BABBITT v. YOUPEE
A late nineteenth century congressional Indian land program resulted in the extreme fractionation of Indian lands as allottees passed their undivided interests on to multiple heirs. In 1983, Congress adopted the Indian Land Consolidation Act to reduce the fractionated ownership of allotted lands. Section 207 of the Act--the "escheat" provision--prohibited the descent of fractional interests that constituted 2 percent or less of the total acreage in an allotted tract and earned less than $100 in the preceding year. The interests described in Section 207 would escheat to the tribe, thereby consolidating the ownership of Indian lands. Section 207 made no provision for the payment of compensation to those who held such fractional interests. The U.S. Supreme Court invalidated the original version of Section 207 on the ground that it was a taking of private property without just compensation, in violation of the Fifth Amendment. Congress then amended Section 207. which looks back five years instead of one year to determine the income produced from a small interest. The will of William Youpee, an enrolled member of the Sioux and Assiniboine Tribes, devised to the respondents, all of them enrolled tribal members, his several undivided interests in allotted lands on reservations. An administrative law judge found that interests devised to each of the respondents fell within amended Section 207 and should therefore escheat to the relevant tribal governments. The respondents, asserting the unconstitutionality of amended Section 207, appealed the order to the Board of Indian Appeals, which dismissed the appeal. The respondents then filed a suit against the Secretary of the Interior, alleging that amended Section 207 violates the Just Compensation Clause of the Fifth Amendment. The District Court agreed with respondents. The Court of Appeals affirmed.
Does amended Section 207 of the Indian Land Consolidation Act violate the Fifth Amendment's Just Compensation Clause?
Legal provision: 25 U.S.C. 2206
Yes. In an 8-1 decision, authored by Justice Ruth Bader Ginsburg, The Court ruled that the amended Section 207 of the Indian Land Consolidation Act does not cure the constitutional deficiency The Court identified in the original version of Section 207, which amounted to a taking of private property without just compensation, in violation of the Fifth Amendment. Justice Ginsburg wrote Section 207 is unconstitutional because it "severely restricts the right of an individual to direct the descent of his property."
CHIEF JUSTICE WILLIAM H.REHNQUIST: We'll hear argument now in Number 95-1595, Bruce Babbitt v. Marvin K. Youpee, Sr. Mr. Feldman.
MR. FELDMAN: Mr. Chief Justice and may it please the Court: This case concerns the constitutionality of section 2--of the amended version of section 207 of the Indian Land Consolidation Act. The unamended version of this statute was before this Court almost 10 years ago in Hodel v. Irving,T and the Court found it unconstitutional. Our submission is that the amended statute remedies the flaws that this Court found in the original version of the statute, and the amended statute is therefore constitutional.
Now, the purpose--the statute arose as a response to what this Court has characterized in Hodel as the extraordinary problem of extreme fractionation of Indian trust lands. Such extreme fractionation when many people combine to own undivided interests in single parcels of land makes productive use of the land very difficult. If a given parcel has a large number, sometimes in the hundreds of different owners, it's very hard for anyone to take initiative to see to it that the parcel is put to a productive economic use.
JUSTICE SANDRA DAY O'CONNOR: Mr. Feldman, in this case, under the facts of this case, did the disposition of the land in question further fractionalize it or did one person take each interest as a whole? I mean, one daughter took some, and a son took all of another, the interest in another tract, and so on? It was not further fractionalized, was it, in this case?
MR. FELDMAN: That's correct. I mean, actually--in respect to one parcel of land was further fractionated, but that was not a parcel that was subject to a--
JUSTICE O'CONNOR: Right.
MR. FELDMAN: It was small enough--
JUSTICE O'CONNOR: Right.
MR. FELDMAN: The decedent--
JUSTICE O'CONNOR: Does that make a difference, do you think, in our analysis?
MR. FELDMAN: No, I don't think it does. In Hodel v. Irving what the Court held was that the extreme fractionation is a serious problem, and that--
JUSTICE O'CONNOR: But we nevertheless thought it was a taking in that case.
MR. FELDMAN: Right. It was a taking because--because such small--because--excuse me. Let me start again. The Court held in Hodel that there was a taking because it completely and totally eliminated all rights of descent and devise for the land and, as the Court said twice in its opinion, even when permitting descent or devise would result in a consolidation of the land. In this case none of the--none of the interest that they had passed effectively through the will would have resulted in such a consolidation of the land and, indeed, in Hodel v. Irving when the Court--in one of the places where the Court made that comment it put a Cf cite specifically to the amended version of the statute.
Now, the amended version of the statute in our view remedies the flaws in the original statue in two ways. In the first place, in connection with the economic impact of the statute, the amended--the original statute required that land be escheated if in the 1 year prior to the decedent's death it had not earned more than $100, and if the interest involved was less than 2 percent. The amended version of the--
JUSTICE O'CONNOR: Well now, let's talk about the amended version a little. Subsection (a) of 207 says if the land is incapable of earning $100 in any one of the 5 years from the date of decedent's death, and where the factional interest has earned its owner less than $100 in any one of the 5 years before the decedent's death there's a rebuttable presumption-
MR. FELDMAN: Yes.
JUSTICE O'CONNOR:--that applies.
MR. FELDMAN: If I may, if I can take the first passage that you quoted, it's our position that that is ambiguous, and that the--it is true that the any one--incapable of earning $100 in any one of the 5 years could mean in any of the 5 years or in any one--
JUSTICE O'CONNOR: Well, that would be the normal reading of it, I suppose.
MR. FELDMAN: Well--
JUSTICE O'CONNOR: I had a hard time understanding your reading of it, which would read in the word each of the 5 years.
MR. FELDMAN: No--well, I think any in some circumstances can mean each, especially when it's conjoined with the negative, but let me just abstract from that for a minute. In the first place, that issue isn't presented by this case because no one has claimed that our reading of the statute in this case was wrong, but more importantly, the kinds of lands that we're generally dealing with here are lands that are useful primarily for grazing or for mineral leasing, and as a general matter it doesn't really make-- it will be a very small number of cases where which year you're looking at is going to be an important factor. If it can be leased for a 5-year period for grazing, it will be leased at about the same amount of money every year.
JUSTICE ANTHONY KENNEDY: What about timber?
MR. FELDMAN: Well, and if it can be leased for timber harvest it might be more than a 5-year period that a lease would permit, but still--
JUSTICE KENNEDY: Well that's--I asked--you said it's mostly grazing and mineral. Does the record support that, and not timber, because one of my concerns along the lines of Justice O'Connor's questioning under this statute is that timber harvesting typically is--oh, some parts of California at least once every 15 years.
MR. FELDMAN: Right. As our reading of the--
JUSTICE KENNEDY But it could be very valuable in that one year.
MR. FELDMAN: That's right. In our reading of the statute, because the other key part of the change is not only that it changed to a 5-year period, but the question is whether it's capable, not whether in fact in any given year it earns an amount--
JUSTICE ANTONIN SCALIA: What point does this go to? Does it go to the point that if the Government only takes a little bit of value it's not a taking?
MR. FELDMAN: No. It--
JUSTICE SCALIA: Do we have any law that says that a de minimis taking is not a taking?
MR. FELDMAN: No, but it--I think it does go to the fact that Congress more carefully tailored what it did in this statute to just those interests that were causing the serious problem. When someone owns the smallest interest that was involved in this case--I think it was 5/1000ths of the parcel, and when people--
JUSTICE SCALIA: Yes, but it doesn't go to the extent of the interest. It goes to the value of the land more than the extent of the interest, or at least as much to the value of the land as the extent of the interest, right?
MR. FELDMAN: It goes--
JUSTICE SCALIA: I mean, you could have a pretty big chunk of an interest of worthless land and--you know, worthless for anything except perhaps camping on it.
MR. FELDMAN: Right, but Congress was trying to define a category of land that was really causing the problem, and in the amended version of the act it acted much more closely and precisely to target that particular land.
For example, by referring to land that's capable of earning $100 rather than land that had in a certain year earned $100, someone whose land might escheat might go into a court and say, well, this can be harvested for timber every 15 years, therefore I can lease the land to somebody for a 15-year period, and if the annual rental on that lease will result in more than $100 for me, then I'm out of the statute.
It's--it was really the change to a capable-of-earning standard as much as focusing on the 5 years versus 1 year that was significant.
*JUSTICE JOHN PAUL STEVENS: I must admit, one has to marvel at the prognosticative ability, or else the serendipity of the Congress, that 3 years before our opinion in Hodel it should pass a statute which happens to solve the very things we were troubled with in Hodel.
MR. FELDMAN: Well, I think that in fact the two key things that the Court pointed out in Hodel that it was most concerned about were first that this--taking just one arbitrary year before the decedent died might really result in the escheat of very valuable interest, and secondly that it completely and totally abolished all descent and devise, even in cases where descent and devise might consolidate interests. What Congress did was, it remedied the first problem primarily by talking about capable of earning, rather than just what it had in fact earned, and in addition by setting up this 5-year window rather than just 1 year before the decedent's death, and it dealt with the second problem by permitting devise in precisely those cases where the devise would result in consolidation of the property.
The kind of property interest that we're talking about here, the smallest interest in this case, as I said, was something like 5/1000ths of a percent, and people who own that small of a property interest can't reasonably be expected, or at least very infrequently will take enough of an interest in the property to do anything with it to--
JUSTICE SCALIA: I don't know that we said in Hodel that there wasn't enough of a need. It seems to me what we said in Hodel is simply, you--an essential part of the bundle of property rights is the ability to bequeath it, and if you take that away, you've taken property, period.
MR. FELDMAN: I think, as I read the--as I read the Court's opinion, what it was speaking of was the complete and total and absolute abrogation of rights of descent and devise. After all, the Court reaffirmed a long line of precedent that had held that the Government has very broad authority to regulate the rules of descent and devise. In this case, this kind of rule is analogous both to typical escheat rules, which are kind of abandonment rules, where you have a very small interest, you can't really expect the owner to do anything, he doesn't have enough of an economic incentive to ever do anything with the property, even to return a post card, perhaps, that--where someone proposes a use of the property that requires his consent, and what Congress was saying was, if that's the kind of interest you have, that is imposing serious costs on the community, and we're going to presume that you abandoned it unless you did one of three things.
Either, during your lifetime, you unite it with another interest and consolidate your interest and get above the 2 percent threshold, or second, you can dispose of the property during your lifetime and thereby--and pass on-- you can certainly pass on any money that you're able to realize by disposing it to your heirs by descent or devise, or however it can be passed on, or three, you can pass it on by--through--after your death, through a probate proceeding, but you can only devise it to somebody who already owns an interest in the same property.
JUSTICE DAVID H. SOUTER: Doesn't that effectively mean that you can't devise it to the people you are most likely to want to devise it to? I mean,
I presume it is highly unlikely that the people who are already owners of the parcel are related to you, or lineal descendants of yours, so I suppose that really cancels out most of the prospective devises, doesn't it?
MR. FELDMAN: I actually don't think that's true. As a matter of fact, in this very case one of the six respondents got three properties that she wouldn't otherwise have gotten, because she was a daughter of the decedent, and she already owned interest in those properties.
But more generally, what's caused the problem that Congress was addressing here was kind of--was rules of descent, was primarily rules of descent that allowed the land to be fractionated over the years, and frequently the land will be held within a given lineal family. Perhaps it's branched out quite a bit by the time it gets to the third or fourth generation.
JUSTICE SOUTER: We--
MR. FELDMAN: So generally it will be other--or at least, very frequently it will be other people who you do have a family tie to, who are--
CHIEF JUSTICE REHNQUIST: But you're talking about collateral heirs, a quite distant relationship if you get to the third or fourth generation, aren't you?
MR. FELDMAN: You might be. You might well be, although as I said in this case one of the people was a daughter, but certainly many of them, some of the other five didn't get any land on that basis, and didn't already own interest in the parcels.
JUSTICE SCALIA: Mr. Feldman, I don't read Hodel as resting upon the total elimination of the ability to devise. It just doesn't say that. It says--it says the regulation here amounts to virtually the abrogation of the right to pass on a certain type of property, the small, undivided interest, to one heir--to one's heirs. Not totally, virtually.
MR. FELDMAN: Right, and--
JUSTICE SCALIA: And it does virtually that here, too.
MR. FELDMAN: And the Court--I would say the Court also said in Hodel the difference in this case from the other cases that the Court reaffirmed that have affirmed the authority of the sovereign to set rules of descent and devise, the difference in this case is the fact that descent and devise are completely abolished. Indeed, they are abolished even in circumstances where the governmental purpose sought to be advanced does not conflict with the further descent of the property.
But I think, stepping aside for a minute, whether the Court's--and, indeed, I think the question before the Court today is the question of whether Hodel rested on the complete abrogation of descent or devise, or rested on a rule that would much more severely restrict the sovereign's ability to regulate descent or devise.
JUSTICE RUTH BADER GINSBURG: With respect to that, Mr. Feldman, I was trying to think of any other kind of regulation by the sovereign of the right to dispose of property on death that would be comparable to this, and you rely on the large power of the sovereign to regulate the disposition of property on death, and here the regulation says most lineal descendants will not qualify.
I couldn't think of anything that would be close to this. Is there any--you talk about a larger authority, but is there anything that so severely restricts the category of potential devisees?
MR. FELDMAN: I don't think--there's nothing I can--I can't answer that I can give you an example of any particular statute that does--that restricts the category of lineal devisees so thoroughly, although there may be statutes that give--include--they give an interest to a spouse, for example, over the interests of children, or something like that, that could in some circumstances have that effect, but there have been, and the Court have upheld statutes that have restricted devise to one's children. Under the common law, I believe, you couldn't devise property to an alien, real property, and even if the alien happened to be your child, and this Court has upheld that. In addition, there are in--there are rules that some Indian tribes have that you can't devise--that you can't devise property--
JUSTICE GINSBURG: But most of them come up as except--in the main, you can devise your property, but there are these exceptions, and here is in the main you can't, unless you come under the exception of somebody who already has a share of that same parcel.
MR. FELDMAN: And I think you really have to look at the unique character of this property interest, the kinds of property interests that we're talking about in this case.
JUSTICE SCALIA: Why is it unique?
MR. FELDMAN: It's unique because these interests are extremely small fractional interests, a kind of fractional interest that very, very rarely exists outside of Indian law, and that the owners may well in fact have abandoned the property.
It's very hard to tell whether they've abandoned the property because the administrative costs of leasing it insofar as it's able to be leased, or doing it with whatever can be done are borne by the United States, and because they're not subject to State taxes, and really one of--what--meanwhile this interest is both--I think it's analogous both to cases where Congress is saying owning this kind of an interest is in itself a kind of a nuisance that has to be abated, and if you don't take State action, you don't take action to abate that nuisance in the course of your lifetime by--
JUSTICE SCALIA: It was a nuisance that Congress created by--principally by prohibiting the Indians from deeding this property. Isn't that how it all came about?
MR. FELDMAN: Well, I--
JUSTICE SCALIA: Weren't there severe limits on the alienation of it by the Indians?
MR. FELDMAN: There are limits on the alienation of it--
JUSTICE SCALIA: So Congress gives this property to the Indians, puts these severe limitations on it which creates this problem of fractionalization, and then comes in and says, because of this problem of fractionalization which we've created, we're going to take it away from you.
MR. FELDMAN: I'm not sure that it's fair, though, to say that Congress created--the process of fractionalization may have been a byproduct of a number of different factors, one among them are the fact that it's not subject to State taxes, and that the Government bears the cost of administering the property, and thereby it doesn't give anybody an incentive to determine whether this is property that they really want, and really want to do something with, or if this is just abandoned property that they're just going to ignore and pass on to the next generation in equal undivided interests.
JUSTICE O'CONNOR: Well, I suppose the Government could purchase these small interests, or take them by eminent domain--
MR. FELDMAN: That's correct.
JUSTICE O'CONNOR:--paying something, and I guess the Government also could help the tribes do just that.
MR. FELDMAN: That's correct, although the magnitude of the problem--you know, each of these interests--in this case some of the interests are an estimated value of $5, or $10, or $15, but the magnitude of the problem over millions of acres of Indian land, where the ownership is highly fractionated, is very, very substantial, and Congress reasonably--
JUSTICE O'CONNOR: But Congress has imposed so many detailed requirements on efforts by the tribes to consolidate. Maybe some of those could be eliminated--
MR. FELDMAN: I think actually--
JUSTICE O'CONNOR:--and make it simpler.
MR. FELDMAN: Actually, I'm sure there's room for improvement in the statutory schemes here, but in the Indian Land Consolidation Act and some of the other provisions that are right, I think--this is codified at 29 U.S.C. 2206 at 2205, 4, 3-- there are some other provisions Congress enacted to enable tribes to take a variety of actions to purchase land or to consolidate interests on the reservation. And in fact in 2206(c), I think it is, the very section we're talking about,
Congress specifically indicated that if a tribe wanted to adopt a code of inheritance that would deal with--that would also deal with this fractionation problem in some other way, that that could be approved by the Secretary--
JUSTICE STEVENS: Mr. Feldman, can I ask you sort of a basic question? Supposing Congress gave plenty of notice to the Indians--you know, I suggested that in the Hodel case-- say that 20, a statute to take effect 20 years after its date, say, no Indian property may be passed by--at death to heir--to anybody. Just, period. It will all escheat to the tribe. Would that violate the Takings Clause?
MR. FELDMAN: I'm sorry, that no--
JUSTICE STEVENS: Just, all property owned by any member of the tribe shall escheat to the tribe at death, but would not interfere with the owner's right to dispose of it inter vivos at any time during the 20 years. Would that violate the Takings--
MR. FELDMAN: I think it would under this Court's decision in Hodel, in fact, at least, and insofar as that was based on prior cases, I think it would violate the Takings Clause on that basis as well. There really wasn't-- although there really wasn't an alternative for Congress' action that it took in this case, by--section 2206 does two things. First, it eliminates the right of devise of these very small fractional interests.
In doing that, the Court itself in Hodel suggested that that's something that Congress may well want to--may be able to do, and indeed, insofar as the statute has only that effect, it should be held constitutional insofar as it affects people who didn't go to the trouble of making a will to determine who an heir of a particular property should be.
JUSTICE O'CONNOR: Well, does the amended statute prevent descent, I assume without a will, of an interest even where the descent under the circumstances would result in a consolidation?
MR. FELDMAN: It doesn't do that, but if you think about it, it would be a very, very rare case where that will happen.
JUSTICE O'CONNOR: It seems to say so.
MR. FELDMAN: It would--
JUSTICE O'CONNOR: It says nothing in this section shall prohibit the devise--
MR. FELDMAN: Right.
JUSTICE O'CONNOR:--of such an escheatable fractional interest.
MR. FELDMAN: Right.
JUSTICE O'CONNOR: But if there's an intestate succession--
MR. FELDMAN: No, I agree with you, I think that it would prevent any descent, that it's--what it's saying--
JUSTICE O'CONNOR: Even if it results in a consolidation.
MR. FELDMAN: Right, but it will be a very unusual situation where descent would--descent was what caused the problem, and it would be a very unusual situation where that would result in consolidation, because if somebody who has an interest, passes it to his two, three, four, five, six, however many there are children, they're each going to get a smaller part of that, and even if one of them already owns a very small interest in the property, it's going to be very unlikely that it's going to result in--it's almost certain to result in increased fractionation, and so I don't think Congress had to go that far in order to remedy the problem, and indeed--
JUSTICE GINSBURG: What do--
MR. FELDMAN: I was just going to say that I do think, as I was saying before, that the statute should be--would be constitutional at least insofar as it prohibits descent, and if there is a case like that out there--
JUSTICE GINSBURG: But Mr. Feldman, isn't that a--I know you asked us to say, at least with respect to descent or further fractionalizing a share by devise, but those people are not before this Court, and we do have these people who were devised shares that were not reduced further by the devise.
We can decide that case. But isn't there something about procedural due process that would inhibit us from deciding the cases of people who have not been given notice and an opportunity to be heard that their cases are going to be affected by this?
MR. FELDMAN: Yeah--I'm not suggesting the Court should decide any case that's not before it, but I do think--there's two points. One is, we are asking the Court to make clear that this is an as-applied challenge in this case, and that there are these other kinds of cases, including a large number where there's no will at all, and where the decedent--
JUSTICE GINSBURG: Those could be left open, but I don't--
MR. FELDMAN: Those at least should be left open--
JUSTICE GINSBURG: And--
MR. FELDMAN:--and it may well be that the Court's reasoning, although we don't--reasoning--if it were to reach the conclusion that the statute's unconstitutional as applied here, the Court's reasoning may well make clear that in these other contexts it would be constitutional, albeit those cases themselves would be left for another time.
JUSTICE STEVENS: May I modify my hypothetical? Suppose instead of prohibiting both devise and intestacy, it simply prohibited intestacy. No property of any Indian shall pass by reason of intestacy, but all-- if there's no will the property will all escheat to the State--to the tribe, rather. Do you think that would be constitutional?
MR. FELDMAN: I think it--I suppose it might depend at least in part on what it is that Congress is intending to accomplish by that. If all that Congress is intending--
JUSTICE STEVENS: Intending to consolidate property interests that are small and fractionated in the--
MR. FELDMAN: Right, but--
JUSTICE STEVENS:--in the tribe.
MR. FELDMAN: Well, insofar as it deals with just very small fractionated interests, our argument is that it would be constitutional, but if a statute like that also applied to, for instance, entire interests in the property, then it's hard to see what it would be trying to accomplish, other than just--it wouldn't be remedying any kind of nuisance--
JUSTICE SCALIA: Well--
MR. FELDMAN:--for the community. It wouldn't be solving any adverse problem that seems to be occurring, and I think in those cases there would be a problem under the Penn Central analysis.
JUSTICE SCALIA: You're saying property you don't care enough to will it to anybody goes back to the tribe.
MR. FELDMAN: Well, I--it's--
JUSTICE SCALIA: We said in Hodel, Justice O'Connor's opinion said that it may be appropriate to minimize further compounding by abolishing the descent of such interest by rules of intestacy.
MR. FELDMAN: Right, and it's possible--
JUSTICE SCALIA: Thereby forcing the owners to formally designate an heir--
MR. FELDMAN: Right.
JUSTICE SCALIA:--to prevent escheat.
MR. FELDMAN: It's possible that a statute like that would be constitutional and, indeed, there are other contexts--
JUSTICE SCALIA: That would solve a lot of the problem, wouldn't it?
MR. FELDMAN: To--it would solve--
JUSTICE SCALIA: And it would focus especially on these little interests that are so insignificant that, you know, the person doesn't care enough--
MR. FELDMAN: I don't--
JUSTICE SCALIA:--to even mention in a will.
MR. FELDMAN: I don't believe it would--the problem is, I don't believe it would focus on those interests. It would--a statute--if we're talking about a statute that would limit devise of all interests in allotted trust lands, it would sweep far more broadly.
JUSTICE SCALIA: Intestate. Eliminate intestate--
MR. FELDMAN: All intestate.
JUSTICE SCALIA: Yes.
MR. FELDMAN: All intestate descent. I think it would focus far more broadly than is necessary or suggested, but I think the Court--there would be authority for that kind of an outcome, if Congress did not act too broadly. For example, in United States v. Locke, and in Texaco v. Short, the Court dealt with cases that involved people who, in order to maintain a very real ownership interest--in this case I think it was mineral leases-- they had to take some kind of action like filing a paper or something like that with a recorder of deeds. If that kind of thing were required, if a will were seen as equivalent to taking that kind of action, then I think a statute like that would be constitutional.
JUSTICE STEVENS: Then it seems to me if you haven't gone that far, really--if you said that was okay, I don't know why you can't say we're going to insist on inter vivos action in order to protect the value and the interest.
I'm making you argue the wrong side of the case, I guess. I shouldn't do this.(Laughter.) But if you're going to abolish intestacy, I don't know why--and say you've got to show sufficient interest in the property to identify it in your Last Will and Testament.
I don't know why you couldn't similarly--if the property owner has plenty of notice, plenty of time to prepare his or her affairs, say you must dispose of it inter vivos in order to preserve the value, and then you can leave the cash to somebody else, because there is a national interest in getting rid of these fractionated interests.
MR. FELDMAN: Yes I--I can only answer that I think that it may be that you could do that--
JUSTICE STEVENS: Well--
MR. FELDMAN:--but that what Congress did in this case is much more narrowly tailored to dealing with--
CHIEF JUSTICE REHNQUIST: A great many wills don't simply set out parcels of property and do nothing else. They'll devise the residuary estate, everything else I have, which would pick up these fractional interests, so wills wouldn't necessarily pick out this property. The person who writes the will may have no more idea that he has the interest than the person who lets it go by intestate succession.
MR. FELDMAN: Right. Indeed, the will in this case, actually a number, maybe 15 or so of the interests that escheated here were, I think, escheated from someone who just got them as a result of a residuary clause in the will in this case.
JUSTICE KENNEDY: Are any of the Indian lands in question here ever subject to partition? Suppose three or four owners are in a real dispute over what to do with the land, do they have a remedy of partition?
MR. FELDMAN: Under some circumstances, yes. All I can say is that there's dispute as to whether it can be done--it requires a majority of the ownership interests in order to seek partition, or whether it requires all the owners to agree to partition.
JUSTICE KENNEDY: And if it does, I suppose that only certain authorized persons at the sale, because it can't be devised to a non-Indian.
MR. FELDMAN: It can be--right, it can't be. That's right. Well--
JUSTICE KENNEDY: Or transferred to a non-Indian.
MR. FELDMAN: It can be--if an Indian has an ownership interest in a parcel of land and seeks to take it out of trust status, ordinarily if the person is competent the Secretary agrees to that, and then at that point it can be transferred--
JUSTICE KENNEDY: But who would be the bidder at the partition sale, if there are limited--if there are a limited number of--
MR. FELDMAN: No, I--
JUSTICE KENNEDY:--qualified owners?
MR. FELDMAN: I think--I believe there would be authority even to take it out of trust status, take--to view the, let's say a unanimous application by the owners, to view that as their request to take it out of trust status--
JUSTICE KENNEDY: Well, but then it wouldn't be partitioned.
MR. FELDMAN: Well, they'd sell it and then--
JUSTICE KENNEDY: If it's unanimous, you don't need partition.
MR. FELDMAN: Well, they'd want to sell it and then it would be partitioned, but I do think that partitioning as a practical matter is not really a solution to the problem, because taking a parcel of land, especially with the size of some of these ownership interests involved, and trying to figure out how fairly to divide it up so the economic value of what you're getting is equal to your ownership interest is extraordinary difficult.
JUSTICE STEPHAN GERALD BREYER: But that's just what happens in the--I mean, outside of the Indian law, isn't that what happens?
MR. FELDMAN: Right, but--
JUSTICE BREYER: And moreover, hasn't that stopped the proliferation of these interests? In other words, why can't you do precisely the same thing in respect to the small interests in the indian territory that you do in respect to the small interests in respect to non-Indian territory?
MR. FELDMAN: I think--
JUSTICE BREYER: You give people the right to partition, or to ask for it, and the person who owns $5-worth of land says, you know, I'll sell it to him for the $5. I'm not going to go to court for that.
MR. FELDMAN: Right. I think the problem is that it's very rarely the case outside of the Indian contexts where these very, very small--
JUSTICE BREYER: That's because we've had that system.
MR. FELDMAN: The fractions are so small that it gets to be very, very cumbersome to effectively partition, or even to--well, I guess it could be sold, but--
JUSTICE BREYER: No, I thought--my point is I thought that outside the Indian context we find that we don't have this problem because there are these mechanisms in place, and so if you--why couldn't you, instead of taking the thing away, just put the same mechanisms in place? I'm not arguing that.
MR. FELDMAN: But you have--
JUSTICE BREYER: I'm just--what the reason is. What is the reason why that hasn't happened--
MR. FELDMAN: I think--
JUSTICE BREYER:--or wouldn't happen, or couldn't?
MR. FELDMAN: I think the reasons is because in order to partition--I suppose one reason is that it is thought that you don't want to just dispossess all of these Indians of their land because perhaps some owner of a very small interest doesn't--wants to have it partitioned.
CHIEF JUSTICE REHNQUIST: Well, it's one thing, too, for an owner, say, of three-quarters of a tract to buy out fractions from the other quarter, but for someone with 3/100ths interest to start a partition proceeding, you have quite different incentives.
MR. FELDMAN: That's right, and also the one other thing I'd add is that this land is--the administrative expenses of upkeep of the land are borne by the United States, and it's not subject to State taxes, and therefore you don't have some of the incentives of why owners of land in a non-Indian context that gets fractionated would want to partition it, so you can just deal with those problems.
JUSTICE SCALIA: All of this just seems to me to say the Government has created an economic wonderland which has caused this problem. The normal market economic incentives that stop fractionalization have been taken away by the Government, and now the Government comes in with this ham-handed approach of simply solving the problem by denying the right to devise, and I don't know why it couldn't solve the problem just as readily by letting the normal incentives of the market come back into the picture.
MR. FELDMAN: I suppose the only answer is that because of--it really goes to the whole history of Indian law and all of the purposes that are served by holding the land in trust and maintaining an Indian land base that is a much more complex problem that just saying, let's take the land out of trust or whatever we would have to do and treat this like any other land.
JUSTICE BREYER: No, but let's take one of the mechanisms. It's perfectly true that for these minuscule interests it may be very cumbersome even to get the ball rolling by going into court in the normal course, filing petitions and so on.
But the Government can certainly provide a simplified partition scheme, for example, that would, I suppose, just allow an extremely simple filing before an administrative officer with a low filing fee or none at all, and that would be a way of bringing a kind of normal market mechanism adapted to the particular problem that the Government has caused. Why can't the Government do something like that?
MR. FELDMAN: There--I suppose that there are partition schemes, there are partition regulations that we cite in our brief that are currently applicable to this land that allow partition in some circumstances. But I suppose the problem is that the land, many, many people have attachments to land, especially some of the larger landowners, and they don't necessarily want their land partitioned, and it's important for the Government to keep the land as part of-- it's not important for the Government, it's important for the--for Indian policy to have the land maintained in trust for the Indians, and that carries with it a lot of other baggage that you can't just--you can't just discard to deal with this aspect of the problem.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Feldman.
MR. FELDMAN: Thank you.
CHIEF JUSTICE REHNQUIST: Mr. Martell, we'll hear from you.
MR. MARTELL: Mr. Chief Justice, and may it please the Court: We're here today to discuss the effects of the amendments on the Hodel decision. Mr. Youpee left 34 parcels to six of his children, and he left them in such a fashion that each child would be sole owner of the parcel that he left.
He pretty much is now put in the position that the plaintiffs were in the Hodel decision. The amended act does not cure the problems pointed out by the Court in the Hodel decision, and it wasn't until 1992 that this--
Congress decided to have, again, hearings on the fractionalization problem, and in 1994 the Secretary distributed for comment new amendments that had--the heart of it, of which was a revolving money fund to pay for these interests.
One of the problems that remains with the amendments now is that the amendments still try to categorize the land as de minimis by considering only the income that they generate, whereas the Court in Hodel say the proper determination is the land's actual economic value.
The economic value here is that $2,100 of these--is what these parcels are worth. That's a significant sum of money, and it's significant in Roosevelt County, which is one of the poorest counties in Montana.
Mr. Youpee's property interests, if they were partitioned, in 10 of those parcels those interests would be between 2 and 6 acres, so as the Court has said--
CHIEF JUSTICE REHNQUIST: Two and 6 acres in each parcel, or total?
MR. MARTELL: When I divided his--the acreage by his interest, in one parcel it was 6 acres, in four other parcels, those were 4-acre tracts, and in three other parcels those tracts were in excess of 2 acres, so a taking even of small land is still a taking.
Under the amendments, at 25 U.S.C. 2206(c), it appears that if the tribe wants to have a consolidation program and pay--and--excuse me, a consolidation program and have--add within their code how they're going to treat descent and distribution, and that code disenfranchises nonmember Indians and non-Indians, that they have to pay fair market value for those interests that they get as a tribe. The second problem here is that the option of inter vivos transfers do not cure the taking.
Mr. Youpee has virtually no opportunity to leave his land to his children. It is only through a devise of his land that he would be able to, and that's only if his children are already owners.
CHIEF JUSTICE REHNQUIST: Well, why would that be, Mr. Martell? I would think that if he knows who he might devise it to, which among his children, he might also make an inter vivos transfer to those children, unless he's dependent upon income from the property.
MR. MARTELL: He wasn't dependent on income. It's just such a headache to do it, and to know--
CHIEF JUSTICE REHNQUIST: Well, but surely it's every--it's no bigger a headache to devise it inter--or to grant it inter vivos than to leave it by will, is it?
MR. MARTELL: Well, it's a tremendous bureaucratic process. I mean, if he was to try to transfer his land in his lifetime, it involves the approval of the local agency--
CHIEF JUSTICE REHNQUIST: He would have to go through it if he did it in his lifetime. His children would have to go through it if he did it by will. (Laughter.)
MR. MARTELL: The third--
JUSTICE STEVENS: Isn't it true that he did consult the Bureau of Indian Affairs in drafting the will? They did it--isn't that true, that these owners do rely on the Bureau for assistance in their legal affairs and dealing with their property?
MR. MARTELL: Correct, Your Honor. In 1981 he went to the regional, the area office in Billings, away from the reservation, and had the chief realty officer draw up his will, and it was retained there, and at no time after 1981 was he ever told that his devises would be ineffective.
JUSTICE STEVENS: There's no explanation of that in the record, is there, why they wouldn't have been advised that the devises didn't comply with the statute?
MR. MARTELL: No. It's just a reality. Nobody knows about this law, and nobody is told about this law. It's just not happening.
JUSTICE STEVENS: Yes.
JUSTICE BREYER: Suppose they had passed--suppose the system were totally different, the administrative system, and what had happened is, every person who has one of these interests got a big piece of paper.
In big letters it said, you own a small interest. Check the box below. Box 1, at my death I would like it to go to the tribe. B, at my death I would like it to go to, fill in the blank, okay?
MR. MARTELL: Right.
JUSTICE BREYER: Now, suppose they got that, and their signature on that, it says, if you check B, proceed to page 3 and sign that, and it happened on page 3 and 2 is all the necessary stuff for an inter vivos transfer, i.e., all the necessary stuff for a trust, and you set up the trust, and then at your death it goes to the beneficiary. You know, all those things were all there. So they'd gotten total notice, they'd gotten exactly how to do it, their wishes would be carried out. It's not that hard to work out. Then would this be unconstitutional?
MR. MARTELL: I don't think it would be a due process problem, but I think there would still be a problem in that the land is not compensated.
JUSTICE BREYER: Well then, why could a State ever, for example, say traditional dower rights are, the wife got one-third of a life estate in the husband's property.
We think that's out of date, so we pass a statute that as to the future the wife or husband is to have one-half of the property acquired during marriage. We make the dower States the same as the community property States, into the future. Could that never occur--
MR. MARTELL: I--
JUSTICE BREYER:--giving everybody proper notice, giving everybody plenty of chance? I don't know. I mean, I'm not asking this because I have an answer. I'm just trying to figure out what the theory is that underlies the unconstitutionality.
MR. MARTELL: I think the theory is, is that he's being forced to forfeit his land to the tribes.
JUSTICE BREYER: Well you have escheat. I mean--
MR. MARTELL: Right.
JUSTICE BREYER:--escheat. And can they never change the escheat law? They say, we think 7 years in our State, gee, that's an awfully long time in today's day and age. We think you have to notify the person who has the bank account that you forgot about within 6 years, otherwise you lose it.
MR. MARTELL: I think there wouldn't be abandonment if there was an opportunity, if there was a process, you knew about the process, and you chose not to do it. Then perhaps the property would be abandoned.
JUSTICE BREYER: It's abandoned.
MR. MARTELL: But that's--people here don't about the process.
JUSTICE BERYER: Yes. That's what I'm trying--
JUSTICE O'CONNOR: Do any of the tribes impose any kind of a property tax on these lands, or are they permitted to under Federal law?
MR. MARTELL: Not that I know of, Your Honors. Some tribes do have consolidation programs, but--
JUSTICE O'CONNOR: Because, of course, with non-Indian property there are State and local taxes applicable, and if the owner doesn't pay them for a period of time, there are procedures that the State or county can go through to forfeit the property for nonpayment of taxes.
JUSTICE SCALIA: Mr. Martell, regarding Justice Breyer's question about changing the escheat law, or changing the inheritance laws, I suppose there's a difference, is there not, for purpose of takings law, as to whether you have a general State law or Federal law that is applicable to all property owners versus a law that simply picks out a few property owners, or one class of property. For example, I think we'd have a different question before us if on the one hand the State law said, property escheats in just 2 years instead of 8 throughout the State, versus a law that picks out a particular class of property owners and just says, we're going to make an exception from the normal State law for you, and your property shall escheat more quickly.
There might be a takings issue in the latter case when there isn't in the former. Aren't you relying to some extent on the fact this is not a general, you know, intestate disposition law? It's one targeted at a particular class of property owners.
MR. MARTELL: Correct, Your Honor, and I--you know, I would maintain that that's pretty much the essence of it, because Indians take--took this property under the allotment act with the understanding that they would have these rights to--
CHIEF JUSTICE REHNQUIST: But the Government has a great deal of authority under the Constitution over the affairs of the Indian tribes. I don't think the Federal Government could step in and prescribe a general partition statute that would be contrary to the laws of all of the 50 States, but it does have special authority to deal with Indian property, and certainly that's what it's attempted to do here.
MR. MARTELL: Correct, Your Honor.
JUSTICE SCALIA: Well, you concede that? This doesn't apply to all Indian property. It only applies to Indian property that is fractionated the way this is.
The only people who are affected are those who hold these small--these small shares. All other Indians can continue to devise or dispose of through intestacy as before.
MR. MARTELL: Yes, Your Honor.
JUSTICE STEVENS: Yes, but it does apply to the entire Indian population, and all Indian lands where there is an interest that is undivided and it meets the statutory formula.
MR. MARTELL: Right.
CHIEF JUSTICE REHNQUIST: Maybe we should just talk to each other. (Laughter.)
JUSTICE BREYER: I mean, anyway, you can say that in this case he didn't get enough notice. They didn't send him the paper. It was passed only a few years before he died.
It wasn't for the future, and so from your point of view I guess this is somewhat irrelevant, the debate of what would happen under other circumstances.
JUSTICE STEVENS: Well, but it's--but is it not true that what we have at issue in this case is your particular client's claim? We aren't necessarily deciding that the statute would be valid or invalid as to a host of other applications, isn't that true?
MR. MARTELL: Yes, Your Honor.
JUSTICE STEVENS: You--it's not a class action, or it's not an industry-wide piece of litigation.
MR. MARTELL: Right.
JUSTICE STEVENS: You would just have a--
JUSTICE SCALIA: We wrestled with this whole thing 10 years ago. I thought the issue before us is a much more narrow one, and that is whether, as applied to the--this as-applied challenge Hodel governs or not. What is it that you say to the Government's contention that this is different from Hodel? It's a hard question as an original matter, and I remember agonizing quite a bit over the decision in Hodel, but there is the decision. It's on the books. Now, tell us why this is the same as Hodel rather than, as the Government says, different.
MR. MARTELL: Okay. It's the same as Hodel because Mr. Youpee has no options. I mean, his option, his complex--during his lifetime a--you know, a series of complex transfers, and the Court in Hodel said that's--you know, that's not a substitute for the rights that's taken.
His right that is taken is, he can't--his land cannot descend, and he cannot leave it to his children, because devise has to be limited to a coowner, and a reality is, as was pointed out before, children don't inherit land at the same time their parents do. Most Indians, when they receive land, receive it through inheritance, but most kids do not.
JUSTICE GINSBURG: Mr. Martell, what about the first difference? The Government didn't bring it up at argument, but on the brief they said that the 1984 change had three things in it that weren't there before, and one of them had to do with authorizing tribes to adopt laws that would govern dispositions of escheatable interests. Have there been, to your knowledge, any such tribal codes?
MR. MARTELL: No, Your Honor. Anything that tribes have done that consolidate, have consolidation programs were before these amendments.
JUSTICE GINSBURG: So that significant change turns out still to be undeveloped and unused.
MR. MARTELL: Correct, Your Honor.
JUSTICE SCALIA: I gather the tribes don't care. The owners of the small, fractionated interests don't care. The only person who cares is the Government, who's saddled with the enormous administrative burden of keeping track of all of these fractionated interests. Is that what's going on?
MR. MARTELL: I think that the tribes strategically don't care because they get the land by not making an effort. If they don't pass a consolidation program they still get the land, but I think the people care about the land. That's kind of why we're here. I mean, Mr. Youpee wanted his children to have the land of his ancestors, and they wanted that land, and so--
JUSTICE SCALIA: Oh, when I say don't care, I don't mean don't care about the land. They don't care about the fractionating.
MR. MARTELL: They care about it, but there's such an overwhelming bureaucracy there that it's hard to make headway into it. I mean, it--I mean, it would be hard to make headway into 34 parcels if the people that you were talking to weren't receptive to doing it, and that's the reality of it. I mean, they don't want to spend the time to help you do a gift deed 34 times, or let you know that perhaps you should do that. We have considered in our argument that under the amendments there is still a problem, as--exactly as there was in Hodel, that for Indians under 18 and those incompetent, that they--they're totally just--are just like the plaintiffs in Hodel, is that devise and descent are totally abrogated for them. We feel that the escheat provision is in fact a categorical taking, because as I mentioned, Mr. Youpee has no options. I mean, in the--the operative provisions of the amendments leave him no choice. He could--you know, he could leave it to a coowner, but that will not be his children, and he could do inter vivos transfers, but that's--as the Court said, that's not an effective substitute for losing the right of devise and descent, so in effect his land is transferred to a tribe without his consent. We feel as a regulation that--if you consider these amendments a regulation, that they go too far, again.
I mean, the stated Government purpose is to stop the fractionization of Indian land, but the underlying purpose that comes out time and again in the legislative history is that the Government wants to save money, and saving money has never been a sufficient reason to allow a taking, and there's no average reciprocity of advantage here. I mean, there's no public benefit to Mr. Youpee for his children if the tribes obtain his land interests. Mr. Youpee's right of descent is a vested right, and compensation should be paid for that right if it is taken.
JUSTICE GINSBURG: But would you contest--suppose all--the only limit was, you can give away what you have, but you can't divide it up into further hands.
So you've got this one piece. You can give it to one person, but you can't give it to three people. Would that be constitutional, to put that restriction on the ability to devise?
MR. MARTELL: I think it would Your Honor, because his land would not be taken from him, and that's in fact what he did, so--
CHIEF JUSTICE REHNQUIST: What if the Government were to put in some sort of a unitization program like the States have put in a lot of oilfields, where the thing is consolidated into certain minimum tracts and you get a percentage from that, but you don't have the right to deal on your own with it any more. Would that be permissible, do you think?
MR. MARTELL: I think it would be permissible, because you'd still have the identifiable property interest.
JUSTICE STEVENS: Would you refresh my recollection on the facts of this case? The decedent had several children.
MR. MARTELL: He had 10 children, Your Honor.
JUSTICE STEVENS: So that if the will were given effect, you would have further fractionalization, then, wouldn't you? Each would get an undivided tenth of what he had.
MR. MARTELL: No, I'm sorry, Your Honor. If the will was allowed to go through, each of his children would only take one interest. His land was not fractionated under his will.
I mean, if there was a royalty check coming, instead of coming to him it would go to one child. The next parcel, it might go to another child, but it wouldn't go to two children.
JUSTICE O'CONNOR: In other words, this decedent left his interests in such a way that there was no further fractionalization--
MR. MARTELL: Correct.
JUSTICE O'CONNOR:--of the real property interests.
MR. MARTELL: Yes, Your Honor.
JUSTICE STEVENS: I don't--would you give me a little more detail? Explain how that could be, if he had 10 children and the will just--was it--did he give a partial to each of the 10? Is that what he did?
MR. MARTELL: I guess I've confused it by saying he had 10 children. His other children were taken care of through other devises.
JUSTICE STEVENS: Oh, so there's one devise to the one child that's at stake here.
MR. MARTELL: There's six children here, but each of them had a specific devise that gave them--
JUSTICE STEVENS: And each in a separate parcel.
MR. MARTELL: Correct.
JUSTICE STEVENS: I see. Okay. I'm sorry.
MR. MARTELL: Sorry to be unclear.
JUSTICE O'CONNOR: And would you clarify for me--this case does not further subdivide the interests, but the Government says even if it did it would be valid. If it further fractionalized the interests--
MR. MARTELL: Correct.
JUSTICE O'CONNOR:--the Government says that would be valid. What is your position on that? Can the Congress prohibit further fractionalization?
MR. MARTELL: I don't think they can prohibit it unless they pay for it.
JUSTICE O'CONNOR: Okay. I didn't find that you took a position in your briefs.
MR. MARTELL: That's--
JUSTICE BREYER: Why would there be a payment requirement there? I would suppose that precluding further fractionalization was not going to make the land worth less, so you're saying the value would be simply the value of the capacity to fractionize.
MR. MARTELL: I'm not sure, Your Honor.
JUSTICE GINSBURG: Mr. Martell, I'm surprised, because I thought you told me that you thought it would be a legitimate restriction for the Government to say to Mr. Youpee or anyone else, you can give each parcel that you have to one person, or to that many different people as you have parcels, but you cannot take that one parcel and turn that parcel into two. I thought in answer to my question you said, that's right, that would be the kind of restriction that we wouldn't attack as a taking.
MR. MARTELL: Correct, Your Honor.
JUSTICE GINSBURG: And then you seemed to give a different response to Justice O'Connor. I thought you accepted that you can freeze the size of the parcel as they now are.
MR. MARTELL: Okay. I guess I--
JUSTICE GINSBURG: And no further division, and that would be okay.
MR. MARTELL: I guess I was confused. I mean, it seems that as long as he doesn't lose his land, that that would be a legitimate way to do it.
JUSTICE STEVENS: So I guess that means that a number of applications of this very statute would be permissible, although the one involving your clients would not be, because this statute will prevent that. It prevents further fractionalization, as I understand it.
MR. MARTELL: But I would think it--I guess I'm getting confused. I mean, I don't think it would ever be--you know, if you're taking somebody's land and not paying for it, then it's not permissible.
JUSTICE BREYER: There are a lot of--there are statutes in different countries that--and that's what I was--this case differs from the last case in that here there is a set of people whom you can leave the property to and a set to whom you cannot leave it to. That's the difference, right?
MR. MARTELL: Right.
JUSTICE BREYER: Okay. Well, there are a lot of land law, I think, property law in different countries that do things like that. They say, you can leave--you cannot leave this land, or you cannot leave this part of your estate to anyone but your first child, or to anyone but the children.
They already have an interest in it. Or you have to leave a certain amount to your wife, or you have--those are traditional, and that's why I was trying to see, is there anything in those cases that--suppose we wanted to move towards some of those kinds of rules. I don't know that any State would or wouldn't, but this sounds a little bit like that.
MR. MARTELL: It seems like most of the State laws that deal with--you know, with forced heirs like that are doing it for the benefit of the family.
JUSTICE BREYER: Right, and here they say, you see the tribe is like your family. We're doing it for the benefit of the tribe.
MR. MARTELL: But not for the benefit of Mr. Youpee's.
JUSTICE BREYER: No, and that's also true if you don't like your children. (Laughter.)
JUSTICE GINSBURG: I suppose if the forced heir was the Nation of France, that might be a different question.
*JUSTICE KENNEDY: Some of these Indians whose property would escheat to the tribe are from, in fact, different segments of the tribe, aren't they, that are not on that reservation?
MR. MARTELL: Correct.
*JUSTICE KENNEDY: Either from a different reservation, or in some cases different tribes, isn't that possible?
MR. MARTELL: Right, Your Honor. There's three reservations involved. We would argue that Mr. Youpee's right of descent is vested because this is an Indian law case, and his right of descent was in--was part of the bundled rights that was understood to be taken to the General Allotment Act, so the General Allotment Act had as its purpose to start the Americanization of Indians, and therefore the right to be--of descent was a vested traditional property right that the Indians understood they had when they took the land.
CHIEF JUSTICE REHNQUIST: How large an area is the Fort Peck reservation, and how many of the tribe reside on it?
MR. MARTELL: It's a--within exterior boundaries it's a million acres. The tribal and the Indian ownership is about 51 percent, and there's about 5,000 people, 5,000 Indians.
CHIEF JUSTICE REHNQUIST: So if it's a family, it's a rather large family.
MR. MARTELL: Yes, Your Honor. Thank you. I've nothing further, Your Honor.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Martell. The case is submitted.