THE FEDERAL TRUST RESPONSIBILITY AND TRIBAL-PRIVATE NATURAL RESOURCE DEVELOPMENT

• Jurisdiction: United States

Natural Resources Development in Indian Country
(Nov 2005)
CHAPTER 13B
THE FEDERAL TRUST RESPONSIBILITY AND TRIBAL-PRIVATE NATURAL RESOURCE DEVELOPMENT
Lynn H. Slade ¹
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
Albuquerque, New Mexico

Lynn H. Slade is Chair of the Indian Country Practice Group of the Albuquerque-based law firm, Modrall, Sperling, Roehl, Harris & Sisk, P.A. Mr. Slade's practice focuses on federal Indian law, energy, natural resources and environmental law, and complex litigation. He represents natural resource developers, financial institutions, utilities, and governments in advice, transactions, and litigation addressing the complex issues presented in Indian country legal environments. He has handled complex litigations in state, tribal and federal trial and appellate courts and in mediation and arbitration. He serves as Chair of the Board of Directors of New Mexico First and has been Chair of the Board of Directors of the State Bar of New Mexico Section of Natural Resource Law; Membership Officer of the ABA Section of the Environment, Energy & Resources, and serves as a Trustee at Large of the Rocky Mountain Mineral Law Foundation.

Mr. Slade's publications include "Puzzling Powers: Overlapping Jurisdictions of Indian Tribes, the Federal, State, and Local Governments in Development of Natural Resources in 'Indian Country'," 42 Rocky Mtn. Min. L. Inst. 11-1 (1996); "Dispute Resolution in Indian Country," 71 N.D. L. Rev. 519 (1995); co-author, "Effects of Historic and Cultural Resources and Indian Religious Freedom on Public Lands Development: A Practical Primer," 35 Nat. Res. J. 135 (1995); co-author, "Oil and Gas Development on Indian Lands: Shifting Sovereignties in the Oil Patch," Southwestern Legal Foundation, 45th Annual Institute on Oil and Gas Law and Taxation 10.1 (1994).

Mr. Slade is a graduate of the University of New Mexico School of Law, J.D. (1976), where he served as editor of the New Mexico Law Review (1975-76).

I. INTRODUCTION

The Federal government's trust responsibility towards Indian lands and resources is multi-faceted. ² One element of the trust doctrine defines tribes' claims against the United States for taking or poorly managing tribal lands. ³ The trust doctrine also figures in defining the United States' day-to-day duties with respect to tribal lands, including minerals development on tribal or individual Indian lands. Consequently, it may define the rights of resource developers under Indian lands leases, minerals agreements, or rights-of-way. ⁴ Considerations of the United States' trust duties towards Indians or their lands and minerals may arise at the point of leasing or contracting, ⁵ in the Bureau of Indian Affairs ("BIA") administration of activities under approved agreements, and in courts' resolutions of disputes regarding the lands or minerals of tribes or individual Indians. ⁶ However, while potentially a sword to advance tribal rights, the trust doctrine also may serve as a shield to protect resources developers' interests under tribal agreements. ⁷

Consequently, the scope and rigor of trust duties may affect resource development and environmental protection in Indian Country. However, despite that the doctrine broadly overlays the United States' relationship with Indians, there is no comprehensive statutory or regulatory definition of the scope or standard of case it imposes or the remedies for the government's breach. Rather, administrators and practitioners must glean its content from reported decisions of the Supreme Court and the lower federal courts. Increasingly, however, those decisions point back to the federal statutes to define trust duties, eschewing an inchoate trust duty.

Trust notions were built upon an early nineteenth century conception of tribes. Chief Justice John Marshall's early opinion in Cherokee Nation v. Georgia reflects views that influenced the doctrine, describing tribes as "domestic dependent nations," weak and unsophisticated, and reliant upon the protection of the United States:

They occupy a territory to which we assert a title independent of their will, . . . meanwhile they are in a state of pupilage. Their relation to the United States resembles that of a ward to his guardian. ⁸

Marshall's premise, that tribes need federal protection of their lands and resources, continues to be reflected in some federal statutes, ⁹ and in some contemporary trust doctrine opinions.

But, while no generalization about tribes will hold, things are changing. While the United States continues to supervise leasing and contracting under federal statutes, tribes increasingly rely on their own scrutiny of a proposed transaction, employing skilled legal counsel and experienced advisors. The BIA's role gradually is being transformed from that of a guardian protecting an incompetent ward to that of a land management agency, managing that compliance with federal environmental and cultural resource-protective statutes that protect both public and tribal interests, and supervising operators and their reporting and payment. ¹⁰ The current era of tribal self-determination is marked by enactment of the Indian Self-Determination Act of 1975 ¹¹ and, with respect to minerals development, by the Indian Minerals Development Act of 1982 ¹² and, more generally, with revisions enacted in 2000, loosening the strict earlier limitations on tribal contracting reflected in "Section 81". ¹³ This year, amendments to the Energy Policy Act of 2005 continued this trend.

The BIA, arguably never very effective in optimizing benefits from Indian resources, now must be evaluated by whether it furthers or undermines achieving tribes economic development goals. ¹⁴ Stepping beyond their more passive roles in prior years, tribes increasingly seek to regulate Indian and non-Indian conduct occurring on tribal lands and for their courts to decide the controversies arising there. ¹⁵ In some areas, federal agencies are delegating regulatory primacy ¹⁶ or program implementation ¹⁷ to tribes or their agencies. In the future, tribes' abilities to enhance economic well-being may depend more upon their abilities to compete effectively in affording opportunities for economic development and their effectiveness as governments, than upon the level of federal support or the rigor of federal supervision.

Increasingly, to the extent the premise of dependency under the trust doctrine, that premise may not comport with contemporary realities. ¹⁸ This Paper seeks to analyze the implications of the trust doctrine in the contemporary era for Indian resource owners, federal regulators, and private developers. It will trace the historical origins of the doctrine, ¹⁹ describe the settings in which the doctrine comes into play in contemporary resource transactions and disputes, ²⁰ and analyze the duties and standards of care the trust doctrine imposes upon actions of the federal trustee. ²¹ Finally, it will discuss ideas for removing impediments the trust doctrine now poses for some tribal resource development. It will review recent initiatives to shift trust functions to capable tribes and suggest ideas for accommodating tribal self-determination in application of the trust doctrine, taking as examples NEPA and the Endangered Species Act, ²² and the implications for an evolving trust doctrine of developing tribal expertise and tribal efforts toward primacy in contracting, regulation, and dispute resolution. ²³ Throughout it will address the trust doctrine's effect on the balance between tribal and developer interests: whether the doctrine's preference to resolve disputed matters to favor tribes creates its own disincentive to tribal economic development.

II. A RELATIONSHIP "UNLIKE THAT OF ANY OTHER TWO PEOPLE IN EXISTENCE": ²⁴ A BRIEF HISTORY OF THE TRUST DOCTRINE

In three seminal decisions termed the "Marshall Trilogy," Chief Justice John Marshall described a framework for defining tribes and their legal relations in the federal system. ²⁵ The origins of the United States' trust powers over tribal lands are discussed in this portion of the Paper.

A. Federal Power Over Alienation of Tribal Lands

The Marshall Trilogy addresses three fundamental principles. Johnson vs. McIntosh addressed federal powers over tribal lands. Cherokee Nation vs. Georgia aligned tribal governments with federal and state powers. It determined that the Cherokee Nation was not a "foreign State" that could invoke the Supreme Court's original jurisdiction over actions between a state and a foreign state. Rather, Justice Marshall denominated tribes as "domestic dependant nations. . . . ." ²⁶ A year later, the Supreme Court decided Worcester vs. Georgia, 31 U.S. (6 Pet.) 515 (1832). ²⁷ Worcester addressed yet a third question: the power of Georgia to control relations within the territory of the Cherokee Nation. The Court concluded that Georgia had no power to require "white persons" residing within the limits of the Cherokee Nation to obtain a license or permit from the State. After reviewing history and treaty provisions, Justice Marshall concluded:

"The Cherokee Nation, then, is a distinct community occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force, in which the citizens of Georgia have no right to enter, but with the ascent of the Cherokees themselves, or in conformity with treaties, and with the acts of congress." ²⁸

Worcester, then, allocates governmental powers between tribes, the states, and the federal government. It recognizes federal primacy in allocating those powers.

Johnson v. McIntosh, ²⁹ the first of the Marshall trilogy to be decided, is the case that directly addresses federal power over tribal land transactions. It considered the case of two claimants to the same piece of land, one of whom had received title directly from the Indians, the other by patent from the government. In holding the grants from the tribes...