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2076

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MAY 18, 1923

heretofore, in so far as I am informed, been submitted for consideration, I deem it advisable to look into the principles on which this opinion is based at some length.

    While there is no statute which in express terms authorizes the granting of such leases, I am of opinion that the power to grant them exists as an incident to, and a necessary aid in the execution of other powers and the performance of other duties which have been directly conferred by statute.

    The fundamental consideration underlying this question is the fact that these natives are, in a very large sense at least, dependent subjects of our Government and in a state of tutelage; or in other words, they are wards of the Government and under its guardianship and care. The relations existing between them and the Government are very similar and in many respects identical with those which have long existed between the Government and the aboriginal peoples residing within the territorial limits of the United States to whom I shall hereafter refer as American Indians.

    Article III of the treaty under which Alaska was ceded to the United States (15 Stat., 539) conferred citizenship on all the inhabitants of the ceded territory "with the exception of the uncivilized tribes" therein, and declared that they "will be subject to such laws and regulations as the United States may, from time to time, adopt in regard to the aboriginal tribes of that country."

    In the beginning, and for a long time after the cession of this Territory Congress took no particular notice of these natives; has never undertaken to hamper their individual movements; confine them to a locality or reservation, or to place them under the immediate control of its officers, as has been the case with the American Indians; and no special provision was made for their support and education until comparatively recently. And in the earlier days it was repeatedly held by the courts and the Attorney General that these natives did not bear the same relation to our Government, in many respects, that was borne by the American Indians. (16 Ops. Atty. Gen., 141; 18 id., 139); United States v. Ferueta Seveloff (2 Sawyer U.S., 311); Hugh Waters v. James B. Campbell (4 Sawyer U.S., 121); John Brady et al. (19 L. D., 323).

    With the exception of the act of March 3, 1891 (26 Stat., 1095, 1101), which set apart the Annette Islands as a reservation for the use of the Metlakatlans, a band of British Columbian natives who immigrated into Alaska in a body, and also except the authorization given to the Secretary of the Interior to make reservations for landing places for the canoes and boats of the natives, Congress has not created or directly authorized the creation of reservations of any other character for them.

    Later, however, Congress began to directly recognize these natives as being, to a very considerable extent at least, under our Government's guardianship and enacted laws which protected them in the possession of the lands they occupied; made provision for the allotment of lands to them in severalty, similar to those made to the American Indians; gave them special hunting, fishing and other particular privileges to enable them to support themselves, and supplied them with reindeer and instructions as to their propagation. Congress has also supplied funds to give these natives medical and hospital treatment and finally made and is still making extensive appropriations to defray the expenses of both their education and their support.

    Not only has Congress in this manner treated these natives as being wards of the Government but they have been repeatedly so recognized by the courts. See Alaska Pacific Fisheries v. United States (248 U.S. 78); United States v. Berrigan et al. (2 Alaska Reports, 442); United States v. Cadzow et al. (5 id., 125), and the unpublished decision of the District Court of Alaska, Division No. 1, in the case of Territory of Alaska v. Annette Islands Packing Company et al., rendered June 15, 1922.

    From this it will be seen that these natives are now unquestionably considered and treated as being under the guardianship and protection of the Federal Government, at least to such an extent as to bring them within the spirit, if not within the exact letter, of the laws relative to American Indians; and this conclusion is supported by the fact that in creating the territorial government of Alaska and vesting that territory with the powers of legislation and control over its internal affairs, including public schools, Congress expressly excluded from that legislation and control the schools maintained for the natives and declared that such schools should continue to remain under the control of the Secretary of the Interior.

    Turning now to a closer consideration of the question before me, and looking to the extent of the powers of the executive branches of the Government, we find ample justification in the following facts and statutes for my opinion that the lease here in question may be executed under your supervision.


 

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Section 465, Revised Statutes, declares that "the President may prescribe such regulations as he may think fit for carrying into effect the various provisions of any act relating to Indian affairs."

    Section 441, Revised Statutes, in defining the powers and jurisdiction of the Secretary of the Interior says that he "is charged with supervision of public business relating to the following subjects:

*     *     *     *     *     *     *     *

Third. The Indians *     *     *;" and by section 7 of the act of January 27, 1905 (33 Stat., 616, 619), Congress declared that "the education of the Eskimos and Indians in the District of Alaska shall remain under the direction and control of the Secretary of the Interior;" that schools for them "shall be provided by annual appropriation" made by Congress, and that these natives "shall have the same right to be admitted to any Indian boarding school as the Indian children in the States and Territories of the United States" have.

    In later acts, Congress went further and made and is still making appropriations "to enable the Secretary of the Interior, in his discretion and under his direction, to provide for the education and support of the Eskimos, Aleuts, Indians, and other natives" of Alaska. (See 42 Stat., 552, 583 and similar former acts.) And it is also well worthy of note in this connection that the Bureau of Education is charged with the immediate duty of executing the laws relating to the education and support of these natives, under the supervision of the Secretary of the Interior, as will appear from the fact that the appropriation just mentioned for their education and support is included with other items in the funds appropriated and set apart by Congress for the support of the activities of that Bureau; and furthermore that the act of July 1, 1918 (41 Stat., 1367, 1406), specifically authorized the Commissioner of Education to sell male reindeer and invest the proceeds in the purchase of female reindeer for distribution by him among the natives who had not been supplied with those animals.

    The objects for which this reservation was created were, therefore, largely the same as those which induced the creation of the Annette Islands Reservation, supra, concerning which Mr. Justice Van Devanter said in Alaska Pacific Fisheries v. United States, supra, "the purpose of creating the reservation was to encourage, assist and protect the Indians in their efforts to train themselves to habits of industry, become self-sustaining and advance to the ways of civilized life."

    In 1874 Attorney General Brewster in considering this question of reservations stated that--

    The regulation of the relation of the Government with these tribes is a great public interest, and their settlement upon reservations has been considered a matter of great importance. Indeed it has been the settled policy of the Government for many years. *     *     * may well be regarded as a measure in the public interest and as for a public use. Congress has in numerous acts of legislation recognized it as such. (17 Ops. Atty. Gen., 258, 260.)

    In Grisar v. McDowell (6 Wall., 363, 381), the Supreme Court recognized the fact that the President had, in the absence of an express statute, the incidental power to create reservations where the lands reserved were needed for the carrying out of some public duty imposed by statute, and said--

    From an early period in the history of the government it has been the practice of the President to order, from time to time, as the exigencies of the public service required, parcels of land belonging to the United States to be reserved from sale and set apart for public uses.

    And both the Attorney General and the courts have recognized the fact that that power extends to the creation of Indian reservations as well as reservations for other public purposes. See Alaska Pacific Fisheries v. United States, supra; United States v. Leathers (Fed. Cas. No. 15581), and 17 Ops. Atty. Gen., 258.

    The making of this reservation was, therefore, justified by the law and the facts relating to the needs of the public service, and having been created for the well known and generally recognized purpose of segregating these natives from otherwise contaminating and hurtful influences, and to enable the Bureau of Education to aid them in advancing towards civilized life and complete self-support by instructing and encouraging them to engage in useful pursuits, this Bureau may use or permit the reserved land to be used in any reason able manner and for any reasonable purpose which will advance the interests of the natives, provided it does not undertake to make such a disposition of them as will eventually embarrass the Government's title. For that reason the proposed lease may be entered into.

 

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MARCH 16, 1938

    This conclusion is in harmony with and has the support of the decision of the highest court of Alaska in the case of the Territory of Alaska v. Annette Islands Packing Company, supra.

    That case involved the question as to the power of the Secretary of the Interior to grant a lease on Annette Islands similar to the one here involved, and the court held that he "had power, as the authorized agent of the Indians residing on the Annette Islands Reservation, as well as under his general authority, to enter into lease."

    It will be observed from the language quoted from the letter of the Commissioner of Education that he has in mind a lease "between Mr. J. A. Magill and the Tyonek native store," in which all the adult males of the Tyonek native families are said to be shareholders.

    In my opinion the lease should be made by you or by some officer of the Bureau of Education at your designation, subject to the subsequent approval of the Secretary of the Interior, and not by the native store, and the proceeds of the lease should be disposed of for the benefit of the Indians.

Approved:

E. C. FINNEY, First Assistant Secretary.

AUTHORITY OF OFFICERS
IN INDIAN SERVICE

M-29669                                                                                                                March 16, 1938.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    My opinion has been requested as to the extent of the authority of the Chief Special Officer, the Special Officers, and the Deputy Special Officers of the Indian Service to maintain law and order among Indians and on Indian Reservations.

    The position of Chief Special Officer was established pursuant to the following appropriation provision contained in the act of March 1, 1907 (34 Stat. 1017):

    "To enable the Commissioner of Indian Affairs, under the direction of the Secretary of the Interior, to take action to suppress the traffic in intoxicating liquors among Indians, s25,000 *     *     * and the powers conferred by Section 2140 of the Revised Statutes upon Indian agents and subagents, and commanding officers of military posts, are hereby conferred upon the special agent of the Indian Bureau for the suppression of the liquor traffic among Indians and in the Indian country, and duly authorized deputies working under his supervision."

Section 2140, Revised Statutes, referred to in the foregoing provision, concerns the prevention of the introduction of spirituous liquors into the Indian country. With one exception all other pertinent legislation relating to the Special Officers and Deputies has also been contained in appropriation items. In these items the Special Officers and Deputies originally were charged with the duty of suppressing the liquor traffic among the Indians and in recent years this has been extended to the "suppression of the traffic in intoxicating liquors, marihuana, and deleterious drugs among Indians."

    An attempt was made to lump the appropriations for Indian courts, Indian police, and the suppression of liquor traffic into one item and to change the designation to "maintaining law and order on Indian reservations" in the appropriation act for the fiscal year ending June 30, 1938. One of the purposes of this proposal was to obtain legislative sanction for the extension of the authority of the liquor enforcement officers. This attempt must be considered to have failed to achieve this purpose inasmuch as the designation "pay of employees engaged in the suppression of the traffic in intoxicating liquors, marihuana, and deleterious drugs among Indians" was present in the appropriation act as passed and approved.

    It appears, therefore, that as far as appropriation legislation is concerned the authority and duties of the Special Officers and Deputies are clearly defined and limited to the suppression of the liquor and drug traffic among the Indians.

    Section 250, Title 25, United States Code, provides as follows:

    "Powers of chief specia1 officer and deputies to suppress liquor tragic.--The powers conferred by section 504 of Title 28 upon marshals and their deputies are conferred upon the chief special officer for the suppression of the liquor traffic among Indians and duly authorized officers working under his supervision whose ap-


 

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pointments are made or affirmed by the Commissioner of Indian Affairs or the Secretary of the Interior."

    Section 504, Title 28, United States Code, referred to in the foregoing section, provides:

    "The marshals and their deputies shall have, in each State, the same powers, in executing the laws of the United States, as the sheriffs and their deputies in such State may have, by law, in executing the laws thereof."

    It is my opinion that section 250, Title 28, United States Code, merely authorizes the use by the Special Officers and Deputies of the same means of enforcing the laws they are charged with the duty of enforcing as may be employed by the United States marshals and deputies in enforcing the laws within their jurisdiction. It seems clear that no additional jurisdiction with regard to the enforcement of laws of the United States was conferred on the Special Officers and Deputies by this section. The powers it confers on the Special Officers and Deputies are the powers conferred on United States marshals and deputies by section 504, Title 28, United States Code, which powers are merely powers of carrying into effect the previously existing duties of the marshals. Section 504, Title 28, does not confer on marshals and their deputies the power to enforce the laws of the United States. They possessed that power prior to the enactment of this provision. What section 504, Title 28, does confer on marshals and their deputies is authority with regard to the methods or means of carrying into effect the powers of enforcement which they already possessed. Since the power to enforce generally the laws of the United States is not conferred on the marshals and their deputies by section 504, Title 28, this power is not conferred on the Special Officers and Deputies by section 250, Title 25.

    The correctness of the foregoing construction is illustrated by the inclusion in section 250, Title 25, of the words "for the suppression of the liquor traffic among Indians" after the words "chief special officer." Thus, by the very authorizing section, the character of the duties of the Special Officers and Deputies was recognized and reaffirmed by Congress. Moreover, the United States Code section heading, while not conclusive as to the question, may be considered in interpreting the section and this limits the powers conferred by the section to the suppression of the liquor traffic. It appears also that Congress in appropriating funds each year after the enactment of section 250, Title 25, for these officers and designating their use to be for the suppression of the liquor and drug traffic has indicated its views as to the effect of that section.

    There is yet another persuasive argument in support of the correctness of the adopted construction of the statute in question. Section 250, Title 25, United States Code, was derived from a proviso annexed to an appropriation for the suppression of the traffic in intoxicating liquor among Indians in the act of August 24, 1912 (37 Stat. 518, 519). It has been held that the "natural limitation of a proviso is to those things that have been previously mentioned" (Hollender v. Magone, 149 U.S. 586, 591), and the scope of a proviso is generally limited to the subject matter of the principal clause. United States v. Morrow, 266 U.S. 531, 535. Applying the foregoing rules, it appears that the proviso codified as section 250, Title 25, United States Code, should be confined to the suppression of the liquor traffic among Indians since that is the subject matter of the principal clause to which the proviso was annexed.

    It is my opinion, therefore, that the authority of the Chief Special Officer, the Special Officers, and the Deputy Special Officers of the Indian Service, as such, is limited to the suppression of the traffic in intoxicating liquor, marihuana, and deleterious drugs among Indians.

                                                                                                                    Respectfully,
                                                                                                                    Frederic L. Kirgis,
                                                                                                                                Acting Solicitor.
Approved: March 16, 1938.
OSCAR L. CHAPMAN, Assistant Secretary.

FEDERAL AND STATE SALES
`TAXES--MENOMINEE INDIAN MILLS

57 I.D. 129                                                                                                                May 3I, 1960.

FEDERAL AND STATE GASOLINE SALES TAX--MENOMINEE INDIAN MILLS--PURCHASE AND SALE OF GASOLINE FOR AND BY MILLS--STATE TOBACCO SALES TAX--TOBACCO SALES BY MENOMINEE INDIAN MILLS COMMISSARY

Federal and State gasoline sales taxes (a) do not apply to sales of gasoline to the Menominee Indian Mills for use in the operation of the mills , but (b) do apply to sales of gasoline to the mills for resale through the commissary of the mills to employees and the general public.


 

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The State tax on the selling of tobacco products does not apply to the selling of such products by the commissary of the Menominee Indian Mills to employees and the general public.

MARGOLD, Solicitor:

    There have been referred to me for an opinion several questions raised by the Indian Office concerning the imposition of certain Federal and State taxes on sales made to and by the Menominee Indian Mills on the Menominee Indian Reservation in Wisconsin. The taxes in question are (1) the Federal excise tax on sales of gasoline, levied pursuant to section 617 of Title IV of the Revenue Act of 1932 establishing manufacturers' excise taxes, which appears in Title 26 of the United States Code following section 1481, and as chapter 29 of the Internal Revenue Code approved February 10, 1939 (53 Stat. 409); (2) the State excise tax on the sale of gasoline, levied under chapter 78 of the Wisconsin Statutes of 1937; and (3) the State occupational tax on the sale of tobacco products, levied under chapters 443 and 518 of the Laws of Wisconsin, 1939.

    The questions concerning these taxes may be formulated as follows:

    1. Are the Menominee Indian Mills exempt from the Federal excise tax on sales to them of gasoline (a) for use in operation of the mills, and (b) for resale to employees and the public through the commissary maintained by the mills?
    2. Are the Menominee Indian Mills exempt from the State excise tax on sales to them of gasoline (a) for use in operation of the mills, and (b) for resale to employees and the public through the commissary?
    3. Are the mills exempt from the State occupation tax on the selling of tobacco products in the case of sales to employees and the public through the commissary?

    These three questions raise distinct problems and will be treated in order.

I. APPLICATION OF THE FEDERAL GASOLINE
SALES TAX

    Section 617 of Title IV of the Revenue Act of 1932 places a tax on gasoline sold by any producer or importer, but section 620 (as amended, August 30, 1935, 49 Stat. 1025) exempts sales "for the exclusive use of the United States." The mechanics for such an exemption are set forth in section 621 which provides for a credit or refund to the producer for taxes paid by him where the gasoline was "resold for the exclusive use of the United States." Section 624 contains the only reference to Indians. It provides that no tax shall be imposed under Title IV "on any article of native Indian handicraft manufactured or produced by Indians on Indian reservations, or in Indian schools, or by Indians under the jurisdiction of the United States Government in Alaska." However, the only subjects taxed by Title IV which could have relevance to section 624 are articles made of fur and articles of jewelry.

    The regulations established by the Bureau of Internal Revenue under Title IV provide for an exemption from the tax of gasoline sold "for the exclusive use of the United States *     *     *" (sec. 314.24 of Regulations 44, under ch. 29, subch. A of the Internal Revenue Code). The exemption certificate required to be used consists of a certification by an officer of the United States that the articles are purchased for the exclusive use of the designated governmental unit. The certificate contains the express agreement that if the articles purchased tax free under the certificate are used otherwise than for the exclusive use of the United States or are sold to employees or others, the fact will be reported by the officer to the manufacturer of the article covered by the certificate.

(a) Purchases of gasoline for the operation of the mills.

    Under these statutory provisions and the regulations, the first question is whether sales of gasoline for use in the operations of the Menominee Indian Mills are sales of gasoline "for the exclusive use of the United States." The answer to this question requires an analysis of the status of the Menominee Mills and their relationship to the Federal Government.

    The Menominee Indian Mills were established under the act of March 28, 1908 (35 Stat. 51), which authorized the Secretary of the Interior to cause to be cut and sold the lumber of the Menominee Reservation and to cause to be established sawmills for that purpose. All proceeds of the operations were to be deposited in the United States

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Treasury for the benefit of the Menominee Tribe and all expenses of the establishment and the operations were to be borne from the Menominee tribal funds and the proceeds of the operations. The amendment to that act of January 27, 1925 (43 Stat. 793), provided that the mills should be exempt from the requirements of sections 3709 and 3744 of the Revised Statutes, regulating the making of Government purchases and contracts. A further significant amendment was carried in the act of June 15, 1934 (48 Stat. 964), which required all expenditures in the operations of the mills to receive the advance review and approval of the tribal council or its authorized committee.

    In the exercise of his administrative authority under the 1908 act the Secretary of the Interior appoints the manager and all the office personnel of the mills and has delegated to the manager the employment of all the mill workers, who are hired on a day-to-day or month-to-month basis. Some of the office personnel are civil service employees and most of them are classified under the Classification Act. All employees are paid from tribal funds. The manager is responsible to the Secretary of the Interior for the operations of the mills but is required to keep within the budget approved by the advisory board, in accordance with the 1934 amendment. Government forms are used in the disbursement and accounting of the funds of the mills, Government regulations followed, and the accounts audited by the General Accounting Office, in the same manner as in the case of Indian Service operations generally.

    Since the Menominee mills have represented a peculiar combination of tribal and Federal activities, they have been the subject of a number of rulings by various administrative agencies. In the first year of their operation, the Attorney General held that the Federal law providing an 8-hour day for Federal employees did not apply to employees of the Menominee mills. He described the mills as "an essentially private enterprise" in which the United States had invested the trust property of its wards for the benefit of those wards; also as a cooperative enterprise in which the tribe supplied the capital, the raw material and the labor, and the United States supplied the management (27 Atty. Gen. 139 (1909) ).

    In a letter dated November 16, 1933, to the Secretary of the Interior, the Comptroller General held that the Federal Economy Act did not apply to the employees of the mills. An analysis of the Interior Department's letter referring the question to the Comptroller General, upon which his reply was based, indicates that the ruling related only to the "irregular employees," meaning the employees hired by the manager and not the supervisory personnel employed by the Secretary of the Interior. After this ruling, the supervisory personnel continued subject to the Federal Economy Act.

    A related ruling was made by the Employees Compensation Commission on September 18, 1936, to the effect that the Federal Employees Compensation Act did not apply to the "employees of the mill." This reversed an administrative practice of the Commission of 20 years' standing. It does not appear whether a distinction has been observed in this connection between the supervisory employees and the laborers in the mill. Congress has, however, restored the original situation and confirmed the Federal aspect of the mills by the act of April 11, 1940 (54 Stat. 105), which specifically defines "employees" of the United States as including the employees in timber operations on the Menominee Reservation.

    The most recent ruling involves the application of the Wages and Hours Act. This office, in the Solicitor's Opinion of November 28, 1938 (M. 29999), held that, until otherwise advised by the appropriate administrative agency, the Wages and Hours Act should be considered as applying to the Menominee mills since they could not be said to be exempted under the exemption of the "United States" as an employer. This ruling was confirmed by the Administrator of the Wages and Hours Administration in a letter to this Department of July 10, 1939, holding that the Wages and Hours Act was deemed to apply to all employees of the mills except those employees hired by the Secretary of the Interior and performing supervisory functions.

    The foregoing administrative decisions lead to the conclusion that the employees of the Menominee mills, at least the non-supervisory employees, are covered by Federal laws regulating employment in private industry and are not covered by Federal laws regulating employment in the Government itself unless clearly intended. This conclusion may be the logical one and correct in law and policy but still not determine the question whether gasoline purchased for the operations of the mills is exempt as for the use of the Federal Government. The mills must be recognized as having a dual capacity. On the one hand they are a profit-making enterprise for the particular benefit of an individ-


 

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ual tribe and on the other hand they are an agency of the Federal Government through which the United States seeks to fulfill its obligation of advancing its Indian wards. One aspect of the enterprise should not be observed to the exclusion of the other. Neither law nor logic requires adherence to one view of the character of the mills. In any case involving the application of a Federal law to these mills, the question is one of finding the intent of Congress in the particular circumstance. The determination of this question is the function primarily of this Department and such other administrative agencies as may be concerned with the enforcement of the particular law in question.

    In this instance, it is my opinion that the aspect of the mills as a Government agency predominates over their aspect as a private industry and that the mills are exempt from the Federal tax on purchases for their operations for the following reasons:

    (1) The exemption from the Federal sales tax of gasoline purchased for the operations of the mills has been accepted thus far without question by all the administrative agencies concerned. The purchase of gasoline for this purpose has been constantly referred to as the purchase of gasoline for "governmental operations." The practice of using exemption certificates for such purchases follows the customary Indian Service practice in Indian Service operations, whether or not the particular operations are being paid for from tribal funds. The purchasing is carried on according to governmental regulations and with the use of Government forms for disbursement and accounting. The exemption of the mills from compliance with certain statutes governing the execution of Government contracts indicates that Congress recognized that the mills were operated as a Government operation.

    (2) The management and supervision of the mills is clearly an Indian Service operation. From a practical viewpoint it would not be possible to separate the gasoline consumed in supervisory functions from the gasoline consumed for strictly productive purposes.

    (3) A tax on the sale of gasoline for the operations of the mills is a tax on the operations of an agency of the Government and is not a tax on the income to any Indians resulting from such operations. The case of Superintendent of the Five Civilized Tribes v. Commissioner of Internal Revenue, 295 U.S. 418, noting that the Federal income taxes applied to the income of Indians received from investment by the Government of the Indians' property, in no way indorses taxation of the processes of the investment of such property by the Government. The recent Supreme Court cases upholding Federal and State income taxes on the employees of each other (Helvering v. Gerhardt, 304 U.S. 405; Graves v. New York; 306 U.S. 466), distinguish a tax upon the income of employees from a tax on the operations of the Government itself. While these cases involve the relation between dual sovereignties, they illustrate a distinction useful in a case such as this, where an enterprise has the dual aspect of a Government function and a private business.

    (4) The proceeds from the operations of the mills are not wholly devoted to per capita payments but large sums are used to carry on Government functions on the Menominee Reservation which otherwise would be paid for from Government funds, particularly the operations of the Keshena Agency and the construction of such buildings as quarters for Government employees, a hospital and jail. Federal use of the proceeds of the operations is significant in determining the application to the operation of a Federal Tax, which reduces such proceeds, although it might not have such weight in determining the application of Federal laws regulating the method of operations.

    (5) Even if the Menominee mills are considered solely as a private tribal enterprise, it is doubtful whether Congress intended that the Internal Revenue Act of 1932 should apply to gasoline purchased for tribal enterprises. The time-honored principle that general laws of Congress should not be so construed as to apply to Indians, if such application would adversely affect them (McCandless v. United States, 25 F. (2d) 71 (C.C.A. 3, 1928), has been so far modified as to permit the application of the general Federal income tax law to the income of individual Indians (Superintendent of the Five Civilized Tribes v. Commissioner of Internal Revenue, supra). However, it has not yet been modified by the courts to apply general tax laws to the tribes and to tribal enterprises. This was pointed out in my opinion of June 30, 1937 (M. 29156), holding that the taxes imposed by the Social Security Act upon employers did not apply to Indian tribes operating enterprises under a trust agreement with the Government for the handling of Indian rehabilitation funds. This opinion, however, does not answer the present question since in that case the exemption provided by the statute in favor of the Government was broad enough to include agencies and instrumentalities of the Gov-


 

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ernment. Until a court has required the application of such general tax laws to Indian tribes or clearly indicated their application, this Department should refrain, I believe, from enunciating such a legal conclusion.

    (6) In considering the application of general Federal laws to Indian tribes and tribal enterprises, I believe it is reasonable and essential for a distinction to be made between Federal laws providing for the regulation of interstate commerce and Federal laws providing solely for the raising of revenue. In the case of the regulation of interstate commerce, it is important for the act to reach all industries producing goods which flow in interstate commerce. For that reason, it may be said that tribal enterprises with interstate operations come within the policy of such Federal regulation. With that consideration in mind, I held in my opinion of November 28, 1938 (M. 29999), that the Wages and Hours Act should be considered as applying to the Menominee Indian Mills. In implied recognition of this policy the Menominee mills operated under the National Industrial Recovery Act and joined with other lumber enterprises in the lumber code. The same considerations do not, however, apply to general Federal laws for the raising of revenue. The exemption of tribal enterprises from such acts would not be an obstacle to the effectuation of the purposes of the act. On the other hand, the application of such acts would have a detrimental effect upon the operations of the tribal enterprise and this would be inconsistent with the purpose of Congress to foster and protect such tribal enterprises and the tribal funds used in the furtherance of such enterprises.

    In this connection, the inclusion in Title IV of the 1932 Revenue Act of an express exemption of Indian handicrafts indicates an intent, not completely expressed, not to have the act affect Indian enterprises.

    (7) An opinion upholding the exemption from the Federal sales tax of purchases of gasoline for the operation of these mills would follow the repeated decisions of this Department holding various tribal enterprises established, managed, and supervised by the United States as part of its program for Indian welfare not subject to this Federal tax. In a letter to the Superintendent of the Great Lakes Indian Agency, approved in the Department June 21, 1938, he was informed that purchases of gasoline for the sawmill established by the Lac du Flambeau Tribe under a rehabilitation loan could be made with exemption certificates exempting the purchase from this Federal sales tax. Again, in my memoranda to the Commissioner of Indian Affairs of December 3, 1938, and June 21, 1939, I held that such exemption certificates and Government license tags could be used in connection with the operations of the corporate hay enterprise carried on by the Chippewa Cree Tribe with revolving loan funds. I see no fundamental distinction between these tribal enterprises and the Menominee Indian Mills, and no reason which induces me to change the ruling in connection with these other tribal enterprises, at least until so advised by the Bureau of Internal Revenue. Whether or not this Department should take the initiative in presenting the question to that Bureau is an administrative question primarily for the consideration of the Indian Office.

    There remains the question whether this conclusion should be changed in view of the recent case of United States v. Algoma Lumber Co., 305 U.S. 415. That case was a suit by the lumber company in the Court of Claims to recover from the United States for overpayment made under a contract for the cutting of timber on the Klamath Indian Reservation. The contract had been executed by the Superintendent under the authority given to the Interior Department to provide for the sale of Indian timber under departmental regulations. The precise question in the case was whether the contract was a contract of the Government within the jurisdiction of the Court of Claims over contracts "with the Government of the United States" (28 U.S.C.A. sec. 250). The court held that the contract was not a contract of the United States but one made through an agency of the Government on behalf of the Indians, adding that the exercise by Congress of its power to manage and dispose of Indian property did not necessarily involve an assumption by the Government of contractual obligations. This holding was undoubtedly necessitated by the fact that the payments made under the contract were made for the benefit of the tribe and deposited in tribal funds. It recognizes, rather than denies, the fact that the management of the tribal timber was a Government operation. While a party to an Indian timber contract may not recover from the United States itself for money paid for the benefit of the Indians, in the contrary situation the United States may sue to recover on a breach of such a timber contract from the party to the contract for money due to the Indians (United


 

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States v. Harris, 100 F. (2d) 268 (C.C.A. 9, 1939). The interest of the United States in contracts made in carrying on tribal timber operations is sufficiently great, in my opinion, to protect a purchase made in such operations through the agency of the Government from the tax here in question.

(b) Purchases of gasoline for resale to employees and the general public.

    Where the Menominee Indian Mills purchase gasoline under an exemption certificate, such certificate may not cover gasoline which is purchased for resale through the commissary to employees and the general public. This is established beyond doubt by the language of Title IV of the Internal Revenue Act of 1932, by the provisions of the regulations of the Internal Revenue Bureau and by the wording of the exemption certificate itself. The fact that some of the employees to whom the gasoline may be resold are Indians is immaterial in the question of the application of a Federal tax. As previously pointed out, individual Indians are not exempt from Federal taxation simply because they are Indians or wards of the Federal Government (Superintendent of the Five Civilized Tribes v. Commissioner of Internal Revenue, supra). Similarly, the fact that the gasoline may be resold within the Indian Reservation is immaterial in considering the application of a Federal, as distinct from a State, tax. Under the statute and regulations, the mills are responsible for the payment of the Federal tax on so much of the gasoline purchased as is used for resale to private persons.

II. APPLICATION OF THE STATE GASOLINE
SALES TAX

    The Wisconsin statute in question (ch. 78; Wisconsin Statutes 1937), places an excise or license tax on all motor fuel sold, used and distributed in the State, with the exception of fuel sold to the United States or any of its agencies except "as permitted by the Constitution or laws of the United States." The tax is enforced through a system of licenses on wholesalers who are responsible for the payment of the tax to the State.

    The application of this act to purchases by the Menominee Indian Mills should be considered in the light of the act of Congress of June 16, 1936 (49 Stat. 1521, 23 U.S.C.A., sec. 55a). Because of the importance of this act it is quoted in full:

    (a) All taxes levied by any State, Territory or the District of Columbia upon sales of gasoline and other motor vehicle fuels may be levied, in the same manner and to the same extent, upon such fuels when sold by or through post exchanges, ship stores, ship service stores, commissaries, filling stations, licensed traders, and other similar agencies, located on United States military or other reservations, when such fuels are not for the exclusive use of the United States. Such taxes, so levied shall be paid to the proper taxing authorities of the State, Territory or the District of Columbia, within whose borders the reservation affected may be located.
    (b) The officer in charge of such reservation shall, on or before the fifteenth day of each month, submit a written statement to the proper taxing authorities of the State, Territory or the District of Columbia within whose borders the reservation is located, showing the amount of such motor fuel not sold for the exclusive use of the United States during the preceding month.

(a) Purchases of gasoline for the operation of the mills.

    The State tax on the purchase of gasoline does not, in my opinion, apply to purchases of gasoline by the Menominee Indian Mills for their own operations. This conclusion is reached in the light of the following considerations:

    (1) The State statute expressly exempts sales to "agencies" of the United States. In view of the discussion in relation to Question 1, and the frequent holding by this office that Indian tribes carrying on enterprises under the management of the United States are Federal agencies, the Menominee Indian Mills would come within the exemption accorded by the State statute.

    (2) Regardless, however, of the wording of the State statute, it is recognized that a State cannot tax the operations of a Federal agency. The tax in question would impose a direct burden on the operations of the agency. It is not remote in its effect on the agency, as has been found in the case of income taxes placed upon employees of an agency (Helvering v. Gerhardt, supra) . These legal propositions have been the basis for several holdings by the Department that State gasoline taxes need not be paid in connection with purchases of gasoline for tribal enterprises (letter to the Superin-

 

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tendent of the Great Lakes Agency approved by the Department June 21, 1938; departmental telegram to the Navajo Agency of August 1, 1938; memoranda to the Commissioner of Indian Affairs from the Solicitor, of December 3, 1938 and June 21, 1939).

    (3) The Act of Congress of June 16, 1936, above quoted, does not change this conclusion since, in the first place, it applies only to gasoline sold through commissaries and like agencies on the reservation. It does not appear that the gasoline purchased from wholesalers and dealers for the operations of the mills is sold to the mills through the commissary or any like agency on the Menominee Reservation. In the second place, even if such gasoline were sold to the mills on the reservation, the gasoline purchased for the operations of the mills would come within the exception in the Federal act for gasoline sold "for the exclusive use of the United States." If my conclusion is correct under Question 1 (a), supra, it has equal application in this instance as the exemption clause in this 1936 statute is identical with that appearing in the 1932 Revenue Act, as amended.

    (4) This conclusion seems to be in accord with the construction of the statute made by the State authorities since the State does not claim taxes for gasoline purchased for the operations of the mills. Its claim is related solely to gasoline resold by the mills through the commissary to private persons.

(b) Purchase of gasoline for resale through the commissary to private persons.

    In the absence of the Federal statute above quoted, it would be my opinion that the State tax would not apply to sales made by a Federal agency or a tribal enterprise on an Indian reservation. My reasons for this conclusion appear more fully in my response to Question III. The principal reason is, however, that the State could not enforce such a tax against such an agency or enterprise since neither is subject to license or revocation of license by the State. The statute clearly subjects the sales made through the Government agencies specified to State gasoline sales taxes and provides the method by which such taxes shall be collected. It is not clear, however, whether the Government agencies specified are intended to include such a Federal agency as the Menominee tribal enterprise and whether the reference to reservations includes Indian reservations.

    The legislative history of the statute supplies three indications that the words "United States military or other reservations" were meant to include Indian reservations. (1) The statute in question was introduced as an amendment to the Federal Aid Highway Act of 1936 and the brief discussion surrounding it indicates that it was intended to permit the application of local sales taxes wherever they were not then collected because the sales were made on a reservation (Cong. Rec. Vol. 80, part 6, p. 6913; part 8, p. 8701). (2) In the same statute, there was a section devoted to roadways on Indian reservations indicating that attention was called in the consideration of the act to Indian reservations. (3) Moreover, when the amendment in question was introduced, the agencies enumerated did not include licensed traders and filling stations. The addition of these agencies by the conference committee indicates an intent to broaden the application of the statute, and the reference to "licensed traders" is particularly suggestive of Indian reservations. These indications, while slight, are sufficient to give ground for considering the broad language of the statute as including Indian reservations.

    The language of the statute and the relevant legislative history I have reviewed distinguish this situation from that discussed in my memorandum for the Assistant Secretary of October 20, 1936, in which I held that the act of June 25, 1936 (49 Stat. 1938), extending State workmen's compensation laws over "lands and premises owned or held by the United States" did not extend Wisconsin's workmen's compensation laws over the Menominee Indian Reservation, and, in particular, over the Menominee Indian Mills. In that case I found that the language of the statute "given its ordinary meaning seems to embrace lands and property owned absolutely by the United States to the exclusion of other lands such as Indian reservations, the full beneficial ownership of which is in the Indian tribes *     *     *." The statute now in question significantly refers to reservations rather than to land ownership. Moreover, the argument and policy in the two cases lead to opposite conclusions in respect to the application of the statute to the Menominee mills.

    Finally, I believe that the designation in the statute of the agencies embraced by its terms must be interpreted to include such an agency as the Menominee Indian Mills. The statute uses the term "commissary" and it is the commissary of the

 

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mills which makes the resales. Secondly, the mills cannot claim exemption from Federal and State taxes as a Federal agency and then claim not to have sufficient character as a Federal agency to be covered by the intent of this statute.

    While I am of the opinion, therefore, that the act of June 16, 1936, subjects to the State gasoline tax sales made through the commissary to private persons, there remains the question whether the statute also removes the immunity from such taxes of Indians making purchases on Indian reservations. In my memorandum for the Commissioner of Indian Affairs of February 4, 1938, and my Opinion of May 8, 1940 (57 I. D. 124) I held that State sales taxes did not apply to purchases from or by Indians on Indian reservations. Although the immunity of purchases from an Indian commissary might be removed by the Federal statute, purchases made by the Indians on the reservation might nevertheless be exempt. However, I think that this would not be the proper conclusion in view of the purpose of the statute to permit State taxes of all sales on reservations not previously subjected to such taxes, and of the wording of the statute, permitting taxes to be levied "in the same manner and to the same extent" as upon sales outside the reservation. Indians making purchases of gasoline outside the reservation must pay the sales tax in the same manner as other persons.

III. APPLICATION OF STATE SALES TAX ON
TOBACCO PRODUCTS

    The Wisconsin laws of 1939 (chs. 433, 518) place an occupational tax on the sale or other disposition of tobacco products except in the case of sales "for shipment in interstate or foreign commerce." Manufacturers and wholesalers are required to pay the tax by purchasing and affixing State stamps on the tobacco products. The statute makes it unlawful for other than registered salesmen to sell tobacco products in the State or to purchase such products from other than licensed wholesalers. Under this law the authorities claim from the Menominee Indian Mills several hundred dollars in taxes based on the inventory of tobacco products on hand in the mills commissary as of the date of the passage of the act.

    The Menominee Indian Mills are not liable, in my opinion, for the payment of this tax for the following reasons:

    (1) The application of this tax to the mills would constitute State regulation and taxation of a Federal agency in violation of the United States Constitution. The tax could not be enforced without State interference with the operations of the mills, its the procedure for enforcement of the State act through licenses, arrests and penalties clearly indicates. The act of Congress of .June 16, 1936, permitting the collection of State gasoline sales taxes on Government reservations from Government agencies is sufficient illustration of the fact that such taxes are not collectible in the absence of congressional permission.

    (2) The application of this tax to the Menominee Indian Mills would constitute a regulation of trade with the Indians which is beyond the power of the State. Commerce with Indian tribes might have been included in the exceptions provided in the State law along with the exception of sales in interstate and foreign commerce, since all three such types of commerce are placed by the Constitution under the regulatory power of Congress. In my memorandum of February 4, 1938, supra, holding that State sales taxes did not apply to purchases made by or from Indians on Indian reservations, I referred to the fact that it was well established that Indians are not amenable to State laws while on their reservations unless expressly subjected to those laws by Congress. The Kansas Indians, 5 Wall. 737, 755, 756; United States v. Kagama, 118 U.S. 375; United States v. Rickert, 188 U.S. 432; United States v. Quiver, 241 U.S. 602; United States v. Hamilton, 233 Fed. 685; In re Blackbird, 109 Fed. 139; In re Lincoln, 129 Fed. 247; State v. Rufus, 237 N.W. 67.

    Congress has not only not subjected the Indians to taxes in this case but has exercised its authority by granting to the Commissioner of Indian Affairs "the sole power and authority" to regulate trade with the Indians and to specify the prices at which goods shall be sold to the Indians (25 U.S.C.A., sec. 261). A sales tax placed upon sales by Indian enterprises or to Indians on the reservation or on the business of making such sales would be an interference with the regulation of trade and prices by the Commissioner. The question whether Indians should pay State sales taxes is a political question for the ultimate determination of Congress.

    The conclusions reached in response to the foregoing question may be summarized as follows:

    1. The Menominee Indian Mills are liable for Federal and State sales taxes on gasoline sold to employees and the public through the commissary


 

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AUGUST 8, 1942

operated by the mills. The liability of the mills for the State tax in this instance is due to an act of Congress.

    2. The Menominee Indian Mills are not liable for the Federal or State sales tax on gasoline purchased for the operations of the mills.

    3. The Menominee Indian Mills are not liable for the State tax placed on tobacco products, where tobacco products are sold through the commissary of the mills, whether the products are sold to Indians or to other persons.

Approved:
OSCAR L. CHAPMAN, Assistant Secretary.

EFFECT OF COUNTY ZONING
ORDINANCES ON LAND
ACQUIRED IN TRUST FOR INDIANS

58 I.D. 52                                                                                                                    August 8, 1942.

ZONING ORDINANCES--INDIAN LANDS--EXEMPTION OF INDIAN LANDS FROM LOCAL ORDINANCE.

Zoning is a proper exercise of the police power of a municipality, county or State. The courts have uniformly held that the United States may perform its functions without conforming to State, county or municipal police regulations. Land acquired by the United States in trust for Indians is, in effect, land of the United States. Zoning ordinances do not affect such lands.

COHEN, Acting Solicitor:

    In accordance with the request from the Office of Indian Affairs an examination has been made of the title data relating to 1.75 acres of land, more or less, Tract No. 28, Cloquet and Sawyer Tribal Funds project in Carlton County, Minnesota.

    Carlton County, Minnesota, passed a zoning ordinance approved May 7, 1940 (entry 23 of the abstract), which provides that no building or structure shall be erected, occupied or used by any person or persons as an established home or with intent to establish a home therein in any restricted district unless such home is necessary for use and is used solely in connection with a mine, quarry, gravel pit, hydro dam, private dam, flowage area, transmission line or substation.

    The Land Field Agent reports it is not anticipated that the land under consideration will be used as home sites; however, since at some future date, the Indian Office might desire to use the land for home sites, the question arises as to whether this zoning ordinance affects the land under consideration after its acquisition by the United States. The lands proposed for purchase by the United States are affected by this ordinance. Zoning is a proper exercise of the police power of a municipality, county or State. Pearsall v. Great Northern Railway Co., 161 U.S. 646.

    The courts have uniformly held that the United States may perform its function without conforming to the police regulations of a State, and that when the exercise of the State police power interferes with the performance of a proper governmental function of the United States, the State police power must give way. James Stewart and Co., Inc. v. Sadrakula, 309 U.S. 94; Oklahoma City v. Sanders, 94 F. (2d) 323; James v. Dravo Contracting Co., 302 U.S. 134. One of the leading cases on this subject is Arizona v. California, 283 U.S. 423, 51 Sup. Ct. 522. The United States constructed a dam. Certain State regulations required a submission of plans and specifications for the building of dams to the State engineer for approval. The Secretary of the Interior did not comply with these State regulations. In passing upon this point the court said:

    If Congress has power to authorize the construction of the dam and reservoir Wilbur is under no obligation to submit the plans and specifications to the State engineer for approval.

    The court cited Johnson v. Maryland, 254 U.S. 51, 41 Sup. Ct. 16; and Hunt v. United States, 278 U.S. 96, 49 Sup. Ct. 38, in support of this fundamental principle.

    In Oklahoma City v. Sanders, 94 F. (2d) 323, the Circuit Court of Appeals held that municipal ordinances relating to licenses, bonds and inspections do not apply to a contractor building a low-cost housing project for the United States on land owned by the United States within the State of Oklahoma.

    For a discussion of the conflict of the police power of the State with the interests of the Federal Government see Note in 7 Tex. 1,. Rev. 471. The case of Hunt v. United States, supra, is reviewed in this Note. The facts in this case were that deer became so plentiful in the Kaibab National Forest that they overbrowsed upon and killed valuable young trees. The district forester acting under an

 

2088

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JANUARY 27, 1943.

order of the Secretary of Agriculture killed large numbers of the deer and shipped them out of the forest. This action was necessary to protect the forest. State officers acting under a game law of the State of Arizona sought to prevent the execution of the order and the United States brought suit for an injunction to restrain the officers from interfering with the district forester. It was held that the injunction should issue and that in case of a conflict between the police power of the State and the interests of the Federal Government, the latter should prevail. See also McCulloch v. Maryland, 4 Wheat. 316; Utah Power & Light Company v. United States, 243 U.S. 389; and Panhandle Oil Co. v. Mississippi, 277 U.S. 218.

    In United States v. 4,450.72 acres of land, Clearwater County, State of Minnesota, 27 F. Supp. 167, the court had before it the question of the right of the United States to condemn land owned by the State and dedicated to a public use. The State of Minnesota had set the land apart as a hunting preserve. The United States desired to acquire the land for the Indians as a wild rice reserve. The United States attempted first to purchase the land from the State, and being unable to do so, filed petition to condemn the land. The court held that:

    If the public use of both sovereigns is mainly directed to the aid and assistance of the Indians, the Federal Government has the exclusive duty to look after its wards and in carrying out this Federal power, it cannot be restricted by the State.

    The United States is authorized to acquire the lands in question in trust for the Indians. Such land is in effect land of the United States. United States v. Rickert, 188 U.S. 432. The State or county in the exercise of its police power may not interfere by zoning ordinance or otherwise with any use of this land by the sovereign, so long as the use thereof is authorized by the laws of the United States.

Approved:
OSCAR L. CHAPMAN, Assistant Secretary.

RIGHTS-OF-WAY ACROSS
TRIBAL AND ALLOTTED LAND
--FLATHEAD RESERVATION

M-31156                                                                                                                January 27, 1943.

The Honorable,
The Secretary of the Interior.

MY DEAR MR. SECRETARY:

    You have requested my opinion as to whether the Department may construct ditches and canals across the tribal lands of the Indians located on the Flathead Reservation, Montana, by reason of a provision contained in the act of August 30, 1890 (26 Stat. 391, 43 U.S.C. sec. 945). This provision in its code form reads:

    "In all patents for lands taken up after August 30, 1890, under any of the land laws of the United States or on entries or claims validated by the Act of August 30, 1890, west of the one hundredth meridian, it shall be expressed that there is reserved from the lands in said patent described a right of way thereon for ditches or canals constructed by the authority of the United States."

    A similar question is presented with respect to the allotted lands of the Flathead Indians.

I

    I am of the opinion that the provision does not operate to reserve a right-of-way across the tribal lands of the Flathead Indians. Since the tribal lands of other Indians may be subject to particular treaties or statutes which might change the result, my opinion is limited to the Flathead Reservation.

    The lands in question are part of the Flathead Reservation which was created by the treaty of July 16, 1855 (12 Stat. 975). By that treaty the Indians ceded certain lands to the United States and reserved for their exclusive use and benefit other lands, described in the treaty, which became the Flathead Indian Reservation. The lands over which it is now proposed to exercise a right-of-way for the construction of ditches and canals are those lands within the reservation which have not since been allotted to individual Indians or otherwise disposed of in accordance with the act of April 23, 1904 (33 Stat. 302), as amended.

    The statutory provision, on its face, applies only to lands title to which is acquired from the United States after August 30, 1890. These lands were neither acquired from the United States nor were they acquired after 1890. Where lands are reserved to an Indian tribe from a cession made to the United States, as in this case, the Indians do not acquire title to the lands in the reservation through


 

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the treaty of cession but hold under their original title. United States v. Romaine et al., 225 Fed. 253 (C.C.A. 9th, 1919). The United States recognized the Indian title to these particular lands when it ratified the treaty of 1855, supra. No patents have ever been issued for the lands here in question nor can they be said to have been taken up under any of the land laws of the United States after August 30, 1890.

    The legislative history of this provision shows conclusively that Congress did not intend to destroy vested rights, nor did it intend to include within the scope of the provision any lands other than the public lands of the United States.1 Nowhere in the history of this provision is there any reference to Indian lands.

    The provision appears in an act making appropriations for the sundry civil expenses of the Government for the fiscal year ending June 30, 1891. As reported to the House there was an item of $720,000 appropriated for the purpose of investigating the extent to which the arid regions of the United States could be redeemed by irrigation, for the investigation of the sources of water to be used in irrigating, and the segregation of irrigable lands in such arid region, and for the selection of sites for reservoirs and other hydraulic works necessary for the storage and utilization of water for irrigation and for ascertaining the cost thereof, etc.2 This item was in pursuance of the act of October 2, 1888 (25 Stat. 505, 526), which reserved from sale, entry, settlement or occupation all lands thereafter selected for sites for reservoirs, ditches or canals for irrigation purposes and all lands made susceptible of irrigation by such reservoirs, ditches or canals, provided, however, that the President might open any portion of the lands reserved to settlement under the homestead laws. Under the above act as then construed the arid lands in the country were tied up and withdrawn from public domain and no entry or settlement of them could be made until they were surveyed. Congress was called upon to repeal the law or make the necessary appropriation to permit the surveys to go ahead so that the land could be opened up to settlement.3 The bill passed the House with the appropriation for continuing such surveys.4 The Senate Committee proposed to repeal the 1888 act. It was pointed out that that act as then construed5 not only deprived those who had made entry since then upon the public lands of their right to obtain title but also prevented all others from obtaining title and that it had absolutely stopped the settlement and development of the West. The proposal of the Committee was agreed to by the Senate,6 but the House refused to agree to the Senate amendment.7 The bill went to conference twice and the conferees finally suggested the language found in the statute. Thus it is necessary to consider this reservation of rights-of-way with the legislation to which it is attached, which is as follows:

    "For topographic surveys in various portions of the United States, three hundred and twenty-five thousand dollars, one-half of which sum shall be expended west of the one hundredth meridian; and so much of the act of October second, eighteen hundred and eighty-eight, . . . as provides for the withdrawal of the public lands from entry, occupation and settlement, is hereby repealed, and all entries made or claims initiated in good faith and valid but for said act shall be recognized and may be perfected in the same manner as if said law had not been enacted, except that reservoir sites heretofore located or selected shall remain segregated and reserved from entry or settlement as provided by said act, until otherwise provided by law, and reservoir sites hereafter located or selected on public lands shall in like manner be reserved from the date of the location or selection thereof.
    "No person who shall, after the passage of this act, enter upon any of the public lands with a view to occupation, entry, or settlement under any of the land laws shall be permitted to acquire title to more than three hundred and twenty acres in the aggregate, under all of said laws, but this limitation shall not operate

____________________

    1 21 Cong. Rec. 7929, 7930, 7931, 7933, 7984, (1890).
   
2 Id. 6045.
    3 Id., 6047, 6048, 6049, 6052, 6053.
    4 Id., 6059.
    5 The Commissioner of the General Land Office stated, in a letter read into the record (p. 7276), that in view of the above act the General Land Office could not approve or suffer to go to patent any entries of land that may be found within the general terms of the statute. The Commissioner pointed out that the reservation did not depend upon the designation of the lands by the Geological Survey but that it was within the terms of the statute itself. By circular dated August 5, 1889, the district land offices were instructed that they should cancel all filings made since October 2, 1888, and should thereafter receive no filings upon any of such lands.
    6 Id., 7415.
    7 Id., 7818.


 

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to curtail the right of any person who has heretofore made entry or settlement on the public lands, or whose occupation, entry or settlement, is validated by this act: Provided, That in all patents for lands hereafter taken up under any of the land laws of the United States or on entries or claims validated by this act west of the one hundredth meridian, it shall be expressed that there is reserved from the lands in said patent described, a right-of-way thereon for ditches or canals constructed by the authority of the United States."

    It is to be observed that this entire legislation, including the proviso under consideration, is concerned with the occupation, entry, or settlement of public lands. By virtue of the proviso, a perpetual easement and right-of-way for ditches and canals constructed by authority of the United States over all public lands west of the one hundredth meridian entered and patented subsequent to the passage of the act were created. Green v. Wilhite, 14 Idaho 238, 93 Pac. 971 (1908). Recitation of the reservation in patents issued for the lands apprised the patentees of the reserved rights of the United States. Ide v. United States, 263 U.S. 495, 503 (1924). Lands severed from the public domain or otherwise disposed of prior to the date of the enactment plainly were not within its contemplation. This is recognized by the proviso itself which directs that the reservation of the right-of-way be expressed only in patents for lands thereafter taken up under any of the land laws of the United States. The lands of Indian reservations established prior to the date of the enactment were not subject to disposal under the land laws and were in no sense public lands. United States v. Minnesota, 270 U.S. 181, 206 (1926); Leavenworth, Lawrence & Galveston R. R. Co. v. United States, 92 U.S. 733, 745 (1875); United States et al. v. Mclntire et al., 101 F. (2d) 650, 654 (C.C.A. 9th, 1939). A holding that such lands are subject to the right-of-way reservation of the 1890 act would find no support in the legislative history of the enactment and would contradict the plain and unambiguous language of the statute.

    It has been urged that this Department has over a long period of years given the statute a contrary interpretation. I find no decision, departmental or judicial, that goes so far as to hold that lands which were in Indian tribal ownership at the time of enactment of the act of 1890 and which still belong to the tribe are subject to the right-of-way reservation in question.

    In the case of United States v. Van Horn, 197 Fed. 611 (D. Colo. 1912), the court was dealing with lands which were subject to disposition under the public land laws in 1890 and not, as in the present case, with lands which have never been public lands and to which the public land laws were not in 1890 and are not now applicable.

    None of the departmental decisions to which my attention has been called deals with the application of the act of 1890 to tribal lands of Indian reservations validly established prior to that date. The case of Clement Ironshields, 40 L. D. 28 (1911), held that the right-of-way reservation should be inserted in a patent to be issued to the purchaser of an Indian allotment. Two Solicitor's opinions, one dated July 10, 1931 (53 I. D. 399), and one dated August 25, 1938 (M. 29908), deal with the payment of compensation for damages done to individually owned land provided for by the act of February 20, 1929 (49 Stat. 1252). Both recognize, without discussion of the point, the existence of a right-of-way across the land under the act of 1890. Apparently the Department has uniformly and consistently interpreted the act of 1890 as reserving to the United States a right-of way for ditches and canals over Indian allotments patented to individual Indians and their successors in interest after that date. The reservation of such a right-of-way has apparently been expressed in all such patents issued for lands located west of the one hundredth meridian. The Department so directed by order of September 3, 1908, as amended November 18, 1908. Neither that order nor the correspondence leading up to its issuance contains any intimation or claim that tribal lands of reservations created prior to 1890 were impressed with the right-of-way reservation. My conclusion that no such reservation exists with respect to the tribal lands of such a pre-existing reservation is not, therefore, in conflict with any departmental order or ruling on the subject. On the contrary, the Department has held in an analogous situation that a right-of way for ditches and canals was not reserved to the United States by the 1890 act. In an opinion approved February 2, 1935, M. 27871, the Solicitor considered the question of whether certain lands in the primary lists and limits of the grant of July 1, 1862 (12 Stat. 489), as amended July 2, 1864 (13

 

2091

ADDENDA

Stat. 356), to the Central Pacific Railroad Company and patented to the company on September 6, 1896, under said grant without reservation of rights-of-way under the 1890 act may be taken under the authority of such proviso or whether the lands must be acquired by purchase. After pointing out that the map of definite location, the official plat of survey, and the lists were all filed prior to August 30, 1890, and that the title of the railroad had fully vested prior to that date and after referring to the instructions of the Department issued on April 19, 1912 (42 L. D. 396), to the effect that where title vested prior to August 30, 1890, the reservation clause should not be inserted in patents issued, the Solicitor concluded that the land required must be purchased and could not be taken under the proviso of the 1890 act.

    In my opinion this is the correct analysis of the law. The principle announced therein that the reservation of a right-of-way was not effective where title had vested prior to August 30, 1890, is equally applicable to the tribal lands on the Flathead Reservation. Therefore, my answer to the question propounded is that the Department may not construct ditches and canals across the tribal lands of the Flathead Indians by reason of the reservation contained in the act of August 30, 1890, supra. Indeed, the application of that act to lands to which the tribal title had attached prior to its passage would, on principles stated and applied in United States v. Klamath and Moadoc Tribe of Indians, 304 U.S. 119 (1938), and Shoshone Tribe v. United States, 299 U.S. 476 (1937), constitute a taking of private property by the United States and would render the Government liable to a claim for just compensation under the Constitution.

    It has been suggested that by legislation subsequent to 1890, Congress has authorized the construction of ditches and canals across the tribal lands of the Flatheads and that since Congress made no provision for the purchase or acquisition of rights-of-way it must have acquiesced in the Department's interpretation of the 1890 act. As stated above I know of no departmental decision which may be said to hold that the tribal lands of the Flathead Indians are subject to the right-of-way imposed by the 1890 act. Nor do I find support for this suggestion in the subsequent legislation of Congress. That legislation, contrary to the suggestion of the Office of Indian Affairs, does make provision for the acquisition of the necessary rights-of-way,8 and contains nothing to suggest that Congress intended the irrigation system on the Flathead Reservation to be constructed in disregard of Indian rights. It must be assumed that when Congress authorized the Secretary of the Interior to perform any and all acts necessary and proper for the purpose of carrying out the provisions of the 1904 act as amended9 and when it appropriated money for the purchase of necessary rights of property, Congress intended that the plan for the irrigation of the lands on the reservation would be carried out in a legal manner, and that when it was necessary to take lands over which no right-of-way had been reserved these lands would be taken in the manner prescribed by law and that just compensation would be paid to the Indians for the lands taken.

    In any taking of the lands, either with the consent of the tribe or by condemnation, due consideration must be given, in the computation of the amount due the Indians, to any compensating benefits which the tribal lands will receive by reason of the irrigation system constructed thereon. Bauman v. Ross, 167 U.S. 548 (1887); United States v. River Rouge Improvement Co. et al., 269 U.S. 411 (1926); Aaronson et al. v. United States, 79 F. (2d) 139 (D. C. Ct. App. 1935); United States v. Victor N. Miller et al., U.S. Sup. Ct., No. 78, Oct. Term 1942 (Jan. 4, 1943).

II.

    As to the application of the act of 1890 to lands allotted in severalty to individual Indians, the act clearly applies to all such allotments carved out of the public domain10 and likewise to allotments made and patented from land of Indian reservations created out of the public domain by statute

____________________

    8 The acts of January 24, 1923 (42 Stat. 1192), June 5, 1924 (43 Stat. 402), March 3, 1925 (43 Stat. 1153), and May 10, 1926 (44 Stat. 464), appropriating money for the construction of irrigation systems on the Flathead Reservation provided that the money appropriated should be used for the purpose of purchasing "any necessary rights of property."
    9 Section 15 of the act of May 29, 1908 (35 Stat. 440. 450), authorized the Secretary of the Interior to perform ally and all acts necessary and proper, for the purpose of carrying into full force and effect the act of April 23, 1904 (33 Stat. 302), section 14 of which provided that a certain part of the proceeds from the salt of lands on the reservation to be opened to settlement should be used for the construction of irrigating ditches for the benefit of the Indians.
    10 Section 15 of act of March 3, 1875 (18 Stat. 420, 43 U.S.C. sec. 189); section 1 of act of July 4, 1884 (23 Stat. 96. 43 U.S.C. sec. 190); section 4 of act of February 8, 1887 (24 Stat. 389, 25 U.S.C. sec. 334).


 

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or Executive order subsequent to 1890. Whether it applies to allotments of land which belonged to Indian tribes in 1890 or prior to that date presents a more serious problem. The considerations above noted governing the interpretation of the 1890 statute all indicate that the statute was not intended to apply, and should not apply, to lands which, when it was passed, were Indian lands rather than public lands. On the other hand, the Department has given the statute a contrary interpretation with respect to allotments over a period of nearly half a century and has regularly included in Indian trust patents express reservations for rights-of-way pursuant to the language of the 1890 statute. This course of practical construction would probably be upheld if challenged in the courts.11

    The problem that is now presented cannot be satisfactorily disposed of without some recognition of changes that have taken place over recent decades in the administrative attitude to Indian property. Undoubtedly there was a time when Indian lands were considered by administrative authorities as public lands, for most purposes. Indians were deemed to occupy such lands by sufferance, and without legal rights,12 and all incidents of ownership were considered to be vested in the Federal Government. Under this theory of tribal property,13 tribal land was, in substance, considered as public land and a "trust patent" transforming tribal land into an individual allotment was viewed as an instrument conferring rights of private property in the public domain where no such rights had existed before. Under this view, and so long as this view had any vitality, it was deemed to be proper to make "trust patents" subject to those reserved public rights which, according to the 1890 statute, were to be specified in patents conferring rights of private property in portions of the public domain.

    While this view of Indian tribal lands was never confirmed by Congress14 or by the course,15 it was, for several decades, applied often enough to be considered a common view of the matter in Executive circles. The first clear expression of this view is perhaps to be found in an opinion of Attorney General Gushing, rendered in 1856, advising the Secretary of the Interior that the recognition of Indian proprietary rights by treaty was "an error" and that such alleged rights could not impair grants of land by the United States to third parties (8 Op. Atty. Gen. 255). Sporadically, though not consistently, administrative action was taken which could be justified only on the theory that Indian occupancy was purely a matter of grace and subject to termination at will without cause of compensation. In recent years the United States has paid several million dollars to Indian tribes which suffered from the application of this view.16

____________________

    11 Estate of Sanford v. Commissioner of Internal Revenue, 308 U.S. 39, 52 (1939); United States v. Jackson et al., 280 U.S. 183, 193 (1930); Kern River Co. et al. v. United States, 257 U.S. 138 (1921).
    12 8 Op. Atty. Gen. 255 (1856).
    13 The theory that Indian lands are simply lands on which Indians are permitted to live and are protected from interference at private hands but in which they have no property rights is described in the Handbook of Federal Indian Law, at p. 288, as the "menagerie theory."
    14 Set Leavenworth etc. R.R. Co. v. United States, 92 U.S. 733 (1875) where the Court said: "*     *     * the policy which dictated them [railroad land grants] confined them to land which Congress could rightfully bestow *     *     *. For all practical purposes they [the Indians] owned it. *     *     * The United States has frequently bought the Indian title, to make room for civilized men--the pioneers of the wilderness; but it has never engaged in advance to do so, nor was constraint, in theory at least, placed upon the Indians to bring about their acts of cession." (at pp. 742-743) While Congress did, on various occasions, dispose of Indian property for non Indian purposes without Indian consent, this apparently happened only when the facts and applicable law had not been adequately presented. See comment of the Supreme Court in United Slates v. Mille Lac Chippewas, 229 U.S. 498 (1913), on Joint Resolutions of July 22, 1890, 26 Stat. 290, and May 27, 1898, 30 Stat. 745 in Joules v. Meehan 175 U.S. 1 (1899), on the Joint Resolution of August 4, 1894, 28 Stat. 1018, and in Choate v. Trapp, 224 U.S. 665 (1912), on the Act of May 27, 1908, 35 Stat. 312. All these enactments were held unconstitutional in whole or in part.
       On the other hand, Congress, even in the period when recognition of Indian property rights was at its lowest ebb, regularly affirmed the sanctity of such rights, even where based only on aboriginal occupancy. See, for example, Act of May 17, 1884, 23 Stat. 24 (protecting Indian possession in Alaska); Act of March 3, 1891 26 Stat. 854 (protecting "any just and unextinguished Indian title or right to any land or place" against private land claims in former Mexican territory); and see Cohen Handbook of Federal Indian Law, 308, and authorities cited.
    15 See cases tilted in preceding footnote.
    16 In the years following 1864, the Interior Department disposed of certain Chippewa lands as public lands, and this was later characterized as illegal by the Supreme Court. United States v. Mille Lac Chippewas, 229 U.S. 498 (1913).
       In 1871 the Interior Department improperly patented to the State of Minnesota certain lands belonging to certain bands of Chippewa Indians, and a cancellation of the patent was subsequently decreed. United States v. Minnesota, 270 U.S. 181 (1926).
       In 1878 the Office of Indian Affairs improperly opened the Shoshone Reservation in Wyoming to the Arapahoe Indians, an act for which the Supreme Court later allowed damages in the sum of $4,4138,444.23 with interest. United States v. Shoshone Tribe, 304 U.S. 111 (1938).
       From 1898 to 1927, the Secretary of the Interior expended Creek funds without Indian consent, and the United States was held liable therefore in the sum of $110,644.92 with interest. Creek Nation v. United States, 78 Ct. Cls. 474 (1933).
       In 1906, the Secretary of the Interior disposed of a portion of the Klamath Reservation without the consent of the Indians, an act for which the Supreme Court allowed damages in the sum of $5,313,347.32 with interest. United States v. Klamath Indians, 304 U.S. 119 (1938).


 

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The first clear rejection of this administrative view is to be found in the opinion of Attorney General Stone in 1924, advising Secretary of the Interior Fall that the proposed disposition, under the public land minerals laws, of lands within Executive order Indian reservations would constitute a violation of the proprietary rights of the Indians (34 Op. Atty. Gen. 181). The period of executive disregard of Indian property rights may perhaps be more definitely fixed in terms of the practice of diminishing Executive order Indian reservations and restoring such lands to the public domain by unilateral Executive order without affording compensation to the Indians. The first known instance of this practice apparently occurred in 1871,17 the last in 1921.18 During this period approximately 82 reductions of Indian reservations were thus effected. The validity of this form of action was questioned in 1924 in the opinion of Attorney General Stone already cited, and Congress forbade the practice in 1927.19

    In the act of June 18, 1934 (48 Stat. 984), Congress provided that Indian lands should not be disposed of over the objection of the Indians concerned, thereby recognizing, if not creating, enforceable tribal property rights in such lands.20 The provisions of this act are applicable to the Flathead Reservation, among others.

    In 1938 the Supreme Court of the United States, in the case of United States v. Shoshone Indians, supra,21 dealt the death blow to the theory that tribal lands are public lands of the United States.

    In view of these considerations, it would, in my judgment, be unfair and anachronistic to continue to treat Indian tribal lands as if they were part of the public domain and to treat Indian trust patents as instruments for disposing of the public domain. Rather we must recognize that tribal land is land which, in equity if not in strict law, belongs to Indian tribes. The process of allotment was not intended to reduce the value of the land allotted. The opposite was the case.22 Since, then, lands which were in tribal status in 1890 were not subject to reserved public rights-of-way, we are are not to assume now that they became subject to such rights-of-way by being allotted. Any language to the contrary included in a trust patent, being legally unauthorized, should be reformed or disregarded.23

    I am satisfied that no other view is consistent

____________________

    17 The reasons for this practice are thus set forth in the justification submitted by Commissioner of Indian Affairs E. S. Parker (himself an Indian) and approved by President Grant:

       "It appears from the papers transmitted herewith that the citizens of San Diego County protest against the order of the President setting apart said lands for Indian reservations; that the Indians are unanimously opposed to going on said reservations; that citizens have made valuable improvements thereon, and that there are but few Indians on the lands set apart as aforesaid; that recent gold discoveries have attracted a large immigration thither, and the opinion of the press, together with other evidence, would indicate that it would be for best interests and welfare of the Indians, as well as others, that the order of the President setting apart said lands for Indian purposes should be rescinded." Executive Orders Relating to Indian Reservations: From May 14, 1855 to July 1, 1912, Department of the Interior, 1914, pp. 43-45.

    18 Executive Orders Relating to Indian Reservations: From July 1, 1912 to July 1, 1922, Department of the Interior, Vol. II, p. 27.
    19 Act of March 3, 1927, sec. 4 (44 Stat. 1347.)
    20 Section 1 (d) of Article 11 of the Flathead Constitution approved October 28, 1935, vests in the Tribal Council power to approve or veto any use or disposition of tribal property, and section 7 of the corporate charter, ratified April 25, 1936 expressly recognizes the tribal ownership of unallotted lands.
    21 For many years prior to the decision in that case the Interior Department and the Department of justice relying upon language of the Supreme Court in United States v. Cook, 19 Wall. 591 (1873), had taken the view that the timber on Indian tribal land belonged to the United States and that the Indians, by virtue of a "right of occupancy," were entitled to no greater rights than those vested in a tenant for life. In accordance with this view, the Attorney General, in 1888, advised the Secretary of the Interior that Indians had no right to cut and sell timber on an Indian reservation (19 Op. Atty. Gen. 194), and two years later the Attorney General advised that the proceeds of timber illegally cut upon such lands belonged not to the Indians but "to the Government absolutely." (19 Op. Atty. Gen. 710). In repudiating the interpretations placed upon its earlier decision and opinion, the Supreme Court in the Shoshone case held that the timber on tribal land belonged to the Indians as did the minerals and every other element of value appurtenant to the land, and that, under appropriate jurisdictional legislation, the United States was liable to the Indians for the value of that which it had taken from them. "For all practical purposes," the Court said, "the tribe owned the land. . . . The right of perpetual and exclusive occupancy of the land is not less valuable than full title in fee." (p. 116).
    22 See Handbook of Federal Indian Law, ch. 11.
    23 Francis v. Francis, 203 U.S. 233 (1906); Hemmer v. United States, 204 Fed. 898 (C.C.A. 8, 1912); United States v. Saunders 96 Fed. 268 (C.C. Wash. 1899). Cf. Leecy v. United State., 190 Fed. 289 (C.C.A. 8, 1911).


 

2094

ADDENDA

with the authorities now on the books. But I should be reluctant to say that an opposite view was not reasonable when it was first laid down. Rather all the evidence indicates that in 1890 and for some years thereafter administrative authorities acted in all good faith when they treated Indian tribal lands as a species of public lands of the United States, denying any claim of Indian proprietary right.

    The question before us may then be put in these terms: Did Congress, in passing a law relating to "public lands" in 1890, at a time when the Interior Department erroneously but honestly viewed tribal lands as public lands, thereby preclude the Department from rising above its original error? I think it would be unreasonable to impute to Congress so obscurantist an attitude towards the possibility of progress in administrative wisdom. Congress undoubtedly contemplated that the proper administrative authorities would decide from time to time what lands were "public," that in the course of time views on this, as on most other questions, might change, and that such changes in viewpoint would normally be followed by changes in practice. Now that the Department of the Interior has abandoned the view that tribal lands are public lands of the United States, it would seem reasonable to abandon the practice of taking Indian lands for rights-of-way without paying compensation, which was based upon that abandoned view.

    This, however, does not imply that actions taken in past years upon the basis of an abandoned theory are now to be considered redressible wrongs. At no time was the past administrative interpretation of this statute so unreasonable that a court could be induced to give relief against its consequences.24 All that this opinion implies is that there is a realm of administrative discretion within which courts will not interfere, and within which administrative authorities may modify views which turn out to be unwise without thereby raising a host of ex post facto claims against the Government.

    The fiction that interpretation of laws reveals their eternal meaning has long stood in the way of any such distinction between the prospective and the retrospective application of decisions. But in recent years a more realistic view of the matter has achieved respectability. The Supreme Court has made it clear that nothing in the Federal Constitution or in the nature of the legal process prevents a tribunal from recognizing changing circumstances and laying down a rule for the future different from the rule which it has sustained for the past. Thus the Supreme Court has upheld the validity of a State court decision which lays down for the future a rule different from that applied in the past.25 The Supreme Court itself has, on occasion, laid down a new rule of law for the future while recognizing the propriety of a different rule in the past.26 The Supreme Court has likewise recognized the propriety of an administrative decision which lays down a new rule for the future without detracting from the validity of a different rule applied in the past.27

    Since Gelpcke v. City of Dubuque, 1 Wall. 175 (1863), State tribunals have commonly denied a retroactive effect to decisions overruling past decisions, where the public convenience would be served by such a distinction.28 A similar attitude has been taken, on occasion, by this Department.29 The application of such a distinction to the circumstances now before me seems amply warranted. Without, then, expressing any disapproval of the rule thus far followed by this Department, and recognizing, on the contrary, that the past applications of this rule do not constitute redressible injuries, I must advise that for the future, when rights-of-way are taken across Indian allotments, the allottee30 should receive the same compensation

____________________

    24 Cf. opinion of Supreme Court in Sioux Tribe v. United States, 316 U.S. 317 (9142), holding that the revocation in 1879 of Executive order additions to the Greater Sioux Reservation did not ground a claim for damages against the United States under the jurisdictional act of June 3, 1920, (41 Stat. 738). Notwithstanding the present policy of according executive order reservations the same respect and protection due other reservations, the Court points out that a different policy prevailed in 1879 and deals with the question of redress in terms of the then prevailing policy.
    25 Great Northern Railway v. Sunburst Co., 287 U.S. 358 (1932).
    26 Montgomery Ward & Co. v. Duncan, 311 U.S. 243 (1940); Reconstruction Finance Corp. v. Prudence Securities Advisory Group, 911 U.S. 579 (1941).
    27 American Chicle Co. v. United States, 316 U.S. 450 (1942). In that case the court declared: ". . . the petitioner insists that the antecedent administrative interpretation long in force renders it impossible for the Commissioner to promulgate a regulation changing for the future the earlier practice, even though the new regulation comports with the plain meaning of the statute. We think the contention cannot be sustained (citing cases) " (at p. 455). It must be noted, however, that in this cast, as in the cases cited, power to modify regulations without retroactive effect was conferred by the governing statute.
    28 See Note 29 Harvard Law Rev. 80 (1915); and Note 42 Yale L. J. 779 (1933).
    29 38 L.D. 553.
    30 No opinion is here intimated as to the rights of non-Indian assigns who have purchased with notice of the reservation of rights-of-way and presumably taken account of the reservation in fixing the purchase price.


 

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ADDENDA

MAY 10, 1957

which would be due to the Indian tribe, in similar circumstances, if the land had never been allotted.

                                                                                                                    Respectfully,
                                                                                                                    WARNER W. GARDNER,
                                                                                                                                                        Solicitor.
Approved:  January 27, 1943.
OSCAR L. CHAPMAN, Assistant Secretary.

SALE OF KLAMATH INDIAN TIMBER SUBJECT
TO SUSTAINED-YIELD MANAGEMENT COVENANT

M-36444                                                                                                        May 10, 1957

Indian Lands: Timber

    The Secretary of the Interior may not, in sales made pursuant to the provision of the Act of August 13, 1954, 68 Stat. 718, 25 U.S.C. 564, require that the purchasers agree, as part of the terms of the salt, to manage the purchased timber lands on what is known as sustained yield management principles as such requirement would reduce the sales value of the land below "fair value".

To:            Secretary of the Interior
From:        Solicitor
Subject:     Sale of Klamath Indian Timber Subject to Sustained-Yield Management Covenant

    You have requested an opinion as to whether, pursuant to the provisions of the Act of August 13, 1954, 68 Stat. 718, 25 U.S.C. 564, the Secretary of the Interior may permit the sale of tribal timber lands, held in trust for the Klamath Tribe of Indians, on the condition that the purchasers agree, as part of the terms of the sale, to manage the purchased timber lands on what is known as sustained yield management principles. Such management methods would promote conservation of the nation's timber resources.

    The plan of the statute is to permit members of the tribe to choose between withdrawing from membership in the tribe and accepting payment for their share of the capital assets of the tribe or remaining as members of the tribe. We are informed that the most substantial resource of the community is ownership of the tribal timber lands. The statute provides that an appraisal shall be made of this resource showing "its fair market value by practicable logging or other appropriate economic units." (25 U.S.C. 564 d (a) (1) ). The tribal members are then to decide whether to withdraw and have their proportionate interest in tribal property converted into money and paid. Enough tribal property is then to be sold which if sold at the appraised value would provide sufficient funds (25 U.S.C. 564d (a) (2) ) to convert the withdrawing member's interest into cash. The choice of withdrawing or remaining, the amount of the timber lands to be sold, and the liquidation of the withdrawing member's share are all dependent on an appraisal at "fair value".

    The term "fair value" used in the statute to determine the factors which the appraisers shall take into consideration has been discussed in numerous court decisions in other fields. The meaning of the phrase is generally understood by persons in the business community. One of the clearest definitions of the term is found in In re Ouellette, D. C. Me., 98 Fed. Supp. 941, at page 943. There the court stated:

    " 'Fair value' means such a price as a capable and intelligent business man could presently obtain for the property from a ready and willing buyer accustomed to buying such property."

The Court specifically warns that "fair value" is not the value "to one person or another specifically circumstanced." There is no lack of precedent to explain the meaning of this useful expression (cf. In re Crane's Estate, 23 A. 2d, 851, 855, 344 Pa. 141; Sibley v. Town of Middlefield, 120 A. 2d., 77, 80, 143 Conn. 100), but none better for our purpose than the citation quoted.

    It is clear from the statute involved here that only sales made at "fair value" will fulfill the statutory purpose. We have been informed by forestry technicians in the Department that as a matter of fact to impose a condition that forest property be managed under the salutary but restrictive principles of sustained yield management will result in lowering the price which any buyer would be willing to pay for the timber offered. In view of the additional capital requirements incident to such long-range use of an asset otherwise available for immediate resale or exploitation many fewer buyers will be in a position to compete for the offered timber lands, and these would be "persons specially circumstanced." This too would reasonably result in a lower price for the offered units. The duty of the Secretary both as trustee of the property in question and as "supervisor" of the liquidation sales under the termination act is to see that the timber lands are sold in a manner reasonably de-


 

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DEPARTMENT OF THE INTERIOR

signed to obtain the best price for the sellers. We conclude that there is no authority for the Secretary to permit the sale of Klamath tribal timber lands, under the act of August 13, 1954, supra, subject to a condition requiring the purchaser to manage the purchased timber properties under sustained-yield principles. Such a condition would result in a sale other than at "fair value."

                                                                                                                    EDMUND T. FRITZ,
                                                                                                                                     Deputy Solicitor.

WESTERN BOUNDARY OF THE
COLORADO RIVER INDIAN
RESERVATION

                                                                                                                    January 17, 1969.

To:            Secretary of the Interior
From:        Solicitor
Subject:     Western boundary of the Colorado River Indian Reservation from the top of
                 Riverside Mountain, California, through section 12, T. 5 S., R. 23 E., S.B.M.,
                 California

    This is in response to your request that we review and define the location of the western boundary of the Colorado River Indian Reservation from the top of Riverside Mountain, California, to its intersection with the line between the second and third tiers of sections in T. 5 S., R. 23 E., S.B.M., California (hereinafter referred to as from the top of Riverside Mountain through section 12, T. 5 S., R. 23 E., S.B.M., California).

    The Colorado River Indian Reservation was established by the Act of March 3, 1865, 13 Stat. 541, 559. Subsequently, its boundaries were modified by the Executive Orders of November 22, 1873, November 16, 1874, May 15, 1876, and November 22, 1915. The unallotted lands of the reservation are held by the United States in trust for the Colorado River Indian Tribes. Act of April 30, 1964, 78 Stat. 188.

    The Colorado River Indian Tribes have requested that the western boundary of the reservation be finally determined. Until such determination is made the leasing provisions of the Act of April 30, 1964, supra, do not extend to lands south of section 25, T. 2 S., R. 23 E., S.B.M., California.

    The Executive Order which describes the portion of the boundary considered in this memorandum is as follows:
                                                                                                                    EXECUTIVE MANSION,
                                                                                                                                                May 15, 1876.

    Whereas an Executive Order was issued November 16, 1874, defining the limits of the Colorado River Indian Reservation, which purported to cover, but did not, all the lands theretofore set apart by act of Congress approved March 3, 1865, and Executive Order dated November 22, 1873; and whereas the order of November 16, 1874, did not revoke the order of November 22, 1873, it is hereby ordered that all lands withdrawn from sale by either of these orders are still set apart for Indian purposes; and the following are hereby declared to be the boundaries of the Colorado River Indian Reservation in Arizona and California, viz:
    Beginning at a point where La Paz Arroyo enters the Colorado River, 4 miles above Ehrenberg; thence easterly with said arroyo to a point south of the crest of La Paz Mountain; thence with said mountain crest in a northerly direction to the top of Black Mountain; thence in a northwesterly direction over the Colorado River to the top of Monument Peak, in the State of California; thence southwesterly in a straight line to the top of Riverside Mountain, California; thence in a direct line toward the place of beginning to the west bank of the Colorado River; thence down said west bank to a point opposite the place of beginning; thence to the place of beginning.

                                                                                                                        U.S. GRANT

    This opinion deals only with that portion of the above-described boundary from the top of River side Mountain through section 12, T. 5 S., R. 23 E., S.B.M., California.

    As established by the Act of March 3, 1865, supra, and enlarged by the Executive Order of November 22, 1873, the Colorado River Indian Reservation was located in the Territory of Arizona and bounded on the west by the Colorado River. Lands in California were first added to the reservation by the Executive Order of November 16, 1874. The record discloses that this latter Executive Order enlarging the reservation was designed to make possible control of access to the reservation from tile west and to avoid loss (transfer of land) caused by changes in the channel of the Colorado River. That segment of the west boundary of the


 

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ADDENDA

reservation germane to this memorandum, i.e., from the top of Riverside Mountain to the west bank of the Colorado River, was described in the Executive Order of November 16, 1874, as a line "*     *     * [from the top of Riverside Mountain] in a Southeasterly direction to the point of beginning *     *     *."

    When this segment of the boundary was surveyed in 1875 by Chandler Robbins, it was ascertained that this line severed a large tract of valuable land on the east side of the river which had been reserved for Indian use by the Act of March 3, 1865, supra, and the Executive Order of November 22, 1873. Because of this fact, the Indian Agent in charge of the reservation, by letter of January 31, 1876, requested the Commissioner of Indian Affairs to obtain an Executive Order changing the boundary line of the reservation between Riverside Mountain and the place of beginning, making the Colorado River the boundary line. Thereafter, by letter of May 10, 1876, from the Acting Commissioner to the Secretary of the Interior, it was recommended that the President be requested to issue an order changing this boundary line so that when it reached the west bank of the Colorado River it would follow said west bank down the river to a point opposite the point of beginning, thence to the place of beginning. Following a concurrence in the recommendation of the Commissioner of Indian Affairs by the Acting Secretary, the President issued the Executive Order of May 15, 1876. For many years the proper location of the west boundary of the reservation, as described in the Executive Order of May 15, 1876, has been in dispute.

    During the trial of Arizona v. California, et al., the United States claimed water rights for an extensive area of irrigable lands along the west side of the river. California resisted the claim of the United States for any lands south of section 25, T. 2 S., R. 23 E., on the grounds that there were no such lands within the boundary of the reservation. California's contention was based upon the fact that the west bank of the river, which was the call of the west boundary of the reservation in the Executive Order of May 15, 1876, established a boundary that would change with movements of the river. The United States contended, among other things, that this Executive Order established a permanent and unchanging boundary along the west bank of the river as it existed in 1876.

    The Special Master ordered that the proper position of the boundary be litigated and, following trial, the Special Master made Findings of Fact and Conclusions of Law which, in effect, held that the Executive Order of May 15, 1876, established a boundary which changes as the course of the Colorado River changes, except when such changes are due to an avulsion. He further held that two avulsive changes had severed lands from the reservation and placed these lands on the west side of the river. The effect of the Master's holding was to disallow any claim of the United States for water for lands south of section 25, T. 2 S., R. 23 E., which were located on the west side of the Colorado River except in the two areas the Master found to have been severed from the reservation and placed on the west side of the river by manmade avulsive changes in the river's course.

    Before the Supreme Court, California excepted to the Findings of Fact and Conclusions of Law of the Special Master. In ruling thereon, the Supreme Court disagreed with the Special Master's decision to determine the disputed boundary of the Colorado River Indian Reservation. Arizona v. California, et al., 373 U.S. 546, 601 (1963). The effect of the Supreme Court's decision was to leave the boundary question open for future determination.

LOCATION OF THE BOUNDARY BETWEEN RIVERSIDE
MOUNTAIN AND THE WEST BANK OF THE COLORADO
RIVER

    The proper position of the first segment of the boundary from the top of Riverside Mountain to the west bank of the river presents little difficulty. The first question that arises is which of two peaks on Riverside Mountain is the top. Absent specific definition in the Executive Orders of November 16, 1874, and May 15, 1876, it is believed that the term "top of Riverside Mountain" should be given its commonly accepted meaning and, therefore, means the highest point of that mountain.

    The "top of Riverside Mountain" was supposedly monumented during a survey in 1912, by R. A. Farmer; however, there is evidence that this corner was not placed on the highest point of the mountain and, therefore, does not represent the true corner of the reservation boundary. In these circumstances, the language of the Executive Orders of November 16, 1874, and May 15, 1876, must control and the erroneous Farmer survey should be suspended in the reach from Riverside Mountain to the Colorado River for reasons hereinafter stated.

 

2098

ADDENDA

    It is concluded that the reservation boundary in this reach should follow a line from the highest point on Riverside Mountain on a direct bearing toward the place of beginning as described in the Executive Order of May 15, 1876, until it strikes the proper location of the west bank of the river as it existed in 1876. This line should terminate at the point it intersects the west bank. The Executive Order clearly stated the line should go to the west bank, not halfway down the bank, to the water's edge, or any other place. The bank of a river is the water-washed and relatively permanent elevation or acclivity at the outer line of the river bed which separates the bed from the adjacent upland, whether hill or valley, and serves to confine the waters when they reach and wash the bank without overflowing it. Oklahoma v. Texas, 260 U.S. 606 (1923). It is, therefore, concluded that the call to the west bank must be taken to mean the line of ordinary high water as it existed in 1876.

    In determining the location of a boundary, when the United States has not conveyed its title to the abutting lands, it may survey and resurvey what it owns and establish and reestablish boundaries. United States v. State Investment Co., 264 U.S. 206 (1924). The record discloses that all the lands outside the reservation boundary in this reach are owned by the United States and are under the jurisdiction of the Department of the Interior. The lands inside the boundary are owned by the United States in trust for the Colorado River Indian Tribes. No private ownerships are involved. In 1879, W. P. Benson established a meander corner common to sections 25 and 36, T. 2 S., R. 23 E., S.B.M., at a point on the west bank of the Colorado River which also fell on the line between the highest point on Riverside Mountain and the place of beginning. In these circumstances, as a matter of administrative convenience, it may be determined that the reservation boundary can and should be reestablished as a line between the highest point of Riverside Mountain and the meander corner common to the aforesaid sections 25 and 36. This line is sustained by adequate evidence of the proper location of the boundary as described in the Executive Order of May 15, 1876.

LOCATION OF THE BOUNDARY FROM SECTION 25,
T. 2 S., R. 23 E., THROUGH SECTION 12,
T. 5 S., R. 23 E., S.B.M.

    From the point where the line from Riverside Mountain intersects the bank of the river, as described above, the second segment of the boundary should follow downstream along the bank of the river at the line of ordinary high water as it existed at the time of the issuance of the Executive Order of May 15, 1876, to the south boundary of section 12, T. 5 S., R. 23 E., S.B.M., subject to the application of the doctrine of erosion and accretion and avulsion to any intervening changes. Oklahoma v. Texas, supra.

    With regard to such intervening changes, when the banks of a river change gradually and imperceptibly, the process is called erosion and accretion and a riparian owner's boundary will remain the stream. In cases where a river suddenly abandons its old bed and seeks a new course, the change is termed an avulsion and a riparian owner's boundary will become fixed and permanent along the line of the former channel. Nebraska v. Iowa, 143 U.S. 359 (1892).

    The Executive Order of May 15, 1876, which included lands located east of the west bank of the river, would operate as to all those lands not previously disposed of by the United States, as unquestionably the President had the power to reserve the lands by Executive Order. Sioux Tribe of Indians v. United States, 316 U.S. 317 (1942); United States v. Midwest Oil Co., 236 U.S. 459 (1915). A portion of the west half of the riverbed, however, was owned at that time by the State of California because the Colorado River has been held to be a navigable stream in the reach here under consideration. Arizona v. California, et al., 283 U.S. 423 (1931). The soil beneath navigable waters was not granted by the original states under the Constitution to the United States but was reserved to the States. Pollard v. Hagan, 44 U.S. (3 How.) 212 (1845). Upon the admission of a new State into the Union on an equal footing it acquires all the rights of the original States which, it has been held, includes title to the lands underlying navigable waters. Mumford v. Wardwell, 73 U.S. (6 Wall.) 423 (1867). The extent of the ownership acquired by the States upon admission is the soil below ordinary high-water mark. Mobile Transp. Co. v. City of Mobile, 187 U.S. 479 (1903). Thereafter, where a navigable stream is a boundary a riparian owner's title will extend to low or high-water mark or to the center of the stream according to the law of the State in which it is situated. Packer v. Bird, 137 U.S. 661 (1891). The United States like any other riparian owner takes such title to submerged lands as may be conferred by State action. Donnelly v.

 

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United States, 228 U.S. 243 (1913).

    In 1873, California enacted a law, now codified as Civil Code 830, which had the effect of granting to riparian owners on non-tidal navigable waters ownership of the soil to low-water mark. It therefore follows that in those areas where the United States owned the uplands, it gained title under State law to the low-water mark. 43 Cal. Ops. Atty. Gen. 291 (1964); Crews v. Johnson, 21 Cal. Rptr. 37 (1962). It is concluded, therefore, that at the time of issuance of the Executive Order of May 15, 1876, the United States owned the area between ordinary high-water mark and low-water mark except in those areas where it may have previously disposed of lands abutting the ordinary high-water mark. The record discloses, however, that in 1876 the United States owned all the lands abutting the west bank of the Colorado River from the above mentioned section 25, T. 2 S., R. 23 E., south through section 12, T. 5 S., R. 23 E.

    In issuing the Executive Order of May 15, 1876, the United States effectively severed that portion of the lands between the high and low-water marks by including them in the reservation, thus, effectively segregating these lands from public lands lying to the west thereof. It must be concluded that the Executive Order was effective to reserve any lands within the river then owned by the United States as such order clearly intended that the river be included in the reservation.

    Thereafter, accretions forming against this shoreline to the east thereof would be lands held in trust for the Colorado River Indian Tribes in those areas where the river has moved to the east by the normal process of erosion and accretion. Similarly, in those areas where the river has moved to the west by the normal process of erosion and accretion, any accretions forming on the east side of the river are owned by the United States in trust for the Colorado River Indian Tribes.

    In possible conflict with the reservation boundary, as hereinabove set out, are three tracts of school lands, these being sections 36 in Tps. 2, 3, 2nd 4 S., R. 23 E. While the Act of Congress which granted California its school lands was passed in 1853, 10 Stat. 244, 246, title to such lands does not pass until they are surveyed. United States v. Morrison, 240 U.S. 192 (1916). Moreover, title to the school lands thus granted was expressly subject to reservations created prior to survey. 10 Stat. 244, 246. These three sections 36 were surveyed in 1879. All three were fractional sections abutting the meander line run as part of the survey.

    It is the general rule that a meander line is not a line of boundary but one used to delineate the sinuosity of the bank or shore as a means of ascertaining the quantity of land in a fractional lot, the boundary line being the water itself. St. Paul and Pacific R. Co. v. Schurmeier, 74 U.S. (7 Wall.) 272 (1869) . Thus, the Department has held on numerous occasions that grants by the United States of lands shown on plats of survey as adjoining navigable waters are not limited to the meander line but extend to the water line. Harvey M. La Follette, 26 L.D. 453 (1898). John J. Serry, 27 L.D. 330 (1898). Gleason v. Pent, 14 L.D. 375 (1892). Louis W. Pierce, 18 L.D. 328 (1894). While this rule has been applied in cases involving the issuance of a patent, the certification of lands (such as school lands) is equivalent to patent and divests the Department of all jurisdiction over the lands or title thereto. Frasher v. O'Conner, 115 U.S. 102 (1885). Smith v. Portage Lake and Superior Ship Canal Co., 11 L.D. 475 (1890). State of California v. Boddy, 9 L.D. 636 (1889).

    Against this background, it can be expected that the State or its successors in interest might claim title to accretions to these three school sections. However, as above noted, title to these lands was expressly subject to reservations created prior to the survey thereof. Inasmuch as the Executive Order of May 15, 1876, effectively segregated the shoreline from these fractional sections 36 by including it in the reservation, it is concluded that accretions to this shoreline are lands held in trust for the Colorado River Indian Tribes and that they did not attach to the three fractional sections 36 as surveyed in 1879. For these reasons, correction surveys approved in 1964 which apportioned accretion lands to sections 36, Tps. 3 and 4 S., R. 23 E., should be suspended and the accretion surveys of these townships approved in 1962 should be reinstated in their entirety.

    There are also three parcels of School Indemnity Lands in sections 1 and 12, T. 5 S., R. 23 E., selection of which was approved in 1926. All three parcels abutted the meander line as surveyed by O. P. Calloway in 1874. Congress had previously authorized Lieu Selections in California. 14 Stat. 218, 220. However, such Lieu Selections are limited to other lands of equal acreage. 26 Stat. 796. It may also be anticipated that the State or its successors in interest would claim accretions to these Indemnity

 

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parcels. The record discloses that, at the time California made its selection of these fractional lots, substantial accretions had previously formed between the meander line abutting these parcels and the course of the river. Since California was in any event limited to lands of equal acreage in making its Lieu Selections, it cannot be said that approval of these School Indemnity Lands carried accretions which had previously formed. To hold otherwise would mean that California acquired lands in excess of that which was permitted by law. This then, is an additional reason why the accretions would not have passed with title to the fractional lots. Of course, the rationale with regard to accretions to the school sections hereinabove discussed is equally applicable to the School Indemnity Lands in that the inclusion of the shoreline in the reservation prior to disposal of the fractional lots effectively segregated such shoreline from the abutting lands which the State eventually selected.

    As mentioned above, the proper location of the boundary in the reach from section 25, T. 2 S., R. 23 E., through section 12, T. 5 S., R. 23 E., is the line of ordinary high water along the west bank of the river at the time of issuance of the Executive Order of May 15, 1876, subject to application of the doctrine of erosion and accretion and avulsion. Absolute certainty as to the location of the bank in 1876 is probably not possible to achieve. However, in fixing the boundary, all that is required is such certainty as is reasonable as a practical matter, having regard to the circumstances. Arkansas v. Tennessee, 269 U.S. 152 (1925). The record discloses that the reach of the bank of the river from section 25, T. 2 S., R. 23 E., through T. 4 S., R. 23 E., was meandered in 1879 and that portion of the right bank in sections 1 and 12, T. 5 S., R. 23 E., was meandered in 1874. These meander lines were reestablished in a dependent resurvey made by the Bureau of Land Management in 1958.

    As noted above, in 1876 the United States owned all the lands abutting the river on the west from the above-mentioned section 25, T. 2 S., R. 23 E., south through section 12, T. 5 S., R. 23 E. Also, the record indicates the present course of the river in this reach is now along or east of its position as surveyed in 1874 and 1879, except in two insignificant respects. The record also discloses that the lands presently lying between the meander lines of 1874 and 1879 and the right bank of the river were formed by accretion. Since the bulk of the lands abutting these meander lines on the west are presently owned by the United States and those lands in non-federal ownership located to the west of the meander lines are not entitled to accretions as against the United States in any event, these meander lines may be adopted as the boundary of the reservation as a matter of Administrative convenience. Only lands of the United States under the jurisdiction of the Department of the Interior are involved. Considering the nature of surveys in isolated areas and the limits of accuracy which could be achieved with equipment available nearly 100 years ago, it is concluded that these lines are adequate evidence of the proper location of the reservation boundary as they are reasonable as a practical matter, having regard to the circumstances. Arkansas v. Tennessee, supra.

    In summary, it is concluded that in those areas where the United States has not conveyed its title to the lands abutting the reservation, it may survey and resurvey what it owns and establish and reestablish boundaries. United States v. State Investment Co., supra. The United States may make or correct its surveys and such are not assailable in the courts, except in a direct proceeding. Cragin v. Powell, 128 U.S. 691 (1888). Therefore, in the above-mentioned areas, it is concluded the determination of the reservation boundary as herein made is not subject to collateral attack. As to those areas where the lands abutting the reservation boundary are in non-federal ownership, it may be expected that litigation will be necessary to extinguish claims of others which are adverse to those of the Colorado River Indian Tribes.

                                                                                                                    EDWARD WEINBERG


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