Assiniboine & Sioux Tribes et al., Appellants, v. R. E. Nordwick et al., Appellees, 378 F.2d 426 (9th Cir. 1967)

The Act of May 30, 1908 (35 Stat. 558) provided that part of the land composing the Fort Peck Reservation was to be allotted among members of the Assiniboine and Sioux Tribes, and the remainder sold for their benefit. The unallotted lands were to be opened to settlement and entry under the homestead laws at prices to be fixed by appraisal. Homestead entrymen were to be allowed five years to pay the purchase price and seven years to make final proof entitling them to patents. Unallotted lands "remaining undisposed of" five years after the lands were opened to entry were to be sold at auction.

The 1908 Act was amended by the Act of March 3, 1927 (44 Stat. 1401) "specifically reserving to the Indians having tribal rights on said reservation the oil and gas in the tribal lands undisposed of on the date of the approval of this Act" (emphasis added); and authorizing the Tribal council to lease the reserved oil and gas deposits.¹ 

On January 24, 1925, Nordwick filed a homestead application on a 160-acre tract under the 1908 Act. When the 1927 Act was passed, Nordwick had paid only one fifth of the purchase price, had not satisfied the statutory cultivation requirements (43 U.S.C. § 218(d) (1964)), and had not submitted the required final proofs. 43 U.S.C. § 164 (1964). He completed these requirements in 1929, and received a patent in 1935.

The issue is whether the oil and gas rights in these 160 acres were reserved to the Tribes by the 1927 Act, or passed to Nordwick.

Land remains subject to the disposing power of Congress until a homestead or pre-emption entryman satisfies the conditions imposed by law for issuance of a patent. Russian-American Packing Co. v. United States, 199 U.S. 570, 577, 26 S. Ct. 157, 50 L. Ed. 314 (1905); Shiver v. United States, 159 U.S. 491, 495-496, 16 S. Ct. 54, 40 L. Ed. 231 (1895); Campbell v. Wade, 132 U.S. 34, 38, 10 S. Ct. 9, 33 L. Ed. 240 (1889); The Yosemite Valley Case, 15 Wall. 77, 82 U.S. 77, 87, 21 L. Ed. 82 (1872); Frisbie v. Whitney, 9 Wall. 187, 76 U.S. 187, 195-196, 19 L. Ed. 668 (1869).²  Congress therefore had power to amend the 1908 Act to reserve oil and gas deposits in land subject to an unperfected homestead entry. The question is whether Congress intended to do so.

* Considerations supporting the conclusion that Congress intended by the 1927 Act to reserve oil and gas deposits in land subject to an unperfected homestead claim may be summarized as follows.

1. In public land law,³  "disposal" often refers to "that final and irrevocable act by which the right of a person, purchaser, or grantee, attaches, and the equitable right becomes complete to receive the legal title by a patent or other appropriate mode of transfer. Until that act the land is not disposed of * * *." Oregon v. Frakes, 33 L.D. 101, 103 (1904). See also Grant v. Oregon, 2 L.D. 641 (1883); Oil Prospecting Permits in Power Site Reserves, 48 L.D. 459, 462-465 (1921). Under these authorities, tribal lands "undisposed of" would include land subject to an unperfected homestead entry.

2. Because statutes withdrawing tribal lands from further alienation commonly include provisions expressly preserving outstanding but unperfected rights,⁴  it may be argued that the omission of such a savings clause from the 1927 Act is to be taken as deliberate.

3. The evident purpose of the Act of 1927 was to further the interests of the Indians⁵  by reserving oil and gas deposits to be leased for their benefit. This purpose would best be served by giving maximum scope to the language of the reservation.

4. In its dealings with Indians the United States "has charged itself with moral obligations of the highest responsibility and trust" (Seminole Nation v. United States, 316 U.S. 286, 297, 62 S. Ct. 1049, 1054, 86 L. Ed. 1480 (1942)), and section 13 of the 1908 Act declares that "the United States shall act as trustee for said Indians to dispose of said [unallotted] lands." Cf. Ash Sheep Co. v. United States, 252 U.S. 159, 166, 40 S. Ct. 241, 242, 64 L. Ed. 507 (1920); Hanson v. United States, 153 F.2d 162, 163 (10th Cir. 1946). The language of the amendatory Act of 1927 is to be construed in this context; and there are considerations of equity and fairness which support a broad construction of the oil and gas reservation, and its related authority for leasing the reserved rights. Leasing is a fairer method of realizing the value of oil and gas deposits than permitting them to pass with the surface rights for no additional consideration. Congress was aware of this fact. Leasing was adopted as the exclusive method for disposing of oil and gas deposits in public domain lands by the Mineral Leasing Act of 1920, 30 U.S.C. § 181 et seq. Furthermore, oil and gas deposits in public domain lands subject to homestead entry when the Mineral Leasing Act of 1920 was enacted did not pass to the entryman, but were reserved by the United States to be leased for its own benefit.⁶  It is argued that Congress must have intended to achieve a result no less favorable to the Indians as to oil and gas deposits in lands which the United States held in trust for their benefit.

5. Finally, the Tribes invoke the settled rule of interpretation that "statutes passed for the benefit of dependent Indian tribes or communities are to be liberally construed, doubtful expressions being resolved in favor of the Indians." Alaska Pac. Fisheries v. United States, 248 U.S. 78, 89, 39 S. Ct. 40, 42, 63 L. Ed. 138 (1918). See also Squire v. Capoeman, 351 U.S. 1, 6-7, 76 S. Ct. 611, 100 L. Ed. 883 (1956); United States v. Santa Fe Pac. R. R., 314 U.S. 339, 354, 62 S.Ct 248, 86 L. Ed. 260 (1941); Maryland Cas. Co. v. Citizens Nat'l Bank, 361 F.2d 517, 521 n. 16 (5th Cir. 1966); Federal Indian Law 566 (G.P.O.1958). A "liberal construction" resolving "doubtful expressions * * * in favor of the Indians" would treat lands subject to unperfected entries as "undisposed of."

II

Looking to the other side, the following considerations suggest that Congress did not intend to include lands under homestead entry in the phrase "undisposed of" in the 1927 Act, and thus deprive entrymen of oil and gas deposits.

1. The phrase "undisposed of" also appears in section 11 of the Act of 1908,⁷  and in this context it concededly does not include lands under entry. This is clear, for Congress could not have intended that lands in the process of acquisition by an entryman should become subject to sale at auction after five years when the statute allowed the entryman seven years to perfect his right to a patent by submitting his final proof — particularly since the price obtainable by auction was less than that obtainable by disposition to the entryman.⁸  Accordingly, contemporaneous administrative interpretation of the phrase "undisposed of" in section 11 of the 1908 Act excluded lands under entry. Lands Within Former Fort Peck Indian Reservation. Instructions, 46 L. D. 380 (1918). It can be argued that the same language in the amendatory Act of 1927 was presumably used with the same meaning.

2. Section 9 of the Act of August 1, 1914, 38 Stat. 582, authorized the Secretary of Interior to allot surplus Fort Peck Reservation lands to Indian children in accordance with the Act of 1908 "as long as surplus lands within said reservation remain undisposed of." (Emphasis added.) Here again it is conceded that the critical phrase excludes land under entry, for Congress could not have intended to expose entrymen to loss of their unperfected homesteads by allotment.⁹ 

3. On January 18, 1929, the Commissioner of the General Land Office issued instructions that, "In the future in all applications for homestead entries of Fort Peck lands or applications for reinstatement of cancelled entries of such lands, you will require the applicant to file a consent to the reservation of oil and gas to the Fort Peck Indians in accordance with" the 1927 Act. Circulars and Regulations of the General Land Office, January 1930, 715-16 (G.P.O.1930). In a subsequent interpretation of these instructions it is said that they "directed that the reservation be made upon future applications, and made no such requirement as to pending unperfected entries at the date of the act, which implies the construction that something less than a complete equitable title and vested right to a patent constituted a disposal under the act." Mineral Reservations in Trust Patent for Allotments to Fort Peck and Uncompoligre Indians, 53 I.D. 538, 544 (1931).¹⁰ 

4. A partial survey of Land Office records, submitted to this court by Nordwick and unchallenged by the Tribes, discloses 157 patents issued after 1927 on homestead entries predating the 1927 Act which do not contain a reservation of oil and gas deposits. Only one contrary instance is called to our attention — the initial patent issued to Nordwick in the present case.¹¹  Moreover, the exclusion of oil and gas deposits from Nordwick's original patent may have resulted from clerical error, and was in fact corrected by issuance of a supplemental patent.¹² 

5. Finally, Nordwick suggests two reasons why Congress would have intended to preserve the claim of holders of unperfected homestead entries to the oil and gas deposits in their tracts. First, disposition of the lands to entrymen under the homestead act at the appraised prices was the preferred method, for it resulted in greater return to the Indians.¹³  Homestead entrymen would be encouraged to continue on the land and complete their payments if they were allowed to retain the oil and gas; they would be discouraged from doing so if they were not. Second, Congress may well have felt that it would be unfair to deny oil and gas rights to prior entrymen who had invested time, effort, and money on the expectation that these rights would be included in their patents.

III

It would be idle to pretend that the choice between these conflicting indicia¹⁴  of congressional intent is clear; and regrettably in this instance Congress cannot readily correct us if we err.

Except for one factor, we would follow the interpretive guide that doubtful language in Indian legislation is to be resolved in favor of the Indians. The consideration we find compelling in favor of the entryman in this case is the virtually unbroken administrative practice of issuing patents on pre-1927 homestead applications after passage of the 1927 Act without reserving oil and gas rights. This practice seemingly reflects a uniform contemporaneous interpretation of the 1927 Act by persons presumably familiar with its background and purpose, and we are persuaded by it.

As the Supreme Court said in a case involving similar circumstances, "Many thousands of acres have been patented to individuals under that interpretation, and to disturb it now would be productive of serious and harmful results. The situation therefore calls for the application of the settled rule that the practical interpretation of an ambiguous or uncertain statute by the executive department charged with its administration is entitled to the highest respect, and, if acted upon for a number of years, will not be disturbed except for very cogent reasons." Logan v. Davis, 233 U.S. 613, 627, 34 S. Ct. 685, 690, 58 L. Ed. 1121 (1914). In addition to the authorities cited in Logan, see United States v. Jackson, 280 U.S. 183, 193, 50 S. Ct. 143, 74 L. Ed. 361 (1930); United States v. State of Minnesota, 270 U.S. 181, 205, 46 S. Ct. 298, 70 L. Ed. 539 (1926); Swendig v. Washington Water Power Co., 265 U.S. 322, 331, 44 S. Ct. 496, 68 L. Ed. 1036 (1924); Blanset v. Cardin, 256 U.S. 319, 326, 41 S. Ct. 519, 65 L. Ed. 950 (1921); McLaren v. Fleischer, 256 U.S. 477, 481, 41 S. Ct. 577, 65 L. Ed. 1052 (1921); LaRoque v. United States, 239 U.S. 62, 64, 36 S. Ct. 22, 60 L. Ed. 147 (1915). See generally, Davis Administrative Law, § 5.06 at 324-38 (1958).

Accordingly, we conclude that withholding provisions of the 1927 Act did not apply to lands subject to pending but unperfected homestead entries under the 1908 Act.

IV

The district court rejected the Tribes' argument that Nordwick was barred by laches and estoppel on the ground that no prejudice appeared,¹⁵  citing Costello v. United States, 365 U.S. 265, 282, 81 S. Ct. 534, 5 L. Ed. 2d 551 (1961). We agree.

Affirmed.