Q: Does 25 U.S.C. 81 require the approval of the Bureau of Indian Affairs in order for an Indian tribe to convey or create a mortgage or deed of trust on property owned by the tribe in fee simple outside of a reservation?

A: Yes, subject to exceptions as noted.

25 U.S.C. 81 and the definition of “Indian lands”

First, note that 25 U.S.C. 81 was amended by Public Law 106-197 on March 14, 2000. 25 U.S.C. 81 allows certain contracts to be entered into by an Indian tribe without approval of the BIA. The section applies when the property is included within the following definition of “Indian lands” in Section 81(a)(1):

“ . . . lands the title to which is held by an Indian tribe subject to a restriction by the United States against alienation.”

Accordingly, in order to determine whether Section 81 applies we first need to determine if the land is subject to a restriction on alienation.

Is property owned by an Indian tribe in fee simple subject to a restraint on alienation?

25 U.S.C. 177 (the “Non-intercourse Act”) provides:

“No purchase, grant, lease or other conveyance of lands, or of any title or claim thereto, from any Indian nation or tribe of Indians, shall be of any validity in law or equity unless the same be made by treaty or convention entered into pursuant to the Constitution. . . ”

25 CFR 155.22 (b) clarifies this further:

“(b) Tribal lands. Lands held in trust by the United States . . . and any other land owned by an Indian tribe may only be conveyed where specific statutory authority exists and then only with the approval of the Secretary unless the Act of Congress authorizing sale provides that approval is unnecessary.”

A paper by Thomas P. Schlosser dated June 16, 2000, entitled “Why Doing Business on Reservations is Unique” contains a discussion of fee property acquired by Indian tribes. The following is an excerpt:

Page 4: “As discussed below, 25 U.S.C. 177 prohibits sale or encumbrance of tribal land except pursuant to federal law. All lands held by an Indian tribe are subject to restrictions against alienation because of 25 U.S.C. 177, with the possible exception of certain lands in the Ninth Circuit. See Lummi Indian Tribe. . . Lummi Indian Tribe thus currently represents an exception to the general rule that all lands held by tribes, in fee simple or otherwise, are subject to statutory restraints against alienation. [citations.]”

Based on the above authority, it appears that non-reservation land acquired in fee simple by an Indian tribe automatically contains statutory restrictions on alienation. Accordingly, such land falls within the definition of “Indian lands” in Section 81(a)(1). With that in mind, Section 81(b) provides:

“No agreement or contract with an Indian tribe that encumbers Indian lands for a period of 7 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.”

Regulations under 25 U.S.C. 81

25 U.S.C. 81(e) requires the Secretary of the Interior to promulgate regulations within 180 days of the enactment of the Act in March, 2000. So far, I have found only proposed regulations at Federal Register: July 14, 2000 (Vol. 65, No. 136), pages 43952-43956. Section 84.004 begins as follows:

Sec. 84.004 Are there types of contracts and agreements that do not required Secretarial approval under this part?
Yes. The following types of contracts or agreements do not require Secretarial approval:

The list does not include anything remotely similar to a deed or mortgage of property owned in fee by an Indian tribe. Also, the detailed supplementary information accompanying the proposed regulation indicates that the kinds of contracts contemplated by the statute do not include mortgages on fee simple property. In fact, the commentary for Section 84.001 uses an example of a financing transaction in which a default would result in the lender operating the encumbered facility. This is sufficient to require the BIA’s approval. Obviously, a deed or a mortgage that provides for wiping out the Indian tribe’s property ownership altogether would also seem to require approval.

Exceptions

Even though 25 U.S.C. 81 requires BIA approval for deeds and mortgages affecting Indian land, there are numerous statutes pertaining to particular Indian tribes that permit sales and mortgages of off-reservation land without BIA approval. Two examples are the Navajo Tribe (25 U.S.C 635(b)) and the Salt River Pima-Maricopa Indian Community (Uncodified Public Law 100-512).

10/30/01