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November 2016 Bar Bulletin

Contracts on Indian Trust Land: A Primer

By Sarah Roubidoux Lawson


It has been a dozen years since I graduated from law school, but the term “contracts” still sends a shiver up my spine. As I write this, I’m reminded of my 1L contracts professor at the University of Wisconsin Law School, Bill Whitford. A staple at the school since the 1960s, Prof. Whitford was so dedicated to the subject that he was still teaching at the law school as an emeritus professor. Yes, he had retired, and then come back.

He frequently wore a T-shirt that said “Life’s a Birch – Vermont,” except for on Halloween, when he showed up for class in a suit. “This is my costume. What am I?” he quizzed the class. “A lawyer!” he exclaimed, and then launched into his lecture.

Prof. Whitford co-authored the textbook we used for the class, which started at the end of a contract — remedies — instead of at the beginning. As much as I wanted to begin this article with remedies, that doesn’t exactly work when you’re dealing with Indian law1 and the many layers of law that may affect your contract.

The Commerce Clause of the U.S. Constitution provides that “Congress has power to regulate commerce with foreign nations, among the several states, and with Indian tribes.” The Indian Commerce Clause, as it is called, is the basis for Congress’s plenary power over Indian affairs.

In 1831, Chief Justice John Marshall declared that Indian tribes are “domestic, dependent nations.” He went on to rather ironically characterize the relationship between a young federal government to comparatively older tribal governments as that of a “ward to his guardian.”2 It is under this authority that Congress legislates over Indian affairs.

In 1887, Congress passed the General Allotment Act, also known as the Dawes Act, after Massachusetts Sen. Henry Dawes, the proponent of the Act. The Act was intended to break up tribal communal land ownership by giving allotments of reservation lands to individual Indians, to be held in trust for a period of 25 years, or until the individual Indian was deemed “competent[,]” whichever came first.

Any lands that were not allotted were opened up to homesteading by non-Indians. What followed was that many allotments fell out of trust, either through sale to unscrupulous land speculators or by issuance of fee title by roaming “Indian Competency Commissions.” As a result, Congress enacted legislation to extend the trust period indefinitely.3

Today, Indian lands are held in trust either for tribes, for individuals, or for the multiple heirs of the original allottee, according to the heirs’ fractional interests. Some Indian land may be titled as “restricted fee.” In 1926, the Supreme Court determined that there is no difference between “trust” and “restricted fee,” and restricted fee land is generally treated the same as trust land in federal regulations affecting Indian land.4

Transactions such as leases, rights-of-way and transfers of Indian trust land are governed by federal statutes and regulations promulgated by the Bureau of Indian Affairs (BIA).5 All transactions on Indian trust land require the consent of the Indian landowner, whether the landowner is the tribe or an individual Indian (or in some cases, a group of individual Indians). The BIA, however, has final approval authority for any transaction on Indian land. Failure to obtain approval of the BIA may void the transaction entirely.

Certain contracts on Indian trust land may also require BIA approval under 25 U.S.C. § 81. Under Section 81, the BIA must approve any contract with a tribe that encumbers Indian land for a period of seven or more years. “Section 81 contracts” commonly include management agreements for tribally owned assets on tribal trust land, such as a hotel. Section 81 does not apply where there are other federal laws and regulations that specifically govern that activity (e.g., leasing).

In addition to the federal laws discussed above, tribes have inherent authority over Indian trust land on the tribe’s reservation, regardless of whether the land is held in trust for the tribe or for individual Indians. The BIA will comply with tribal law in approving contracts on Indian trust land, unless tribal law conflicts with federal law. Under the HEARTH Act of 2012,6 a tribe may be able to lease tribal trust land without approval of the BIA, if the tribe has enacted tribal leasing regulations that have been reviewed and approved by the Bureau.

State law generally does not apply on Indian trust land, except as Congress has provided.7 Indian trust land is therefore not subject to state regulation or taxation, including state property taxes. The leasing and rights-of-way regulations that were recently issued contain very strong statements against assertion of any state tax on permanent improvements, possessory interests or activities on Indian trust land. Tribes have full tax and regulatory authority on Indian trust land on the tribes’ reservations.

In the event of breach of a contract on Indian trust land, the BIA or the Indian landowner may seek remedies under either applicable law or the terms of the lease. This may include an action for enforcement in federal, tribal or state court (where the state has jurisdiction to hear a cause of action arising on the reservation), depending on the terms of the contract. Remedies also may include an administrative proceeding through the BIA, according to the provisions of 25 C.F.R. Part 2.

Although contracts on Indian trust land can seem complicated to navigate given the myriad of laws involved, they are vitally important for tribes to carry out housing and economic development activities on their reservations. The federal government has been working with tribes to streamline many of these laws, making contracting on Indian trust land less complex to promote tribal development goals.

Sarah Roubidoux Lawson is an enrolled member of the Iowa Tribe of Kansas and Nebraska, and an attorney at Schwabe, Williamson & Wyatt in Seattle. She too will be masquerading as a lawyer for Halloween.

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