CHAPTER 15 SOMETHING A LITTLE DIFFERENT -- FEDERAL VALUATION OF INDIAN OIL AND GAS FOR ROYALTY PURPOSES
| Jurisdiction | United States |
(Mar 1988)
SOMETHING A LITTLE DIFFERENT -- FEDERAL VALUATION OF INDIAN OIL AND GAS FOR ROYALTY PURPOSES
Wilkinson, Barker, Knauer & Quinn
Washington, D.C.
I. THE UNDERLYING DIFFERENCE — THE SECRETARY'S FIDUCIARY OBLIGATION TO INDIANS
A. Sources of the Federal Trust Relationship
The Constitution gives Congress plenary authority over the lands and resources of Indian tribes and restricted Indians. Delaware Tribal Business Committee v. Weeks, 430 U.S. 73, 83-84 (1977); Northern Cheyenne Tribe v. Hollowbreast, 425 U.S. 649, 655-656 (1976). This is extremely broad power akin to Congress' authority over the public lands. Congress, in turn, has granted executive power over Indian affairs to the Secretary of the Interior (43 U.S.C. § 1457) and, through the Secretary, to the Commissioner of Indian Affairs (now the Assistant Secretary for Indian Affairs). This authority encompasses "the management of all Indian affairs and of all matters arising out of Indian relations." 25 U.S.C. § 2.
Given the constitutional system, and the breadth of federal authority over Indian affairs, it was inevitable that a doctrine would develop to protect the Indians from arbitrary exercises of power or political excess. The protective shield which has evolved is the concept of the trust relationship between the government and Indians. Justice Marshall provided an early enunciation of the concept in Cherokee Nation v. Georgia,
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30 U.S. 1, 17 (1831), when he noted that the Cherokees' relationship to the federal government resembled that of "a ward to his guardian." The Supreme Court has defended the doctrine ever since. See, e.g., United States v. Cherokee Nation of Oklahoma, 107 S. Ct. 1487, 1492 (1987) ("the Government in its dealings with Indian tribal property acts in a fiduciary capacity").
The trust doctrine originally was used to interpret treaties, which were the government's initial attempt to regulate Indian affairs. However, the concept soon found its way into statutes. Thus, the General Allotment Act of 1887, the legislation under which most restricted individual Indian land is held, provides that the land will be held by the United States "in trust for the sole use and benefit" of the Indian allottee. 25 U.S.C. § 348. Despite the early emergence of the trust concept, however, the express application of fiduciary principles to the government's management of Indian mineral resources is a fairly recent development.
It began with an unusual pair of decisions by the Supreme Court. In the 1970's, Quinault Indians, whose timber lands were held in trust under the General Allotment Act, sued the government for damages for mismanagement of Quinault timber. In United States v. Mitchell, 445 U.S. 535, 542 (1980), the Supreme Court held that, despite the specific reference to trust status, the General Allotment Act did not impose a fiduciary obligation upon the United States with respect to the government's management of Indian timber resources. The Indians tried again. Once more they prevailed in the lower courts — this time
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on the theory that federal laws and federal regulations created a system of comprehensive federal management of Indian timber which imposed a trust responsibility upon the government with respect to that management. The Supreme Court, again, granted certiorari, and this time the Indians won. United States v. Mitchell, 463 U.S. 206 (1983) ("Mitchell II"). The Court agreed with the lower court, finding that federal laws and regulations did, in fact, result in comprehensive federal management of the Indians' timber and a corresponding trust obligation to the Indians with respect to that management.
The extension of the Mitchell II rationale, to Indian oil and gas matters occurred first in Jicarilla Apache Tribe v. Supron Energy Corp., 782 F.2d 855 (10th Cir. en banc 1986), adopting the dissent, 728 F.2d 1555, 1563-73 (10th Cir. 1984), as modified, 793 F.2d 1171 (10th Cir. 1986), cert. denied, 107 S. Ct. 471 (1987).1 Again, it was a close call for the Indians. The original panel in Supron seemed unpersuaded that any trust relationship existed with respect to federal management of tribal oil and gas. Jicarilla Apache Tribe v. Supron Energy Corp., 728 F.2d 1555, 1560 (10th Cir 1984). It was only on reconsideration that the full court discerned a trust obligation commensurate with the government's management responsibilities. The Tenth
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Circuit's decision has been widely accepted. See, e.g., Pawnee v. United States, 830 F.2d 187 (Fed. Cir. 1987); Assiniboine and Sioux Tribes v. Bd. of Oil and Gas Conservation, 792 F.2d 782, 794 (9th Cir. 1986).
Inexplicably in Supron, the Court did not note that Congress already had expressly affirmed the federal trust responsibility with respect to Indian oil and gas in the Federal Oil and Gas Royalty Management Act, 30 U.S.C. §§ 1701 -57 (discussed below).
B. Laws Governing Disposition of Indian Mineral Interests
In general, the disposition of Indian mineral interests is governed by three general statutes: the 1909 Allotted Lands Leasing Act, 25 U.S.C. § 396; the 1938 Tribal Mineral Leasing Act, 25 U.S.C. §§ 396(a) -(g); and the 1982 Indian Mineral Development Act, 25 U.S.C. §§ 2101 -08 . The government's management responsibilities with respect to Indian oil and gas are also subject to the Federal Oil and Gas Royalty Management Act, 30 U.S.C. §§ 1701 -57 . Only the latter two statutes, both passed in the 1980's, refer to the government's trust responsibility over Indian minerals.
Indeed, the 1909 Allotted Lands Leasing Act is little more than a general authority to lease. That authority rests with the Indian allottee except in special cases. Poafpybitty v. Skelly Oil Co., 390 U.S. 365 (1968). The Secretary of the Interior, however, must approve any lease and has broad authority to promulgate regulations governing all aspects of leasing and
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development of restricted Indian oil and gas assets. 25 U.S.C. § 396.
Legislatively, the Allotted Lands Leasing Act was fleshed out somewhat via the Tribal Mineral Leasing Act of 1938. 25 U.S.C. §§ 396(a) -(g). This statute provides for such matters as performance bonds and gas storage on both tribal and allotted lands.
The 1938 Act was designed to provide a uniform system for leasing tribal lands and to accommodate the powers of newly "organized" tribes which had incorporated under the Indian Reorganization Act. 25 U.S.C. § 476. In addition, the Supreme Court has discerned that one purpose of the Act was to assure that the Indians recover "the greatest return from their property." Montana v. Blackfeet Tribe, 471 U.S. 759, 767 n.5 (1985). See also Montana v. Crow Tribe, 819 F.2d 895, 898 (9th Cir. 1987), aff'd, No. 87-343, 56 U.S.L.W. 3458 (January 11, 1988).
Both the Allotted and Tribal Mineral Leasing Acts limit disposition of Indian mineral lands to leasing by competitive bid.2 In 1982, Congress decided to expand the means by which tribes could dispose of their minerals. The Indian Mineral Development Act, 25 U.S.C. §§ 2101-08 , permits tribes to enter into joint ventures and other risk-type dispositions of their
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minerals. Again, the Secretary must approve any agreement related to such disposition. The Act contains a clause limiting the liability of the United States for any losses resulting from such agreements. 25 U.S.C. § 2103(e). However, nothing in the statute absolves the United States from any other responsibility to the Indians, including any responsibility "which derives from the trust relationship." (Id.) Allotted lands are generally excluded from the Act except where those lands are incorporated into a tribal venture. 25 U.S.C. § 2102(b).
The first unequivocal congressional affirmance of the government's trust responsibility with respect to Indian lands did not appear in federal statute until 1983 when...
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