Small Sioux band still 'occupying' Black Hills area

A February thaw brought some relief from winter to Yellow Thunder Camp, but the legal thaw its inhabitants hope for is not in sight.

Camped defiantly on federal land in a small valley nestled among the Black Hills of South Dakota, a few dozen Sioux are trying to reclaim a small portion of their inheritance.

They are occupying one small part of ''Indian Country.'' This act of defiance is part of a larger effort to bolster their claim that Indians are suffering disproportionately from the current federal austerity.

The glare of publicity that swirled about Yellow Thunder Camp last September when the government ordered its occupants to leave their chosen spot has faded like the leaves of autumn. The traditional but transient tepees have been supplemented with a geodesic dome. The legal battle which will determine the camp's future drags on in nearby Rapid City.

''We are just wrapping up the discovery phase of the case. It will be a few months before a decision, but I am confident of the outcome,'' says Bruce Ellison, the camp's attorney.

The Forest Service maintains the Indians have no legal right to be there and are violating federal regulations. The small group of Sioux, including American Indian Movement leader Russell Means, maintains that the US government took this land away from the tribe in direct violation of the Fort Laramie Treaty of 1868. The Black Hills, they say, play a vital part in their religion and they want 800 acres where they can perform religious ceremonies, build a school for their children, and live more in accordance with their traditions. The district court allowed them to keep the dome, but has not yet ruled on whether the government can kick them out.

Their claim is one that the US government has repeatedly refused to acknowledge.

Last month, in fact, the Supreme Court ended a separate legal attempt by the Oglala Sioux tribe to claim the entire Black Hills. The court refused to hear an appeal from a lower court ruling that limited the Indians to cash compensation for the Black Hills seizure. The high court had previously ruled that the seizure was unconstitutional and upheld an award of $105 million to the eight Sioux tribes as compensation. The Oglala tribe had rejected this settlement and sued for return of the land plus $10 billion compensation for the minerals removed from the area and $1 billion in additional damages for ''hunger, malnutrition, disease, and death.''

However, the White House has been discussing the possibility that it might support legislation which would turn over a small portion of the Black Hills to the Sioux. This could be part of Mr. Reagan's yet-to-be-formulated Indian policy , say Interior Department sources. Issuance of this policy, originally scheduled for last month, was delayed when the scope of the policy was broadened to include natural resource issues and, as a consequence, the Cabinet-level policy group formulating this policy was expanded.

Meanwhile, federal budget-cutting has hit many parts of Indian country hard. ''Indians are much worse off today than a year ago . . . because of this administration,'' says Susanne Harjo, an analyst with the Native American Rights Fund. A key indicator of this is Indian unemployment. ''I have heard (of) as many as 50 reservations where unemployment has topped 70 percent,'' the Indian lobbyist reports.

More subtly, the administration has decided not to act on behalf of Indians in thousands of damage and trespass cases against third parties that must be settled before December, when a statute of limitation expires.

The BIA is also coming under criticism from some Indian activists for being eight months late with legislation to cover cases where litigation does not seem appropriate.

''They are dismissing cases wholesale and are simply waiting for time to run out. It's a crazy thing to do, because the government is clearly liable. . . ,'' analyst Harjo says.

Michael Cox of Interior's Solicitors Office confirms that the government has decided not to pursue 8,000 out of 17,000 cases. Primarily these involve unapproved rights-of-ways for roads and power lines on reservations, rejected by the Justice Department because they concluded the damages were not significant. Too, there are other cases where the government improperly issued land titles to individual Indians in the early 1900s, allowing local governments to levy property tax on the land. When the Indian ''owners'' could not pay, local goverments then took title to the land and sold it at tax auctions.

In a third category - cases involving attempts to get money incorrectly paid to states from Indian trust funds in compensation for Indian old-age benefits - the government has decided legislation, rather than litigation, is appropriate. But a bill has not yet been drafted, Mr. Cox reports.

Despite all these problems, there has been some good news for Native Americans:

* Jan. 25 the Supreme Court ruled against a dozen of the nation's biggest oil companies in upholding Indians' right to levy severance taxes on minerals removed from their land. This was only a partial victory, however, because the courts have yet to decide whether states can impose their own severance tax as well. If state taxes also apply, then tribal taxes would, in many cases, simply make development on the reservation uneconomical.

* The Denver-based 10th US Circuit Court affirmed the right of tribal councils to control the use of reservation land owned by non-Indians. The court told a Wyoming couple that they must gain the approval of tribal councils on the Wind River Reservation before they can subdivide their property.