[Senate Report 109-294]
[From the U.S. Government Publishing Office]
Calendar No. 536
109th Congress Report
SENATE
2d Session 109-294
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AMENDING THE INDIAN LAND CONSOLIDATION ACT TO MODIFY CERTAIN
REQUIREMENTS UNDER THAT ACT
_______
July 26, 2006.--Ordered to be printed
_______
Mr. McCain, from the Committee on Indian Affairs, submitted the
following
R E P O R T
[To accompany S. 3526]
The Committee on Indian Affairs, to which was referred the
bill (S. 3526), to amend the Indian Land Consolidation Act to
modify certain requirements under that Act, having considered
the same, reports favorably thereon without amendment and
recommends that the bill do pass.
Purpose
The purpose of S. 3526 is to amend certain provisions of
the Indian Land Consolidation Act relating to the uniform
Indian probate code at 25 U.S.C. 2206. These amendments
include, inter alia, clarifying amendments to certain defined
terms in 25 U.S.C. 2201; amendments to the defined term
``land'' in that section that will have the effect of delaying
the application of the uniform Indian probate code to permanent
improvements until after July 20, 2007; and amendments in 25
U.S.C. 2206 that will have the effect of delaying the
application of certain provisions of the uniform Indian probate
code until after July 20, 2007.
Background and Overview
On October 27, 2004, the President signed S. 1721, the
American Indian Probate Reform Act of 2005, Public Law 108-374
(``AIPRA''). The centerpiece of AIPRA is its uniform Indian
probate code, which was intended in part to stem the phenomenon
of Indian land ``fractionation'' caused in large part by the
application of state laws of intestate succession to trust and
restricted Indian lands. To achieve this end, AIPRA was
deliberately structured to encourage the practice of estate
planning and will-writing among Indian landowners and to
discourage the pervasive historical tendency among Indian
landowners to allow their interests in trust and restricted
land to pass from one generation to the next by intestate
succession.
To encourage estate planning, AIPRA amended the estate
planning provisions in the ILCA (25 U.S.C. 2206(f)) to state
that the Secretary's estate planning services ``shall be
designed to . . . dramatically increase the use of wills and
other methods of devise among Indian landowners [and] . . .
substantially reduce the quantity and complexity of Indian
estates that pass intestate through the probate process''
(emphasis added). AIPRA also amended this section to authorize
a substantial grant program for Indian tribes, nonprofit legal
service organizations and, on reservations where such
organizations do not operate, other legal service providers to
provide estate planning services in Indian country.
AIPRA also included provisions intended to discourage the
tendency to allow interests in trust and restricted land to
pass without a will. These provisions include a ``single-heir
rule'' (25 U.S.C. 2206(a)(2)(D)) and the involuntary ``purchase
at probate'' (25 U.S.C. 2206(o)(5), both of which only apply to
small fractional interest passing without a will. Similarly,
wills that would pass land to ``all my children, share and
share alike'' or to ``all my grandchildren, share and share
alike,'' which would cause fractionation as surely as intestate
succession, are discouraged with a rule that a testamentary
devise of land to two or more people is presumed to create a
joint tenancy with rights of survivorship rather than a tenancy
in common, absent ``clear and express language'' that a tenancy
in common was intended. See, 25 U.S.C. 2206(c). These
provisions can all be avoided with careful estate planning,
which is, again, one of the central goals of the AIPRA.
AIPRA was developed through considerable consultation with
and collaboration among representatives of Indian tribes and
Indian organizations as well as with various levels and
components of the Department of the Interior. The Committee
acknowledges that although not explicit, there was an implicit
understanding among the rather divergent interests involved in
the development of AIPRA that the consequences of provisions
like the single-heir rule and the involuntary purchase option
at probate would be avoided by a significant effort throughout
Indian country to encourage estate planning and will writing
among Indian landowners. However, on April 21, 2005, less than
six months after the enactment of AIPRA, the Department
announced its intent to ``discontinue the practices of
assisting Indians in preparing wills by acting as a scrivener
and accepting wills for storage'' \1\--services that the
Department had been providing to Indian landowners for decades.
The only reason given for this decision was that the Department
``was not required by law to perform these services.'' \2\ At
the same time, to the Committee's knowledge the Department
provided but one contract in FY 2005 for an estate planning
pilot project for two of the twelve regions of the Bureau of
Indian Affairs. While this pilot project, funded in the amount
of $500,000, has had a very positive impact in disseminating
information and provoking discussion about AIPRA, it cannot, by
itself, possibly meet the AIPRA objective of ``dramatically
increas[ing] the use of wills'' among Indian landowners.
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\1\ See, memorandum dated April 21, 2005, from Associate Deputy
Secretary of the Interior James E. Cason and Special Trustee for
American Indians Ross Swimmer to all ``AS-IA/BIA Employees and OST
Employees.''
\2\ Id.
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As noted above, the more onerous provisions of the
intestate provisions of the uniform probate code as well as the
presumption of joint tenancy in devises to two or more persons
can be avoided by careful estate planning. The Committee is
deeply troubled by the prospect that, in light of the
significant changes in the law brought by AIPRA, the combined
effects of the Department's (1) decision to discontinue will-
writing services and (2) failure to adequately fund alternative
estate planning services through the grant program authorized
by AIPRA or otherwise will result in an unfair hardship on
landowners--especially on the many elderly landowners who
reside in remote areas of Indian reservations where adequate
estate planning services are simply unavailable. S. 3526 would
provide some relief to Indian landowners by delaying until
after July 20, 2007, the application of rules that can only be
avoided through the execution of a proper will after receiving
advice on how AIPRA works.
S. 3526 would make technical amendments to clarify an
ambiguity in the definition of the term ``trust or restricted
interest in land'' (25 U.S.C. 2201(4)) and the application of
ILCA to permanent improvements (25 U.S.C. 2201(7)). In the
latter case, the amendments would clarify that ``land''
includes such improvements only for purposes of intestate
succession of a decedent's interest in the improvements under
25 U.S.C. 2206(a) and even there only when the decedent also
owns a trust or restricted interest in the parcel of land to
which the improvements are attached.\3\ Although the Committee
feels that both of these ILCA provisions can be interpreted in
the same way that these amendments make clear, they are
included in S. 3524 to eliminate doubt. The bill also amends
the definition so as to delay the application of the uniform
probate code to permanent improvements until after July 20,
2007, in order to provide additional time to study how
permanent improvements should be handled under the code.
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\3\ The reason improvements were addressed in AIPRA was to assure
that permanent improvements are inherited by the same persons who
inherit the underlying real estate.
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Finally, S. 3526 would amend the provisions relating to the
purchase option at probate in three principal respects. First,
under current law, where two or more persons express an
interest in purchasing an interest during probate, the interest
is to be sold by the Secretary at auction. Because so many
interests are small and of low value, the cost and delay in the
probate process associated with holding an auction will often
be unjustified. Accordingly, S. 3526 would amend 25 U.S.C.
2206(o)(3) to allow the person who would otherwise be
inheriting the interest to designate which party may purchase
the interest. Second, with respect to the involuntary purchase
option at probate, the bill amends 25 U.S.C. 2206(o)(5)(A)(iii)
so that the 5% threshold is measured against the decedent's
ownership interest in the land immediately before death and not
against the interest passing to the heir. Third, this provision
is amended so that the only purchasers that are eligible to
cause an involuntary sale of a small interest are the Secretary
as part of the fractional interest acquisition program and the
Indian tribe where the small interest is passing to a person
who is not a member, or eligible to be a member, of the tribe.
Legislative History
S. 3526 was introduced on June 15, 2006, by Senator John
McCain and referred to the Committee on Indian Affairs. On June
22, 2006, in an open business session the Committee ordered S.
3526 to be reported favorably without amendment.
Committee Recommendation and Tabulation of Vote
In an open business session on June 22, 2006, the
Committee, by voice vote, ordered the bill, S. 3526, to be
reported favorably to the Senate without amendment.
Section-by-Section Analysis
Section 1
Section 1 sets forth the short title of the bill, the
Indian Land Consolidation Act Amendments of 2006.
Section 2
Section 2 amends the definition of ``trust or restricted
interest in land'' and ``trust or restricted interest in a
parcel of land'' set forth at 25 U.S.C. 2201(4) and the
definition of ``land'' insofar as it relates to permanent
improvements. The amendment restricts the definition to a
decedent's interest in permanent improvements permanently
affixed to a parcel of trust or restricted land that was owned
in whole or in part by the decedent immediately prior to the
decedent's death. The amendment also states that it applies to
decedents who die after July 20, 2007.
Section 3
Section 3(1) amends 25 U.S.C. 2206(a)(2)(D) to state that
the paragraph, which sets forth the single heir rule, does not
apply to any interest in the estate of a decedent who dies
during the period beginning on the enactment date of the
amendment and ending on July 20, 2007, and authorizes the
Secretary to extend this period for up to 1 year.
Section 3(2) amends 25 U.S.C. 2206(c) by providing that the
presumption that a devise of an interest in trust or restricted
land to more than one person creates a joint tenancy with
rights of survivorship absent clear language creating a tenancy
in common will not apply to any will executed prior to July 21,
2007.
Section 3(3) amends 25 U.S.C. 2206(o) by eliminating the
auction requirement where the Secretary receives multiple
requests to purchase an interest and allowing the heir, devisee
or surviving spouse to select the purchaser; providing that the
5% threshold for the involuntary purchase at probate is
measured against the interest in the decedent's hands rather
than the interest passing to the heir; limits the eligible
purchasers of an interest in the context of an involuntary sale
at probate to (1) the Secretary under the fractional interest
acquisition program and (2) the Indian tribe, where the
interest would otherwise be inherited by a nonmember; provides
for a period of nonapplicability of the involuntary purchase
provisions to interests in the estates of decedents who die on
or before July 20, 2007; and authorizes the Secretary to extend
this period of nonapplicability for up to one year.
Cost and Budgetary Considerations
The following cost estimate dated July 13, 2006, was
prepared for S. 3526:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 13, 2006.
Hon. John McCain,
Chairman, Committee on Indian Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3526, the Indian
Land Consolidation Act amendments of 2006.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Matthew
Pickford (for federal costs), Marjorie Miller (for the impact
on state, local, and tribal governments), and Amy Petz (for the
impact on the private sector).
Sincerely,
Donald B. Marron,
Acting Director.
Enclosure.
S. 3526--Indian Land Consolidation Act Amendments of 2006
S. 3526 would make technical and clarifying amendments to
the Indian Land Consolidation Act (ILCA). The legislation would
clarify that permanent improvements to land are covered by the
provisions of the ILCA. It would delay implementation of
certain interstate inheritance provisions of the probate code
until July 20, 2007. Based on information from the Office of
Special Trustee for American Indians, CBO estimates that
implementing S. 3526 would have no significant impact on the
federal budget.
S. 3526 contains one intergovernmental and two private-
sector mandates as defined by the Unfunded Mandates Reform Act
(UMRA), but CBO expects the aggregate cost of those mandates
would be small and would fall well below the annual thresholds
established in UMRA ($64 million for intergovernmental entities
and $128 million for the private sector in 2006, adjusted
annually for inflation).
The bill would impose an intergovernmental and private-
sector mandate on certain Indian tribes and individuals because
it would limit the right they now enjoy to bid without the
consent of the heirs on small fractional property interests at
probate. CBO expects that any costs imposed by this mandate on
tribal governments or the private sector would not be
significant. The bill would impose no other costs on state,
local, or tribal governments.
The bill also would impose a private-sector mandate on
certain individuals who would otherwise inherit small
fractional interests in land under the ``single heir rule.''
Under current law, if an Indian owning a small fractional
interest in certain types of land dies without a will, only one
individual is eligible to inherit that interest based on the
single heir rule. S. 3526 would suspend implementation of the
single heir rule through July 20, 2007, which would allow a
larger set of heirs to be eligible to receive an equal share of
the property interest. CBO expects the suspension would result
in a loss of a portion of inheritance for a limited number of
individuals in the near term and would impose a small cost on
those individuals in such cases. Consequently, the cost of the
mandate would be very small relative to the annual threshold
established by UMRA for private-sector mandates.
The CBO staff contacts for this estimate are Matthew
Pickford (for federal costs), Marjorie Miller (for the impact
on state, local, and tribal governments), and Amy Petz (for the
impact on the private sector). This estimate was approved by
Peter H. Fontaine, Deputy Assistant Director for Budget
Analysis.
Regulatory Impact Statement
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires each report accompanying a bill to evaluate the
regulatory and paperwork impact to be incurred in carrying out
the bill. The Committee believes that S. 3526 will have minimal
regulatory or paperwork impact.
Executive Communications
The Committee has received no official executive
communications on S. 3526.
Changes in Existing Law
In compliance with subsection 12 of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
enactment of S. 3526 will result in the following changes in
existing law, with existing law proposed to be omitted enclosed
in black brackets, new language proposed to be added in italic,
and existing law to which no change is proposed shown in roman:
25 U.S.C. 2201(4)
(4)(i) ``trust or restricted lands'' means lands, title to
which is held in trust for an Indian tribe or individual, or
which is held by an Indian tribe or individual subject to a
restriction by the United States against alienation; and
[``trust or restricted interest in land'' or] (ii) ``trust or
restricted interest in land'' or ``trust or restricted interest
in a parcel of land'' means [an interest in land, title to
which] an interest in land, the title to which interest is held
in trust by the United States for an Indian tribe or
individual, or which is held by an Indian tribe or individual
subject to a restriction by the United States against
alienation.
25 U.S.C. 2201(7)
[(7) ``land'' means any real property, and includes within
its meaning for purposes of this act improvements permanently
affixed to real property.]
(7) the term ``land''--
(A) means any real property; and
(B) for purpose of intestate succession only under
section 207(a), includes, with respect to any decedent
who dies after July 20, 2007, the interest of the
decedent in any improvements permanently affixed to a
parcel of trust or restricted lands (subject to any
valid mortgage or other interest in such an
improvement) that was owned in whole or in part by the
decedent immediately prior to the death of the
decedent.
25 U.S.C. 2206(A)(2)(D)(I)
(i) General rule
Notwithstanding subparagraphs (A) and (B), and subject to
any applicable Federal law, any trust or restricted interest in
land in the decedent's estate that is not disposed of by a
valid will and represents less than 5 percent of the entire
undivided ownership of the parcel of land of which such
interest is a part, as evidenced by the decedent's estate
inventory at the time of the heirship determination, shall
descend in accordance with [clauses (ii) through (iv)] clauses
(ii) through (vi).
25 U.S.C. 2206(A)(2)(D)(V)
[(v) Rule of construction
This subparagraph shall not be construed to limit a
person's right to devise any trust or restricted interest by
way of a valid will in accordance with subsection (b) of this
section.]
(v) Effect of subparagraph; nonapplicability to certain
interests.--Nothing in this subparagraph--
(I) limits the right of any person to devise any trust or
restricted interest pursuant to a valid will in accordance with
subsection (b); or
(II) applies to any interest in the estate of a decedent
who died during the period beginning on the date of enactment
of this subclause and ending on July 20, 2007 (or the last day
of any applicable period of extension authorized by the
Secretary under clause (vi)).
(vi) Authority to extend period of nonapplicability.--The
Secretary may extend the period of nonapplicability under
clause (v)(II) for not longer than 1 year if, by not later than
July 2, 2007, the Secretary publishes in the Federal Register a
notice of the extension.
25 U.S.C. 2206(C)
(c) Joint tenancy; right of survivorship
(1) Presumption of joint tenancy
If a testator devises trust or restricted interests in the
same parcel of land to more than 1 person, in the absence of
clear and express language in the devise stating that the
interest is to pass to the devisees as tenants in common, the
devise shall be presumed to create a joint tenancy with the
right of survivorship in the interests involved.
(2) Exception
Paragraph (1) shall not apply to any devise of an interest
in trust or restricted land where the will in which such devise
is made was executed prior to [the date that is 1 year after
the date on which the Secretary publishes the certification
required by section 8(a)(4) of the American Indian Probate
Reform Act of 2004.] July 21, 2007.
25 U.S.C. 2206(O)(3), (4) AND (5)
[(3) Request to purchase; auction; consent requirements
No sale] (3) Request to purchase; consent requirements;
multiple requests to purchase.--
(A) In general.--No sale of an interest in probate
shall occur under this subsection unless--
[(A)] (i) an eligible purchaser described in
paragraph (2) submits a written request to
purchase prior to the distribution of the
interest to heirs or devisees of the decedent
and in accordance with any regulations of the
Secretary; and
[(B)] (ii) except as provided in paragraph
(5), the heirs or devisees of such interest,
and the decedent's surviving spouse, if any,
receiving a life estate under subparagraph (A)
or (D) of subsection (a)(2) of this section
consent to the sale.
[If the Secretary receives more than 1 request to
purchase the same, the Secretary shall sell the
interest by public auction or sealed bid (as determined
by the Secretary) at not less than the appraised fair
market value to the eligible purchaser submitting the
highest bid.]
(B) Multiple requests to purchase.--Except for
interests purchased pursuant to paragraph (5), if the
Secretary receives a request with respect to an
interest from more than 1 eligible purchaser under
paragraph (2), the Secretary shall sell the interest to
the eligible purchaser that is selected by the
applicable heir, devisee, or surviving spouse.
(4) Appraisal and notice
Prior to the sale of an interest pursuant to this
subsection, the Secretary shall--
(A) appraise the interest at its fair market value in
accordance with this Act; and
(B) provide eligible heirs, other devisees, and the
Indian tribe with jurisdiction over the interest with
written notice, sent by first class mail, that the
interest is available for purchase in accordance with
this subsection[; and].
[(C) if the Secretary receives more than 1 request to
purchase the interest by a person described in
subparagraph (B), provide notice of the manner (auction
or sealed bid), time and place of the sale, a
description, and the appraised fair market value, of
the interest to be sold--
(i) to the heirs or other devisees and the
Indian tribe with jurisdiction over the
interest, by first class mail; and
(ii) to all other eligible purchasers, by
posting written notice in at least 5
conspicuous places in the vicinity of the place
of the hearing.]
(5) Small undivided interests in Indian lands
(A) In general
Subject to paragraph (B), the consent of a person who
is an heir otherwise required under paragraph (3)(B)
shall not be required for the [auction and] sale of an
interest at probate under this subsection if--
(i) the interest is passing by intestate
succession; [and]
(ii) prior to the auction the Secretary
determines in the probate proceeding that [the
interest passing to such heir represents], at
the time of the death of the applicable
decedent, the interest of the decedent in the
land represented less than 5 percent of the
entire undivided ownership of the parcel of
land as evidenced by the Secretary's records as
of the time the determination is made[.]; and
(iii)(I) the Secretary is purchasing the
interest as part of the program authorized
under section 213(a)(1); or
(II) after receiving a notice under paragraph
(4)(B), the Indian tribe with jurisdiction over
the interest is proposing to purchase the
interest from an heir who is not a member, and
is not eligible to be a member, of that Indian
tribe.
[(B) Exception
Notwithstanding subparagraph (A), the consent of such
heir]
(B) Exception; nonapplicability to certain
interests.--
(i) Exception.--Notwithstanding subparagraph
(A), the consent of an heir or surviving spouse
shall be required for the sale at probate of
the heir's interest if, at the time of the
decedent's death, the heir or surviving spouse
was residing on the parcel of land of which the
interest to be sold was a part.
(ii) Nonapplicability to certain interests.--
Subparagraph (A) shall not apply to any
interest in the estate of a decedent who dies
on or before July 20, 2007 (or the last day of
any applicable period of extension authorized
by the Secretary under subparagraph (C)).
(C) Authority to extend period of nonapplicability.--
The Secretary may extend the period of nonapplicability
under subparagraph (B)(ii) for not longer than 1 year
if, by not later than July 2, 2007, the Secretary
publishes in the Federal Register a notice of the
extension.