Originally published in Indian Gaming | OCTOBER 2010
When building casinos and other projects, Tribes have used a system of “rights of way” to allow access across tribal lands held in trust by the United States and to “leases” for other uses of those lands. However, after Congress amended 25 U.S.C §81, Tribes became entitled to issue licenses under a tribal permit system without the regulation, interference, or delay imposed by the Bureau of Indian Affairs. Tribes can embrace this opportunity and promote the use of tribal licenses rather than “rights of way” and leases. The license approach liberates Tribes and their business partners from many of the burdens previously imposed by the federal bureaucracy.
Authority to Issue Tribal Licenses
For years, utility companies and others obtained “rights of way” for power lines and other access across tribal trust lands pursuant to 25 C.F.R. Part 169, which requires the consent of both the Tribe and the BIA. Cell phone and other companies have obtained “leases” for towers or other uses of land pursuant to 25 C.F.R. 162. However, more recently, at least one Tribe has begun issuing licenses for power lines, cell towers, and other purposes. The Northern Arapaho Tribe prefers licensing as a mechanism to create the right for third parties to use reservation lands because the right created does not encumber the land and, as a result, BIA approval is not required. 25 U.S.C §81 was amended in 2000 to “ensure that Indian tribes will be able to engage in a wide array of commercial transactions without having to submit those agreements to the BIA as a precaution,” S. Rep. 106-150 at 9. The authority for the Tribe to issue licenses is made plain at 25 U.S.C §81:
§81. Contracts and agreements with Indian Tribes
(a) Definitions. In this section:
(1) The term “Indian Lands” means lands the title to which is held by the United States in trust for an Indian Tribe or title to which is held by an Indian Tribe subject to a restriction by the United States against alienation.
(2) The term “Indian Tribe” has the meaning given that term in section 450b(e) of this title.
(3) The term “Secretary” means the Secretary of the Interior.
(b) Approval. No agreement or contract with an Indian tribe that encumbers Indian lands for a period of seven or more years shall be valid unless that agreement or contract bears the approval of the Secretary of the Interior or a designee of the Secretary.
Examples of Recent Case Law
Under section 81, agreements which do not encumber the trust land do not require BIA approval, a fact which recently has been amplified and clarified by the federal courts. See Gasplus L.L.C. v. U.S. Dept. of the Interior, 510 F.Supp.2d 18 (D.D.C. 2007), 2007 WL 2506402. A contract which “encumbers Indian lands” is one that, “by its terms, provides a third party with a legal interest in the land itself; that is, a right or claim attached to the real property that would interfere with the tribe’s exclusive proprietary control over the land.” Id. at p.9. Mortgages and other liens on real property are examples of such “encumbrances.” Id., citing U.C.C. 9-102(a)(32). In Gasplus, the Tribe entered into an agreement for the company to manage the Tribe’s gasoline distribution business, located on the trust land. According to the BIA, the agreement gave the company “nearly exclusive proprietary control over tribal land” and therefore required BIA approval. Gasplus, supra, at 10. The Court disagreed, however, saying the BIA’s “conclusion does not follow as a matter of law or logic.” Id. Nothing in the agreement explicitly or implicitly gave the company “a legal right attached to the real property.” Id. Because the agreement created no encumbrance on the land, it was not subject to BIA approval.
Unlike mortgages and other liens, licenses are not “encumbrances.” See Black’s Law Dictionary (4th ed.)(“license, n. 1 . . . revocable certificate of convenience and necessity. . .”); see also C.J.S. Easements §9; Licenses §88 (“[A] license is an authority to do a particular act, or series of acts, upon another’s land, without possessing any estate therein . . .”).
The Northern Arapaho Tribe’s standard licensing agreement provides, by its terms, that it “does not constitute or create an encumbrance upon lands pursuant to 25 U.S.C. §81 . . .” By contracting with third parties who wish to use the Tribe’s land through licenses, rather than leases or rights of way, the Tribe is able to enjoy the protections that are afforded by keeping its land in trust, while avoiding federal bureaucratic control that can result from BIA administration of leases and rights of way.
While a prospective licensee might be initially cautious about entering license agreements, Tribes that commit to a licensing approach can quickly overcome this by explaining the legal underpinnings of the licensing approach, and, where necessary, by defending their licenses.
The Northern Arapaho Tribe has aggressively protected its licensees from interference by the BIA. The U.S. District Court for the District of Wyoming has recognized the Tribe’s right to issue these licenses and to protect tribal licensees from unwarranted interference from the federal government. Northern Arapaho Tribe v. Superintendent of the BIA, U.S. District Court for the District of Wyoming, 06-CV-0271-J, August 30, 2007, Order, p. 19. The Court dismissed the suit as moot after the United States conceded “in unequivocal terms” that the BIA could not interfere with tribal licenses which did not encumber trust lands, or did not encumber them for more than seven years. (The Court said “the Tribe already has the sword it needs [25 U.S.C.§81]. . . future litigation may be brought [against the BIA] if the facts and the need arise.”) The license in that case was issued to a third party to cross trust lands in order to access his private property. The BIA had interfered with the tribal license, then changed its position after the lawsuit was filed, admitting that such interference was unlawful.
Re-Defining the Universe
Sometimes, the BIA sees its regulations as the entire universe of lawful options for Tribes and their economic partners – a view which is contrary to principles of tribal sovereignty, federal trust obligations, Section 81, Congressional policy, and the whole body of jurisprudence on property law. One need only turn to authorities like the Restatement of Property to see the wide variety of rights and privileges parties may create between themselves with respect to land, and to see that the BIA regulations address only a few of those subjects. Moreover, with the 2000 amendments to Section 81, Congress made it clear that greater freedom of contract and self-determination are necessary to promote economic development in Indian Country. In light of these federal policies, Tribes should not hesitate to look beyond standard BIA forms of agreement.
In many states, utility companies provide service to customers across lands controlled by the State through the use of licenses. The Wyoming Department of Transportation, for example, issues licenses for power lines, not rights of way. As a result, the license approach is familiar to most companies which routinely require access across another’s property.
Benefits of Tribal Licensing
The use of tribal licenses instead of BIA-approved “rights of way” or “leases” offers several important benefits for casino and other development:
- Licenses do not, by their terms, encumber trust lands of the Tribe, or do not encumber them for more than seven years; by contrast, “rights of way” do and “leases” might encumber trust lands (depending on their terms).
- The issuance of licenses by tribal government is a positive exercise of tribal sovereignty.
- Eliminating BIA approval avoids unnecessary delay and costs involved in the bureaucratic process.
- Direct negotiations with licensees establish a better understanding and relationship between the Tribe and economic developers, who communicate without the interference of the BIA as intermediary.
- License agreements reflect actual market value for the access across tribal lands. The BIA has recommended fees that are one-tenth what the Tribe can and has obtained through direct negotiations.
- License agreements allow Tribes and their licensees the flexibility to draft specific terms for specific uses, rather than staying within the framework provided by BIA forms.
Tribes should take full advantage of the federal recognition of tribal sovereign authority over trust lands provided in the amendments to 25 U.S.C §81. With these amendments, Congress has provided Tribes a powerful tool that allows for more efficient and sophisticated management of real estate resources. Independence from the BIA allows Tribes to engage businesses and economic developers more straightforwardly, which, in turn, empowers Tribes to tailor economic development to best serve their sovereign interests. In the experience of the Northern Arapaho Tribe, the use of licensing has created more efficient and better defined solutions for access to casino property and other land use issues and increased revenue to tribal government from licensing fees.
Andrew Baldwin represented the Tribe in Northern Arapaho Tribe v. State of Wyoming, 389 F.3d 1308 (2004), and is a shareholder in Baldwin, Crocker & Rudd, P.C..