or any of its clients.
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federal and state court cases. The Old Model took off during the 1800s when the federal government assumed direct control over tribal lands and resources based on concepts labeling Indian tribes and Indians as having a relation to the United States that "resembles that of a ward to his guardian,"3 disabling them from managing their lands and resources as a matter of law.4 In some cases, the consent of tribal and other Indian landowners for use of their lands was not required, federal trustee approval being deemed sufficient.5 In the Old Model, some Indians were employed in projects using tribal land and resources but generally not in key management positions. The non-tribal counterparty generally went about the business of whatever was authorized in a lease, mineral agreement, or right-of-way ("ROW") with little real involvement by the tribe as a business partner and little or no oversight by the federal trustee. Supreme Court decisions broadly immunized the federal trustee from liability and thus accountability for mismanagement of tribal land, resources and money, as well as conflicts of interest.6 Not surprisingly, with lackluster administration of trust responsibilities by the federal trustee, Indian
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tribes not infrequently got shortchanged (to use a polite phrase) in Transactions with private entities and could do almost nothing about it.
The 1934 Indian Reorganization Act ("IRA") partially turned federal policy toward "principles of tribal self-determination and self-governance," but "Congress made no attempt to undo the dramatic effects of the allotment years on the ownership of former Indian lands."7 Despite the IRA, the Old Model went on to reach its political and legal zenith in the 1950s with enactment of several acts by Congress terminating the federal legal and political relationship with certain Indian tribes ("Termination Acts")8 and Public Law No. 83-2809 directing several named states to assume criminal and civil jurisdiction over Indians in Indian country and granting other states the option of doing so, all without tribal consent.10
The Old Model was inadvertently enhanced by federal environmental laws that apply uniquely to federal action. For example, a lease of tribal land by an Indian tribe under 25 U.S.C. § 415(a) must be approved by the Bureau of Indian Affairs ("BIA"). BIA action to approve such a lease is federal agency action. Like other federal agencies, the BIA must comply with federal environmental laws, as applicable, prior to taking agency action. Thus, when the BIA approves a lease under section 415(a), it must make and support its action on an administrative record demonstrating compliance with procedural requirements of the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321, and implementing regulations adopted by the Department of the Interior ("DOI"), 43 C.F.R. Part 46, and the Council on Environmental Quality, 40 C.F.R. Parts 1500-1508, and section 7(a)(2) of the Endangered Species Act ("ESA"), 16 U.S.C. § 1536, and section 106 of the National Historic Preservation Act ("NHPA"), 16 U.S.C. § 470f. BIA or other federal agency compliance with federal environmental procedural laws applicable to federal agency action can add significant time, costs (including mitigation costs imposed by a federal agency), and risks to the process of developing projects on tribal land, including the time,
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cost, and other risks associated with administrative appeals and judicial review of challenges to federal agency action.
II. Indian Self-Determination
Long-standing tribal opposition to the Old Model and the existential threats of Termination Acts and Public Law No. 83-280 coalesced in tribal political and legal objectives of tribal sovereignty and self-determination, political and economic. The National Congress of American Indians ("NCAI"), founded in 1944 to represent Indian tribes, called an emergency conference in November 1954 to develop a program that included tribal self-sufficiency in opposition to federal termination policies. NCAI's 1961 conference led to a "Declaration of Indian Purpose" with an emphasis on tribal sovereignty.11 President Nixon's Special Message on Indian Affairs on July 8, 1970 explicitly rejected forced termination and endorsed Indian self-determination. Congress responded in 1975 by enacting the Indian Self-Determination and Education Assistance Act. 25 U.S.C. § 450 et seq. Today, "a principle goal of Federal Indian policy is to promote tribal economic development, tribal self-sufficiency, and strong tribal government." 25 U.S.C. § 2701(4).
President Reagan's January 24, 1983 Statement on Indian Policy endorsed, among other things, removal of "legal barriers which restrict the type of contracts tribes can enter into, and reducing the numerous and complex regulations which hinder economic growth." As discussed below, several federal laws have been enacted that reduce or remove legal barriers to certain types of contracts by and with Indian tribes.
III. Federal Legislation Reducing or Removing Federal Barriers to Contracts by and with Indian Tribes and Tribal Entities
A. Indian Mineral Development Act
At the urging of Indian tribes, Congress enacted the Indian Mineral Development Act in 1982 ("IMDA") allowing Indian tribes to "enter into any joint venture, operating, production sharing, service, managerial, lease or other agreement . . . providing for the exploration for, or extraction, processing, or other development of, oil, gas, uranium, coal, geothermal, or other energy or nonenergy mineral resources ... or providing for the sale or other disposition of the production or products of such mineral resources." 25 U.S.C. § 2102(a) (defining IMDA "Mineral Agreements"). This enabled tribes to develop flexible mineral agreements and removed the narrow constraint of lease-only options for developing tribal mineral resources under prior law.
The IMDA did not dispense with the need for BIA approval of Mineral Agreements. Thus, federal environmental laws triggered by federal agency action still apply to BIA action to
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approve IMDA Mineral Agreements. BIA regulations implementing the IMDA are found at 25 C.F.R. Part 211.
B. 25 U.S.C. § 81
Prior to 2000, 25 U.S.C. § 81 proved to be incomprehensible as to which agreements with Indian tribes required BIA approval, without which a regulated agreement would be "null and void." 25 U.S.C. § 81 (prior to amendment in 2000). At the instance of Indian tribes, Congress amended section 81 in 2000 to limit the requirement for BIA to an "agreement or contract with an Indian...
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