Appeal from the United States District Court for the District of Montana. D.C. No. CV-93-00021-JDS. Jack D. Shanstrom, District Judge, Presiding.
Before: Eugene A. Wright, Robert R. Beezer and Michael Daly Hawkins, Circuit Judges. Opinion by Judge Beezer.
Congress has tried for many years to solve the problem of fractionation of Indian lands. The Supreme Court held Congress' first effort, Section 207 of the Indian Land Consolidation Act, an unconstitutional taking without just compensation. Congress' second effort, amended Section 207, is before us now.
The district court held that amended Section 207 of the Indian Land Consolidation Act ("ILCA"), 25 U.S.C. § 2206, violates the Takings Clause of the Fifth Amendment. The district court also enjoined the defendants from acting under Section 207 to escheat certain lands to Indian tribes. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.
In the late Nineteenth Century, Congress initiated an Indian land policy under which lands would be allotted to individual members of Indian tribes. General Allotment Act of 1887, ch. 119, 24 Stat. 388.*fn1 The land was held in trust by the Government for a specified period of time and then descended according to the law of the state in which the land was located. After 1910, allottees were permitted to devise the allotted land by last will and testament in accordance with regulations promulgated by the Secretary of the Interior.
This land allotment policy led to disastrous results for the Indians. As successive generations came to hold the land, large parcels of land became fractionated into multiple undivided interests, with some parcels having dozens of owners. Representative Howard, in discussing the Indian Land Reorganization Act of 1934, explained the problem:
On allotted reservations, numerous cases exist where the shares of each individual heir from lease money may be 1 cent a month. Or one heir may own minute fractional shares in 30 or 40 different allotments. The cost of leasing, bookkeeping, and distributing the proceeds in many cases far exceeds the total income.
78 Cong. Rec. 11,728 (1934) quoted in Hodel v. Irving, 481 U.S. 704, 708, 95 L. Ed. 2d 668, 107 S. Ct. 2076 (1987).
Recognizing the problem, Congress discontinued further Indian land allotment. Indian Reorganization Act of 1934, 25 U.S.C. § 461. The land allotments continued to splinter, however, as each landowner generally had more than one heir. Congress then enacted ILCA in 1983. The escheat provision, Section 207, provided:
No undivided fractional interest in any tract of trust or restricted land within a tribe's reservation or otherwise subjected to a tribe's jurisdiction shall decedent [sic] by intestacy or devise but shall escheat to that tribe if such interest represents 2 per centum or less of the total acreage in such tract and has earned to its owner less than $100 in the preceding year before it is due to escheat.
Hodel, 481 U.S. at 709. Congress did not provide for compensation to the landowner of the land subject to escheat. Id.
The escheat provision was challenged by the heirs or devisees of members of the Oglala Sioux Tribe. At the time of their deaths, the decedents owned fractional interests in land subject to the escheat provisions. Id. The Eighth Circuit held that the statute violated the Takings Clause because it did not provide compensation to the decedents' estates. Irving v. Clark, 758 F.2d 1260 (8th Cir. 1985). Irving held that the General Allotment Act granted each decedent ...