A recent dismissal of an appeal in the District of Columbia Circuit upholds a federal District Court decision narrowly construing legislation designed to encourage companies to enter into business relationships with Indian tribes.
In October 2007, Bracewell alerted you to an important ruling by the United States District Court for the District of Columbia in GasPlus v. Bureau of Indian Affairs. Read 2007 Update. In the first case to interpret the 2000 amendments to 25 U.S.C. § 81 and to challenge the BIA's invalidation of a contract under new § 81, the District Court ruled that a contract with an Indian tribe to manage a gas distribution business on tribal lands did not require BIA approval under the 2000 amendment of 25 U.S.C. § 81.
Construing the reach of § 81, the District Court noted that Congress intended the amended § 81 to require that BIA approve only contracts that affect proprietary rights to Indian lands. Before the 2000 amendments, the BIA exerted control over nearly all contracts within Indian lands and helped tribes escape "unfavorable" business arrangements by withholding or revoking BIA's approval. Congress wished to put an end to this "paternalistic" application of § 81. Deferring to Congress's intent, the District Court held that the amended § 81 does not extend to agreements that have no effect, or only an incidental effect, on tribal lands. Rather, only contracts that give non-Indians proprietary control over tribal land require BIA's approval under 25 U.S.C. § 81.
Not unexpectedly, BIA took issue with the District Court's ruling in GasPlus, and in November, 2007, BIA filed its appeal with the District of Columbia Circuit Court of Appeals. However, on February 12, 2008, only one day before the government's opening brief was due, the government notified GasPlus that the government's appeal would be withdrawn. The order dismissing the appeal was entered on March 12, 2008, leaving intact, and as precedent on which businesses can rely, the District Court's ruling.
The significance of the GasPlus case cannot be overstated. First, it is a precedential case. Second, it narrows the reach of § 81. Third, it narrows BIA's authority over contracts that do not impede tribes' proprietary control over their land.
However, while viewed through GasPlus, new § 81 is more business-friendly than its predecessor, it is not a safe harbor. While it reads § 81 narrowly, the GasPlus decision reminds us that not all contracts are exempt from § 81. To the contrary, many contracts remain subject to BIA's review and approval. Whether a contract is exempt depends largely on its subject matter and its terms and conditions. Therefore, businesses, developers, investors and lenders should review all contracts with tribes to determine what federal approvals are necessary to create a valid contract and to ensure that all requisite approvals are obtained.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
