Testimony of Lawrence E. Long, Attorney General

State of South Dakota

Chair, Conference of Western Attorneys General

Before the United States Senate Committee on Indian Affairs

Thursday, May 21, 2009

 

Mr. Chairman:

 

I understand that this hearing was prompted by the recent decision of the Supreme Court in Carcieri v. Salazar, ___ U.S. ___, 129 S.Ct. 1558 (2009). There are those who think that Carcieri should be “fixed” and those who oppose a “fix”. We are not here today to talk about a “fix,” but to put this matter into the larger context of the relationship among States, Tribes, and local units of government as that relationship is impacted by the taking of land into trust.

 

With that as background, we are happy to take this opportunity, as one of the major stakeholders, to discuss the circumstances in which it is appropriate for the Department of the Interior to invoke its statutory authority to take land into trust.

 

Statutory foundation for the authority to take land into trust

 

The primary statute which authorizes the taking of land into trust was enacted in 1934 as part of the Indian Reorganization Act. 25 U.S.C. 465 provides, in part, that:

 

The Secretary of the Interior is hereby authorized, in his discretion, to acquire . . . any interest in lands . . . within or without existing reservations . . . for the purpose of providing land for Indians.

 

For the acquisition of such lands . . . there is authorized to be appropriated . . . a sum not to exceed $2,000,000 in any one fiscal year. . . . 

 

As can be seen, the text is written very broadly, and has the effect of allowing the Secretary to acquire lands “for the purpose of providing lands for Indians” either within or without reservations.

 

While the text of the 1934 statute was broadly written, members of Congress likely expected it to be narrowly applied, and that its fundamental purpose, as articulated by Senator Wheeler and Representative Howard, the two main sponsors, was to assist truly landless or virtually landless Indians by acquiring land for them by way of limited Congressional appropriations. See 78 Cong. Rec. 11,123, 11,134 (Comments of Sen. Wheeler); 78 Cong. Rec. 11,726-11,730 (Comments of Rep. Howard); House Report No. 1804, 73rd Cong., 2d Sess. (May 28, 1934) at 6-7. John Collier, the Commissioner of Indian Affairs, affirmed that the purpose of the section, as it was finally revised, was to provide for the purchase of land for landless Indians. (“The acquisition of land for landless Indians is authorized, with two million dollars a year appropriated for this purpose.” 78 Cong. Rec. 611, 743 (1934) (Letter of John Collier.))

 

This original purpose has been abandoned. Few of the acquisitions of land in trust within the last half century have been by way of federal purchase of land through congressional appropriation for “landless Indians”, except perhaps in the case of restored tribes. In almost all of the cases since 1950, the tribe or individual is already the fee title owner of the land when it, he or she seeks to place that land into trust. 64 Fed. Reg. 17574, 17576 (April 12, 1999).

 

An enormous amount of land remains in trust or has been placed in trust

 

As of 1997, the last year for which statistics are available, there were over 56,000,000 acres of land in trust in 36 states. See, Department of the Interior, Lands under the Jurisdiction of the Bureau of Indian Affairs as of December 21, 1997.

 

There are two principal means by which this land came into trust status. First, at the time of the breaking up of the reservations in the late 1800’s, a significant amount of the original tribal land was converted into allotted trust land for individual Indians. Allotted land has a special status in law, and remains Indian country, even if the reservation from which it derived has been terminated. 18 U.S.C. 1151(c). It is estimated that approximately 47,000,000 acres of allotted land remain in trust status as of 1997. Second, land can be taken into trust under 25 U.S.C. 465, the statute discussed immediately above. We estimate that there were 9,000,000 acres of such statutory trust land in 1997, which, added to the 47,000,000 acres of allotted trust land, equals 56,000,000 acres.

 

To put the 56,000,000 acres into perspective, the state of Maryland consists of about 8,000,000 acres and the state of Rhode Island consists of about 1,000,000 acres. The entire area of New England, including Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont encompasses about 46,000,000 acres. North Dakota is comprised of about 45,000,000 acres and the state of Washington includes about 46,000,000 acres.

 

It is notable that the identity of lands which have trust status is not stable, with a significant amount of land being acquired and a significant amount leaving trust status each year. In 1997, the BIA reported acquiring about 360,000 acres of land in trust, and disposing of about 260,000 acres, for a net increase of about 100,000 acres. Government Accountability Office, Indian Issues: BIA’s Efforts to Impose Time Frames and Collect Better Data Should Improve the Processing of Land Trust Applications (GAO‑06‑781) (hereinafter Indian Issues) at 9 n.8, available at http://www.gao.gov/new.items/d06781.pdf. See also, 64 Fed. Reg. 17574, 17575 (April, 1999) (forecasting annual requests for 6,594 on reservation and 278 off reservation trust acquisitions).

 

Since 1997, Indian gaming revenues have increased at a rapid rate. The National Indian Gaming Commission reported that net revenues from Indian gaming increased from $8.5 billion to $26.0 billion from 1998 to 2007. As a consequence, tribes have significantly greater funds available to purchase land, and seek trust status for that land, than was true in 1934, when the enabling statute was enacted (25 U.S.C. 465), or even in the 1980’s and 1990’s when the first implementing regulations, now set out at 25 C.F.R. Section 151, were written.

 

The “Why” of it—What is the rationale for taking land in trust in the 21^st Century?

 

As government theorists, including President Obama, have noted, government programs sometimes persist long after their purpose has been accomplished, or persist even though they do little or nothing to reach the original goal of the enactment at issue.

 

We suggest that the land into trust program, like every other government program, merits a thorough review so as to identify the goals which can reasonably be accomplished by the program, so that the program can be directed so as to accomplish those goals.

 

The most common justification offered for the land into trust program is that the acquisition of land in trust for tribes enhances their economic position. The evidence, unfortunately, strongly refutes this thesis and suggests that in many instances, the acquisition of land in trust for tribes inhibits economic development.

 

The most detailed study to date of the economic effect of taking land in trust is Terry L. Anderson, Sovereign Nations or Reservation?: An Economic History of American Indians (Pacific Research Institute for Public Policy (1995)). After controlling for land quality to the extent allowed by the available statistics, Anderson concluded that “the data show that the value of agricultural output on individual [trust] lands is significantly lower than on fee simple lands and that tribal trust lands do even worse, controlling for variables that might influence output.” Id. at 133. Anderson also found that the “per-acre value of agricultural output was found to be 85-90% lower on tribal trust land than on fee simple land and 30-40% lower on individual trust land than on fee simple land.” Id. at 127. The author continued “the magnitude of these numbers supports the contention that trust constraints on Indian land reduce agricultural productivity.” Id.

 

The reasons that trust status inhibits economic development are clear, and are inherent in the idea of maintaining the property of another government or person in trust:

 

The bureaucratic regulations placed on individual trust lands increase the cost of management decisions compared to fee-simple land. First, and perhaps most important, the restriction on alienation or other encumbrances constrains the use of land as collateral in the capital market. Banks making loans cannot easily sell the land to collect on defaulted loans, and even the government cannot take the land in return for delinquent taxes.

 

Id. at 121-22.

 

A congressional committee report makes a similar point with regard to individual home ownership. According to the report:

 

Continued deplorable housing conditions for low income, Native American families greatly concerns the committee. In many cases, these deplorable conditions are attributable to several factors: the unique nature of Native American trust lands, private industry’s inability to understand the special Trust land status, and the lack of cost-effective ways to build on Indian lands. Nevertheless, considerable money is appropriated annually to address these concerns with little result.

 

House Report 104-628, Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriation Bill, 1997 Committee Report 1, page ____ (emphasis added).

 

See also, Jeremy Fitzpatrick, The Competent Ward, 28 Am. Indian L. Rev. 189, 195 (2003) (“unnecessary restrictions on the conveying and leasing of land will often inhibit resource development with respect to allotted [trust] land.”) But see Steven Cornell and Joseph P. Kalt, What Can Tribes Do? Strategies and Institutions in American Indian Economic Development, page 41 (1993) (acknowledging that there are several disadvantages to trust status, but concluding, after a brief discussion, that the “advantages of trust status outweigh those of fee status”).

 

Other reasons have also been offered to justify the taking of land into trust. For example, some applicants have argued that a generalized treaty right exists, but, so far, none has been located. Some have argued that the genuine historic oppression of Native Americans justify a land in trust program, but other races have been subjected to such oppression, even slavery, and lack the benefit of such a program. It has also been argued that Native Americans have a special relationship to the land. The answer often given is that those of other races likewise have an abiding attachment to their lands, whether the lands are developed for the purpose of raising a family or maintained in a relatively wild state.

 

Having said that, it is likewise clear that in some instances there is a genuine goal which can be identified and which can be reached. Some acquisitions of land for the purpose of gaming, for example, are likely to lead to substantial profits for the tribes. The irony, of course, is that sometimes these projects are those which raise the most controversy from the non-Indian community because of their influence on the surrounding area.

 

In sum, we do not say today that there is no genuine rationale for a land into trust program, but it can be said that there is a lack of a clearly articulated and well-justified reason for this massive governmental program and that any reform of the program ought to seek to articulate its goals in a concrete and ascertainable way.

 

The interests of the States and local units of governments: Why they sometimes oppose land into trust applications

 

No comprehensive study has been done of the rate at which land into trust applications are opposed by states and local units of government, but the percentage of applications which the States oppose appears to be quite low. The low rate is driven by more than one factor, but the desire to “get along” with the Tribes is certainly one factor, and the unlikelihood of a successful opposition is certainly another.

 

There are, nonetheless, real interests at stake which justify, in the view of the States and local governments, opposition to land into trust applications.

 

-----Tax loss

 

Every trust acquisition, by the terms of 25 U.S.C. 465, removes the ability of the States and local units of government to tax the land. The property tax is, however, the major source of local funding for schools and local governments generally, so repeated acquisitions of land in trust can seriously undermine local governments. This situation is aggravated by the refusal of the BIA to consider the cumulative effect on the tax rolls of taking new land into trust. Thus, even if half the land in a county is already in trust, a new 100-acre acquisition is analyzed as if it were the first acquisition in trust in the county. See, e.g., Shawano County, Wisconsin, Board of Supervisors v. Midwest Regional Director, 40 IBIA 241, 249 (2005) (“analysis of the cumulative effects of tax loss on all lands within Appellants’ jurisdictional boundaries is not required.”)

 

-----Loss of zoning authority

 

Federal regulations assert that each acquisition of land in trust deprives State and local government of zoning authority. 25 C.F.R. 1.4(a). As the Supreme Court has long maintained, the exercise of such authority is one of the primary ways in which the community can maintain its integrity.

 

-----Jurisdictional uncertainty

 

Beyond the loss of the ability to tax imposed by the very terms of 25 U.S.C. 465, and beyond the terms of the loss of zoning authority imposed by 25 C.F.R. 1.4(a), there are large realms of jurisdictional uncertainty created, especially when an acquisition of land in trust is imposed off reservation.

 

Some courts have found that merely taking land into trust creates “Indian country” or reservation, even though 25 U.S.C. 467 requires the Secretary to invoke his authority under that statute to convert land in trust into a reservation. Other courts have found to the contrary, or have left that question up in the air. Compare United States v. Roberts, 185 F.3d 1125 (10th Cir. 1999) (trust land constitutes Indian country) with United States v. Stands, 105 F.3d 1565 (8th Cir. 1997) (trust status alone is insufficient to create Indian country); South Dakota and Moody Country v. United States Department of the Interior, 487 F.3d 548 (8th Cir. 2007) (determining on rehearing not to decide the question).

 

The failure of affirmative federal law to resolve the issue of the status of off reservation land taken into trust has created, and will continue to create, tension between the Indian and non-Indian communities in which the acquisitions occur with regard to both criminal and civil matters.

 

Neither the land in trust statute nor the regulations provide adequate guidance to the decision makers

 

There are, it seems clear, conflicting interests of the States and local units of government on one side, and the Tribes on the other side, in at least some land into trust applications. One problem faced by both the States and the Tribes is the failure of either the statute or the regulations to provide substantial guidance on what lands should be taken into trust.

 

The key land in trust statute, 25 U.S.C. 465, provides very generally, as noted above, that the Secretary of the Interior is “hereby authorized, in his discretion, to acquire . . . lands . . . for the purpose of providing land for Indians.” The statute thus contains virtually no guidance to the decision maker.

 

Furthermore, the regulations fail to fill the gap left by the statute. The first regulations applicable to the taking of land in trust were not promulgated until 1980, evidencing the low level of acquisitions and their then non-controversial nature.

 

The regulations are now found at 25 C.F.R. 151. Unfortunately, they provide little guidance, and impose virtually no limits on the lands which might be taken into trust. The GAO has found that the “regulations provide the BIA with wide discretion” and that the BIA “has not provided clear guidance for applying them.” Indian Issues, supra, at 17. The GAO continued:

 

For example, one criterion requires BIA to consider the impact of lost tax revenues on state and local governments. However, the criterion does not indicate a threshold for what might constitute an unacceptable level of lost tax revenue and, therefore, a denial of an application. Furthermore, BIA does not provide guidance on how to evaluate lost tax revenue, such as comparing lost revenue with a county’s total budget or evaluating the lost revenue’s impact on particular tax-based services, such as police and fire services.

 

The GAO set out a table which analyzed the regulations set out in 25 C.F.R. 151. Excerpts from the table, illustrating the main flaws in the guidance, are set out below:

 

Criteria	GAO’s analysis of the criteria
The need of the individual Indian or the tribe for additional land.	[T]he regulations do not define or provide guidance on the type of need to be considered and how the level of need should be evaluated.
The purposes for which the land will be used.	The regulations do not provide any guidance on how the criterion applies to applications from individual Indians.
If the land is to be acquired for an individual Indian, the amount of trust or restricted land already owned by or for that individual and the degree to which the individual needs assistance in handling business matters.	No guidance in the regulations on how the amount of land owned by an individual Indian should be weighted against their need for assistance in handling their business matters.
If the land to be acquired is in unrestricted fee status, the impact on the state and its political subdivisions resulting from the removal of the land from the tax rolls.	No guidance in the regulations on what constitutes an acceptable level of tax loss or how to evaluate the tax loss from approving an application.
Jurisdictional problems and potential conflicts of land use that may arise.	No guidance in the regulations on what types of jurisdictional and land use concerns might warrant denial of the application.
If the land to be acquired is in fee status, whether BIA is equipped to discharge the additional responsibilities resulting from the acquisition of the land in trust.	No guidance in the regulations on how the BIA should evaluate its ability to discharge additional duties.
The extent to which the applicant has provided information that allows the Secretary to comply with environmental requirements, particularly NEPA.	No guidance provided on the amount or type of information needed by BIA to make the required environmental determinations.

 

Id. at 18. Furthermore, as the GAO points out, the criteria are not “pass/fail” and “responses to the criteria” do not even “necessarily result in an approval or a denial of an application.” Id.

 

The process lacks an impartial decision maker

 

In most cases, the initial decision maker is the local Superintendent of the Agency. The Superintendent, of course, is expected to be, and is almost inevitably, a strong advocate for tribal interests. In some cases, the Superintendent is actually a member of the tribe. The decision is then subject to review by the Regional Director, who succeeded to his or her position, presumably, by achieving success as a Superintendent. The final level of review is the in the Interior Board of Indian Appeals, which is highly deferential to the decision makers below.

 

The system is structured such that the States and local units of government do not have the perception of being given an impartial hearing, even though their very governmental jurisdiction is at stake.

 

Conclusion

 

The Carcieri decision provides this Committee with a unique opportunity to re-examine the land into trust process and, in cooperation with all of the stakeholders, to provide a twenty-first century rationale for trust land acquisitions. Further, the Committee has an opportunity to reform the structure of trust land decision making to assure that the process both appears impartial and fair, and is impartial and fair.