Cobell Land Buy Back could become a Land Give Back by the time it’s over

Cobell Land Buy Back could become a Land Give Back by the time it’s over

By Jay Daniels

The Cobell Settlement, approved on November 24, 2012, provides for a $1.9 billion Trust Land Consolidation Fund (Fund). The Settlement charges the U.S. Department of the Interior (“DOI”) with the responsibility to use the Fund within a 10-year period to acquire, at fair market value as defined in the Indian Land Consolidation Act (ILCA.

The overall goal of the Cobell Land Buy Back Program is to reduce the number of fractional interests through individually-owned Indian land transfers to tribes. There are approximately 150 reservations with 2.9 million purchasable fractional interests owned by more than 219,000 individuals. While the American Indian Probate Reform Act of 2004 appears to be slowing the growth of fractionation, the number of fractional interests remains high. 

In pondering the ability of the Cobell Land Buy Back (“Program”) to be successful, I have found major issues leading me to believe that in the end, it will just be another federal program that doesn’t truly meet the needs of Indian Country. There are three significant issues detrimental to the overall purpose of the program to consolidate highly fractionated interests by providing $1.9 billion in funds to tribes to consolidate, or acquire, individual Indian landowner’s land to tribal ownership.

First of all, the DOI hasn’t been specific to tribes in consultation and determination of those tribes who will benefit from the program. The tribes to participate in the program have already been determined. If DOI hasn’t acquired one single interest in nine months, how are they are going to acquire 2.9 million purchasable interest in the remaining 112 months? And then DOI believes that by setting up a new organizational structure to work on the Program will not eat up the $285 million administrative costs allowance under the Agreement. 

The definition of a “highly fractionated tract” is found at 25 U.S.C. § 2201 (6) “parcel of highly fractionated Indian land” means a parcel of land that the Secretary, pursuant to authority under a provision of this chapter, determines to have, as evidenced by the Secretary’s records at the time of the determination—

(A) 50 or more but less than 100 co-owners of undivided trust or restricted interests, and no 1 of such co-owners holds a total undivided trust or restricted interest in the parcel that is greater than 10 percent of the entire undivided ownership of the parcel; or

(B) 100 or more co-owners of undivided trust or restricted interests;

DOI is going through the motions of tribal consultations with all tribes without advising those tribes that they will not actually get to participate.

Secondly, the requirement is that fair market value (“FMV”) must be obtained for the benefit of the Indian landowners found at 25 U.S.C. § 2214(E.)(3).

For purposes of this chapter, the Secretary may develop a system for establishing the fair market value of various types of lands and improvements. Such a system may include determinations of fair market value based on appropriate geographic units as determined by the Secretary. Such a system may govern the amounts offered for the purchase of interests in trust or restricted land under this chapter.

The proposed method appears to be a market analysis which generally assesses a value for an area of property and determining a broad value estimate regardless of land type or infrastructure such as utilities, roads, etc. A person with a newer home could technically receive the same value per acre as a person who has an older home. The indication is that individual landowners want a FMV that is truly valuating their land at current market values yet tribes are leaning more toward a type of market analysis

 

And finally, the real kicker is that the Agreement has a shelf life of ten years meaning that any funds not expended by November 23, 2022, will be returned to the U.S. Treasury and forever lost. There’s no guarantee that the final Agreement is for $3.4 billion if the entire buy back funds isn’t expended during this period. The Agreement states:

(F.)(4) Length of Fund. Interior Defendants shall have no more than ten (10) years from the date of Final Approval of this Agreement to expend the Trust Land Consolidation Fund, at which time any amounts remaining in the Trust Land Consolidation Fund shall be returned to the Treasury.

If you consider that the DOI and Bureau of Indian Affairs has taken nine months to solicit comments from tribes and still hasn’t implemented a final plan for consolidation, when will it start and who is earning the interest on $1.9 billion earned to this point while it sits in an account waiting for distribution? Conservative estimates are approximately $1,429,279 may have accrued in interest during the past nine months since the money was deposited with the trustee. Please forgive me if I my computation may be slightly off since I am not a banker or a certified public accountant. But a lot of money has been earned but never mentioned in the Agreement or by the BIA during tribal consultations.

I could go on about more issues, such as tribal politics, family preference, etc. But for now, the question remains, is it a bought back or taken back program?

Jay Daniels has 30 years of experience working in Indian Country, managing trust lands and is a member of the Cherokee Nation of Oklahoma. You can find resources and information at http://roundhousetalk.com.