Although the first producing oil well was drilled on Osage land in 1897, tribal oil revenues remained negligible for another twenty years. By 1918, the reservation was dotted with nearly four thousand productive oil wells, and the tribal council had negotiated favorable lease and royalty agreements to maximize tribal profits. Leases to establish wells on 160-acre tracts were auctioned by the tribe to the highest bidder, with some oil companies paying bonuses of more than $1 million dollars to lease a single tract.
The majority of the tribe's original 15-million acre Oklahoma reservation was allotted in severalty, or parceled out, to individual tribal members based on the allotment provisions of the Osage Act of 1906. Within a few decades, most of the land had been sold to non-Osage ranchers. Today, the Osage nation is a federally recognized tribe with 18,000 members and several town-site reservations located in Osage County in north central Oklahoma. A small number of enrolled Osage live on the diminished reservation, while most tribal members are scattered throughout the United States and abroad.
The tribe retains surface rights to several hundred acres of land as well as subsurface mineral rights to the entire one and a half million acres of the original reservation. Oil and gas companies lease from the tribe the right to drill for and extract minerals from specified tracts of land on the former Osage reservation. Although non-Osage now own the surface rights to most of this land, the tribe owns the minerals beneath the ground and the right to erect oil derricks and other structures on the surface in order to reach the minerals beneath. Most, if not all, of the oil companies that lease Osage mineral rights are not Osage owned. Thus, the tribe profits from owning the minerals but is not involved in extracting them. Tribal profits are derived from the leasing fees, bonuses, and royalties that oil companies pay the tribe.
The 1906 Act, as negotiated by the tribe, provides for almost all of this tribal mineral income to be distributed annually on a per-capita basis to individual tribal members. The members to whom revenues were initially to be distributed were the 2,229 Osages listed on the 1906 tribal roll. As these people passed away, their right to a share of the mineral income passed to their spouses and descendents. This right to an equal portion of tribal mineral income has come to be known as an Osage headright.
Annual headright income can be considerable. From March 2000 through March 2006, headright owners received on average $12,000 per year. The Department of the Interior, which maintains contact information for all headright owners, distributes headright income quarterly. Although royalties are distributed equally among the 2,229 headrights, not all headright owners receive equal payments. Head-right owners of more than 50 percent Indian blood, whose affairs are managed by the Department of the Interior, are paid just $1,000 per quarter, with the remainder of the payment placed in an account for the Indians' benefit. In addition, some shareholders own multiple headrights, while others own only a fraction of a single headright; mineral income is paid out to these individuals according to the percentage of the headrights they own.
Although most headrights are owned by the Osage descendents of the individuals listed on the 1906 roll, today most tribal members do not own headrights. Further, not all headright owners are Native American. Several hundred headrights are currently owned by non-Indians who purchased or inherited them. Before 1978, it was not uncommon for headrights to be sold or inherited by non-Indians. These practices have since been severely curtailed. Today, Indian headright owners may not sell their shares and non-Indian shareholders may sell shares only after first offering them to the tribe. In addition, only a life estate in a headright—not a permanent, heritable interest—may be willed to or inherited by a non-Osage.
A small portion of the tribe's mineral income is reserved for tribal government use and to pay the federal government's administrative costs. In addition to mineral income, the tribe derives additional revenue from other enterprises, including several tribal casinos.
For almost a hundred years from the enactment of the 1906 Osage Act, membership in the tribe and participation in tribal government were reserved to headright holders of Osage blood. During this time, only headright owners qualified for the benefits accorded members of federally recognized tribes, and only headright owners could vote or run for office in tribal elections. Although for years the tribe struggled against these rigid prescriptions and made several attempts to expand tribal membership and suffrage, the Bureau of Indian Affairs (BIA) and the courts invalidated the efforts on the grounds that they violated the 1906 Act. It was not until the 2004 passage of Public Law 108, also known as the Osage Membership Act, that the tribe regained control over its membership and government. With the passage of the 2004 Act, tribal enrollment swelled to 18,000 members, all of whom now qualify for federal Indian programs and will have the opportunity to participate in tribal government.
The 2004 Act resolved some, but not all, of the inequalities among tribal members caused by the headright system. Today all members can equally partake of the benefits of tribal membership, but only a few share in the tribe's mineral wealth. Today, the thousands of cubic feet of natural gas and gallons of oil extracted annually from beneath the tribe's former reservation are of little benefit to the tribe or most tribal members. Instead, the system of headright ownership has created among the Osage a group of haves and have-nots. While the haves receive a substantial mineral income, the have-nots receive little or nothing.
Wealth has been a source of both prosperity and suffering for the Osage. Several hundred years before the discovery of oil beneath the tribe's Oklahoma reservation, the Osage were a powerful and wealthy tribe with a vast territory that included much of the present-day states of Kansas, Missouri, Oklahoma, and Arkansas. The Osage drove competing tribes from the area and leveraged their geographic position to monopolize the European fur and weapons trades.
By 1825, the expansion and growing strength of the U.S. government had reduced the tribe's territory to an 8 million-acre reservation in southern Kansas. Although the Osage used their land primarily for hunting, the reservation contained fertile agricultural land that white emigrant settlers wanted for homesteads. Groups lobbied Washington to open the reservation to white settlement, while intruders invaded the reservation, stole livestock, forced Osages from their homes, and established illegal settlements. Eventually the U.S. government acceded to the settlers' demands and in 1870 forced the Osage to sell their Kansas reservation and relocate to a new reservation in Indian Territory—now the state of Oklahoma.
Stinging from the loss of their Kansas reservation and desiring a permanent homeland safe from the predations of white settlers, the Osage chose for their new reservation land that they felt would be undesirable to farmer-homesteaders. In this manner, they were able to keep the land to themselves for a number of years. The next invasion of Osage territory came in the form of trespassing cattle grazing on the reservation's rich fields of bluestem grass. Tribal members quickly made the best of this situation by selling grazing leases to white cattlemen.
As a result of income from grazing leases and interest from the proceeds of the sale of the Kansas reservation, by the time reservation oil wells began to produce, the Osage were already in a better financial position than most tribes. The tribe had proved incredibly resilient in responding to rapidly changing circumstances, but in coping with its oil wealth, it was to face its greatest challenge.
When tribal leaders arranged for per-capita distribution of mineral royalties, they were acting to keep tribal resources in the hands of tribal members. But the incredible wealth generated by oil profits led to exploitation at every level. Government agents took kickbacks and oil companies underreported output. Common criminals flocked to the reservation along with lawyers eager to represent Osage for ridiculously high fees. Merchants left their merchandise unmarked, then charged the Osage higher prices than other customers or sold items on credit for 10 percent interest. Most of the Osage, who were considered incompetent to manage their own affairs, were appointed legal guardians, who collected high fees for their services while misusing their influence to cheat their wards.
National media coverage focused on the Osages' sudden wealth. Racially charged comic photos depicted extravagant spending, such as traditionally dressed Osages parking Pierce Arrow limousines outside their wickiups. Such depictions fed white resentment and paved the way for the worst of the depredations—whites who married Osage for money, then murdered their spouses to inherit their headrights.
Amy L. Propps
"Osage Nation." 2005. In Cohen's Handbook of Federal Indian Law. Albuquerque, NM: American Indian Law Center.; Baird, W. David. 1972. The Osage People. Phoenix, AZ: Indian Tribal Series.; McAuliffe, Dennis, Jr. 1999. Bloodland. San Francisco: Council Oak Books.; Wilson, Terry P. 1985. The Underground Reservation. Lincoln: University of Nebraska Press.