Leasing, Law, and Land Tenure: Understanding the Impact of the Long-Term Leasing Act of 1955 on Indian Land Holdings

Abstract

An increasing focus of contemporary Native American economic development literature concentrates on the role of institutions. Land tenure arrangements are an important part of the institutional structure on reservations because several reservations rely on agriculture and resource extraction. The 1950s and 1960s were characterized by a series of policy interventions targeting Native Americans. One such policy, the Long-Term Leasing Act (LTLA) of 1955, reduced bureaucratic oversight and altered the composition of Native American trust land. The policy extended the possible term of leases on trust lands, increasing economic opportunities, lowering transaction costs, and increasing the discounted present value of retaining land in trust status. Using a new panel dataset on land tenure, this paper finds that the LTLA significantly diminished the flow of land to fee-simple (private ownership) and tribally owned land held in trust, leading to a higher rate of retention in individually owned land held in government trust. I extend the empirical framework to determine whether reservations under state jurisdiction experienced additional changes in land tenure due to the ability to more credibly commit to leasing contracts or whether legal uncertainty over land-use and expanded credit access led to increased transfer to fee-simple. The results suggest that reservations under state jurisdiction continued transferring land to fee-simple, which supports the legal land-use uncertainty and suggests the expanded credit access impacted purchasing more than leasing. To examine the degree that heirship is influencing the results, I estimate the model by allotment date groups, where allotment dates proxy for heirship. Results indicate that reservations allotted earlier, which have more fractionated ownership, responded more to the Long-Term Leasing Act. Shifts in land holdings induced by the LTLA reinforce the importance of reducing transaction costs associated with trust land for Native American economic development.

Keywords: Property Rights, Land Tenure, Native Americans, Leasing, Heirship, Public Law 280

JEL Classification: D02, K11, N42, N52, P48