ISSUES FOR CONSIDERATION IN NEGOTIATING CONTRACTS FOR MINERAL DEVELOPMENT BETWEEN TRIBES AND NON-INDIANS
| Jurisdiction | United States |
(Nov 2005)
ISSUES FOR CONSIDERATION IN NEGOTIATING CONTRACTS FOR MINERAL DEVELOPMENT BETWEEN TRIBES AND NON-INDIANS
Knierim, Fewer & Christoffersen, P.C.
Poplar, Montana
Ryan C. Rusche is an associate with the firm of Knierim, Fewer & Christoffersen, P.C., in Poplar, Montana. He is engaged in general practice primarily representing tribal and Indian clients.
Rusche completed his undergraduate studies at Carroll College in Helena, Montana in 1998 and earned his law degree from the University of Montana School of Law in 2001.
Prior to joining the firm in 2003, Rusche served as in-house legal counsel to the Assiniboine and Sioux Tribes of the Fort Peck Reservation in Poplar, Montana.
I. INTRODUCTION
While presenting an oral argument before a state trial court last year in an Indian tax dispute, the presiding judge noted, "this is 'Indian law', so we go one line at a time." Prior to this comment, I had not appreciated that Indian law encompassed an overwhelmingly tedious body of law. Frankly, I had been convinced up to that point that the tax law side of my case was far more tedious than the Indian law issues.
Indian law is not necessarily a defined term, but encompasses, generally, the body of law affecting Indian tribes and the special relationship between the various tribes and the federal government. For practitioners faced with drafting or negotiating contracts involving Indian tribes, it is important to keep in mind that the unique attributes of a tribe flow from the unique status of the tribes and the relationship that tribe has with the federal government.
From the very first days of the republic, authority to address Indian affairs have been reserved unto the federal government. The Constitution vests in Congress the sole power to "regulate Commerce with the Indian Tribes" and in the President the power to make treaties. 2 Congress set forth to exercise its authority in its very first session in 1790 and then again in 1834 in the Trade and Intercourse Acts, establishing the basic policy of separating Indians and non-Indians and subjecting relations between the two groups to federal control.
The Supreme Court was then called upon to address the relationship between Indian tribes, the federal government (and the states) in 1823, 1831 and 1832. The opinions that followed established a few basic concepts. First, the Court recognized the legal right of Indians in their land against all others, but existing at the sufferance of the federal government. This concept has often been referred to as "aboriginal title" or "Indian title". 3 Second, the Court opined that tribes are "domestic dependant nations" whose relationship with the United States is akin to that of a ward to his guardian. 4 Finally, in its third Indian law decision, the Supreme Court held that the state law has no effect in Indian Country. 5
Moreover, federal Indian law and policy has generally supported the policy of allowing tribes to make their own laws and be governed by them, and to exercise their authority over those within their territory, including in some instances, non-Indians. 6
Accordingly, tribes present perhaps unique attributes for non-Indian companies seeking to do business in Indian country, particularly when the business calls for a contractual relationship between the company and a tribe. For example, some agreements for the exploration and development of mineral resources in Indian country may require review by and approval of the Interior Secretary. However, the Secretary's review may take up to six months. For parties seeking to begin exploration, this delay on the part of a third party may cause a deterioration in the relationship between the parties. Similarly, providing for adequate dispute resolution mechanisms to deal with tribal court jurisdiction, tribal sovereign immunity and the tribal court exhaustion requirement may require creative drafting in contracts. However, structured properly, business ventures may realize benefits that arise from the special status of tribes saving the venture money in tax savings and through state regulatory immunity.
This paper surveys a series of basic issues to consider in the development of a contractual relationship with Indian tribes for the purpose of reaching mutually agreeable contracts and to maximize any benefits that may arise in contracting with a tribe. Part II of this paper will address the nature of the transaction and the involvement of the federal government from a regulatory and approval perspective. Part III of this paper will explore the attention that should be given to parties to a potential contract. Part IV will address some benefits that are unique to the potential relationship and how those benefits may affect various provisions of a contract. Part V will consider the impact of tribal jurisdiction and the doctrines of tribal sovereign immunity and tribal court exhaustion on a potential contract, particularly dispute resolution clauses, choice of law provisions and forum selections.
II. THE NATURE OF THE TRANSACTION AND THE ROLE OF THE FEDERAL GOVERNMENT
A. Federal approval of contracts with Indian tribes
Contracts for the exploration and development of Indian mineral resources in Indian country are generally achieved through standard leases or contracts under the Indian Mineral Development Act of 1982 (hereafter "IMDA"). 7 In both cases federal statutes and regulations provide a basic framework for the nature and structure of the arrangement. 8 However, when the development of a contract with an Indian tribe falls outside of this category, the parties will likely have less guidance for the structure of the transaction.
Thus, a primary concern for both the tribal client and the non-Indian client, is the extent to which the United States will be involved in the transaction. The first consideration in this regard is whether a potential contract will require the approval of the federal government. Many contracts with Indian tribes require approval of the Secretary of the Interior, or her designee in order to be valid. 9 In some transactions, Congress has authorized the Interior Department to be, at the request of the tribe, involved directly in the negotiating process and to provide the tribe with confidential assistance in the drafting of the contract. 10
Similarly, some contracts with tribes require no federal involvement whatsoever. However, that is not to say that federal law will not implicate certain requirements on non-Indian activity within Indian country. Thus, a second consideration must be what federal regulations may be applicable to the obligations of the parties under a contract. 11
B. The Self Determination Act and its impact on contracts
In addition, parties should consider that many tribes have assumed functions traditionally performed by the Secretary of Interior under contracts and compacts pursuant to the Indian Self Determination and Education Assistance Act. 12 Below is a brief history on the development of the law in this area.
For the past 35 years, Congress and the federal Executive Branch have pursued an essentially bipartisan federal Indian policy: strengthening the authority of tribal governments and encouraging tribal self-sufficiency rather than dependence on the United States. In a Message to Congress in 1968, President Johnson "proposed a new goal for our Indian programs: A goal that ends the old debate about 'termination' of Indian programs and stresses self-determination; a goal that erases old attitudes of paternalism and promotes partnership self-help." Two years later, on July 8, 1970, President Nixon sent Congress his Message on Indian Affairs.
President Nixon, like President Johnson, advocated a policy of Indian self-determination. This has continued to be the basic Indian policy of the federal government. President Nixon's Message rejected the system of "excessive dependence on the Federal government" where "the Indian community is almost entirely run by outsiders who are responsible and responsive to Federal officials" rather than tribal communities. In his message, he sent specific proposals to Congress requiring federal agencies to transfer administrative responsibility for federal services and programs to tribes at the tribes' options and spurring Indian economic development by providing federal loan guarantees, loan insurance and interest subsidies. These proposals were enacted by Congress in 1975 as the Indian Self Determination and Education Assistance Act ("ISDA"), and the Indian Financing Act.
The ISDA forms the cornerstone of modern federal Indian policy, a period aptly termed the "Self-Determination Era." 13 The Supreme Court has frequently remarked on the special significance of the ISDA. 14
In crafting this unique and historic law, Congress observed that "prolonged Federal domination of Indian service programs has served to retard rather than enhance the progress of Indian people." 15 To remedy this problem while maintaining the federal trust responsibility, Congress committed the Nation to shifting control over federal Indian programs from the federal government to the tribes themselves. 16 The ISDA achieves this goal by imposing an absolute mandate on the Secretary of the Interior to transfer to an Indian tribe, upon its request, daily operation of any federal Indian program or project administered by any Bureau or Agency within the Department of Interior. 17
Indian tribes now have a choice regarding how to receive these federal trust services. They may continue to rely on the federal government to deliver federal trust services to their Tribal members, or they may opt to assume control of these federal programs and resources themselves and provide the services directly to their Tribal members. When choosing this second option, Indian tribes essentially "step into the shoes" of the...
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