B-206875 L/M, APR 7, 1982

B-206875 L/M, APR 7, 1982

DIGEST: THE SECRETARY OF THE INTERIOR IS AUTHORIZED BY 25 U.S.C. SEC. 413 TO DEDUCT ADMINISTRATIVE COSTS FROM ROYALTIES DERIVED FROM MINERAL LEASES ON INDIAN LANDS.

SIDNEY R. YATES, HOUSE OF REPRESENTATIVES:

DURING A MARCH 23, 1982, HEARING ON OIL AND GAS ROYALTY COLLECTIONS, A QUESTION AROSE AS TO WHETHER THE SECRETARY OF THE INTERIOR IS AUTHORIZED TO DEDUCT ADMINISTRATIVE COSTS FROM ROYALTIES DERIVED FROM MINERAL LEASES ON TRIBAL OR ALLOTTED INDIAN LANDS. SUCH ROYALTIES ARE, AS A GENERAL MATTER, REQUIRED TO BE COLLECTED BY THE SECRETARY OR HIS DESIGNEE AND HELD IN TRUST FOR THE BENEFIT OF THE INDIVIDUAL TRIBE OR ALLOTTEE. SEE, E.G., 25 U.S.C. SEC. 398B (1976); 25 C.F.R. SECS. 171.12, 172.14 (1981). THIS LETTER IS IN RESPONSE TO YOUR REQUEST FOR OUR VIEWS ON THE MATTER.

WE HAVE EXAMINED THE RELEVANT LEGISLATION AND CONCLUDE THAT THE AUTHORITY TO DEDUCT COSTS FROM MINERAL ROYALTIES IS INCLUDED WITHIN THE BROADER AUTHORITY OF THE SECRETARY TO CHARGE FOR THE COST OF ANY WORK PERFORMED FOR INDIANS, CONTAINED IN 25 U.S.C. SEC. 413 (1976). THAT PROVISION AUTHORIZES THE SECRETARY OF THE INTERIOR, UNDER SUCH RULES AND REGULATIONS AS HE MAY PRESCRIBE, TO COLLECT REASONABLE FEES TO COVER THE COST OF "ANY AND ALL WORK" PERFORMED FOR INDIAN TRIBES OR INDIVIDUALS. THESE COSTS MAY BE "DEDUCTED FROM THE PROCEEDS OF SALE, LEASES, OR OTHER SOURCES OF REVENUE." WHERE THE EXPENSES OF THE WORK PROVIDED ARE PAID FROM TRIBAL FUNDS, THE AMOUNTS COLLECTED ARE TO BE CREDITED TO THOSE FUNDS; OTHERWISE, AMOUNTS COLLECTED ARE TO BE DEPOSITED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

THE BROAD LANGUAGE OF 25 U.S.C. SEC. 413 WOULD CERTAINLY APPEAR TO COVER THE TYPE OF COLLECTIONS CONSIDERED BY THE SUBCOMMITTEE. IN ADDITION, THE LEGISLATIVE HISTORY OF THAT PROVISION SHOWS THAT THE CONGRESS HAS LONG CONTEMPLATED ITS APPLICATION IN THE CONTEXT OF MINERAL LEASES. ORIGINALLY ENACTED, 25 U.S.C. SEC. 413 PROVIDED FOR THE CHARGING OF FEES TO COVER ADMINISTRATIVE COSTS ONLY IN CERTAIN ENUMERATED SITUATIONS: ONE SUCH SITUATION WAS FOR EXPENSES IN CONNECTION WITH THE SALE, LEASING, OR ASSIGNMENT OF TRIBAL OR ALLOTTED LANDS FOR MINERAL PURPOSES. ACT OF FEBRUARY 14, 1920, CH. 75 SEC. 1, 41 STAT. 408, 415. THE REFERENCE TO MINERAL LEASES WAS DELETED IN 1933, WHEN THE PROVISION WAS AMENDED TO INCLUDE THE BROAD LANGUAGE CURRENTLY IN EFFECT. ACT OF MARCH 1, 1933, CH. 158, 47 STAT. 1417. THAT AMENDMENT WAS INTENDED, AMONG OTHER THINGS, TO EXPAND THE TYPES OF ACTIVITIES FOR WHICH FEES COULD BE COLLECTED. FOR EXAMPLE, WHEREAS THE ORIGINAL PROVISION RELATED PRIMARILY TO ACTIVITIES IN CONNECTION WITH THE CREATION AND TRANSFER OF INTERESTS IN INDIAN LANDS, INCLUDING MINERAL INTERESTS, THE 1933 AMENDMENT WAS INTENDED TO "PERMIT COLLECTION OF FEES TO REIMBURSE THE UNITED STATES FOR EXPENDITURES *** IN CONNECTION WITH ADMINISTRATION OF LAWS RELATED TO MINING ON INDIAN LANDS ***." H.R.REP. NO. 879, 92D CONG., 1ST SESS. 1 (1932).

WE NOTE AS A FINAL MATTER THAT, IN 1973, THE UNITED STATES COURT OF CLAIMS CONSIDERED THE PROPRIETY OF ACTIONS TAKEN BY THE SECRETARY OF THE INTERIOR TO DEDUCT ADMINISTRATIVE EXPENSES FROM THE PROCEEDS OF TIMBER SALES FROM CERTAIN INDIAN LANDS. IN QUINAULT ALLOTTEE ASSOCIATION V. UNITED STATES, 485 F.2D 1391 (CT.CL. 1973), CERT. DENIED, 416 U.S. 961 (1974), THE COURT HELD THAT SUCH ACTIONS, INITIATED UNDER THE AUTHORITY OF 25 U.S.C. SEC. 413, WERE NOT INCONSISTENT WITH THE GENERAL ALLOTMENT ACT OF 1887, AS AMENDED, 25 U.S.C. SEC. 331-358 (1976), AND WERE NOT IN VIOLATION OF ANY FIDUCIARY DUTY, TREATY, STATUTE OR REGULATION. 485 F.2D AT 1401. WE CONSIDER THAT THE HOLDING OF THE COURT OF CLAIMS, IN THE ABSENCE OF ANY SPECIFIC TREATY OBLIGATION TO THE CONTRARY, IS OF GENERAL APPLICABILITY TO COSTS DEDUCTED FROM THE PROCEEDS OF MINERAL LEASES AS WELL.

WE TRUST THE ABOVE WILL BE OF ASSISTANCE TO YOU.