The Oklahoma Bar Journal April 2024

received more than $1 in annual rent. 25 This property is extremely difficult to lease because, on one hand, it is inherently challenging for the lessee to obtain consent from hundreds of co-owners, and on the other hand, the owners have very little incentive to agree since they stand to receive so little bene fit. The unfortunate reality is that many allotments remain entirely unproductive for these reasons. EARLY EFFORTS TO ADDRESS FRACTIONATION Even during the allotment era, the federal government began to realize the problem of fraction ation. 26 By the 1960s, fractionation was the subject of hearings and studies by the U.S. Congress. 27 In 1983, Congress passed the Indian Land Consolidation Act (ILCA). Among other things, the ILCA tried to reduce fractionation by mandating the escheat of very small fractional interests back to tribes upon the death of the owner. 28 The original version of the ILCA provided that a frac tional interest of 2% or less of the total acreage of the allotment that had earned its owner less than $100 in the preceding year would not descend by intestacy or devise to the owner’s heirs but would instead escheat to the tribe. The U.S. Supreme Court struck down this provision of the ILCA as an unconstitutional taking without just compensation. 29 It found the restriction on the ability to freely pass the property interests to one’s heirs “extraordinary.” 30 Congress amended the law in 1984 to try to cure these deficiencies, but the Supreme Court struck down the amended version of the ILCA for the same reasons in 1997. 31

any of the other potential benefits of that land ownership.” 21 In this way, “the legacy of allotment” 22 endures despite the formal end of the policy in 1934. A simple example illustrates the problem of fractionation. Most allotments in Oklahoma were issued around 1900. If the recipient of the allotment – the “allottee” – had three children, and each child had three children of their own and so on, within six generations (approximately 120 years or roughly the present day), there would be 243 heirs and potential co-owners. If you increase the average to four children, within six generations there would be over 1,000 heirs and potential co-owners today. The sheer number of co-owners “prevents efficient use of the property [and] impedes individual and community economic devel opment.” 23 Title to the property is often unclear because there is little incentive to probate an estate with such a small ownership interest. Without a clear title, many pro spective purchasers or lessees view transactions involving the land as too risky. Moreover, under federal regulations governing the leasing of allotted lands, no lease may be granted on a highly fractionated tract unless 50% of the co-owners consent. 24 With so many co-owners, it is often time-consuming to locate and obtain the consent of the req uisite number of owners, a factor that may dissuade potential lessees from pursuing the transaction. Often, the value of the transaction is simply not worth the adminis trative hurdle for both the lessee and the owners. For example, the U.S. Supreme Court recounted an instance where a tract of land producing $1,080 in annual income had 439 owners, none of whom

THE LAND BUY-BACK PROGRAM FOR TRIBAL NATIONS In Babbitt v. Youpee , the Supreme Court observed that although forced escheat of small fractional property interests violated the Constitution, the government was free to “pursue other options to achieve consol idation including Government purchase of the land.” 32 Congress followed this advice in authoriz ing the LBBP. 33 The LBBP was part of the settlement of the Cobell v. Salazar litigation. Congress appro priated $1.9 billion for a land con solidation fund for the purchase of fractional interests in trust or restricted allotments. Owners had to be paid the fair market value of their fractional interests. By all accounts, the LBBP was a resounding success. Although up to 15% of the fund could be spent on administrative and implementa tion costs, less than 8% was spent, freeing up more than $135 million for the purchase of additional fractional interests. 34 More than 1 million fractional interests were consolidated, comprising about 2.9 million acres. 35 Tribal owner ship increased in more than 50,000 different tracts, and the number of tracts in which tribes now own a majority interest increased by approximately 100%. 36 More than 123,000 willing sellers received $1.69 billion in total payments. 37 Despite the overwhelming success of the program, there were shortcomings. Most fundamen tally, the $1.9 billion that Congress authorized was not sufficient to comprehensively address the frac tionation problem. The LBBP “was unable to implement land pur chases at 63 percent of the approx imately 150 unique locations with fractionated land, involving nearly

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

30 | APRIL 2024

THE OKLAHOMA BAR JOURNAL