Last November, the Osage LLC board terminated its ranch lease with the Nation that was supposed to last 25 years. It only made it to six. The reason, according to former board chairman Frank Freeman, is that they were backed into a corner.
In September of last year, Freeman said the board received a letter from the Osage Nation Attorney General’s office stating the Osage LLC had done irrevocable damage to the ranch. “We were given 14 days to remedy that. But you cannot remedy irrevocable damage,” said Freeman. “We had no options but to terminate that lease. … they could have taken our cow herd.”
Longtime cattle rancher Galen Crum – now the Osage LLC’s board chairman – said at the time he was very afraid for the future of the ranch. “It was a scary moment, not knowing if the ranch would still exist,” he said.
Despite conflicts between various leaders in the Osage Nation government and the board over how to structure the ranch’s financials, nearly all parties agree – from Assistant Principal Chief RJ Walker to Crum and Freeman – that the ranch is a profitable asset.
“We at least proved that the ranch can make money,” Freeman said.
He has remained on the board but said he was not consulted on the new lease, which he said allows the Nation greater control of the ranch.
The tribe is using that control to put a higher priority on remediating the land.
The new lease
Since this April, the ranch’s new lease with the Nation is under contract – this time for ten years, instead of 25. Chairman Crum said that all is well, and so far, the lease has not inhibited the ranch’s profits or their operations.
Assistant Chief Walker said the new lease will make the ranch more likely to show a return on investment, but Crum didn’t feel that way, necessarily.
For Crum’s part, he is happy to find a way to meet the Nation’s goals so the board can keep the ranch running. Freeman said the new lease ensures the Nation is managing the land, and the ranch is now only managing its cattle.
It’s true that under the new lease, the ranch has many scenarios where they’ll require the Nation’s written consent.
While the old lease gave significant leeway to the Osage LLC, under the new lease, they must get permission before doing things like adding a fence or a pond, or building a new structure or performing any land management activities.
This increased oversight is because the Nation is refocusing efforts on protecting the land. Specifically, they want to protect wildlife, allow tribal members to forage, and build land-based resources for Osage people to use, according to Dr. Jann Hayman, director of the tribe’s Department of Natural Resources.
In the future, Hayman said such land uses could include “maybe some public hunting areas, where Osage people can have access to gathering areas for specific foods. We can do things in the bison preserve that takes into account some of the cultural aspects that maybe the LLC wouldn’t. They could, I’m sure, but [maybe they] wouldn’t, because their goals are economically driven.”
Natural Resources manages (in yellow). There are certain areas listed in the old lease which aren’t
included in the new one. For example, the “Texaco” pasture pictured above used to be under the
purview of the Osage LLC in the old lease but is now managed by the Nation’s Department of Natural
Resources. Courtesy Photos
One manifestation of this intention to increase Osage peoples’ chances to engage with Osage land is the fact that the DNR is now running the Youth Hunt, a hunting event that was managed in the past by the ranch.
The changes are not all sunny, however. Crum expressed the board has had their freedoms curbed, and the process of arriving at the new lease required some negotiation.
“The [Nation] initially wanted to put the ranch on a two-year lease. I had to explain … you can’t run a cattle lease that way. Calves are a five or 10-year commitment,” Crum said.
The new lease is not only for far fewer years but also for significantly less land. What was 42,300 acres of leased ranch land is now 32,743.32 – a 15-square-mile reduction amounting to 9,557 acres of land now in the Nation’s care.
But Hayman said this sovereign land stewardship is something the Nation is celebrating. “We don’t just want to lease that [land] out to some other non-Osage entity, because … nobody’s going to really understand the Osage-specific interests better than ourselves, whether that’s wildlife management or taking into consideration we don’t want to spray this area because there’s cultural species of plants we want to make available to the Osage.”
The Osage LLC does lease out to non-Osage entities to make money, but under the new lease, every sub-lessee will have to be approved by the Nation first.
As Hayman explained, “Building more resources for Osage people to use … is in the back of my mind. … There’s a lot of possibility in the future, but it takes a long road, making sure we don’t do something now that is going to keep that from happening in the future.”
ON Real Estate Services confirmed there is another reason for the change in leased acreage, in addition to the desire for oversight. KP Gilmore, geographic information systems (GIS) coordinator, said “restricted land” has been taken out of the new lease because it’s not supposed to be leased out.
The new lease “legitimized the land the ranch was running cattle on,” Hayman said. “There was so much restricted land included in the old lease.”
The ranch land is currently undergoing a fee-to-trust land application process as well. If the Nation moves the ranch land into trust, Gilmore said the lease will be redone as a “Business Lease Agreement in Compliance with the Trust Land Leasing Act.”
The land uses of the Nation’s holdings are expected to grow beyond cattle, but not necessarily in the direction of business development.
Utilizing everything
Assistant Chief Walker is a cowboy by background who is proud of the Osage Nation Ranch and wants to see it as successful as possible.
He said the Nation is not using all the acreage the new lease has added to the tribe’s bison preserve, so they are creating an agreement with the Osage LLC to allow the ranch to run cattle on portions of the preserve.
“That way we’re not just having land out there that’s designated for something that’s not being utilized,” he said.
Under the old lease, land utilization was ensured to allow tribal mineral development by the Nation, but that clause does not appear in the new lease. It read, “the lessee shall not … interfere with or hinder entry … as may be necessary to explore, drill, mine, store or transport oil, gas or other minerals, including the constructing and maintaining of pipelines …” The new lease doesn’t address mineral development explicitly.
Real Estate Services explained there is a “right-of-way” clause that could pertain to mineral development, however, via easements. The new lease ensures “the Osage Nation can still grant … easements on the property. … For instance,” said Gilmore, “if a pipeline company wanted to run a pipeline through a portion of the ranch, they would fill out a right-of-way application with Real Estate Services.”
When asked why the clause on mineral development was absent from the new lease, Real Estate Services deferred to the Osage Nation Attorney General’s office but AG Clint Patterson did not respond to the request for comment by the time of publication.
The land is nothing if not multi-purposed under the new lease agreement. While the old lease was a “land management, farming and grazing” lease, the new one is a “commercial property lease.” The new lease allows the land to be used for “any lawful purpose … in no way limited to cattle ranching and related activities and drone flight operations.”
‘Restoring the land, protecting the water’
In past years, the ranch took some conservation measures the Department of Natural Resources would not have approved of, Hayman said. For example, they sprayed to kill species that interfere with grazing. “For [the Department of Natural Resources], we’re just thinking about greater habitat management … we’re restoring the land, protecting the water resources that are out there.”
Hayman mentioned spraying to kill blackberries as another example, pointing out that while the shrubs do take away from grazing areas for cattle, they can be a gathering opportunity for ground birds that need protection.
“There may be some tough conversations in the future,” she said, but she is determined to work well with the ranch. “I feel, based on old conversations, that they kind of thought we would be anti-spray and not communicate with them. … [but] I don’t want anything to stop here. So, if they have a request for a spray, that’s not going to stop here. We don’t want it to get here and stall. We will ask questions. We will work with them quickly.”
The DNR is not the only department the ranch will have to up its communication with. Berbon Hamilton, Osage LLC projects manager, said the ranch has waited on reviews that relate to the Native American Graves Protection and Repatriation Act (NAGPRA), rather than just building a fence without permission, even though it is needed to help prevent erosion.
A huge return on investment
Assistant Chief Walker said the ranch is now worth $140 million. It was bought for $74 million.
“We have almost a quarter of a billion [dollars] worth of land, and we are one of the largest tribal nation landowners. Good things are happening out there. We are making money. Even though we’ve sold off quite a few cows,” he said.
In exact numbers, Walker acknowledged the Nation owns more than $200 million worth of land. If not quite a quarter of a billion, he believes it’ll get there.
“We own roughly 55,000 acres of fee simple land and all or part of over 28,000 acres of a combination of trust and restricted land. Current land prices in Osage County are averaging between $2,500 – $3,000 an acre,” he said.
However, the focus on conservation begs the question as to whether the Nation is really trying to make more profit with the new lease.
Both the reduced acreage in the new lease and the same price charged per acre as in the old lease – $1 – suggest that modest increases will be fine for the Nation’s interests, as long as the tribe’s land resources are healthy.
And now, with the updated terms between the Nation and the Osage LLC, the new lease ensures neither party can easily wriggle free of their agreement again.
The new lease cannot be terminated unless either party breaks a law or regulation, or if they are in breach of the contract.
If the Nation fails to do something the lease holds them responsible for in a timely manner, the Osage LLC would have to provide them an account of the issue in writing and then wait 60 days to see if the tribe can remedy the problem before they even have the option to terminate the lease.
But the new relationship seems to be working, and all parties are passionately committed to their part.
Will the Nation be able to balance land protection and profits for the ranch?
So far, yes.
Additional noted changes between the old lease and the new:
- The new lease states the lessee, or the ranch, must comply with all environmental laws. The old lease states, “the lessee agrees to comply with all Osage Nation laws” and will “not authorize” illegal activity.
- While the old lease allowed subleasing at the tenant’s or ranch’s discretion, the new lease dictates the ON Office of Real Estate will manage the subleasing, including collecting rent – after approval of a sublessor by the Nation. The LLC will need to get their payments from ON Real Estate. Any subleases which pre-date the new lease, however, are exempted.
- If an easement interferes with ranching operations by reducing acreage needed for cattle grazing or otherwise, the Nation will pay a monetary amount to the ranch to compensate them for the losses.
- In the previous lease, capital improvements to the land were to be performed over a year, which was measured starting in April. In the new lease, capital improvements are to be done between January 1 of each year, leaving the ranch on a shorter timeline for 2024, since the new lease was signed in April. The ranch is considering working on ponds, a spring, and some extra fencing for this year’s capital improvements.
- The new lease omits the interest charge on late rent. The only exception is that if the lease were to be terminated and the ranch remained there, the Nation would charge them 200 percent of the cost of rent each day they stay on the leased land.
- In the old lease, the Nation promised to help the ranch develop, agreeing to “pursue grants, hire experts, and make financial decisions” on the ranch’s behalf, and “secure … partnerships, and other relations that will benefit lessee.” However, in the new lease, the Nation’s Department of Natural Resources ensures the ranch cannot interfere in land management practices intended to increase tribal members’ access to land-based activities.
- The new lease limits financial burdens on the ranch. For example, the new lease asks the ranch to pay for repairs up to $2,500, and after that, the Nation is responsible. This contrasts to the old lease, which required the ranch to “keep the premises … in good repair” and held the ranch responsible for damages, with no cap.
This article was clarified on Aug. 21, 2024.
