Allotment has not provided individual Indians with economic opportunity; instead, it has weakened tribal structures and shrunk the tribal land base. The administrative burden is significant, absorbing federal monies that could be used elsewhere in Indian Country. In addition, transaction costs inhibit economic development and depress the returns to individual Indians. Congress has attempted to reduce fractionation through regulating devise and descent. Unfortunately, the Supreme Court has limited the quickest mechanism for consolidating land ownership. However, any consolidation program that relies solely on inheritance will take decades to reduce fractionation.
The literature on fractionation has produced several interesting suggestions. Unfortunately, changing the default rules, partition, or increasing individual autonomy requires federal action. So far, Congress has shown little interest in addressing fractionation except through inheritance law (and purchase on a very small scale). Tribal purchase of future interests does not require federal action, but it is too expensive for most tribes affected by fractionation. Together, these proposals might reduce fractionation, albeit not on a grand scale.
Instead, tribes should rely on incorporation and eminent domain to consolidate ownership and control of allotted lands in a tribal enterprise. Interests in allotted lands can be exchanged for shares in the TLC, limiting the cost of formation. Eminent domain should be used to prevent uneven tender and quickly expand to an efficient scale. Since funds are limited, compensation for the taking of allotted interests should be an interest of equivalent value in other parcels. The Rosebud TLE is just such a TLC, although with several structural defects imposed by the OIA. Even with weak shareholder control, the incentives facing the TLC are closer to the individual Indians than the BIA. Economic theory suggests that the TLC should provide better management of trust land.
Incorporation is not a panacea. This model is most appropriate for tribes where both the resource and culture are appropriate for centralized management. The BIA should continue to purchase heavily-fractionated parcels, particularly where the value of individual interests is de minimis. At the very least, the BIA should purchase all interests worth less than the cost of processing a lease, currently estimated to be $50. The administrative costs of heavily-fractionated parcels would burden the TLC, depressing returns. Improved management of allotted lands will improve economic opportunities for Indian enterprise and increase returns to landowners. However, the economic development in Indian Country still faces significant obstacles.
Any proposal that expands the tribal land base will face non-Indian resistance. However, tribes do not and should not represent non-Indian interests. Resistance and enmity, unfortunately, may be the price of restoring tribal sovereignty and control over Indian resources. In addition, the federal government has a responsibility to encourage, rather than prevent, economic development in Indian Country. If the federal government is to live up to its rhetoric, Congress and the BIA should assist tribes in eliminating fractionation of allotted lands.
Tribal Land Corporations: Using Incorporation to Combat Fractionation,
88 Neb. L. Rev.
Available at: http://digitalcommons.unl.edu/nlr/vol88/iss2/5