What are endowment lands? Are they public lands? Or are they just open to the public? Aren’t they owned by the state? So, they’re managed for the people of the state…right? Endowment lands are, well, complicated. But their underlying principle is fairly straightforward. This article endeavors to answer each of the above questions by taking a retrospective look at where these lands originated and why they were created so that their function in today’s society can be understood. Let’s start with the most important question…

Where Did They Come From?

Endowment (n. a gift of money or property to an institution for a specific purpose) lands were gifted to some states by the federal government upon statehood to support public institutions, primarily public schools. Their origins can be traced from present-day statutes and constitutions back through statehood and territory acts, to the equal-footing doctrine, the Northwest Ordinance, and the Land Ordinance.

The Land Ordinance of 1785 (“Ordinance”) created a survey system to inventory and dispose of land owned by the general (federal) government. The starting point for the entire survey system was to be where the Ohio River flowed from Pennsylvania’s southern border. From there, the Ordinance required a rectangular survey system to divide the land into township and ranges. Each township was to consist of thirty-six sections; each one square mile section was to contain 640-acres.[i]

Within the Ordinance, the continental congress granted some land, sold some, and reserved certain, yet unnumbered, sections. The most important reservation (for the purposes of this article) was for the “maintenance of public schools.”[ii] Reserving each township’s “central section” signaled the early government’s first intention to use lands to support public institutions. Once surveyed, the central section became section sixteen.

As the United States acquired land from foreign governments, tribes, and the original colonies, it was surveyed according to the Ordinance’s survey system, reserved, and, among other things, disposed of pursuant to various westward expansion acts such as The Homesteading Act of 1862 and the Desert Lands Act of 1877. The 1785 Ordinance’s survey system persists today as the Public Land Survey System and is administered by the Bureau of Land Management.

In 1787, the Northwest Ordinance (“NW Ordinance”) created a system of governance for the territory north-west of the Ohio River (i.e. the area that had just been surveyed under the Land Ordinance). It also established the procedure for joining the Union and provided that three to five states were to be established from what became known as the Northwest Territory. The territories that formed from the Northwest Territory were eventually “enabled,” via congressional enabling acts, to draft and submit a state constitution and, hopefully, officially join the Union. The Northwest Territory gave way to present day Ohio, Indiana, Illinois, Michigan, Wisconsin, and the eastern portion of Minnesota, each of which were admitted “on an equal footing, in all respects” with the original states.[iii]

The equal-footing doctrine holds that each state admitted into the Union is equal to the original thirteen states “in power, dignity, and authority” and that each state is “competent to exert that residuum of sovereignty not delegated to the United States by the Constitution itself.”[iv] In an attempt to put new states on an equal footing with the original thirteen states, who owned the land within their borders when it agreed to form the Union, Congress granted a “fixed portion of the lands within [the new state’s] borders for the support of public education.”[v]

The equal-footing doctrine is often associated with the public trust doctrine. This association is because the public trust doctrine is inherent in the equal footing doctrine.[vi] The public trust doctrine stems from English common law (which stemmed from Roman civil law). When the American Revolution occurred, the people of the thirteen colonies “became themselves sovereign; and in that character hold the absolute right to all their navigable waters, and the soils under them, for their own common use, subject only to the rights since surrendered by the constitution to the general government.”[vii] So, just as the original states obtained title to the beds and banks of navigable waters from the English post-Revolution, so did subsequently admitted states since “a State’s title to these sovereign lands arises from the equal footing doctrine and is conferred not by Congress but by the Constitution itself.”[viii]

Aside from helping create the equal footing doctrine, the NW Ordinance laid the foundation for how to join the Union. It was, in essence, the first territory act.

As the United States’ title to land expanded westward, more territories started to form. The territories that morphed into the individual states as they are known today were all formally recognized by congressional territory acts akin to the NW Ordinance. Subsequent territory acts confirmed the 1785 Land Ordinance’s reservation of the central section, section sixteen, for common schools. For example, Idaho’s Territory Act, section 14, states: “When the lands in the territory shall be surveyed … sections numbered sixteen and thirty-six in each township in said territory shall be, and the same are hereby reserved for the purpose of being applied to schools in said territory[.]”[ix]

Like the states that emerged from the Northwest Territory per the NW Ordinance, subsequent territories would eventually be “enabled” by Congress to join the Union via enabling acts, which were, essentially, Congress’s terms and conditions for joining the United States of America. Upon receiving an enabling act, the territories would convene a constitutional convention to draft a constitution that, at minimum, provided for the act’s terms and conditions.[x] If the constitution was deemed acceptable by the general (federal) government, the territory would be admitted “on an equal footing” into the Union via a Presidential Proclamation.[xi]

The terms and conditions Congress used in enabling acts varied very little between each act. Seeing the precedent set by newly admitted neighbor states, some territories took it upon themselves to initiate the process of joining the Union. They did so sans enabling act by convening a constitutional convention, drafting a constitution based on recent enabling acts and constitutions, ratifying it, and then submitting it to Congress for approval. Since there wasn’t an enabling act, if the constitution was sufficient, a congressional admissions act was drafted, passed, and approved, and the state was admitted into the Union “on an equal footing”. This was Idaho’s path to admission.[xii]

It is within these enabling or admission acts that endowment lands, as they are known today, were officially born. Consistent with the 1785 Land Ordinance and territory acts, enabling and admission acts reserved section sixteen within each township “for the support of” common (public) schools.[xiii] Thanks to that same Ordinance, these “in place” grants were easily identified, or would be once surveyed, and title to surveyed and unsurveyed sections was transferred upon admission.[xiv] If the land wasn’t available for whatever reason at the time of statehood, the state could select “in-lieu,” aka “indemnity,” lands to make up the difference.[xv]

In later acts, additional acres of land were also often granted from the federal government to the states. These “in quantity” grants were to support other public institutions, such as, in Idaho’s case: “university purposes;” “an agriculture college;” “a scientific school;” “normal schools;” “an insane-asylum;” “the state University in Moscow;” “the penitentiary;” “other state, charitable, educational, penal, and reformatory institutions;” and “public buildings.” The “in-lieu” and “in quantity” grants were to be selected as the legislature may provide, under the direction of the Secretary of the Interior, from the surveyed, unreserved, and unappropriated public lands of the United States within the state’s boundaries.

The further along the timeline of states being admitted into the Union, the more land was granted for public institutions. This trend is most noticeable in relation to public schools. “Between the years 1802 and 1846 the grants were of every section sixteen, and, thereafter, of sections sixteen and thirty-six. In some instances, additional sections have been granted.”[xvi] Nearly all states surrounding and including Idaho were granted both sections sixteen and thirty-six “for the support of” common schools.[xvii] Arizona, New Mexico, and Utah are instances where sections two and thirty-two were granted in addition to sections sixteen and thirty-six.

As Congress granted more of the federal government’s land, it imposed more conditions within enabling and admission acts. When states joined the Union, they assented to the terms and conditions of their enabling or admission act by ratifying their constitution.[xviii] So, what exactly did the states sign up for in accepting the granted, or “endowed,” land?

Honorary Obligation or Sacred Trust?

“Although the basic pattern of school lands grants was generally consistent from State to State in terms of the reservation and grant of the lands, the specific provisions of the grants varied by State and over time.”[xix]

In states admitted early on, like Alabama and Michigan, the Supreme Court has found that the sparse language surrounding the grant of lands did little more than create an “honorary obligation,” not a trust.[xx] In these states, the granting language said little more than that section sixteen was “for the use of schools.”[xxi]

In later-admitted states, like Arizona and New Mexico, there is no question as to whether Congress intended to create a trust when it granted the lands. Their enabling act plainly states that “all lands hereby granted … shall be held by the said State in trust” and that “[d]isposition of any of said lands [or of any money derived therefrom] … in any manner contrary to the provisions of this Act, shall be deemed a breach of trust.”[xxii]

Most states, like Idaho, fell between the two extremes. Since Congress evolved its legislative approach to granting school lands, a case-specific analysis of a state’s enabling or admission act is required to determine whether a trust was created.[xxiii]

Congress can, without question, create a trust. It need not use the term “trust” nor know it is creating one if it manifests an intention to create a trust relationship.[xxiv] One way a trust relationship is created is when a trustor (the U.S.) transfers property (the land) to a trustee (the individual states) to be managed for a specific purpose (i.e. “common schools”) with enforceable duties.[xxv]

As explained, Alabama and Michigan’s grant “for the use of” was not enough to create enforceable duties. So, what was? In Colorado’s enabling act the Tenth Circuit found “a sufficient enumeration of duties to indicate Congress’s intent to create a fiduciary relationship” with the state since it prescribed: (1) how the lands are to be disposed; (2) at what minimum price; (3) how income from disposals is to be held; (4) what may be done with the interest accrued from the income; and (5) the permanent nature of the assets for the “support of” public institutions.[xxvi]

Idaho’s land granting act, along with many other western states’, enumerates similar, if not identical, duties. Idaho’s admission act requires that: if disposal of education lands occurs, it be done at public auction and that the proceeds constitute a permanent school fund, of which only the interest may be used to support schools; certain lands granted by the act may not be sold for less than ten dollars an acre; and that all “lands granted shall be held, appropriated, and disposed of exclusively for the purpose herein mentioned in such manner as the legislature of the state may provide”—among other things.[xxvii]

These fundamental duties created a fiduciary relationship between the federal government, as trustor, and the individual state, as trustee. Accordingly, traditional trust law principles, including fiduciary duties, have been imposed by courts. So, in addition to following the duties prescribed by the trustor in the act granting the land, the state must carry out the purposes of the trust with undivided loyalty, in good faith, and in a way that a prudent person “of good business sense and judgment” would act in regard to their own affairs[xxviii]. The state may further constitutionally or statutorily bind itself to additional duties, but, fundamentally, as trustee, the state must manage the trust for the sole benefit of the beneficiary.

The trust corpus, or body, is twofold. One is comprised of the physical land granted “for the support of” a certain public institution. The other is a fiscal trust, “the principal of which is derived primarily from the sale or lease of [granted] lands.” [xxix]

The two corpuses work in conjunction with each other. Both are permanent and inviolate. One cannot be significantly reduced without the other growing. For example, if granted lands are sold, money is gained. The land trust diminishes, but the fiscal trust grows. The fiscal trust’s principal is protected since only the accrued interest may be expended to support the institution to which the land was granted. When exchanging endowment land for other land (which is a common practice among western states) the acquired land becomes a part of the land trust so that neither the land nor fiscal trust is significantly diminished.

The endowment land and fund are independently and collectively a “sacred trust”that must be managed for the benefit of the beneficiary.[xxx] Beneficiaries receive all the trust’s benefits, without having to do much, if anything. Here, they are the public institutions that received land in the enabling or admission acts. For example, public schools in Idaho are the beneficiaries of the land within sections 16 and 36 and the revenue derived from that land.

Congress granted these lands to provide financial support to public institutions and put the newly admitted state on an equal footing with the original states.[CC1]  Given that these lands were intended to help the new state financially support various public institutions, the question becomes—how are the lands managed to generate revenue?

How Are They Actually Managed?

When states ratified their constitutions, they accepted the trust and its terms “by an ordinance irrevocable without the consent of the United States and the people of the State.”[xxxi] Some states took their fiduciary duty to financially support the public institutions seriously by inscribing a financial management mandate within their constitution.

Idaho’s original constitutional mandate was to manage the lands “in such a manner as will secure the maximum possible amount therefor[.]” In 1982 that mandate was changed to language that remains today. Now, management must “secure the maximum long term financial return to the institution to which granted.” Acting as trustees for the state, the State Board of Land Commissioners “is granted discretion in determining what constitutes the maximum long term financial return.”[xxxii]

Originally, Colorado’s constitution mirrored Idaho’s original constitutional mandate. In 1996, a voter-approved amendment, which was challenged and upheld (twice), heralded a “new management approach for the land trust” by announcing a “‘sound stewardship’ principle.” [xxxiii] Instead of managing the lands “in such manner as will secure the maximum possible amount,” the lands are to be managed “in order to produce reasonable and consistent income over time” and “in a manner which will conserve the long-term value of such resources, as well as existing and future uses[.]”[xxxiv]

Montana is unique in how it has interpreted the trust created in its enabling act. Since the Montana’s inception, it’s constitution has held “all lands of the state” that have been granted to the state by congress “in trust for the people, to be disposed of hereafter provided, for the respective purposes for which they have been … granted.”[xxxv] The constitution provides for the endowment fund trust but otherwise provides no fiscal guidance for how to manage the lands. Statutorily, however, the state board of land commissioners must administer the trust to “secure the largest measure of legitimate and reasonable advantage to the state” and “provide for the long-term financial support of education”[xxxvi] while managing the lands under a “multiple-use management concept” that recognizes “some land may be used for less than all of the resources” and avoids “impairment of the productivity of the land.”[xxxvii]

Other western constitutions, original and current, do little more than acknowledge the granted lands and require the revenue be held for the use of schools. Even still, those states, along with most others, provide statutory guidance on how to fulfill the fiduciary obligations associated with managing endowment lands. Even with a fiscal mandate, some variation of trust law’s “prudent investor rule” lingers in the background guiding management practices and decisions. Throughout the varying approaches the duty to manage these lands (and revenue) for the sole and exclusive benefit of the beneficiary remains unalterable.[xxxviii]

To execute their duties as trustees and administer the trusts most western states have a constitutionally[xxxix] or statutorily[xl] created board of land commissioners. The board serves as trustees on behalf of the state and oversees the management of the “sacred trust.” States with land boards often have an “administrative arm” to carry out the day-to-day duties of being a land manager. These divisions, departments, or agencies, depending on the state, all report to the board and are bound by the same fiduciary obligations of the “sacred trust.”

In Idaho, for example, the constitution created the state board of land commissioners consisting of the governor, superintendent of public instruction, secretary of state, attorney general, and state controller.[xli] The Department of Lands is statutorily created and acts as the Board’s “administrative arm.”[xlii]

Other states, like Arizona[xliii] and Nevada,[xliv] just have a statutorily created division, department, or agency to act as trustee and oversee all aspects of managing and administering the trust.

How Do They Generate Revenue?

Initially, most western states “pursued an aggressive policy of selling off the school-grant lands both to provide income for the state’s public schools and as a means to spur settlement in the state.”[xlv] For this reason, some states, like Nevada, have very little trust land left (in Nevada’s case, about 3,000 of the estimated 4,000,000 granted acres remain).But, just as Congress’s legislative approach to granting lands changed throughout the years, so did the state’s approach to managing those lands. Over the years, states have seemingly shifted from disposal to retention. While endowment land sales are still a prevalent source of revenue, states have found ways to generate revenue while retaining title to the lands.

State management activities vary depending on a variety of factors such as the type of resources available on the land, what the land is best suited for, and how the state has interpreted its duties. Most states lease endowment land for a variety of purposes, most commonly, timber harvesting, agriculture, grazing, oil and gas, renewable energy, and mineral extraction. Heavily timbered states, like Idaho, derive most of their revenue from timber harvests while mineral-heavy states, like Utah, derive most of their revenue from mineral extraction. Arizona, Colorado, and Montana generate a significant amount of revenue from commercial, residential, and recreational leasing. Colorado’s leasing program includes carbon sequestration and ecosystem services (e.g. a pollinator program). Overall, the state, as trustee, has broad discretion to determine how to fulfill its fiduciary obligations to the beneficiary. [xlvi]Other uses are also permitted—literally and figuratively—like public access.

Before turning to the final question—are these lands public lands or just open to the public? —here is a quick recap. Endowment lands were granted to help support various public institutions, such as public schools, and are held in a “sacred trust” by the respective state to support those various public institutions. They are “working lands” and must be managed as such.

The term “public lands,” evokes different meanings for different people, but it is commonly associated with land owned by the government (usually federal) that is open to and managed for the general public (usually under a multiple use and sustained yield management approach). While endowment lands are managed by a governmental agency and may be open to the public, they are held in trust and are managed to financially support their associated beneficiary. So, fundamentally, endowment lands differ from the traditional use and understanding of “public lands.” Practically, however, that difference can be hard to distinguish.

Just because they’re “working lands” doesn’t necessarily mean that they’re closed for public use. In Idaho, Oregon, and Wyoming, endowment lands are generally open for responsible public use, free of charge. In Colorado, endowment lands are closed for public use unless a lessee opens the land up for such use. And, while Montana’s constitution states that the granted lands are “public lands of the state,” it, along with Arizona and Washington, require a fee to use endowment lands (think of the Idaho’s Parks and Recreation Passport that you can purchase when registering your car). So, once again, whether endowment lands are open to the public depends on the state and how it, as trustee, has interested and implemented its duties.

One thing is certain, regardless of the state, endowment lands are special. They represent a unique piece of western land policy that highlights the importance of land and public institutions and that has persisted since the inception of this nation. While land management policy and approaches evolve over time, this “intergenerational,” “sacred trust” between a state and its public institutions has endured the test of time and will continue to do so given the states entrusted with endowment lands continue to responsibly manage both the land and fiscal corpus of the sacred trust to benefit current and future beneficiaries.

BIO: Alli Olson is an environmental attorney and proud Idaho native. She obtained her B.A. at Boise State University and J.D. with an emphasis in Natural Resources and Environmental Law from the University of Idaho.

[i] An Ordinance for ascertaining the mode of disposing of lands in the Western Territory, Cont. Cong. No. 124 (May 20, 1785).

[ii] Id.

[iii] Northwest Ordinance of 1785, Const. Cong. No. 224a (July 13, 1787).

[iv] Coyle v. Smith, 221 U.S. 559, 567 (1911).

[v] Andrus v. Utah, 446 U.S. 500, 523 (1980) (Powell, J. dissenting).

[vi] Idaho v. Cour d’Alene Tribe of Idaho, 521 U.S. 261 (1997) (internal citation omitted).

[vii] Martin v. Waddell’s Lessee, 41 U.S. 367, 410 (1842).

[viii] Cour d’Alene Tribe of Idaho, 521 U.S. at 283 (internal citation omitted); see also PPL Montana, LLC v. Montana, 565 U.S. 576, 591 (2012).

[ix] An Act to provide a temporary government for the territory of Idaho (Idaho Territory Act), 12 Stat. L. 808, ch. 117, § 14 (1863).

[x] See e.g., An Act to enable the people of Utah to form a constitution and state government and be admitted into the Union on an equal footing with the original States, 28 Stat. 107, §§ 6 – 13 (1894).

[xi] See e.g., Proclamation No. 9, 29 Stat. 876 (Jan. 4, 1896).

[xii] See e.g., An act to provide for the admission of the State of Idaho into the Union (Idaho Admission Act), 26 Stat. 215 (1890).

[xiii] See e.g., Id. at § 4.

[xiv] Balderson v. Brady, 17 Idaho 567, 107 P. 493 (Idaho 1910).

[xv] Andrus, 446 U.S. at 508 (“[A]s is typical of private contract remedies, the purpose of the right to make indemnity selections was to give the State the benefit of the bargain.”).

[xvi] United States v. Morrison, 240 U.S. 192, 198 (1916).

[xvii] Colorado, Montana, Nevada, Oregon, Washington, and Wyoming were also granted sections sixteen and thirty-six.

[xviii] Ervien v. United States, 251 U.S. 41, 46 (1919) (“The constitutional convention was required to provide, by an ordinance irrevocable without the consent of the United States and the people of the State, that the State and its people consent to the provisions of the act, and the constitution of the State did so provide.”).

[xix] Papasan v. Allain, 478 U.S. 265, 270, (1986).

[xx] Alabama v. Schmidt, 232 U.S. 168 (1914); Cooper v. Roberts, 59 U.S. 173 (1855) (regarding Michigan).

[xxi] Id.

[xxii] An Act to enable the people of New Mexico to form a constitution and state government and be admitted into the Union on an equal footing with the original States; and to enable the people of Arizona to form a constitution and state government and be admitted into the Union on an equal footing with the original States, 36 Stat. 557, §§ 10, 28 (June 20, 1910); see also United States v. Ervien, 251 U.S. 41 (1919); Lassen v. Arizona, 385 U.S. 458 (1966).

[xxiii] See Papasan, 478 U.S. 265.

[xxiv] Restatement (Third) of Trusts § 13 (Am. Law Inst. 2003).

[xxv] Id. at §§ 10, 13.

[xxvi] Branson Sch. Dist. Re-82 v. Romer, 161 F.3d 619, 634 (10th Cir. 1998).

[xxvii] Idaho Admission Act, 26 Stat. 215, §§ 4-14 (July 3, 1890).

[xxviii] Barber Lumber v. Gifford, 25 Idaho 654, 139 P. 557, 561 (1914).

[xxix] State, ex rel. Moon v. State Bd. of Examiners, 104 Idaho 640, 641, 662 P.2d 221, 222 (1983).

[xxx] State v. Peterson, 61 Idaho 50, 97 P.2d 603, 604 (1939).

[xxxi] Ervien, 251 U.S. at 46.

[xxxii] Idaho Watersheds Project v. St. Bd. Of Lnd. Comm’rs, 128 Idaho 761, 765, 918 P.2d 1206, 1210 (1996).

[xxxiii] Branson Sch. Dist. Re-82 v. Romer, 958 F. Supp. 1501 (D. Colorado 1997), aff’d, 161 F.3d 619, 626 (10th Cir. 1998).

[xxxiv] Colo. const. art 9, § 10.

[xxxv] Mont. const. art. 10, § 11 (originally art. 17, §1).

[xxxvi] M.C.A. §77-1-202. 

[xxxvii] M.C.A. §77-1-203.

[xxxviii] See Cooper v. Roberts, 59 U.S. 173 (1855); Ervien v. United States, 251 U.S. 41, 46 (1919).

[xxxix] Colorado, Montana, Idaho, and Wyoming have constitutionally created land boards.

[xl][xl] Utah and Washington have statutorily created land boards.

[xli] Idaho Const. Art. IX § 7.

[xlii] I.C. § 58-101.

[xliii] In title 37, chapter 1, Arizona created the state land commissioner and state land department.

[xliv] In title 26, chapter 321, Nevada created the division of state lands.

[xlv] Romer, 161 F.3d at 626.

[xlvi] See Allen v. Smylie, 92 Idaho 846, 452 P.2d 343 (1969).