Youpee v. Babbitt, 94-35415

• Decision Date: 05 September 1995
• Docket Number: No. 94-35415,94-35415
• Citation: 67 F.3d 194
• Parties: 95 Cal. Daily Op. Serv. 6995, 95 Daily Journal D.A.R. 11,993 Marvin K. YOUPEE, Sr.; Cary G. Youpee; Darlan D. Youpee; Allen F. Youpee; Helen Youpee-Ricker; Williamette Y. Bussard, Plaintiffs-Appellees, v. Bruce BABBITT, Secretary, Department of Interior, and his Agents, Assigns, and Successors in office, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 194

67 F.3d 194

95 Cal. Daily Op. Serv. 6995, 95 Daily Journal

D.A.R. 11,993

Marvin K. YOUPEE, Sr.; Cary G. Youpee; Darlan D. Youpee;

Allen F. Youpee; Helen Youpee-Ricker;

Williamette Y. Bussard, Plaintiffs-Appellees, v. Bruce BABBITT, Secretary, Department of Interior, and his

Agents, Assigns, and Successors in office,

Defendant-Appellant.

No. 94-35415.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 8, 1995.

Decided Sept. 5, 1995.

Lois J. Schiffer and Andrew C. Mergen, United States Department of Justice, Washington, DC, for the defendant-appellant.

Rene A. Martell, Montana Legal Services, Wolf Point, Montana, for the plaintiffs-appellees.

Appeal from the United States District Court for the District of Montana.

Before: WRIGHT, BEEZER and HAWKINS, Circuit Judges.

OPINION

BEEZER, Circuit Judge:

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. Sec. 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. Sec. 1291 and affirm.

I

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. ¹ 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, 107 S.Ct. 2076, 2079, 95 L.Ed.2d 668 (1987).

Recognizing the problem, Congress discontinued further Indian land allotment. Indian Reorganization Act of 1934, 25 U.S.C. Sec. 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, 107 S.Ct. at 2079. 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 a vested right of transferring an interest in land at death, thus invoking Fifth Amendment protection. Id. at 1268-69.

The Supreme Court affirmed. Hodel v. Irving, 481 U.S. 704, 107 S.Ct. 2076, 95 L.Ed.2d 668 (1987). The Court first noted that the plaintiffs had standing to challenge the escheat provision. The plaintiffs suffered injury-in-fact, satisfying Article III of the Constitution, because they were deprived of fractional interests they otherwise would have inherited. Id. at 711, 107 S.Ct. at 2080. The plaintiffs also satisfied the prudential standing doctrine because they could appropriately assert the claims of the decedents. Id. The Court then held that Section 207 of ILCA constituted an unconstitutional taking. While recognizing Congress' broad powers to regulate Indian land, the Court held that the escheat provision at issue "went too far" and that it was an extraordinary regulation of privately owned land. Id. at 716, 718, 107 S.Ct. at 2083, 2084.

First, the Court noted that while the income generated by the individual parcels may be de minimis, the value of the land itself may not be. Id. at 714, 107 S.Ct. at 2082. Second, the statute was unconstitutional because it completely abrogated a decedent's right to transfer land, thereby destroying "one of the most essential sticks in the bundle of rights that are commonly characterized as property--the right to exclude others." Id. at 716, 107 S.Ct. at 2083 (quoting Kaiser Aetna v. United States, 444 U.S. 164, 176, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979)). Although the decedents could enjoy the use of the land during their lifetime and could transfer the land inter vivos, "the right to pass on valuable property to one's heirs is itself a valuable right." Id. at 715, 107 S.Ct. at 2082. The Court observed that the statute abolished the right to devise even when consolidation of the land could occur.

Finally, the Court recognized the serious problem of extreme fractionation of Indian lands. The Court encouraged Congress to ameliorate this problem and suggested that some regulation of descent and devise of Indian lands may be appropriate. Id. at 718, 107 S.Ct. at 2084.

While Hodel was pending before the Eighth Circuit, Congress amended the escheat provision of ILCA. However, the Supreme Court declined to address the amended version because none of the land at issue escheated pursuant to the amended statute. The amended version is the subject of this appeal.

The escheat provision was amended in three significant respects. First, the class of land subject to escheat was narrowed. The definition of "fractional interest" changed to a 2 per centum or less interest in a parcel which did not earn $100 in any of the five years prior to the date of the decedent's death. 25 U.S.C. Sec. 2206(a). Second, the statute permits landowners to devise their interest to any other owner of an undivided fractional interest. 25 U.S.C. Sec. 2206(b). Finally, the statute permits a tribe to adopt its own laws governing the disposition of escheatable interests, subject to the approval of the Secretary of the Interior. Under amended Section 207, the Secretary may not approve any tribal law which "fails to accomplish the purpose of preventing further descent or fractionation of such escheatable interests." 25 U.S.C. Sec. 2206(c). ²

II

William Youpee ("Mr. Youpee") was an enrolled member of the Sioux and Assiniboine Tribes of the Fort Peck Reservation. He died testate on October 19, 1990. During his lifetime, he possessed several undivided interests in allotted trust land on various Indian reservations. ³ The plaintiffs, Marvin K. Youpee, Sr., Cary G. Youpee, Allen F. Youpee, Helen Youpee Ricker, Williamette Y. Bussard and Darlan D. Youpee ("the plaintiffs") are enrolled members of the Fort Peck Tribes and are the children and potential heirs of William Youpee.

Mr. Youpee's estate was assigned to a Department of the Interior Administrative Law Judge ("ALJ") to determine the heirs of Mr. Youpee and claims against his estate. At a hearing, the ALJ stated that various certified interests would escheat to various tribes under the amended ILCA, based on Bureau of Indian Affairs certifications that Mr. Youpee's interest in the allotments at issue was 2% or less and the designated devisees were not owners of existing shares of any of the allotments. The plaintiffs did not present any evidence to rebut the presumption of escheat. In April 1992, the ALJ issued an order validating Mr. Youpee's 1981 will and decreed the partial distribution of Mr. Youpee's estate.

The plaintiffs appealed the decree of the partial distribution to the Department of the Interior Board of Indian Appeals arguing that the escheat provisions of ILCA were unconstitutional. The Board of Indian Appeals dismissed this appeal stating that it did not have jurisdiction to determine constitutional issues.

The plaintiffs then filed this action in the district court against Defendant Bruce Babbitt, his agents and assigns ("the Government"). The district court granted summary judgment in favor of the plaintiffs holding that they had standing to assert Mr. Youpee's claim and declaring that amended Section 207 of ILCA violated the Takings Clause of the Fifth Amendment. The Government timely appealed. On appeal, the Government concedes that the plaintiffs have standing to assert the claim of their father but contests the declaratory and injunctive relief ordered by the district court.

III

We review de novo the grant of summary judgment. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). A challenge to the constitutionality of a federal statute is also reviewed de novo. Apache Survival Coalition v. United States, 21 F.3d 895, 901 (9th Cir.1994).

IV

The Government argues that amended Section 207 cures the unconstitutional...