7

Recognizing Tribal Sovereignty

AS THE ENERGY tribes gathered for the September 1980 annual meeting of the Council of Energy Resource Tribes, they had good reason to be optimistic. Earlier that year, the federal government had made good on its $24 million pledge to support Indian energy development. The tribes had put these funds to work developing an extensive Indian resource inventory, conducting feasibility studies for new energy technologies, breaking ground on tribal mining projects, and continuing to educate tribal leaders on resource management techniques. In addition to the flow of federal dollars, the Department of the Interior had also just proposed new regulations for mining on Indian lands that promised to minimize “any adverse environmental or cultural impact on Indians, resulting from such development” as well as guaranteeing the tribes “at least, fair market value for their ownership rights.” The key to delivering these results was a new provision authorizing Indian mineral owners to enter into flexible mineral agreements that “reserve to them the responsibility for overseeing the development of their reserves.” These “alternative contracts” to the standard lease form would finally provide tribes with the control necessary to ensure mining did not threaten their indigenous communities.1

Reflecting the improved relationship with the federal government, CERT held its 1980 annual gathering in Washington, D.C. There, Chairman Peter MacDonald explained that the meeting’s purpose was to further explore “how to go about building a truly meaningful energy partnership between the tribes and the federal government.” Federal officials played their part enthusiastically: Energy Secretary Charles Duncan delivered the keynote address, and numerous governors, senators, and members of Congress attended the event to endorse the strengthening tribal-federal relationship. The three presidential candidates—Jimmy Carter, Ronald Reagan, and the independent congressman John Anderson—either personally attended or sent congressional delegates to voice their support for tribal autonomy and lobby for CERT’s endorsement. Speaking at the concluding press conference, Senator John Melcher of Montana captured the shared sentiment: “No longer can the federal government dictate the terms of energy development on Indian lands [and] no longer can the government decide what is good for the Indian people.” All the years of work seemed to be paying off. Again, optimism abounded.2

But to those paying close attention, there were rumblings of trouble in the recesses of the conference’s meeting hall. In fact, despite the recent contribution of funds, promising new regulations, and supportive messages, Wilfred Scott, CERT’s vice chairman, noted “mixed signals” coming from federal officials over whether tribes had the legal authority to manage their own minerals. The specific source of these concerns was a recent oil and gas deal struck between the Northern Cheyenne and the Atlantic Richfield Company (ARCO) that deviated from standard lease form and procedure. This agreement, like a lease, conveyed exploration and production rights to the oil company, but it retained for the Northern Cheyenne certain ownership interests in the project. Moreover, the Northern Cheyenne procured this alternative oil and gas contract through private negotiations rather than via the standard public notice and bidding process. Government officials wondered aloud whether federal law allowed a deal that failed to comply with the 1938 Indian Mineral Leasing Act, even if it represented a clear exercise of tribal sovereignty. After delaying approval until a tribal referendum established that a majority of Northern Cheyenne supported the project, the Department of the Interior grudgingly authorized the arrangement only after ARCO agreed to assume the risk should a court later invalidate the contract.³

More troubling than the reluctant approval, however, was Interior’s announcement made shortly after CERT’s annual meeting. The Northern Cheyenne contract had forced the agency to review the law governing reservation mineral rights, and the department’s new lead attorney, Clyde O. Martz, did not like what he saw. A former University of Colorado law professor and oft-described “father of natural resource law,” Martz reasoned that “the Indian Nonintercourse Act prohibits contracts that convey interest in land unless they meet the requirements of the 1938 Mineral Leasing Act.” Finding no other statutory authorization for alternative contracts like the one just entered into by the Northern Cheyenne, the solicitor told CERT staff that any contract conveying Indian minerals “other than the traditional lease, may currently be illegal.” Once again, the federal government threatened to constrain tribal sovereignty.4

Martz’s statement regarding the legality of alternative contracts sent shockwaves through the energy tribes’ community. Peter MacDonald called it the “final betrayal,” rendering “everything CERT tribes have been doing or want to do . . . illegal.” This strong reaction stemmed from the fact that tribes had come to view alternative agreements as the linchpin for exerting control over reservation development. They were the mechanism that allowed tribal leaders to apply their increasing expertise to secure desirable terms and oversee mining operations. Without non-lease contracts, the progress of the previous decade could be lost, turning back the clock to the days of federally run bidding procedures, standard lease terms, and minimal tribal control. Martz’s opinion even threw the legality of his own agency’s recently proposed rulemaking into question. How could an executive agency promise to allow tribes “to enter into contracts which reserve to them the responsibility for overseeing the development of their [mineral] reserves” if federal statutes limited energy contracts to the standard lease form? Federal officials had promised Indian self-determination but now seemed poised to invalidate clear exercises of tribal sovereignty. Certainly, energy tribes had come a long way in developing the capacity to manage their own resources. Now, it appeared, there was work left to be done to ensure that federal law recognized their authority to do so.⁵

“THE MOST IMPORTANT TRIBE IN AMERICA,” REPRISE

The Northern Cheyenne’s measured pursuit of energy development forced federal officials to address the disconnect between federal laws governing Indian resources and tribes’ increasing capacity to manage these assets. Since the Northern Cheyenne’s successful 1974 challenge to its inequitable coal leases, the tribe had been working to develop its vast energy reserves in a manner that balanced the need for revenue with the desire to preserve its indigenous community and environment. The first step in this process was ensuring that the tribe, not individual allottees, actually owned the minerals underlying the reservation. Like the Crow’s allotment law, the Northern Cheyenne Allotment Act had reserved subsurface mineral rights to the tribe, but only for a period of fifty years. The intent was to provide the initial means for an economic base but ultimately to have these rights flow to individual landowners. Prior to the 1960s, however, there was no viable market for Cheyenne oil, gas, or coal. Sensing the tribe had missed its opportunity to capitalize on communal resources, both federal and tribal officials lobbied to have the mineral rights transferred to the tribe in perpetuity. In 1968, Congress obliged, passing a law effectuating this permanent transfer.

But federal support for tribal ownership of mineral rights came with conditions. Not wanting to create liability from an unconstitutional taking of private property rights, the 1968 law conditioned the permanent transfer on a determination by a federal court that the 1926 Northern Cheyenne Allotment Act had not created vested mineral rights in allottees. In other words, Congress practically demanded litigation, placing the Northern Cheyenne in the unenviable position of having to sue its own members to settle property rights. Seeing little alternative, the tribe commenced legal action in summer 1970 against several allottees who stood to gain mineral rights at the end of the fifty-year period. By 1976, the case had made its way to the United States Supreme Court, where, in Northern Cheyenne Tribe v. Hollowbreast, the court upheld the permanent transfer of minerals to the tribe. Specifically, the unanimous opinion found that the conveyance conformed to the 1926 act’s original intent that the tribe benefit from their minerals, which clearly had not yet happened.6

In the same year the Northern Cheyenne confirmed tribal rights over reservation minerals, the tribe also forged new legal ground to shape regional energy projects threatening its reservation. Recall that in 1972, the planned construction of the Colstrip Power Plant at the reservation’s border had helped unite the tribe with area ranchers and environmentalists against regional coal development. This partnership spread concerns about impending energy projects and produced the Northern Cheyenne’s historic petition to cancel all reservation leases. It did not, however, stop construction at Colstrip. By 1976, two coal-fired boilers were in operation with plans announced for two additional units that were twice the size of the originals. All told, this facility had the potential to produce 2,100 megawatts of electricity, making it larger than the country’s dirtiest power plant, the Four Corners facility, located on the edge of the Navajo Reservation.7

With a massive power plant planned at the reservation’s border, and just beyond the reach of the tribal government, the Northern Cheyenne got creative. The tribe turned to new relief offered by the 1970 Clean Air Act and announced in July of 1976 that it would reclassify the air above its reservation as a Class I air shed. Under the pioneering 1970 environmental law, the Environmental Protection Agency had established a nationwide area classification system to prevent the deterioration of air quality in regions with relatively clean air. Initially the EPA designated all air sheds as Class II areas, which would allow for some air quality degradation due to light industry. The implementing regulations, however, gave state and tribal governments the option to protect specific areas from virtually any change in air quality by requesting an upgrade. In June 1976, the state of Montana approved the Colstrip plant’s expansion based on modeling that showed its air emissions would not violate the region’s Class II standards. Two weeks later, Northern Cheyenne President Allen Rowland announced plans to reclassify his downwind reservation to the higher, cleaner standard.⁸

As the first land manager in the nation, whether state or tribal government, to request an upgrade in air quality protection, the Northern Cheyenne garnered many accolades from the environmental community. One publication even named the tribe “Environmentalist of the Year” for 1976. But more than a defense of the natural environment was at play. The tribe took action primarily to ensure the integrity of its social and cultural community. This was the same concern that rallied tribal members to halt on-reservation mining. Massive energy development on or near the reservation would despoil the Cheyenne’s land, air, and water, but even more so, it would bring outsiders to disrupt social customs and cultural norms that defined the tribe. Numerous tribal members and groups, including the Northern Cheyenne Landowners Association, made this exact point to the state of Montana during Colstrip’s permitting process. The tribal government’s official comments warned that development on the reservation’s border “portend[s] nothing but adverse environmental, social and cultural consequences for the People of the Northern Cheyenne Tribe, their way of life, and the natural resources of their Reservation Lands.” These comments further explained the tribe’s opposition within the context of its long and difficult history to secure the reservation:

Not only is the Reservation the Northern Cheyenne Tribe’s Home Land; as a Tribe, as a People, it is their only place in this world. The Tribe’s life as a People, as the Tribe knows and desires to maintain it, is unqualifiedly dependent upon maintaining its Reservation free from outside environmental insult and destructive social and cultural impact.

But these pleas went unheeded and the state of Montana issued Colstrip’s permit. The tribe was now forced to take its argument to the federal level. Writing to the EPA to request the redesignation of the reservation’s air shed, Allen Rowland was clear about Cheyenne intentions:

We are not requesting this redesignation because we are against progress, either here or anywhere else. Our Tribe has been struggling for progress and self-determination for years. . . . For us, progress means developing our environmental resources in renewable and compatible manners. . . . Not only are such activities our livelihood, they are the cores of our value systems as a people.

The Northern Cheyenne did not oppose energy development per se, just projects beyond tribal control because they threatened the community. The tribe thus exercised its sovereign rights under the Clean Air Act to prevent a project that would change the fabric of its region and reservation.9

As powerful as this argument was, the Northern Cheyenne could only shape, not preclude, regional energy development. The EPA granted the tribe’s request to upgrade their air designation and stepped in to halt Colstrip’s expansion based on expected impacts to the new Class I air shed. Colstrip’s owners responded, however, by adding new pollution control technologies that they claimed would drastically reduce emissions. The move satisfied EPA officials, whose focus remained on protecting environmental quality. In fall 1979, the agency approved the issuance of Colstrip’s long-awaited expansion permit.¹⁰

But again, the Northern Cheyenne had broader concerns than just the environment. The tribe filed a legal challenge to the EPA’s approval, and the longtime head of the Natural Resources Committee, Edwin Dahle, began exploring a negotiated settlement that would allow for Colstrip’s construction and alleviate tribal fears over the unhealthy influx of non-Indians and pollutants. Ultimately, Colstrip’s owners and the Northern Cheyenne settled on what CERT Executive Director Ed Gabriel described as “a precedent-setting, multi-faceted agreement” whereby the facility would install more stringent pollution controls, fund reservation air quality monitoring, provide $350,000 to the tribe for continued socioeconomic impact analyses, and guarantee employment and job training at Colstrip for tribal members. Certainly the outcome did not please all Cheyenne, but these concessions addressed the tribe’s major fears. As Dahle explained, the agreement reduced the threat of unwanted people and pollutants and meant “wealth will be coming into the reservation, not just flowing out, as it has in the past.” Dahle also believed the agreement would help the tribe “develop a trained workforce for the day when the Cheyenne might develop our own coal.”11

*

The Northern Cheyenne’s willingness to negotiate and tailor the Colstrip facility to address specific tribal concerns signaled a shift in the tribe’s approach to energy development. Throughout much of the 1970s, the tribal government had found itself on the defensive, fighting to prevent projects it did not control rather than pursuing energy ventures that could bring wealth. This approach began to change, however, with the fall 1978 election of new council members eager to explore development options. This rush of new blood coincided with mounting debt accrued through the tribe’s various legal battles and the real possibility of reduced federal support for tribal programs. Now that the tribe had secured its authority over reservation resources—not to mention demonstrated its ability to shape off-reservation development—the time had come to exercise this power to produce revenue. As Allen Rowland explained, “We’ve made millionaires out of several lawyers”; now it was the tribe’s turn.¹²

This shift toward a more assertive pursuit of tribal-controlled development was evident on the very first day the new council members took office. Sworn in on September 13, 1978, by none another than Marie Sanchez, who by now was a tribal judge, the newly elected leaders endured a crash course in reservation energy development. CERT consultants were brought in to lead a three-day orientation program featuring CERT Executive Director Ed Gabriel, National Congress of American Indians President Chuck Trimble, Native American Rights Fund attorneys John Echo Hawk and Scott McLaroy, and the tribe’s own attorney, Steven Chestnutt, who had spearheaded the petition to halt uncontrolled reservation mining. The new officers also heard from Dick Monteau, director of the Northern Cheyenne Research Project (NCRP) that had been established after the first round of harmful coal leases in 1973 to investigate coal mining’s impacts. Supported by federal funds, the NCRP was a quasi-independent arm of the tribal government that gathered economists, geologists, anthropologists, and energy consultants to inventory Cheyenne resources and evaluate mining proposals. It provided the internal, institutional expertise the Northern Cheyenne had lacked when the tribe eagerly auctioned away reservation coal rights in the early 1970s. In evaluating potential energy projects, the NCRP also was guided by the founding principles of “maintaining survival [of the Northern Cheyenne] as an ethnic group” and “aiding in the maintenance of Tribal identity and sovereignty.”13

With the Northern Cheyenne’s renewed interest in energy development, it did not take long for the NCRP to prove its worth. In summer 1979, several energy companies approached the tribe with new coal mining ventures, and the tribe referred these proposals to the NCRP for analysis. The staff there quickly concluded that although cloaked in the language of joint partnerships, these latest deals shared similar deficiencies with the previous leases. Namely, they provided no tribal control over the pace and scale of development. Without such control, the NCRP warned the tribe would be unable to protect its community and environment. Hearing these critiques, the Northern Cheyenne rejected the offers out of hand.¹⁴

But more than tribal control was now required for on-reservation energy projects. Among the general membership, concerns about coal development’s impacts had grown so strong that even when a proposal provided control, tribal members were wary to authorize strip-mining. In response to the deficient 1979 deals, for instance, tribal consultant George Crossland—the Osage attorney who initially found fault with the Northern Cheyenne’s earlier coal leases—introduced a coal mining proposal from the Fluor Corporation that would have allowed the tribe to retain complete ownership over the venture. Fluor, the world’s largest construction firm, offered to operate the proposed mine under a service contract. But even this was too much. The wounds of the recent coal mining wars were fresh, and tribal members rejected this promising deal structure. Council member Joe Little Coyote explained the reaction: “Because of the impact on our socio-economic and cultural development, coal mining is not an option at all at this point.” Tribal members simply could not overcome the idea that massive strip mines would disrupt community relations and despoil their landscapes.15

With reservation coal mining a dead issue, pro-development tribal leaders quickly turned to the seemingly less invasive option of oil and gas drilling as the vehicle for economic growth. Ironically, the initial push for this form of development came from the NCRP, which, according to employee James Boggs, typically operated under “a policy of caution and skepticism towards large-scale leasing.” Considering this viewpoint, the organization’s director, Richard Monteau, had for some time been exploring the possibility of a small, tribally owned and operated oil and gas project as an alternative to massive strip-mining. When tribal members rejected all coal mining offers in the fall of 1979, pro-development council members appropriated the idea for oil and gas production and expanded the scope of Monteau’s small proposal to fit their larger objectives. In December 1979, these leaders then consolidated authority over energy development decisions by passing a resolution bringing the NCRP under the direct supervision of the tribe’s Planning Committee, which was controlled by the pro-development wing. In protest, much of the NCRP’s staff, including Director Monteau, resigned. With the cautious NCRP eviscerated, the path was cleared to pursue large-scale oil and gas projects.¹⁶

To land such a deal, the Northern Cheyenne turned the typical, federally controlled process for soliciting and evaluating energy proposals on its head. Rejecting the standard public notice and bidding process, the tribe advertised directly for mining partners in national oil and gas trade journals. By February 1980, Tribal President Allen Rowland could report that the response was “very good . . . proposals are coming in daily.” But to evaluate these offers, the Northern Cheyenne turned not to federal officials; instead, it relied largely on its own expertise, augmenting this knowledge where necessary with some Bureau of Indian Affairs technical assistance. Several tribal members argued that the loss of the NCRP had left the tribe unprepared to effectively evaluate drilling proposals, but Harvard-educated tribal member Joe Little Coyote skillfully led negotiations with potential energy partners. In May, the tribal government settled on an agreement with the independent oil firm Atlantic Richfield Company that gave the tribe a $6 million upfront bonus and a 25 percent production share. Beyond these unprecedented financial benefits, the contract also stipulated that the Northern Cheyenne would retain joint ownership over all geological data and would hold approval authority over all operating plans, and that ARCO would fund a Tribal Oil and Gas Office to monitor drilling activities. This was not your typical lease. Instead, it resembled more a service agreement in which the drilling company would prospect and produce reservation oil and gas in exchange for a share of the profits. Importantly, the Northern Cheyenne retained control.17

Most, though certainly not all, tribal members viewed the ARCO deal as a sensible compromise between all-out development and none at all. Opponents pointed to the relatively hasty manner in which the deal was constructed and the absence of the NCRP to evaluate its impacts. But when these concerns were put to the entire tribe in the form of two referenda on the ARCO agreement, an overwhelming majority sided with their tribal government (82 percent in the first, 88 in the second). Yes, the tribe would open its reservation to an outside developer, but most were comfortable with the tribal government retaining oversight over drilling operations and ownership of geological data. Furthermore, many defended the deal on environmental grounds. Allen Rowland noted simply that drilling pads leave smaller holes in the ground than do coal mines, and Joe Little Coyote concurred that oil wells “are a lot more environmentally acceptable than coal mining.” The Department of the Interior also agreed, describing the ARCO project in its environmental assessment as “the first major energy development on the reservation, but it is small-scale when compared to other energy development alternatives such as strip-mining.” In a world of trade-offs, the impoverished Northern Cheyenne determined that some energy development, operating under the supervision of its Tribal Oil and Gas Office, was better than none at all.18

*

The Northern Cheyenne’s increasing sophistication in managing its valuable energy resources was emblematic of advances occurring throughout Indian Country. Since 1975, numerous tribes had positioned themselves to negotiate alternative contracts that included better financial terms than the BIA’s standard leases. Although not all deals resulted in tribal-led mining ventures, each evidenced the tribes’ increasing capacity to tailor contracts to reflect specific reservation conditions. For example, on the Navajo Reservation, where the tribal government had the most experience with mineral development and possessed ample geological and market data, the tribe brokered a 1977 uranium deal with the Exxon Corporation that netted a $6 million bonus and included the option for a joint venture operation. On the Blackfeet Reservation, however, where less geological information existed, tribal leaders willingly gave up bonus payments in favor of an oil and gas agreement with the Damson Oil Corporation that included percentage royalties plus half of all production revenue once the company recouped its start-up costs (potentially 58 percent of all profits). In this case, Blackfeet leaders may not have secured ownership over the energy project, but they understood that a back-loaded service contract was necessary to encourage the small, independent oil company to prospect in a relatively unproven area. And like other tribes, the Blackfeet knew federally orchestrated leases did not meet tribal demands. As one BIA area director explained, “The difference [now] is that the tribes are fully informed about the market value of their holdings and the [problems with the] leasing strategy.” Kenneth Black, the director of the National Tribal Chairman’s Association, summed up the demands of these newly enlightened leaders: “No more leases—we want a percentage of the deals.”¹⁹

Tribal efforts to secure more beneficial agreements certainly indicated a rising level of sophistication, but their alternative contracts also put the Department of the Interior in the difficult position of trying to support Indian self-determination while also enforcing the letter of the law. Federal agents did their best to juggle these competing duties, employing a host of innovative legal theories to approve negotiated contracts that deviated from the 1938 Indian Mineral Leasing Act. One such theory applied a broad reading of the term “lease” contained in the statute, rationalizing that the 1938 Congress surely intended to authorize whatever form of mineral contract was favored by industry standards, and thus joint ventures must be allowed. Another approach justified non-lease mining agreements based on an obscure federal statute authorizing tribes to enter into “service contracts,” though this law had been previously applied only to approve contracts for tribal attorneys. By 1980, then, the Interior Department had approved a handful of alternative contracts based on these legal theories, but the piecemeal approach left the law unsettled. Serious concerns remained as to the authority of tribes to negotiate their own contracts and participate directly in the development of reservation resources.20

With the Northern Cheyenne–ARCO agreement, Interior Solicitor Clyde Martz had seen enough. After first delaying his review of the contract until the September 1980 tribal referendum confirmed that a strong majority supported the deal—again, more than 80 percent were in favor—Martz then suspended federal approval until two issues could be resolved. One, the solicitor questioned whether the contract conveyed a property interest in Northern Cheyenne minerals, making it a “lease” that then failed to comply with the 1938 Indian Mineral Leasing Act. Two, Martz wondered whether any other laws beyond the 1938 act authorized such a mineral agreement. Hoping to slap a pragmatic solution onto a sticky legal question, the Northern Cheyenne and ARCO quickly executed a “Statement of Intent” noting the parties themselves did not consider the agreement a lease but instead a service contract authorized by existing law. For good measure, ARCO also agreed not to sue the federal government if a court later invalidated the agreement.²¹

This stop-gap solution eased some of Martz’s immediate concerns, but the former law school professor was most interested in a long-term fix that could clarify tribal authority once and for all. Martz was sympathetic to tribal aims, but his hands were tied without further congressional action. Pulling in Montana Senator John Melcher, all parties thus agreed to support legislation that would, according to Northern Cheyenne Vice President George Hiwalker, Jr., “remove any uncertainty that may exist regarding the Secretary’s . . . authority to approve such agreements, and to provide Indian tribes with a clear alternative to the 1938 Minerals [sic] Leasing Act.” With a legislative solution proposed, and ARCO’s promise not to sue, Interior Secretary Cecil Andrus had enough assurances to approve the Northern Cheyenne–ARCO agreement on September 23, 1980. A few days later, Martz made the startling announcement that, without clarifying legislation, other alternative agreements may be illegal. As he did so, however, both Senator Melcher and the Solicitor’s Office had already begun work on legislation to recognize tribal authority to enter into these vital contracts.22

“DOING BUSINESS WITH INDIAN TRIBES”: THE 1982 INDIAN MINERAL DEVELOPMENT ACT

Just as it had done in stopping inequitable leasing practices earlier in the decade, the Northern Cheyenne provided the specific impetus for changing federal law to recognize tribes’ sovereign control over reservation development. But the tribe, of course, did not operate in a vacuum. Broader changes in federal Indian affairs created a sense of urgency that helped push the new legislation through Congress. These changes were set in motion barely a month after the Department of the Interior approved the Northern Cheyenne–ARCO agreement when the country elected Ronald Reagan as its fortieth president. A California conservative who sought to extend many of the policies of his fellow Californian Richard Nixon, Reagan proclaimed his support for Nixon’s Indian self-determination policy and its goal of strengthening tribal governments so as to lessen federal dependency. But like Nixon, Reagan inherited a sputtering national economy and a burgeoning federal bureaucracy, two problems he aimed to remedy with deep cuts in government spending. Perhaps unsurprisingly, Indian programs topped the list of expendable items. The president’s first budget proposed more than $1 billion in cuts to the 1982 federal Indian budget, representing a 34 percent reduction. These cuts included a 77 percent reduction in economic development programs and a 46 percent reduction to programs assisting Indian energy resource management.²³

But the real blow to Indian energy development was actually much worse. The only Indian energy programs Reagan proposed to leave intact were those run by the BIA to inventory Indian minerals and oversee mineral leasing; the Department of Energy’s entire tribal energy program, which provided the backbone of support for CERT and specific Indian energy projects, was on the chopping block. Adding insult to injury, the president also appointed western attorney James Watt as the new Interior secretary. As president of the Mountain States Legal Foundation, Watt had just filed an amicus brief to the Supreme Court challenging tribal rights to tax energy companies operating on their reservation. The multifront attack on tribal-controlled energy development so alarmed energy tribes that CERT Chairman Peter MacDonald immediately wrote to Congress complaining that the new administration seemed determined to “return to an era of . . . giveaways of tribal oil, gas and coal resources.”24

Energy tribes fought hard against Reagan’s budget cuts in Congress, but the unmistakable trend of diminishing federal support forced tribal leaders to reassess their strategies for pursuing energy development. With 74 percent of CERT’s 1981 budget pegged to federal funds, energy tribes could not simply wait and hope that Congress would reverse the trend. These groups needed immediate cash to continue consulting services and capital for mining projects already in development. To fill the financial gap left by a retreating federal government, CERT reached out to private industry. Styling its 1981 annual meeting as “Doing Business with Indian Tribes,” CERT’s Executive Director Ed Gabriel pressed hard for industry attendance, touting the tribes’ vast natural resources and assuring potential investors that “the Indian people are amenable to bold, innovative business proposals of all types.” The only stipulation, Gabriel noted in his letter to industry invitees, was that the deals must “recognize and respect [the tribes’] own cultural, environmental, and economic values and priorities.”²⁵

The 1981 meeting featured speakers who continued the message that tribal leaders stood ready to consider serious business proposals. In his opening remarks, Peter MacDonald implored the assembled tribal leaders and corporate officers to demonstrate the power of private investment by turning economically depressed reservations “into new growth zones that would transform the economy, the nation, and the future for us all.” “I encourage you to gamble,” the CERT chairman continued, as “the odds are much better here than at Las Vegas. There is risk—but the risk is far less than the danger we face if we fail to seize the opportunity of the moment.” MacDonald’s call for investment was followed by energy consultants explaining the procedures for doing business in Indian Country and by testimony from corporate executives already working with tribes extolling the potential for profits. And as if on cue, the keynote speaker at the conference, Houston oilman Michael Halbouty, a close energy advisor to President Reagan and a member of Secretary Watt’s Commission on Fiscal Accountability of the Nation’s Energy Resources, concluded the meeting by telling the audience, “It is about time that the entire business community of the United States realize that it can do business with the Indian tribes.”26

This shift by energy tribes toward actively courting private investment was certainly not the first time these groups looked outside the federal government to support their quest for economic self-sufficiency. The tribes had made similarly eager overtures in the 1960s, when energy companies first descended on western reservations looking for low-sulfur coal. This time, however, tribal leaders understood what was needed to make the tribal-private partnership work for both parties. Years of work by CERT and others to educate tribal leaders and provide market and geological data created negotiators well equipped to demand fair royalties. But as Peter MacDonald explained at the 1981 CERT meeting, “Simply bargaining for higher royalty rates is not enough and [the energy tribes] must explore issues involving ownership, management, up-front payments, and differentiation of agreements to authorize development.” The tribes were hungry to strike deals, but this time they understood that the agreements must give Indians an active role in the ensuing ventures.²⁷

To ensure the outcome they desired, CERT members concluded their annual meeting with a series of resolutions supporting measures that would give energy tribes the authority to control reservation resource development. In emphatic terms, MacDonald declared these initiatives would inaugurate “the dawning of a new era for [the federal-tribal] relationship: an era of recognition of our right to freedom from the shackles of federal restrictions on our ability to do business, to look after the needs of our people and to shape our own future.” After first demanding that tribes receive the same regulatory status as states in every “federal program that delegates authority,” tribal delegates turned their attention to the ongoing efforts to amend the 1938 Indian Mineral Leasing Act. Clearly, energy tribes supported any action enlarging—or more accurately, recognizing—their sovereign authority over reservation resources. But CERT had not been consulted on this important piece of new legislation and the energy tribes wanted a voice in the process. The organization’s lawyers at the Native American Rights Fund opined that tribes “probably” already possessed the legal authority to negotiate alternative agreements, but like Senator Melcher and the Department of the Interior, CERT began drafting its own piece of clarifying legislation. Until its version was considered and its officers consulted, the organization resolved to oppose the other bills. The energy tribes would go it alone, if necessary, working their congressional connections to promote their own legislative proposal.28

*

By fall 1981, then, no less than three different versions of legislation to amend the 1938 Indian Mineral Leasing Act were in circulation. While they differed in the details, all shared the goal of clarifying tribal authority to negotiate alternative mineral contracts. The proposals drafted by Senator Melcher and by CERT were similar in that they offered a clear, straightforward authorization for tribes to enter into whatever type of agreement they desired, subject only to the federal government’s subsequent approval. This shared approach provided ground for dialogue between the energy tribes and the senator, dissolving CERT’s opposition to his bill. When the Department of Justice endorsed Melcher’s proposal, finding “no reason to differentiate between lease and non-lease arrangements” in the law, the senator introduced his bill to Congress on November 30, 1981. Rather than supplant the old 1938 Indian Mineral Leasing Act, however, the proposal left that statute intact to give tribes the option of using competitive bidding procedures and standard lease forms if they so desired. The bill also included a provision retroactively ratifying all previous alternative agreements.²⁹

Energy tribes and their corporate partners quickly rallied to support the proposed legislation. At special on-site hearings held in Billings in February 1982, nine western tribes—including the Northern Cheyenne, Crow, and Navajo—voiced their support for the legislation’s general concepts. They argued again that increased tribal sophistication meant their governments deserved the flexibility to craft deals meeting their specific needs. As Navajo spokesman Gilbert Harrison explained,

In the last decade, the Navajo Nation has upgraded its internal capacity to plan, evaluate and develop various energy projects. No longer is the Navajo Tribe satisfied with the old standard federal leases, which only emphasized and relied on royalty return. New concepts which could be formalized will address alternative forms of agreements keyed to assumption of control and efficient development of its energy resources and these agreements will pay a higher return to the tribe.

Knowledgeable mining companies agreed, noting, as ARCO representative Curtis Burton did, that the days of Indian ignorance in energy negotiations were gone:

Our recent experience in conducting business with representatives of Indian tribes is that the tribes, represented by their elected authorities and by retained experts, bring to the negotiating table a level of sophistication and trading skill that rebuts any alleged need for a status resembling guardianship for the protection of tribal assets.

Witnesses expressed similar sentiments a month later when these hearings continued in Washington, D.C. There, Peabody Coal Company, Amoco, and oil and gas prospector Mission Resources added their names to the list of corporate supporters.30 Existing law may have treated American Indians as incapable wards, but business people engaged with tribal enterprises understood how inaccurate that perception was.

Not all interested parties, however, supported a bill designed to ease the tribes’ ability to develop reservation resources. Indian allottees formed the most forceful opposition to Melcher’s proposal, arguing the new law would subject them to the same pressures and unbalanced negotiations that had produced inequitable coal leases with tribal governments a decade earlier. Norman Hollow, chairman of the Assiniboine and Sioux tribes on the Fort Peck Reservation, where 90 percent of minerals were owned by individual allottees, distilled their complaints:

The fundamental thing wrong with [the bill] is that it provides the tribes and individual Indians with no protection or advice during the most important time; that is, when the company or its agent is soliciting a lease or contract from the individual Indian. Perhaps most tribes will have the means and will to hire independent consultants. But [Melcher’s bill] leaves the uneducated and uninformed Indian on his own.

Tribal governments may have come a long way in developing the expertise to manage reservation resources, but many believed the same could not be said for individual Indians who happened to own valuable mineral rights.31

This allottee opposition reflected the diversity of Indian experience with mineral development and the differing ownership structures on reservations. But energy tribes had come too far in developing their institutional capacities to allow individual Indians to now derail the expansion of tribal authority. The fix, they proposed, was not to discard the new law but to tie the fate of allottee mineral owners to their presumably better-equipped tribal governments. Melcher’s Senate select committee thus amended the bill to remove allottees’ authority to negotiate their own alternative agreements and give these individuals only the right to join a tribal agreement. As the committee report explained, everyone agreed allottees should receive the same flexibility to develop their minerals as the tribes themselves, but there was no way to ensure they would be adequately prepared and protected. Therefore, since “it is, of course, expected that tribes are in the best position to protect their own members from exploitation,” the committee amended the bill to “retain the Secretary’s authority to approve the inclusion of allottees in a tribe’s negotiated agreement.” For allottees on the Northern Cheyenne, Navajo, Fort Peck, and other reservations whose plans for mineral development differed from their tribal governments, the response to their fears of being exploited must have provided cold comfort.³²

With allottee concerns addressed, though perhaps not alleviated, supporters refocused the debate on the proposed legislation’s primary benefit: recognizing tribal authority over reservation resources to match the tribes’ expanded capacity to craft smart energy deals. At the bill’s final hearings, CERT Executive Director Ed Gabriel reiterated that his members were prepared to govern their own minerals and that energy tribes “were no longer content to sit on the sidelines while their resources were being taken from them under unfair terms.” This law, Gabriel argued, was thus “a critical element” for Indian self-determination, not to mention for “all Americans, as our country strives to become more independent of foreign energy resources.” The Department of the Interior concurred, sending letters of support to both the Senate and House committees explaining that the flexible mineral agreements authorized by the legislation would “provide the vehicle by which tribes can become directly involved in management decisions,” thereby “enabling them to gain management experience and contributing significantly to the goal of self-determination.” Tribal capacity and authority thus formed a mutually constitutive relationship. Increased tribal skills and knowledge justified tribes’ having the authority to strike their own deals and participate in mineral development, and this participation would further increase tribal capacity to effectively manage reservation resources. Capacity without authority, however, thwarted the goals of Indian self-determination.33

With the support of federal agencies, mining companies, and energy tribes, Melcher’s bill gathered bipartisan support as it worked its way through Congress. Reported unanimously out of the Senate Select Committee on Indian Affairs, the full Senate passed the measure on June 30, 1982. On the House floor, Arizona Democrat Morris Udall and Nebraska Republican Douglas Bereuter coordinated the easy passage of a slightly amended bill, which they explained updated antiquated federal laws passed early in the twentieth century when tribes did not have the capacity to effectively manage their minerals. Melcher and Udall avoided a time-consuming conference between the Senate and House by negotiating mutually agreeable amendments that both chambers passed unanimously on December 8 and 10, respectively. As Melcher explained on the Senate floor, the new law would provide the flexibility Indians needed to develop their resources, which “should help tribes to become economically self-sufficient and the rest of the Nation to become less dependent upon foreign energy sources.” On the House side, Congressman Bereuter agreed, noting the law “is strongly supported by Indian tribes, the administration, and by companies interested in working with tribes to develop reservation mineral resources. It represents a large and positive step toward the future economic well-being of a large segment of the Nation’s Indian population.”³⁴

With all parties in support, on December 22, 1982, President Reagan signed the bill into law as the Indian Mineral Development Act. The bill’s sponsor, Senator Melcher, hailed the act as an opportunity for tribes “to play an active role as opposed to the passive role permitted under the 1938 Act.” He further explained that “in the last decade, many Indian tribes, under self-determination, have begun to build solid governmental infrastructures, as well as trained management and planning personnel.” The president followed up one month later with his administration’s first, and only, formal statement on Indian policy. In it, Reagan reaffirmed Nixon’s self-determination approach and pledged “to assist tribes in strengthening their governments by removing the federal impediments to tribal self-government and tribal resource development.” The statement announced the transfer of the White House’s Indian affairs personnel from the Office of Public Liaison to the Office of Intergovernmental Affairs, thereby recognizing the tribe’s “rightful place among the governments of this nation.” Then, in a clear nod to the recently passed Indian Mineral Development Act, the president noted:

Tribal governments have the responsibility to determine the extent and the methods of developing the tribe’s natural resources. The federal government’s responsibility should not be used to hinder tribes from taking advantage of economic development opportunities. . . . The federal role is to encourage the production of energy in ways consistent with Indian values and priorities. To that end, we have strongly supported the use of creative agreements such as joint ventures and other non-lease agreements for the development of Indian mineral resources.

Almost a half century after the 1938 Leasing Act coded into law paternalistic assumptions of Indians’ inability to manage their affairs, tribes finally secured explicit federal authority to develop reservation resources however they deemed fit.35

The ground for this remarkable expansion of tribal sovereignty was prepared over the previous decade by energy tribes’ coordinated efforts to increase their capacity to responsibly and effectively manage reservation assets. Once adequately prepared, tribal leaders pursued innovative deal structures meant to realize their desire for tribal-controlled development. The Northern Cheyenne were both leaders in and emblematic of this movement. After first confirming ownership over reservation minerals and asserting legal rights to shape regional development, the tribe negotiated a sophisticated oil and gas agreement that promised both revenue from and control over drilling operations. But the deal also forced federal officials to reckon with an outdated and ineffective law that seemed to foreclose the Cheyenne’s and other energy tribes’ chosen path to self-determination. Undeterred, these groups redirected their energies toward changing that law. Working under the pressures of massive federal budget cuts and with a consortium of federal officials and energy executives, energy tribes orchestrated the passage of the 1982 Indian Mineral Development Act to provide the legal authority to match the tribes’ recently expanded governing capacity.