Hoopa Valley Tribe v. Hongkong & Shanghai Banking Corp. (In re Blue Lake Forest Products, Inc.)

We decide the extent to which federal limitations on the alienation of Indian trust timber supersede the Uniform Commercial Code.

I

This dispute, which we review following a grant of summary judgment, is over who gets the proceeds from a sale of logs that the United States originally held in trust for the Hoopa Valley Indian Tribe (“the tribe”).

Our story begins on June 27, 1990, when the tribe and the United States, as its trustee, concluded a written agreement with Hoo-pa Forest Industries (“HFI”), a business venture wholly owned by the tribe. 1 The contract (the “Timber Sale Contract”) called for the sale of timber from the tribe’s Pine Creek L Logging Unit to HFI, SER 3-4, and cross-referenced a set of statutory provisions *1140 and regulations — 25 U.S.C. § 407 and 25 C.F.R. § 163 — which specify that title to Indian timber held in trust by the United States cannot pass until the buyer first pays for it. 2 ER 28, 72.

HFI in turn contracted with Blue Lake Forest Products, Inc. (“Blue Lake”), a non-Indian buyer. ER 79-103. Under the HFI-Blue Lake agreement (the “Log Purchase Agreement”), HFI sold the logs to Blue Lake, which planned to turn them into lumber at its…