[Federal Register Volume 76, Number 229 (Tuesday, November 29, 2011)]
[Proposed Rules]
[Pages 73783-73827]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29991]



[[Page 73783]]

Vol. 76

Tuesday,

No. 229

November 29, 2011

Part II





Department of the Interior





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Bureau of Indian Affairs





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25 CFR Part 162





Residential, Business, and Wind and Solar Resource Leases on Indian 
Land; Proposed Rule

Federal Register / Vol. 76 , No. 229 / Tuesday, November 29, 2011 / 
Proposed Rules

[[Page 73784]]


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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 162

[Docket ID BIA-2011-0001]
RIN 1076-AE73


Residential, Business, and Wind and Solar Resource Leases on 
Indian Land

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Indian Affairs (BIA) is proposing to revise the 
regulations addressing non-agricultural leasing of Indian land. This 
rule would add new subparts to address residential leases, business 
leases, wind resource evaluation and development leases, and solar 
resource development leases on Indian land, and would therefore remove 
the existing subpart for non-agricultural leases.

DATES: Comments on this proposed rule must be received by January 30, 
2012. Comments on the information collections contained in this 
proposed regulation are separate from those on the substance of the 
rule. Comments on the information collection burden should be received 
by December 29, 2011 to ensure consideration, but must be received no 
later than January 30, 2012.

ADDRESSES: You may submit comments by any of the following methods:
    Federal rulemaking portal: http://www.regulations.gov. The rule is 
listed under the agency name ``Bureau of Indian Affairs.'' The rule has 
been assigned Docket ID: BIA-2011-0001. If you would like to submit 
comments through the Federal e-Rulemaking Portal, go to http://www.regulations.gov and do the following. Go to the box entitled 
``Enter Keyword or ID,'' type in ``BIA-2011-0001,'' and click the 
``Search'' button. The next screen will display the Docket Search 
Results for the rulemaking. If you click on BIA-2011-0001, you can view 
this rule and submit a comment. You can also view any supporting 
material and any comments submitted by others.

--Email: consultation@bia.gov. Include the number 1076-AE73 in the 
subject line of the message.
--Mail: Del Laverdure, Principal Deputy Assistant Secretary--Indian 
Affairs, U.S. Department of the Interior, Mail Stop 4141, 1849 C Street 
NW., Washington, DC 20240. Include the number 1076-AE73 on the outer 
envelope.
--Hand delivery: Del Laverdure, Principal Deputy Assistant Secretary--
Indian Affairs, U.S. Department of the Interior, Room 4141, 1849 C 
Street NW., Washington, DC 20240. Include the number 1076-AE73 on the 
outer envelope.

    We cannot ensure that comments received after the close of the 
comment period (see DATES) will be included in the docket for this 
rulemaking and considered. Comments sent to an address other than those 
listed above will not be included in the docket for this rulemaking.
    Comments on the information collections contained in this proposed 
regulation are separate from those on the substance of the rule. Send 
comments on the information collection burden to OMB by facsimile to 
(202) 395-5806 or email to the OMB Desk Officer for the Department of 
the Interior at omb.eop.gov">OIRA_DOCKET@omb.eop.gov. Please send a copy of your 
comments to the person listed in the FOR FURTHER INFORMATION CONTACT 
section of this notice.

FOR FURTHER INFORMATION CONTACT: Elizabeth Appel, Office of Regulatory 
Affairs & Collaborative Action, (202) 273-4680; 
Elizabeth.appel@bia.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    This proposed rule would revise the current 25 CFR part 162, Leases 
and Permits, to establish subparts specifically addressing the 
following categories of leasing on Indian land: residential; business; 
wind resource evaluation and development; and solar resource 
development. Specifically, this rule would:
     Revise Subpart A, General Provisions
     Create a new Subpart C, Residential Leases
     Create a new Subpart D, Business Leases
     Create a new Subpart E, Wind Energy Evaluation Leases 
(WEELs) and Wind and Solar Resource (WSR) Leases
     Delete Subpart F, Non-agricultural Leases (because that 
subpart was intended to address residential and business leasing, which 
this proposed rule addresses specifically in subparts C and D, 
respectively)
     Move the current Subpart E, Special Requirements for 
Certain Indian Reservations, to Subpart F
     Create a new Subpart G, Records.
    The proposed rule does not affect Subpart B, Agricultural Leases. 
Subpart B may be revised at a later time. In addition, to ensure that 
changes to the General Provisions do not affect agricultural lease 
regulations, the current General Provisions sections are being moved to 
Subpart B, where they apply only to agricultural leases. Minor edits 
were made to these General Provisions to delete redundancies and 
clarify that they now apply only to agricultural leases.

II. Summary of Substantive Revisions

    This rule makes the procedures for leasing as explicit and 
transparent as possible. The consent requirements in the proposed 
regulations are consistent with the Indian Land Consolidation Act of 
2000 (ILCA), as amended by the American Indian Probate Reform Act 
(AIPRA). Because this statute does not apply to tribes in Alaska, the 
consent requirements for Alaska remain the same as the previous 
regulations governing leasing. The proposed regulations provide 
procedures for approval of lease amendments, assignments, subleases and 
leasehold mortgages. The current regulations provide for the approval 
of such instruments, but do not specify the procedure for such 
approval, leading to the possibility of inconsistencies nationwide, to 
the detriment of lessees and lenders.
    This rule provides that leases on tribal land may be approved for 
the compensation established in the lease. Leases for less than fair 
market rental may be approved on individually owned Indian land under 
certain circumstances.
    Subpart C, Residential Leases, addresses leasing for single-family 
homes and housing for public purposes on Indian land. The proposed 
regulations provide for a 30-day time frame within which BIA must issue 
a decision on a complete residential lease application. Bonds are not 
required for leases for housing for public purposes and otherwise may 
be waived by BIA upon a determination that it is in the best interest 
of the landowner(s). Subpart C also includes provisions for enforcement 
of lease violations.
    Subpart D, Business Leases, addresses leasing for business 
purposes, including: (1) Leases for residential purposes that are not 
covered in Subpart C; (2) leases for business purposes not covered by 
Subpart E (wind energy evaluation and wind and solar resource 
development); (3) leases for religious, educational, recreational, 
cultural, and other public purposes; and (4) commercial or industrial 
leases for retail, office, manufacturing, storage, biomass, waste-to-
energy, and/or other business purposes. The proposed regulations 
provide for a 60-day time frame within which BIA must issue a

[[Page 73785]]

decision on a complete business lease application.
    Subpart E, WEELs and WSR Leases, establishes procedures for 
obtaining BIA review and approval of wind energy evaluation leases 
(WEELs) and wind and solar resource (WSR) development leases. For wind 
energy, this proposed rule establishes a two-part process whereby 
developers obtain BIA approval of a short-term lease for possession of 
Indian land for the purposes of installation and maintenance of wind 
evaluation equipment, such as meteorological towers. The WEEL may 
provide the developer with an option to lease the Indian land for wind 
energy development purposes. The environmental reviews conducted for 
the short-term lease, which would only evaluate the impacts of the 
evaluation equipment, not the full development of the wind project, may 
be rolled into environmental reviews conducted for a lease for full 
development of the wind project. This two-part process is not necessary 
for solar resource development because solar evaluation does not 
require possession of the land.
    Some of the more notable cross-cutting substantive changes include:

BIA Approval Process

     Eliminating the requirement for BIA approval of permits of 
Indian land;
     Eliminating the requirement for BIA approval of subleases 
and assignments where certain conditions are met;
     Imposing time limits on BIA to act on requests to approve 
lease amendments, lease assignments, subleases, and leasehold 
mortgages;
     Establishing that BIA has 30 days to act on a request to 
approve a lease amendment or sublease, or the document will be deemed 
approved;
     Establishing that BIA must approve amendments, 
assignments, leasehold mortgages, and subleases unless it finds a 
compelling reason not to, based on certain specified findings.

Compensation and Valuations

     Providing that BIA will defer to the tribe's negotiated 
value for a lease of tribal land and will not require valuation of 
tribal land;
     Allowing for waivers of valuation for residential leases 
of individually owned land if the individual landowners provide 100 
percent consent and a waiver and BIA determines it is in the best 
interest of the landowners (100 percent consent is necessary because 
non-consenting owners receive fair market value, so a valuation will be 
necessary if any individual does not consent);
     Allowing short-term leases for wind resource evaluation 
purposes at the value negotiated by the Indian landowners (whether 
tribal or individual Indians);
     Allowing alternative forms of rental (other than monetary 
compensation) if BIA determines it is in the best interest of the 
Indian landowners;
     Allowing other types of valuation (other than appraisals) 
under certain circumstances;
     Allowing for automatic rental adjustments and restricting 
the need for reviews of the lease compensation (to determine if an 
adjustment is needed) to certain circumstances.

Improvements

     Requiring plans of development and schedules for 
construction of improvements to assist the BIA and Indian landowners in 
enforcement of diligent development of the leased premises.
     Clarifying that improvements on trust or restricted land 
are not taxable by States or localities, without regard to ownership. 
The purposes of residential, business, and WSR leasing on Indian land 
are to promote Indian housing and to allow Indian landowners to use 
their land profitably for economic development. These regulations are 
intended to preempt the field of leasing of Indian lands. The Federal 
statutory and regulatory scheme for leasing, including the regulation 
of improvements, is so pervasive as to preclude the additional burden 
of State taxation. The assessment of State taxes would obstruct Federal 
policies supporting tribal economic development and self-determination, 
and tribal interests in effective tribal government and economic self-
sufficiency.

Direct Pay

     Allowing for direct pay only where there are 10 or fewer 
landowners, and all landowners consent to direct pay;
     Continuing direct pay unless and until 100 percent of the 
owners agree to discontinue direct pay, but suspending direct pay for 
any one Indian landowner who dies, is declared non compos mentis, or 
whose whereabouts become unknown.
    These changes are intended to increase the efficiency and 
transparency of the BIA approval process for leasing of Indian land, 
support tribal decisions regarding the use of their land, increase 
flexibility in compensation and valuations, and facilitate management 
of direct pay.

III. Procedural Requirements

A. Regulatory Planning and Review (E.O. 12866)
B. Regulatory Flexibility Act
C. Small Business Regulatory Enforcement Fairness Act
D. Unfunded Mandates Reform Act
E. Takings (E.O. 12630)
F. Federalism (E.O. 13132)
G. Civil Justice Reform (E.O. 12988)
H. Consultation With Indian Tribes (E.O. 13175)
I. Paperwork Reduction Act
J. National Environmental Policy Act
K. Effects on the Energy Supply (E.O. 13211)
L. Clarity of This Regulation
M. Public Availability of Comments

III. Procedural Requirements

A. Regulatory Planning and Review (E.O. 12866)

    The Office of Management and Budget (OMB) has determined that this 
rule is significant under Executive Order 12866. This rule replaces 
provisions that apply to non-agricultural leasing of Indian land, 
generally, with provisions that apply specifically to the different 
types of non-agricultural leasing: Residential, business, and wind and 
solar resource leasing of Indian land. This rule describes how the BIA 
will administer residential, business, and wind and solar resource 
leases on trust and restricted land. Thus, the impact of the rule is 
confined to the Federal Government and individual Indian and tribal 
landowners and does not impose a compliance burden on the economy 
generally or create any inconsistencies or budgetary impacts to any 
other agency or Federal program.
    (1) This rule will not have an annual effect of $100 million or 
more on the economy or adversely affect in a material way the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities. This 
rule makes changes to promote economic development on Indian land 
through, for example, providing greater transparency to procedures for 
obtaining BIA approval, imposing timelines on BIA to act on certain 
lease requests, and establishing that BIA will defer to tribes' 
negotiated values. The rule's changes will not have direct effects on 
the economy as a whole; however, the changes should result in increased 
leasing of Indian land, which will have a beneficial effect on tribal 
economies and communities.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency because the 
Department is the only agency with authority for approving leases on 
Indian land. We

[[Page 73786]]

have coordinated with the Department of Housing and Urban Development 
(HUD) to ensure that the leasing procedures will not impede Indian 
landowners' ability to obtain HUD-funding for residences.
    (3) This rule does involve entitlements, grants, user fees, or loan 
programs or the rights or obligations of their recipients. The 
revisions have no budgetary effects and do not affect the rights or 
obligations of any recipients.
    (4) This rule may raise novel legal or policy issues because it 
alters established procedures for reviewing and approving leases of 
Indian land.

B. Regulatory Flexibility Act

    The Department of the Interior certifies that this proposed rule 
will not have a significant economic effect on a substantial number of 
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). Small entities are not likely to enter into residential leases 
on Indian land because tribal housing authorities and tribal members 
usually enter into such leases. It is possible that small entities may 
enter into business leases or wind or solar resources leases but this 
rule does not impose any new requirements in obtaining or complying 
with a lease that would have a significant economic effect on those 
entities.

C. Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. It will not result in the 
expenditure by State, local, or tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year. The 
rule's requirements will not result in a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions. The rule continues to 
require lessees to pay at least fair market rental, with certain 
exceptions, and adds that lessees agree to some other amount negotiated 
by the Indian tribe under certain circumstances. Nor will this rule 
have significant adverse effects on competition, employment, 
investment, productivity, innovation, or the ability of the U.S.-based 
enterprises to compete with foreign-based enterprises because the rule 
is limited to Indian land and is intended to promote economic 
development.

D. Unfunded Mandates Reform Act

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local, or tribal governments or the private sector. A statement 
containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1531 et seq.) is not required.

E. Takings (E.O. 12630)

    Under the criteria in Executive Order 12630, this rule does not 
affect individual property rights protected by the Fifth Amendment nor 
does it involve a compensable ``taking.'' A takings implication 
assessment is not required.

F. Federalism (E.O. 13132)

    Under the criteria in Executive Order 13132, this rule has no 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. This rule 
governs leasing on Indian land, which is land held by the Federal 
Government in trust or restricted status for individual Indians or 
Indian tribes. Such land is subject to tribal law and Federal law, 
only, except in limited circumstances and areas where Congress or a 
Federal court has made State law applicable. This rule therefore does 
not affect the relationship between the Federal Government and States 
or among the various levels of government.

G. Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of Executive Order 12988. 
Specifically, this rule has been reviewed to eliminate errors and 
ambiguity and written to minimize litigation; and is written in clear 
language and contains clear legal standards.

H. Consultation With Indian Tribes (E.O. 13175)

    In accordance with the President's memorandum of April 29, 1994, 
``Government-to-Government Relations with Native American Tribal 
Governments,'' Executive Order 13175 (59 FR 22951, November 6, 2000), 
and 512 DM 2, we have evaluated the potential effects on federally 
recognized Indian tribes and Indian trust assets. During the 
development of this proposed rule, the Department discussed the rule 
with tribal representatives at several consultation sessions. We 
distributed a preliminary draft of the rule to tribes in February 2011 
and held three consultation sessions: Thursday, March 17, 2011 at the 
Reservation Economic Summit (RES) 2011 in Las Vegas; March 31, 2011 in 
Minnesota; and April 6, 2011, in Albuquerque, New Mexico. We requested 
that tribes submit written comments by April 18, 2011. We received 
written and oral comments from over 70 Indian tribes during tribal 
consultation. We reviewed each comment in depth and revised the rule 
accordingly. This proposed rule incorporates those revisions. We also 
compiled a summary of tribal comments received and our responses to 
those comments and are making that document available to tribes at: 
http://www.bia.gov/WhoWeAre/AS-IA/Consultation/index.htm. We plan to 
hold additional tribal consultation sessions, particularly in the 
geographic areas we were not able to reach prior to this proposed rule. 
We will announce the dates and locations of the additional tribal 
consultation sessions by letter to tribal leaders.

I. Paperwork Reduction Act

    OMB Control No. 1076-0155 currently authorizes the collections of 
information contained in 25 CFR part 162, totaling an estimated 106,065 
annual burden hours. If this proposed rule is finalized, the annual 
burden hours will increase by an estimated 2,910 hours. Because the 
sections where the information collections occur changes, we are 
including a table showing the section changes and whether a change to 
the information collection requirement associated with those sections 
has changed.

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                                                                 Information collection
           Current CFR cite                  New CFR cite             requirement         Explanation of change
----------------------------------------------------------------------------------------------------------------
162.109, 162.204, 162.205............  162.109, 162.204,        Provide notice of        No change. Previously
                                        162.205, 162.338(e),     tribal leasing laws,     required, but now
                                        162.438(e),              regulations,             listed in specific
                                        162.528(d), 162.568(e).  exemptions.              subparts.
                                       162.320(a), 321(a),      Request for fair market  New.
                                        162.420(a), 421(a),      rental/valuation on
                                        162,546(a), 162.547(a).  tribal land.
                                       162.320(b), 321(b),      Request for waiver of    New.
                                        162.420(b), 421(b),      fair market rental/
                                        162,546(b), 162.547(b).  valuation for
                                                                 individually owned
                                                                 land.
                                       162.324, 162.424,        Agreement to suspend     New.
                                        162.550.                 direct pay.
                                       162.368, 162.468,        Notification of good     New.
                                        162.593.                 faith negotiations
                                                                 with holdover.
162.207, 162.242-244, 162.604(a),      162.009, 162.207,        Submit lease,            No change. Previously
 162.610.                               162.242-244, 162. 345,   assignment, amendment,   required, but now
                                        350, 353, 357, 162.      leasehold mortgage for   listed in separate
                                        445, 450, 453, 457,      approval.                subparts.
                                        162. 530, 162.570,
                                        574, 578, 582.
162.213, 162.604(a)..................  162.024, 162.213,        Provide supporting       No change. Previously
                                        162.338, 162.438,        documentation.           required, but now
                                        162.528, 162.563.                                 listed in separate
                                                                                          subparts.
                                       162.004................  Submit permits to BIA    Permits must now be
                                                                 for file.                submitted to BIA for
                                                                                          file.
162.217, 162.246.....................  162.217, 162.246,        Submit lease for         No change. Previously
                                        162.341, 162.441,        recording.               required, but now
                                        162.566.                                          listed in separate
                                                                                          subparts.
162.234, 162.604(c)..................  162.234, 162.334,        Provide a bond.........  No change. Previously
                                        162.434, 162.525,                                 required, but now
                                        162.559.                                          listed in separate
                                                                                          subparts.
162.237, 162.604(d)..................  162.237, 162.337,        Provide information for  No change. Previously
                                        162.437, 162.527,        acceptable insurance.    required, but now
                                        162.562.                                          listed in separate
                                                                                          subparts.
162.241..............................  162.241................  Administrative fees....  No change.
162.247, 162.613.....................  162.247, 162.325, 329,   Pay rent...............  No change. Previously
                                        162.425, 429, 162.523,                            required, but now
                                        551, 555.                                         listed in separate
                                                                                          subparts.
162.248, 162.616.....................  162.248, 162.365,        Pay penalties for late   No change. Previously
                                        162.465, 162.590.        payment.                 required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.212, 162.606.....................  162.009, 162.212.......  Bidding on advertised    No change. Previously
                                                                 lease.                   required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.603..............................  162.008(b)(2)..........  Use of minor's land....  No change. Previously
                                                                                          required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.251, 162.618.....................  162.251, 162.363,        Provide notice of        No change. Previously
                                        162.463, 162.588.        curing violation.        required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.256, 162.623.....................  162.256, 162.368,        Respond to notice of     No change. Previously
                                        162.468, 162.593.        trespass.                required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.113..............................  162.022, 162.113.......  Appealing decisions....  No change. Previously
                                                                                          required, but now
                                                                                          listed in separate
                                                                                          subparts.
----------------------------------------------------------------------------------------------------------------

    The table showing the burden of the information collection is 
included below for your information.
BILLING CODE 4310-6W-P

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[GRAPHIC] [TIFF OMITTED] TP29NO11.010


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[GRAPHIC] [TIFF OMITTED] TP29NO11.011

BILLING CODE 4310-6W-C
    BIA invites comments on the information collection requirements in 
the proposed regulation. You may submit comments to OMB by facsimile to 
(202) 395-5806 or you may send an email to the attention of the OMB 
Desk Officer for the Department of the Interior: omb.eop.gov">OIRA_DOCKET@omb.eop.gov. Please send a copy of your comments to the person 
listed in the FOR FURTHER INFORMATION CONTACT section of this notice. 
Note that the request for comments on the rule and the request for 
comments on the information collection are separate. To best ensure 
consideration of your comments on the information collection, we 
encourage you to submit them by December 29, 2011; while OMB has 60 
days from the date of publication to act on the information collection 
request, OMB may choose to act on or after 30 days. Comments on the 
information collection should address: (a) The necessity of this 
information collection for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of the burden (hours 
and cost) of the collection of information, including the validity of 
the methodology and assumptions used; (c) ways we could enhance the 
quality, utility and clarity of the information to be collected; and 
(d) ways we could minimize the burden of the collection of the 
information on the respondents, such as through the use of automated 
collection techniques or other forms of information technology. Please 
note that an agency may not sponsor or request, and an individual need 
not respond to, a collection of information unless it has a valid OMB 
Control Number.

J. National Environmental Policy Act

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment because these are 
``regulations * * * whose environmental effects are too broad, 
speculative, or conjectural to lend themselves to meaningful analysis 
and will later be subject to the NEPA process, either collectively or 
case-by-case.'' 43 CFR 46.210(j). No extraordinary circumstances exist 
that would require greater NEPA review.

K. Effects on the Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in Executive Order 13211. A Statement of Energy Effects is not 
required.

L. Clarity of This Regulation

    We are required by Executive Orders 12866 and 12988 and by the 
Presidential Memorandum of June 1, 1998, to write all rules in plain 
language. This means that each rule we publish must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you feel that we have not met these requirements, send us 
comments by one of the methods listed in the ``COMMENTS'' section. To 
better help us revise the rule, your comments should be as specific as 
possible. For example, you should tell us the numbers of the sections 
or paragraphs that are unclearly written, which sections or sentences 
are too long, the sections where you believe lists or tables would be 
useful, etc.

M. Public Availability of Comments

    Before including your address, phone number, email address, or 
other personal identifying information in your comment, you should be 
aware that your entire comment--including your personal identifying 
information--may be made publicly available at any time. While you can 
ask us in your comment to withhold your personal identifying 
information from public review, we cannot guarantee that we will be 
able to do so.

List of Subjects in 25 CFR Part 162

    Indians--lands.
    For the reasons stated in the preamble, the Department of the 
Interior, Bureau of Indian Affairs, proposes to amend part 162 in Title 
25 of the Code of Federal Regulations as follows:

PART 162--LEASES AND PERMITS

    1. Revise the authority citation for part 162 to read as follows:

    Authority:  5 U.S.C. 301, R.S. 463 and 465; 25 U.S.C. 2 and 9. 
Interpret or apply sec. 3, 26 Stat. 795, sec. 1, 28 Stat. 305, secs. 
1, 2, 31 Stat. 229, 246, secs. 7, 12, 34 Stat. 545, 34 Stat. 1015, 
1034, 35 Stat. 70, 95, 97, sec. 4, 36 Stat. 856, sec. 1, 39 Stat. 
128, 41 Stat. 415, as amended, 751, 1232, sec. 17, 43 Stat. 636, 
641, 44 Stat. 658, as amended, 894, 1365, as amended, 47 Stat. 1417, 
sec. 17, 48

[[Page 73790]]

Stat. 984, 988, 49 Stat. 115, 1135, sec. 55, 49 Stat. 781, sec. 3, 
49 Stat. 1967, 54 Stat. 745, 1057, 60 Stat. 308, secs. 1, 2, 60 
Stat. 962, sec. 5, 64 Stat. 46, secs. 1, 2, 4, 5, 6, 64 Stat. 470, 
69 Stat. 539, 540, 72 Stat. 968, 107 Stat. 2011, 108 Stat. 4572, 
March 20, 1996, 110 Stat. 4016; 25 U.S.C. 380, 393, 393a, 394, 395, 
397, 402, 402a, 403, 403a, 403b, 403c, 409a, 413, 415, 415a, 415b, 
415c, 415d, 477, 635, 2201 et seq., 3701, 3702, 3703, 3712, 3713, 
3714, 3715, 3731, 3733, 4211; 44 U.S.C. 3101 et seq.


Sec.  162.100  [Removed]

    2. Remove Sec.  162.100.


Sec. Sec.  162.101.162.113   [Redesignated]

    3. Redesignate Sec.  162.101-Sec.  162.113 in subpart A as Sec.  
162.101-Sec.  162.113 in subpart B.
    4. Revise subpart A to read as follows:

PART 162--LEASES AND PERMITS

Subpart A--General Provisions

Purpose, Definitions, and Scope

Sec.
162.001 What is the purpose of this part?
162.002 How is this part subdivided?
162.003 What key terms do I need to know?
162.004 May BIA approve or grant permits under this part?

When to Get a Lease

162.005 When does this part apply?
162.006 To what land does this part apply?
162.007 To what types of land use agreements does this part not 
apply?
162.008 When do I need a lease to authorize possession of Indian 
land?

How to Get a Lease

162.009 How do I obtain a lease?
162.010 How does a prospective lessee identify and contact Indian 
landowners to negotiate a lease?
162.011 What are the consent requirements for a lease?
162.012 Who is authorized to consent to a lease?

Lease Administration

162.013 What laws apply to leases approved under this part?
162.014 Will BIA comply with tribal laws in making decisions 
regarding leases?
162.015 May tribes administer this part on BIA's behalf?
162.016 May a lease address access to the leased premises by roads 
or other infrastructure?
162.017 May a lease combine tracts with different Indian landowners?
162.018 What are BIA's responsibilities in approving leases?
162.019 What are BIA's responsibilities in administering and 
enforcing leases?
162.020 What may BIA do if an individual or entity takes possession 
of or uses Indian land without an approved lease or other proper 
authorization?
162.021 May BIA take emergency action if Indian land is threatened?
162.022 May decisions under this part be appealed?
162.023 Who may I contact with questions concerning the leasing 
process?
162.024 What documentation may BIA require in approving, 
administering, and enforcing leases?

Subpart A--General Provisions

Purpose, Definitions, and Scope


Sec.  162.001  What is the purpose of this part?

    This part identifies:
    (a) Conditions and authorities under which we will approve leases 
of Indian land and may issue permits on Government land;
    (b) How to obtain leases;
    (c) Terms and conditions required in leases;
    (d) How we administer and enforce leases; and
    (e) Special requirements for leases made under special acts of 
Congress that apply only to certain Indian reservations.


Sec.  162.002  How is this part subdivided?

    (a) This part includes multiple subparts relating to:
    (1) General Provisions (Subpart A);
    (2) Agricultural Leases (Subpart B);
    (3) Residential Leases (Subpart C);
    (4) Business Leases (Subpart D);
    (5) Wind Energy Evaluation, Wind Resource, and Solar Resource 
Leases (Subpart E);
    (6) Special Requirements for Certain Reservations (Subpart F);
    (7) Records (Subpart G).
    (b) Subpart F identifies special provisions applicable only to 
leases made under special acts of Congress that apply only to certain 
Indian reservations. Leases covered by Subpart F are also subject to 
the provisions in subparts A through G, except to the extent that 
subparts A through G are inconsistent with the provisions in subpart F 
or any act of Congress under which the lease is made.
    (c) Leases covered by Subpart B are not subject to the provisions 
in subpart A. Leases covered by subpart B are subject to the provisions 
in subpart G, except that if a provision in subpart B conflicts with a 
provision of subpart G, then the provision in subpart B will govern.


Sec.  162.003  What key terms do I need to know?

    Adult means a person who is 18 years of age or older.
    Appeal bond means a bond posted upon filing of an appeal that 
provides a security or guaranty if an appeal creates a delay in 
implementing a BIA decision that could cause a significant and 
measurable financial loss to another party.
    Approval means written authorization by the Secretary or a 
delegated official or, where applicable, the ``deemed approved'' 
authorization of an amendment or sublease.
    Assignment means an agreement between a lessee and an assignee, 
whereby the assignee acquires all or some of the lessee's rights, and 
assumes all or some of the lessee's obligations, under a lease.
    BIA means the Secretary of the Interior or the Bureau of Indian 
Affairs within the Department of the Interior and any tribe acting on 
behalf of the Secretary or Bureau of Indian Affairs under Sec.  
162.015, except that this term means only the Secretary of the Interior 
or Bureau of Indian Affairs if the function is an inherently Federal 
function.
    Business day means Monday through Friday, excluding federally 
recognized holidays and other days that the applicable office of the 
Federal Government is closed to the public.
    Consent or consenting means written authorization by an Indian 
landowner to a specified action.
    Constructive notice means:
    (1) Public notice posted at the tribal government office, tribal 
community building, and/or the United States Post Office; and
    (2) Notice published in the local newspaper(s) nearest to the 
affected land and/or announced on a local radio station(s).
    Court of competent jurisdiction means a Federal, tribal, or State 
court with jurisdiction.
    Day means a calendar day, unless otherwise specified.
    Emancipated minor means a person less than 18 years of age who is 
married or who is determined by a court of competent jurisdiction to be 
legally able to care for himself or herself.
    Equipment installation plan means a plan that describes the type 
and location of any improvements to be installed by the lessee to 
evaluate the resources and a schedule showing the tentative 
commencement and completion dates for installation of those 
improvements.
    Fair market rental means the amount of rental income that a leased 
tract of Indian land would most probably command in an open and 
competitive market, or as determined by competitive bidding.
    Fee interest means an interest in land that is owned in 
unrestricted fee status, and is thus freely alienable by the fee owner.
    Fractionated tract means a tract of Indian land owned in common by 
Indian landowners and/or fee owners holding undivided interests 
therein.

[[Page 73791]]

    Government land means any tract, or interest therein, in which the 
surface estate is owned and administered by the United States, not 
including tribal land that has been reserved for administrative 
purposes.
    Holdover means circumstances in which a lessee remains in 
possession of the leased premises after the lease term expires.
    Housing for public purposes means multi-family developments and 
single-family residential developments (i) administered by a tribe, 
Tribally-Designated Housing Entity, or a tribally-sponsored or tribally 
sanctioned not-for-profit entity; or (ii) substantially financed using 
a tribal, Federal, or State housing assistance program or not-for 
profit entity.
    Immediate family means a spouse, brother, sister, aunt, uncle, 
niece, nephew, first cousin, lineal ancestor, lineal descendant, or 
member of the household.
    Improvements means buildings, other structures, and associated 
infrastructure constructed or installed under a lease to serve the 
purposes of the lease.
    Indian means:
    (1) Any person who is a member of any Indian tribe, is eligible to 
become a member of any Indian tribe, or is an owner as of October 27, 
2004, of a trust or restricted interest in land;
    (2) Any person meeting the definition of Indian under the Indian 
Reorganization Act (25 U.S.C. 479) and the regulations promulgated 
thereunder; and
    (3) With respect to the inheritance and ownership of trust or 
restricted land in the State of California pursuant to 25 U.S.C. 2206, 
any person described in paragraph (1) or (2) or any person who owns a 
trust or restricted interest in a parcel of such land in that State.
    Indian land means any tract in which any interest in the surface 
estate is owned by a tribe or individual Indian in trust or restricted 
status and includes both individually owned Indian land and tribal 
land.
    Indian landowner means a tribe or individual Indian who owns an 
interest in Indian land.
    Individually owned Indian land means any tract, or interest 
therein, in which the surface estate is owned by an individual Indian 
in trust or restricted status.
    Indian tribe means an Indian tribe under section 102 of the 
Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
    Interest, when used with respect to Indian land, means an ownership 
right to the surface estate of Indian land.
    Lease means a written contract between Indian landowners and a 
lessee, whereby the lessee is granted a right to possession of Indian 
land, for a specified purpose and duration.
    Leasehold mortgage means a mortgage, deed of trust, or other 
instrument that pledges a lessee's leasehold interest as security for a 
debt or other obligation owed by the lessee to a lender or other 
mortgagee.
    Lessee means person or entity who has acquired a legal right of 
possession to Indian land by a lease under this part.
    Life estate means an interest in property held only for the 
duration of a designated person's life. A life estate may be created by 
a conveyance document or by operation of law.
    LTRO means the Land Titles and Records Office of the BIA.
    Mail means mailing by U.S. Postal Service or commercial delivery 
service.
    Minor means an individual who is less than 18 years of age.
    Nominal rental or nominal compensation means a rental amount that 
is so insignificant that it bears no relationship to the value of the 
property that is being leased.
    Non compos mentis means a person who has been legally determined by 
a court of competent jurisdiction to be of unsound mind or incapable of 
managing his or her own affairs.
    Notice of violation means a letter notifying the lessee of a 
violation of the lease and providing the lessee with a specified period 
of time to show cause why the lease should not be cancelled for the 
violation. A 10-day show cause letter is one type of notice of 
violation.
    Orphaned minor means a minor who does not have one or more 
guardians duly appointed by a court of competent jurisdiction.
    Performance bond means security for the performance of certain 
lease obligations, as furnished by the lessee, or a guaranty of such 
performance as furnished by a third-party surety.
    Permit means a written, non-assignable agreement between Indian 
landowners or BIA and the permittee, whereby the permittee is granted a 
temporary, revocable privilege to use Indian land or Government land, 
for a specified purpose.
    Permittee means a person or entity who has acquired a legal right 
of use to Indian land or Government land by a permit.
    Power of attorney means an authority by which one person enables 
another to act for him/her as attorney in fact.
    Remainder interest means an interest in Indian land that is created 
at the same time as a life estate, for the use and enjoyment of its 
owner after the life estate terminates.
    Restoration and reclamation plan means a plan that defines the 
reclamation, revegetation, restoration, and soil stabilization 
requirements for the project area, and requires the expeditious 
reclamation of construction areas and revegetation of disturbed areas 
to reduce invasive plant infestation and erosion.
    Secretary means the Secretary of the Interior.
    Single-family residence means a building with one to four dwelling 
units on a tract of land under a single residential lease, or as 
defined by tribal zoning law or other tribal authorization.
    Single-family residential development means one or more single-
family residences owned, managed, or developed by a single entity.
    Sublease means a written agreement by which the lessee grants to an 
individual or entity a right to possession less than that held by the 
lessee under the lease.
    Surety means one who guarantees the performance of another.
    Trespass means any unauthorized occupancy, use of, or action on any 
Indian land or Government land.
    Tribal authorization means a duly adopted tribal resolution, tribal 
ordinance, or other appropriate tribal document authorizing the 
specified action.
    Tribally Designated Housing Entity means a tribally designated 
housing entity under 25 U.S.C. 4103(21).
    Tribal land means the surface estate of lands or any interest 
therein, title to which is held by the United States in trust for one 
or more tribes, or title to which is held by one or more tribes subject 
to Federal restrictions against alienation or encumbrance, and includes 
such lands reserved for BIA administrative purposes. The term also 
includes the surface estate of lands held by the United States in trust 
for an Indian corporation chartered under section 17 of the Act of June 
18, 1934 (48 Stat. 988; 25 U.S.C. 477).
    Tribal law means the body of non-Federal law that governs lands and 
activities under the jurisdiction of a tribe, including ordinances or 
other enactments by the tribe, and tribal court rulings.
    Tribal land assignment means a contract or agreement that conveys 
to tribal members any rights for the temporary use of tribal lands, 
assigned by an Indian tribe in accordance with tribal laws or customs.
    Trust or restricted land or trust or restricted status means any 
tract, or interest therein, that the United States

[[Page 73792]]

holds in trust for the benefit of one or more tribes or individual 
Indians, or any tract, or interest therein, that one or more tribes or 
individual Indians holds title to, but can only alienate or encumber 
with the approval of the United States because of limitations contained 
in the conveyance instrument pursuant to Federal law or limitations 
contained in Federal law.
    Undivided interest means a fractional share in the surface estate 
of Indian land, where the surface estate is owned in common with other 
Indian landowners or fee owners.
    Us/we/our means the Secretary or the Bureau of Indian Affairs (BIA) 
and any tribe acting on behalf of the Secretary or BIA under Sec.  
162.015, except that this term means only the Secretary or BIA if the 
function is an inherently Federal function.
    Uniform Standards of Professional Appraisal Practice (USPAP) means 
the standards promulgated by the Appraisal Standards Board of the 
Appraisal Foundation to establish requirements and procedures for 
professional real property appraisal practice.
    Violation means a failure to take an action, including payment of 
compensation, when required by the lease, or to otherwise not comply 
with a term of the lease. This definition applies for purposes of this 
part no matter how ``violation'' or ``default'' is defined in the 
lease.


Sec.  162.004  May BIA approve or grant permits under this part?

    (a) Permits for the use of Indian land do not require our approval; 
however, you must fulfill the following requirements:
    (1) Ensure that permitted activities comply with all applicable 
environmental and cultural resource laws; and
    (2) Submit all permits to the appropriate BIA office for us to 
confirm that the document meets the definition of ``permit'' and does 
not grant an interest in Indian land and allow us to maintain a copy of 
the permit in our records.
    (b) The following table provides characteristics of permits versus 
leases.

 
------------------------------------------------------------------------
                  Permit                                Lease
------------------------------------------------------------------------
Does not grant a legal interest in Indian   Grants a legal interest in
 land.                                       Indian land.
Shorter term..............................  Longer term.
Limited use...............................  Broader use with associated
                                             infrastructure.
Subject to unlimited access by others.....  Lessee has right of
                                             possession, ability to
                                             limit or prohibit access by
                                             others.
Indian landowner may terminate at any time  Indian landowner may
                                             terminate under limited
                                             circumstances.
------------------------------------------------------------------------

     (c) We may grant permits for the use of Government land. The 
leasing regulations in this part will apply to such permits, as 
appropriate.

When to Get a Lease


Sec.  162.005  When does this part apply?

    (a) This part applies to all leases, amendments, assignments, 
subleases, and leasehold mortgages submitted to BIA for approval after 
[INSERT FINAL RULE EFFECTIVE DATE].
    (b) If the terms of a lease document approved by BIA prior to 
[INSERT FINAL RULE EFFECTIVE DATE] conflict with this part, the terms 
of the lease document govern.
    (c) We may amend this part at any time.


Sec.  162.006  To what land does this part apply?

    (a) This part applies to Indian land and Government land, including 
any tract in which an individual Indian or tribe owns an interest in 
trust or restricted status.
    (1) We will not lease fee interests or collect rent on behalf of 
fee interest owners. We will not condition our approval of a lease of 
the trust and restricted interests on a lease having been obtained from 
the owners of any fee interests.
    (2) We will not include the fee interests in a tract in calculating 
the applicable percentage of interests required for consent to a lease 
document.
    (b) This paragraph applies if there is a life estate on the land to 
be leased.
    (1) When all of the trust or restricted interests in a tract are 
subject to a life estate, the life tenant may lease the land without 
our approval, for the duration of the life estate. The following 
conditions apply:
    (i) Such a lease must be recorded;
    (ii) The lessee must pay rent directly to the life tenant under the 
terms of the lease;
    (iii) We may monitor the use of the land on behalf of the owners of 
the remainder interests, as appropriate, but will not be responsible 
for enforcing the lease on behalf of the life tenant.
    (iv) We will not lease the remainder interests or join in a lease 
by the life tenant on behalf of the owners of the remainder interests 
except as needed to preserve the value of the land;
    (v) We will not lease on the life tenant's behalf, but we may 
collect rents on behalf of the life tenant; and
    (vi) We will be responsible for enforcing the terms of the lease on 
behalf of the owners of the remainder interests.
    (2) When less than all of the trust or restricted interests in a 
tract are subject to a life estate, the life tenant may not lease the 
land unless the remainder interests are also leased. The following 
conditions apply:
    (i) We will not lease on the life tenant's behalf, but we may 
collect rents on behalf of the life tenant; and
    (ii) We will be responsible for enforcing the terms of the lease on 
behalf of the owners of the remainder interests.
    (3) Rent payable under the lease will be paid to the life tenant in 
accordance with Part 179 of this chapter, unless the document creating 
the life estate provides otherwise.
    (4) All leases entered into by life tenants must be recorded in our 
Land Titles and Records Office, even where our approval is not 
required.


Sec.  162.007  To what types of land use agreements does this part not 
apply?

    (a) This part does not apply to the following types of land use 
agreements:

------------------------------------------------------------------------
     This part does not apply to . . .       which are covered by . . .
------------------------------------------------------------------------
Mineral leases, prospecting permits, or     25 CFR parts 211, 212 and
 mineral development agreements.             225.
Grazing permits...........................  25 CFR part 166.
Timber contracts..........................  25 CFR part 163.
Contracts or agreements that encumber       25 U.S.C. 81.
 tribal land.
Rights-of-way.............................  25 CFR part 169.
Tribal land assignments and similar         tribal laws.
 instruments authorizing temporary uses.
Traders' licenses.........................  25 CFR part 140.
------------------------------------------------------------------------

     (b) This part does not apply to leases of water rights associated 
with Indian land, except to the extent the use of such water rights is 
incorporated in a lease of the land itself.


Sec.  162.008  When do I need a lease to authorize possession of Indian 
land?

    (a) You need a lease under this part to possess Indian land if you 
meet one of the criteria in the following table.

[[Page 73793]]



------------------------------------------------------------------------
                                           then you must obtain a lease
            If you are . . .                  under this part . . .
------------------------------------------------------------------------
(1) A person or legal entity (including  from the owners of the land
 an independent legal entity owned and    before taking possession of
 operated by a tribe) who is not an       the land or any portion
 owner of the Indian land.                thereof.
(2) An Indian landowner of a fractional  from the owners of other trust
 interest in the land.                    and restricted interests in
                                          the land, unless those owners
                                          have given you permission to
                                          take or continue in possession
                                          without a lease.
------------------------------------------------------------------------

     (b) You do not need a lease to possess Indian land if you meet any 
of the criteria in the following table.

------------------------------------------------------------------------
 You do not need a lease if you are . .    but the following conditions
                   .                               apply . . .
------------------------------------------------------------------------
(1) An Indian landowner who owns 100     (1) We may require you to
 percent of the trust or restricted       provide evidence of a direct
 interests in a tract.                    benefit to the minor child;
                                          and
(2) A parent or guardian of a minor      (2) When the child is no longer
 child who owns 100 percent of the        a minor, you must obtain a
 trust interests in the land.             lease to authorize continued
                                          possession.
(3) A 25 U.S.C. 477 corporate entity     You must record documents in
 that holds the Indian land directly      accordance with Sec.
 under its Federal charter (not           162.341, Sec.   162.441, and
 pursuant to a lease from the Indian      Sec.   162.566.
 tribe).
(4) A person or legal entity that is     You must record documents in
 leasing Indian land under a special      accordance with Sec.
 act of Congress authorizing leases       162.341, Sec.   162.441, and
 without our approval.                    Sec.   162.566.
------------------------------------------------------------------------

     (c) Landowners who enter into an agreement under paragraph (a)(2) 
may wish to consider documenting such an agreement and recording it in 
the LTRO.

How to Get a Lease


Sec.  162.009  How do I obtain a lease?

    (a) This section establishes the basic steps to obtain a lease.
    (1) Prospective lessees must:
    (i) Directly negotiate with Indian landowners for a lease; and
    (ii) Notify all Indian landowners and obtain the consent of the 
Indian landowners of the applicable percentage of interests, for 
fractionated tracts; and
    (2) Prospective lessees and Indian landowners must:
    (i) Prepare the required information and analyses, including 
information to facilitate BIA's analysis under applicable environmental 
and cultural resource requirements; and
    (ii) Ensure the lease complies with the requirements in subpart B 
for agricultural leases, subpart C for residential leases, subpart D 
for business leases, and subpart E for wind energy evaluation, wind 
resource, or solar resource leases; and
    (3) Prospective lessees and/or Indian landowners must submit the 
lease, and required information and analyses, to the BIA office with 
jurisdiction over the lands covered by the lease for our review and 
approval.
    (b) Generally, residential, business, wind energy evaluation, wind 
resource, and solar resource leases will not be advertised for 
competitive bid.


Sec.  162.010  How does a prospective lessee identify and contact 
Indian landowners to negotiate a lease?

    (a) Prospective lessees may submit a written request to us to 
obtain the following information for the purpose of negotiating a 
lease:
    (1) Names and addresses of the Indian landowners or their 
representatives;
    (2) Information on the location of the parcel; and
    (3) The percentage of undivided interest owned by each Indian 
landowner.
    (b) We may assist prospective lessees in contacting the Indian 
landowners or their representatives for the purpose of negotiating a 
lease, upon request.
    (c) We will assist the Indian landowners in those negotiations, 
upon their request.


Sec.  162.011  What are the consent requirements for a lease?

    (a) For fractionated tracts:
    (1) Except in Alaska, the owners of the following percentage of 
undivided trust or restricted interests in a fractionated tract of 
Indian land must consent to a lease of that tract:

------------------------------------------------------------------------
 If the number of owners of the undivided   Then the required percentage
 trust or restricted interest in the tract    of the undivided trust or
                    is                         restricted interest is
------------------------------------------------------------------------
(i) One to five...........................  90 percent;
(ii) Six to 10............................  80 percent;
(iii) 11 to 19............................  60 percent;
(iv) 20 or more...........................  Over 50 percent.
------------------------------------------------------------------------

     (2) Leases in Alaska require consent of all of the Indian 
landowners in the tract.
    (3) If the prospective lessee is also an Indian landowner, their 
consent will be included in the percentages in paragraphs (a)(1) and 
(a)(2).
    (4) Where owners of the applicable percentages in paragraph (a)(1) 
consent to a lease document:
    (i) That lease document binds all non-consenting owners to the same 
extent as if those owners also consented to the lease document.
    (ii) That lease document will not bind a non-consenting Indian 
tribe, except with respect to the tribally owned fractional interest, 
and the non-consenting Indian tribe will not be treated as a party to 
the lease. Nothing in this paragraph shall be construed to affect the 
sovereignty or sovereign immunity of the Indian tribe.
    (5) We will determine the number of owners of, and undivided 
interests in, a fractionated tract of Indian land, for the purposes of 
calculating the percentages in paragraph (a)(1) based on our records on 
the date on which the lease is submitted to us for approval.
    (b) Tribal land subject to a tribal land assignment may only be 
leased with the consent of the tribe.


Sec.  162.012  Who is authorized to consent to a lease?

    (a) Indian tribes, adult Indian landowners, or emancipated minors, 
may consent to a lease of their land, including undivided interests in 
fractionated tracts.
    (b) The following individuals or entities may consent on behalf of 
an individual Indian landowner:
    (1) An adult with legal custody acting on behalf of his or her 
minor children;
    (2) A guardian, conservator, or other fiduciary appointed by a 
court of

[[Page 73794]]

competent jurisdiction recognized to act on behalf of an individual 
Indian landowner;
    (3) Any person who is authorized to practice before the Department 
of the Interior under 43 CFR part 1 and has been retained by the Indian 
landowner;
    (4) BIA, under the circumstances in paragraph (c) of this section; 
or
    (5) An adult or legal entity who has been given a written power of 
attorney that:
    (i) Meets all of the formal requirements of any applicable law 
under Sec.  162.013; and
    (ii) Identifies the attorney-in-fact; and
    (iii) Describes the scope of the powers granted, to include leasing 
land, and any limits on those powers.
    (c) BIA may give written consent to a lease, and that consent must 
be counted in the percentage ownership described in Sec.  162.011, on 
behalf of:
    (1) The individual owner if the owner is deceased and the heirs to, 
or devisees of, the interest of the deceased owner have not been 
determined;
    (2) Individuals whose whereabouts are unknown to us, after we make 
a reasonable attempt to locate such individuals;
    (3) Individuals who are found to be non compos mentis, or 
determined to be an adult in need of assistance or under legal 
disability as defined in part 115 of this chapter;
    (4) Orphaned minors who do not have guardians duly appointed by a 
court of competent jurisdiction;
    (5) Individuals who have given us a written power of attorney to 
lease their land; or
    (6) The individual Indian landowners of a fractionated tract where:
    (i) We have given the Indian landowners written notice of our 
intent to consent to a lease on their behalf;
    (ii) The Indian landowners are unable to agree upon a lease during 
a three month negotiation period following the notice; and
    (iii) The land is not being used by an Indian landowner under Sec.  
162.008(b)(1).

Lease Administration


Sec.  162.013  What laws will apply to leases approved under this part?

    (a) In addition to the regulations in this part, leases approved 
under this part are subject to:
    (1) Applicable Federal laws and any specific Federal statutory 
requirements that are not incorporated in this part;
    (2) Tribal law, subject to paragraph (b) of this section; and
    (3) State law, in the specific areas and circumstances in Indian 
country where Congress or a Federal court has made it expressly 
applicable.
    (b) If any regulation in this part conflicts with a tribal law, the 
Secretary may waive the application of such regulation to tribal land, 
unless the waiver would:
    (1) Violate a Federal statute or judicial decision; or
    (2) Conflict with the United States' trust responsibility under 
Federal law.
    (c) The parties to a specific lease may subject it to State or 
local law in the absence of Federal or tribal law, if:
    (1) The lease includes a provision to this effect; and
    (2) The Indian landowners expressly agree to the application of 
State or local law.
    (d) An agreement under paragraph (c) of this section does not waive 
a tribe's sovereign immunity unless the tribe expressly states its 
intention to waive sovereign immunity in the lease of tribal land.


Sec.  162.014  Will BIA comply with tribal laws in making decisions 
regarding leases?

    Unless contrary to Federal law, BIA will comply with tribal laws in 
making decisions regarding leases, including tribal laws regulating 
activities on leased land under tribal jurisdiction, including, but not 
limited to, tribal laws relating to land use, environmental protection, 
and historic or cultural preservation.


Sec.  162.015  May tribes administer this part on BIA's behalf?

    A tribe or tribal organization may contract or compact under the 
Indian Self-Determination and Education Assistance Act (25 U.S.C. 450f 
et seq.) to administer any portion of this part that is not an inherent 
Federal function.


Sec.  162.016  May a lease address access to the leased premises by 
roads or other infrastructure?

    A lease may address access to the leased premises by roads or other 
infrastructure, as long as the access complies with applicable 
statutory and regulatory requirements, including 25 CFR part 169.


Sec.  162.017  May a lease combine tracts with different Indian 
landowners?

    (a) We may approve a lease that combines multiple tracts of Indian 
land into a unit, if we determine that unitization is:
    (1) In the Indian landowners' best interest; and
    (2) Consistent with the efficient administration of the land.
    (b) For a lease that covers multiple tracts, the minimum consent 
requirements apply to each tract separately.
    (c) Unless the lease provides otherwise, the rent or other 
compensation will be prorated in proportion to each tract acreage 
contribution to the entire lease. Once prorated per tract, the rent 
will be distributed to the owners of each tract based upon their 
respective percentage interest in that particular tract.


Sec.  162.018  What are BIA's responsibilities in approving leases?

    (a) We will work to provide assistance to Indian landowners in 
leasing their land, either through negotiations or advertisement.
    (b) We will promote tribal control and self-determination over 
tribal land and other land under the tribe's jurisdiction, including 
through contracts and self-governance compacts entered into under the 
Indian Self-Determination and Education Assistance Act, as amended, 25 
U.S.C. 450f et. seq.
    (c) We will promptly respond to requests for BIA approval of 
leases, as specified in Sec.  162.339, Sec.  162.439, Sec.  162.529, 
and Sec.  162.564.
    (d) We will work to ensure that the use of the land is consistent 
with the Indian landowners' wishes.


Sec.  162.019  What are BIA's responsibilities in administering and 
enforcing leases?

    (a) Upon notification from the Indian landowner that the lessee has 
failed to comply with the terms and conditions of the lease, we will 
promptly take appropriate action, as specified in Sec.  162.362, Sec.  
162.462, and Sec.  162.587.
    (b) We will promptly respond to requests for BIA approval of 
amendments, assignments, leasehold mortgages, and subleases, as 
specified in subparts B, C, D, and E.
    (c) We will respond to Indian landowners' concerns regarding the 
management of their land.
    (d) We will take emergency action as needed to preserve the value 
of the land.


Sec.  162.020  What may BIA do if an individual or entity takes 
possession of or uses Indian land without an approved lease or other 
proper authorization?

    If an individual or entity takes possession of, or uses, Indian 
land without a lease and a lease is required, the unauthorized 
possession or use is a trespass. We may take action to recover 
possession on behalf of the Indian landowners and pursue any additional 
remedies available under applicable law. The Indian landowner may 
pursue any available remedies under tribal law.


Sec.  162.021  May BIA take emergency action if Indian land is 
threatened?

    (a) We may take appropriate emergency action if there is a natural 
disaster or if an individual or entity causes or threatens to cause 
immediate

[[Page 73795]]

and significant harm to Indian land. Emergency action may include 
judicial action seeking immediate cessation of the activity resulting 
in or threatening the harm.
    (b) We will make reasonable efforts to notify the Indian landowners 
before and after taking emergency action. In all cases, we will notify 
the Indian landowners after taking emergency action by constructive 
notice.


Sec.  162.022  May decisions under this part be appealed?

    Appeals from BIA decisions under this part may be taken pursuant to 
part 2 of this chapter, except where otherwise provided in this part. 
For purposes of appeals from BIA decisions under this part, 
``interested party'' is defined as any person whose own direct economic 
interest is adversely affected by an action or decision.


Sec.  162.023  Who may I contact with questions concerning the leasing 
process?

    The Indian landowner or prospective lessee may contact the local 
BIA realty office with jurisdiction over the land for answers to 
questions about the leasing process.


Sec.  162.024  What documentation may BIA require in approving, 
administering, and enforcing leases?

    (a) We may require that the parties provide any pertinent 
environmental and technical records, reports, and other information 
(e.g., records of lease payments), related to approval, administration, 
and enforcement of leases.
    (b) We will adopt environmental assessments and environmental 
impact statements prepared by another Federal agency, entity, or person 
under 43 CFR 46.320 and 42 CFR 1506.3, but may require a supplement. We 
shall use any reasonable evidence that another Federal agency has 
accepted the environmental report, including but not limited to, 
letters of approval or acceptance.
    (c) Upon our request, the parties must make appropriate records, 
reports, or information available for our inspection and duplication. 
We will keep confidential any such information that is marked 
confidential or proprietary and is exempt from public release, to the 
extent allowed by law. Failure to cooperate with such request, provide 
data, or grant access to information or records, may, at our 
discretion, be treated as a lease violation. All approved leases must 
include such disclosure provisions.
    5. In Sec.  162.101, revise the section heading and the 
introductory language to read as follows:


Sec.  162.101  What key terms do I need to know for this subpart?

    For the purposes of this subpart:
* * * * *


Sec. Sec.  162.102-162.104  [Removed]

    6. Remove Sec.  162.102-Sec.  162.104.


Sec. Sec.  162.105 and 162.106  [Amended]

    7. In Sec.  162.105 and Sec.  162.106, remove the word ``lease'' 
and add in its place the words ``agricultural lease'' and remove the 
word ``leasing'' and add in its place the words ``agricultural 
leasing'' wherever they appear.
    8. In Sec.  162.107, revise the section heading and the 
introductory language in paragraph (a) to read as follows:


Sec.  162.107  What are BIA's objectives in granting and approving 
agricultural leases?

    (a) We will assist Indian landowners in leasing their land for 
agricultural purposes. For the purposes of Sec. Sec.  162.102 through 
162.256:
* * * * *


Sec. Sec.  162.108-162.110  [Amended]

    9. In Sec.  162.108-Sec.  162.110 remove the word ``lease'' 
wherever it appears and add in its place the words ``agricultural 
lease''.
    10. In Sec.  162.111, revise the section heading, the introductory 
language in paragraph (a), and paragraph (b) to read as follows:


Sec.  162.111  Who owns the records associated with this subpart?

    (a) Records associated with this subpart are the property of the 
United States if they:
* * * * *
    (b) Records associated with this subpart not covered by paragraph 
(a) of this section that are made or received by a tribe or tribal 
organization in the conduct of business with the Department of the 
Interior under this subpart are the property of the tribe.
    11. Revise the heading of Sec.  162.112 to read as follows:


Sec.  162.112  How must records associated with this part be preserved?


Sec.  162.113  [Amended]

    12. In Sec.  162.113 remove the word ``part'' wherever it appears 
and add in its place the word ``subpart''.
    13. Add new subparts C through D to read as follows:
Subpart C--Residential Leases

Residential Leasing General Provisions

Sec.
162.301 What types of leases does this subpart cover?
162.302 Is there a model residential lease form?

Lease Requirements

162.311 How long may the term of a residential lease run?
162.312 What must the lease include if it contains an option to 
renew?
162.313 Are there mandatory provisions that a residential lease must 
contain?
162.314 May improvements be made under a residential lease?
162.315 How must a residential lease address ownership of 
improvements?
162.316 How will BIA enforce removal requirements in a residential 
lease?
162.317 How must a residential lease describe the land?

Rental Requirements

162.320 How much rent must be paid under a residential lease?
162.321 Will BIA require a valuation to determine fair market rental 
for a residential lease?
162.322 What type of valuation may be used to determine fair market 
rental for a residential lease?
162.323 When are rental payments due under a residential lease?
162.324 Must a residential lease specify to whom rental payments may 
be made?
162.325 What form of payment may be accepted under a residential 
lease?
162.326 May a residential lease provide for non-monetary or varying 
types of compensation?
162.327 Will BIA notify a lessee when a payment is due under a 
residential lease?
162.328 Must a residential lease provide for rental reviews or 
adjustments?
162.329 What other types of payments are required under a 
residential lease?

Bonding and Insurance

162.334 Must a lessee or assignee provide a performance bond for a 
residential lease?
162.335 What forms of performance bonds may be accepted under a 
residential lease?
162.336 What is the bond release process under a residential lease?
162.337 Must a lessee provide insurance for a residential lease?

Approval

162.338 What documents must the parties submit to obtain BIA 
approval of a residential lease?
162.339 What is the approval process for a residential lease?
162.340 When will a residential lease be effective?
162.341 Must residential lease documents be recorded?
162.342 What action may BIA take if a residential lease disapproval 
decision is appealed?

Amendments

162.343 May the parties amend a residential lease?
162.344 What are the consent requirements for an amendment of a 
residential lease?
162.345 What is the approval process for an amendment of a 
residential lease?
162.346 How will BIA decide whether to approve an amendment of a 
residential lease?

[[Page 73796]]

Assignments

162.347 May a lessee assign a residential lease?
162.348 What are the consent requirements for an assignment of a 
residential lease?
162.349 What is the approval process for an assignment of a 
residential lease?
162.350 How will BIA decide whether to approve an assignment of a 
residential lease?

Subleases

162.351 May a lessee sublease a residential lease?
162.352 What are the consent requirements for a sublease of a 
residential lease?
162.353 What is the approval process for a sublease of a residential 
lease?
162.354 How will BIA decide whether to approve a sublease of a 
residential lease?

Leasehold Mortgages

162.355 May a lessee mortgage a residential lease?
162.356 What are the consent requirements for a leasehold mortgage 
of a residential lease?
162.357 What is the approval process for a leasehold mortgage of a 
residential lease?
162.358 How will BIA decide whether to approve a leasehold mortgage 
of a residential lease?

Effectiveness, Compliance, and Enforcement

162.359 When will an amendment, assignment, sublease, or leasehold 
mortgage under a residential lease be effective?
162.360 What happens if BIA disapproves an amendment, assignment, 
sublease, or leasehold mortgage?
162.361 May BIA investigate compliance with a residential lease?
162.362 May a residential lease provide for negotiated remedies in 
the event of a violation?
162.363 What will BIA do about a violation of a residential lease?
162.364 What will BIA do if the lessee does not cure a violation of 
a residential lease on time?
162.365 Will late payment charges or special fees apply to 
delinquent payments due under a residential lease?
162.366 How will payment rights relating to a residential lease be 
allocated between the Indian landowners and the lessee?
162.367 When will a cancellation of a residential lease be 
effective?
162.368 What will BIA do if a lessee remains in possession after a 
residential lease expires or is cancelled?
162.369 Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving residential leases?
162.370 When will BIA issue a decision on an appeal from a 
residential leasing decision?
162.371 What happens if the lessee abandons the leased premises?
Subpart D--Business Leases

Business Leasing General Provisions

Sec.
162.401 What types of leases does this subpart cover?
162.402 Is there a model business lease form?

Lease Requirements

162.411 How long may the term of a business lease run?
162.412 What must the lease include if it contains an option to 
renew?
162.413 Are there mandatory provisions that a business lease must 
contain?
162.414 May improvements be made under a business lease?
162.415 How must a business lease address ownership of improvements?
162.416 How will BIA enforce removal requirements in a business 
lease?
162.417 What requirements for due diligence must a business lease 
include?
162.418 May a business lease allow compatible uses?
162.419 How must a business lease describe the land?

Monetary Compensation Requirements

162.420 How much monetary compensation must be paid under a business 
lease?
162.421 Will BIA require a valuation to determine fair market rental 
for a business lease?
162.422 What type of valuation may be used to determine fair market 
rental for a business lease?
162.423 When are monetary compensation payments due under a business 
lease?
162.424 Must a business lease specify to whom monetary compensation 
payments may be made?
162.425 What form of monetary compensation payment may be accepted 
under a business lease?
162.426 May the business lease provide for non-monetary or varying 
types of compensation?
162.427 Will BIA notify a lessee when a payment is due under a 
business lease?
162.428 Must a business lease provide for compensation reviews or 
adjustments?
162.429 What other types of payments are required under a business 
lease?

Bonding and Insurance

162.434 Must a lessee provide a performance bond for a business 
lease?
162.435 What forms of performance bond may be accepted under a 
business lease?
162.436 What is the bond release process under a business lease?
162.437 Must a lessee provide insurance for a business lease?

Approval

162.438 What documents must the parties submit to obtain BIA 
approval of a business lease?
162.439 What is the approval process for a business lease?
162.440 When will a business lease be effective?
162.441 Must business lease documents be recorded?
162.442 What action may BIA take if a lease disapproval decision is 
appealed?

Amendments

162.443 May the parties amend a business lease?
162.444 What are the consent requirements for an amendment to a 
business lease?
162.445 What is the approval process for an amendment to a business 
lease?
162.446 How will BIA decide whether to approve an amendment to a 
business lease?

Assignments

162.447 May a lessee assign a business lease?
162.448 What are the consent requirements for an assignment of a 
business lease?
162.449 What is the approval process for an assignment of a business 
lease?
162.450 How will BIA decide whether to approve an assignment of a 
business lease?

Subleases

162.451 May a lessee sublease a business lease?
162.452 What are the consent requirements for a sublease of a 
business lease?
162.453 What is the approval process for a sublease of a business 
lease?
162.454 How will BIA decide whether to approve a sublease of a 
business lease?

Leasehold Mortgages

162.455 May a lessee mortgage a business lease?
162.456 What are the consent requirements for a leasehold mortgage 
under a business lease?
162.457 What is the approval process for a leasehold mortgage under 
a business lease?
162.458 How will BIA decide whether to approve a leasehold mortgage 
under a business lease?

Effectiveness, Compliance, and Enforcement

162.459 When will an amendment, assignment, sublease, or leasehold 
mortgage under a business lease be effective?
162.460 What happens if BIA disapproves an amendment, assignment, 
sublease, or leasehold mortgage under a business lease?
162.461 May BIA investigate compliance with a business lease?
162.462 May a business lease provide for negotiated remedies in the 
event of a violation?
162.463 What will BIA do about a violation of a business lease?
162.464 What will BIA do if the lessee does not cure a violation of 
a business lease on time?
162.465 Will late payment charges or special fees apply to 
delinquent payments due under a business lease?
162.466 How will payment rights relating to a business lease be 
allocated between the Indian landowners and the lessee?
162.467 When will a cancellation of a business lease be effective?
162.468 What will BIA do if a lessee remains in possession after a 
business lease expires or is cancelled?
162.469 Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving business leases?

[[Page 73797]]

162.470 When will BIA issue a decision on an appeal from a business 
leasing decision?
162.471 What happens if the lessee abandons the leased premises?

Subpart C--Residential Leases

Residential Leasing General Provisions


Sec.  162.301  What types of leases does this subpart cover?

    (a) This subpart covers both ground leases (undeveloped land) and 
leases of developed land (together with the improvements thereon) on 
Indian land, for housing purposes. Leases covered by this subpart would 
authorize the construction or use of:
    (1) A single-family residence; and
    (2) Housing for public purposes.
    (b) Leases for other residential development (for example, single-
family residential developments that are not housing for public 
purposes and multi-family developments) are covered under subpart D of 
this part.


Sec.  162.302  Is there a model residential lease form?

    We will make available one or more model lease forms that satisfy 
the formal requirements of this part, including, as appropriate, the 
model tribal lease form jointly developed by BIA, the Department of 
Housing and Urban Development, the Department of Veterans' Affairs, and 
the Department of Agriculture. Use of a model lease form is not 
mandatory, provided all requirements of this part are met. If a model 
lease form is not used, we will assist the Indian landowners in 
drafting lease provisions or in using tribal lease forms that conform 
to the requirements of this part.

Lease Requirements


Sec.  162.311  How long may the term of a residential lease run?

    (a) A residential lease must provide for a definite lease term, 
state if there is an option to renew and, if so, provide for a definite 
term for the renewal period.
    (b) Unless otherwise provided by paragraphs (b)(1) or (b)(2) of 
this section, the maximum term may not exceed 50 years. The lease may 
provide for a primary term of less than 50 years with a provision for 
one or more renewals, so long as the maximum term, including all 
renewals, does not exceed 50 years.
    (1) If a Federal statute provides for a longer maximum term (e.g., 
25 U.S.C. 415(a) allows for a maximum term of 99 years for certain 
tribes), the lease may provide for a primary term, and one renewal not 
to exceed 25 years, so long as the maximum term, including the renewal, 
does not exceed the maximum term established by statute.
    (2) Where all of the trust or restricted interests in a tract are 
owned by a deceased Indian whose heirs and devisees have not yet been 
determined, the maximum term may not exceed two years.
    (c) A residential lease may not be extended by holdover.


Sec.  162.312  What must the lease include if it contains an option to 
renew?

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us;
    (3) Whether landowner consent to the renewal is required;
    (4) That the lessee must provide notice to the Indian landowner and 
any mortgagees of the renewal;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the commencement of the renewal 
term;
    (6) That any change in the terms of the lease will be considered an 
amendment subject to consent and BIA approval requirements pursuant to 
Sec. Sec.  162.343 through 162.346; and
    (7) Any other conditions for renewal (e.g., the lessee may not be 
in violation of the lease at the time of renewal).
    (b) We must record any renewal of a lease in the Land Titles and 
Records Office.


Sec.  162.313  Are there mandatory provisions that a residential lease 
must contain?

    (a) All residential leases must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The owner being represented and the authority under which such 
action is being taken, where one executes a lease in a representative 
capacity;
    (6) The citation of the statute that authorizes our approval;
    (7) Who is responsible for constructing, owning, operating, 
maintaining, and managing improvements;
    (8) Payment requirements and late payment charges, including 
interest;
    (9) Insurance requirements under Sec.  162.337; and
    (10) Bonding requirements under Sec.  162.334. If a performance 
bond is required, the lease must state that the lessee must obtain the 
consent of the surety for any legal instrument that directly affects 
their obligations and liabilities.
    (b) All residential leases must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) Nothing in the lease would prevent or delay termination of 
Federal trust responsibilities for the land during the lease's term;
    (3) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (4) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.013;
    (5) The lessee indemnifies and holds the United States and the 
Indian landowners harmless from any loss, liability, or damages 
resulting from the lessee's use or occupation of the leased premises 
(this provision is not mandatory if the lessee would be prohibited by 
law from making such an agreement);
    (6) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to the use, 
handling, treatment, removal, storage, transportation, or disposal of 
hazardous materials, or the release or discharge of any hazardous 
material from the leased premises that occurs during the lease term, 
regardless of fault, unless the liability or cost arises from the gross 
negligence or willful misconduct of the Indian landowner (this 
provision is not mandatory if the lessee would be prohibited by law 
from making such an agreement);
    (7) In the event that historic properties, archeological resources, 
human remains, or other cultural items not previously reported are 
encountered during the course of any activity associated with this 
lease, all activity in the immediate vicinity of the properties, 
resources, remains, or items will cease and the lessee will contact BIA 
and the tribe that has jurisdiction to determine how to proceed and 
appropriate disposition;
    (8) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice, to enter upon the leased premises 
for inspection and compliance; and
    (9) Unless otherwise indicated, this is a lease of the trust and 
restricted interests in the property described and is not a lease of 
any undivided fee interests. All rental payments by the

[[Page 73798]]

lessee will be distributed to the trust and restricted landowners and 
life estate holders on trust and restricted land only. The lessee will 
be responsible for accounting to the owners of any fee interests that 
may exist in the property being leased.
    (c) We may treat any provision of a lease, sublease, amendment, 
assignment, or leasehold mortgage that is in violation of Federal law 
as a violation of the lease.


Sec.  162.314  May improvements be made under a residential lease?

    (a) The lessee may construct improvements under a residential lease 
if the residential lease authorizes the construction and generally 
describes the type and location of the improvements to be constructed 
during the lease term.
    (b) The lessee must provide reasonable notice to the Indian 
landowners of the construction of any major improvements not generally 
described in the lease. We will treat any attempt by the lessee to 
construct major improvements, without the necessary notice, as a lease 
violation.


Sec.  162.315  How must a residential lease address ownership of 
improvements?

    (a) A residential lease must specify who will own any improvements 
the lessee constructs during the lease term. In addition, the lease 
must indicate whether each specific improvement the lessee constructs 
will, upon the expiration or termination of the lease:
    (1) Remain on the leased premises, in a condition satisfactory to 
the Indian landowners and become the property of the Indian landowner;
    (2) Be removed immediately or within a time period specified in the 
lease, at the lessee's expense, with the leased premises to be restored 
as close as possible to their condition before construction of such 
improvements; or
    (3) Be disposed of by other means.
    (b) A lease that requires the lessee to remove the improvements 
must also provide the Indian landowners with an option to take 
possession of and title to the improvements if the improvements are not 
removed within the specified time period.
    (c) Any permanent improvements on the leased land shall be subject 
to 25 CFR 1.4 and, in addition, shall not be subject to any fee, tax, 
assessment, levy, or other such charge imposed by any State or 
political subdivision of a State, without regard to ownership of those 
improvements. Improvements may be subject to taxation by the Indian 
tribe with jurisdiction.


Sec.  162.316  How will BIA enforce removal requirements in a 
residential lease?

    We may take appropriate enforcement action in consultation with the 
tribe for tribal land or, where feasible, with Indian landowners for 
individually owned Indian land, to ensure removal of the improvements 
or restoration of the premises at the lessee's expense. We may take 
such enforcement action after termination or expiration of the lease. 
We may collect and hold the performance bond until removal and 
restoration are completed.


Sec.  162.317  How must a residential lease describe the land?

    (a) A residential lease must describe the leased premises by 
reference to a public or private survey, if possible. If the land 
cannot be so described, the lease must include a legal description or 
other description that is sufficient to identify the leased premises, 
subject to our approval.
    (b) If the tract is fractionated, we will describe the undivided 
trust or restricted interest in the leased premises.

Rental Requirements


Sec.  162.320  How much rent must be paid under a residential lease?

    (a) A residential lease of tribal land may allow for any payment 
amount negotiated by the tribe, if the tribe submits a signed 
certification stating that it has determined the negotiated amount to 
be in its best interest. The tribe may request, in writing, that we 
require fair market rental, in which case we will determine fair market 
rental in accordance with Sec.  162.322 and will approve the lease only 
if it requires payment of not less than fair market rental. Unless the 
tribe makes such a request, BIA will not require a valuation or 
appraisal or determine fair market rental, but instead will defer to 
the tribe's determination that the negotiated compensation is in its 
best interest.
    (b) A residential lease of individually owned Indian land must 
require payment of not less than fair market rental except that we may 
approve a lease of individually owned Indian land that provides for the 
payment of nominal rent, or less than a fair market rental, if:
    (1) The Indian landowners execute a written waiver of the right to 
receive fair market rental; and
    (2) We determine it is in the Indian landowners' best interest, 
based on factors including but not limited to:
    (i) The lessee is a member of the Indian landowner's immediate 
family as defined in Sec.  162.003;
    (ii) The lessee is a co-owner of the leased tract; or
    (iii) A special relationship or circumstances exist that we believe 
warrant approval of the lease.
    (c) Where the owners of the applicable percentage of interests 
consent to a residential lease on behalf of all the Indian landowners 
of a fractionated tract, the lease must provide that the non-consenting 
Indian landowners and those on whose behalf we have consented receive 
fair market rental.


Sec.  162.321  Will BIA require a valuation to determine fair market 
rental for a residential lease?

    (a) We will not require valuations for negotiated residential 
leases of tribal land, or of any undivided tribal interest in a 
fractionated tract, if the tribe submits a signed certification. The 
tribe may request, in writing, that we require a valuation, in which 
case we will determine fair market rental in accordance with Sec.  
162.322.
    (b) We will require valuations for individually owned Indian land, 
except that we may waive the valuation requirement when:
    (1) 100 percent of the Indian landowners submit to us a written 
request to waive the valuation requirement; and
    (2) We determine that the waiver is in the best interest of the 
Indian landowners, taking into consideration the landowners' written 
request.
    (c) We have 30 days from receipt of the waiver request in paragraph 
(b) of this section to make a determination. Our determination whether 
to approve the request will be in writing and will state the basis for 
our approval or disapproval. If we fail to meet the 30-day deadline, 
the lessee or Indian landowners may take appropriate action under part 
2 of this chapter.


Sec.  162.322  What type of valuation may be used to determine fair 
market rental for a residential lease?

    (a) We will use a market analysis, appraisal, or other appropriate 
valuation method to determine the fair market rental for residential 
leases of individually owned Indian land, or at the request of the 
tribe for tribal land.
    (b) We will either:
    (1) Prepare a market analysis, appraisal, or other appropriate 
valuation method; or
    (2) Use an approved market analysis, appraisal, or other 
appropriate valuation method from the Indian landowner or lessee.
    (c) We will approve a market analysis, appraisal, or other 
appropriate valuation method for use only if it:

[[Page 73799]]

    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary pursuant to 25 U.S.C. 2214; and
    (2) Complies with Department policies.


Sec.  162.323  When are rental payments due under a residential lease?

    (a) A residential lease must specify the dates on which all 
payments are due.
    (b) Unless otherwise provided in the lease, payments may not be 
made or accepted more than one year in advance of the due date.


Sec.  162.324  Must a residential lease specify to whom rental payments 
may be made?

    (a) A residential lease must specify whether the lessee will make 
payments directly to the Indian landowners (direct pay) or to us on 
their behalf.
    (b) The lessee may make payments directly to the Indian landowners 
whose trust accounts are unencumbered when there are 10 or fewer 
beneficial owners and 100 percent of the beneficial owners agree to 
receive payment from the lessee at the commencement of the lease.
    (1) If the lease provides that the lessee will directly pay the 
Indian landowners, the lease must include provisions for proof of 
payment.
    (2) When we consent on behalf of an Indian landowner, the lessee 
must make payment to us.
    (3) The lessee must send direct payments to the parties and 
addresses specified in the lease, unless the lessee receives notice of 
a change of ownership or address.
    (4) Unless otherwise provided in the lease, payments may not be 
made payable directly to anyone other than the Indian landowners.
    (5) Direct payments must continue through the duration of the 
lease, except if:
    (i) 100 percent of the Indian landowners agree to suspend direct 
pay and provide us with documentation of their agreement, then the 
lessee must make all Indian landowners' payments to us; or
    (ii) If any individual Indian landowner dies, is declared non 
compos mentis, becomes whereabouts unknown, or owes a debt resulting in 
a trust account encumbrance, then the lessee must make that individual 
Indian landowner's payment to us.


Sec.  162.325  What form of payment may be accepted under a residential 
lease?

    (a) When payments are made directly to Indian landowners, the form 
of payment must be acceptable to the Indian landowners.
    (b) When payments are made to us, we will accept:
    (1) Money orders;
    (2) Personal checks;
    (3) Certified checks;
    (4) Cashier's checks; or
    (5) Electronic funds transfer payments.
    (c) We will not accept cash, foreign currency, or third-party 
checks, except that we will accept third-party checks from financial 
institutions or Federal agencies.
    (d) The preferred method of payment is electronic funds transfer 
payments.


Sec.  162.326  May a residential lease provide for non-monetary or 
varying types of compensation?

    (a) With our approval, the lease may provide for:
    (1) Alternative forms of rental, including, but not limited to in-
kind consideration; or
    (2) Varying types of compensation at specific stages during the 
life of the lease.
    (b) For individually owned land, we will approve alternative forms 
of rental and varying types of compensation if we determine that it is 
in the best interest of the Indian landowners. For tribal land, we will 
defer to the tribe's determination that the alternative forms of rental 
and varying types of consideration are in its best interest, if the 
tribe submits a signed certification stating that it has determined the 
alternative forms of rental and varying types of consideration to be in 
its best interest.


Sec.  162.327  Will BIA notify a lessee when a payment is due under a 
residential lease?

    Upon request of the Indian landowner, we may issue invoices to a 
lessee in advance of the dates on which payments are due under a 
residential lease, but the lessee's obligation to make such payments in 
a timely manner will not be excused if such invoices are not issued, 
delivered, or received.


Sec.  162.328  Must a residential lease provide for rental reviews or 
adjustments?

    (a) For a residential lease with a term of five years or less, the 
parties may agree in the lease to provide for periodic reviews of the 
adequacy of rent in the lease. For a residential lease with a term of 
more than five years, a review of the adequacy of rent must occur at 
least every fifth year, in the manner specified in the lease, unless 
the conditions in paragraph (b) of this section are met. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who is authorized to make adjustments;
    (3) What the adjustments are based on; and
    (4) How to resolve disputes arising from the adjustments.
    (b) A review of the adequacy of rent is not required if:
    (1) The lease provides for automatic rental adjustments; or
    (2) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, where the lease provides 
for payment of less than fair market rental or the lease provides for 
most or all rent to be paid during the first five years of the lease 
term or prior to the date the review would be conducted.
    (c) When a review results in the need for adjustment of rent, we 
must approve the adjustment and Indian landowners must consent to the 
adjustment in accordance with Sec.  162.011, unless otherwise provided 
in the lease.


Sec.  162.329  What other types of payments are required under a 
residential lease?

    (a) The lessee may be required to pay additional fees, taxes, and/
or assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.315(c). 
The lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. Failure to make such payments will be treated as a violation 
of the lease.

Bonding and Insurance


Sec.  162.334  Must a lessee or assignee provide a performance bond for 
a residential lease?

    (a) Except for leases for housing for public purposes or as 
provided in (f), the lessee must provide a performance bond in an 
amount sufficient to secure the contractual obligations including:
    (1) No less than the highest annual rental specified in the lease, 
if the rent is paid annually, or other amount established by BIA in 
consultation with the tribe for tribal land or, where feasible, with 
Indian landowners for individually owned Indian land, if the rent is to 
be paid on a non-annual schedule;
    (2) The operation and maintenance charges for any land located 
within an irrigation project; and
    (3) As appropriate, the restoration and reclamation of the leased 
premises to

[[Page 73800]]

their condition at the commencement of the lease term or some other 
specified condition.
    (b) The performance bond must be deposited with us and made payable 
only to us, and may not be modified without our approval.
    (c) The lease must provide that we may adjust security or 
performance bond requirements at any time to reflect changing 
conditions.
    (d) We may require that the surety provide any supporting documents 
needed to show that the performance bond will be enforceable, and that 
the surety will be able to perform the guaranteed obligations.
    (e) The surety must provide notice to us at least 60 days before 
canceling a performance bond so that we may notify the lessee of its 
obligation to provide a substitute performance bond. Failure to provide 
a substitute performance bond will be a violation of the lease.
    (f) We may waive the requirement for a performance bond upon the 
request of the Indian landowner, if the waiver is in the best interest 
of the Indian landowner, including if the lease is for less than fair 
market rental or nominal rent. We may revoke the waiver and require a 
performance bond at any time if the waiver is no longer in the best 
interest of the Indian landowner.


Sec.  162.335  What forms of performance bonds may be accepted under a 
residential lease?

    (a) We will only accept a performance bond in one of the following 
forms:
    (1) Cashiers' checks;
    (2) Certificates of deposit issued by a federally insured financial 
institution authorized to do business in the United States;
    (3) Irrevocable letters of credit issued by a federally insured 
financial institution authorized to do business in the United States;
    (4) Negotiable Treasury securities; or
    (5) Surety bond issued by a company approved by the U.S. Department 
of the Treasury.
    (b) All forms of performance bonds must:
    (1) Indicate on their face that BIA approval is required for 
redemption;
    (2) Be accompanied by a statement granting full authority to BIA to 
make an immediate claim upon or sell them if lessee violates the lease;
    (3) Be irrevocable during the term of the performance bond; and
    (4) Be automatically renewable during the term of the lease.


Sec.  162.336  What is the bond release process under a residential 
lease?

    (a) Upon expiration, termination, or cancellation of the lease, the 
lessee must submit a written request for a performance bond release to 
BIA.
    (b) Upon receipt of a request under paragraph (a) of this section, 
BIA will confirm with the tribe, for tribal land or, where feasible, 
with the Indian landowners for individually owned Indian land, that the 
lessee has complied with all lease obligations, then release the 
performance bond to the lessee unless we determine that the bond must 
be redeemed to fulfill the contractual obligations.


Sec.  162.337  Must a lessee provide insurance for a residential lease?

    Except as provided in paragraph (c) of this section, a lessee must 
provide insurance necessary to protect the interests of the Indian 
landowners and in an amount sufficient to protect all insurable 
improvements on the premises.
    (a) The insurance may include property, liability and/or casualty 
insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. We may revoke the waiver and require insurance 
at any time if the waiver is no longer in the best interest of the 
Indian landowner.

Approval


Sec.  162.338  What documents must the parties submit to obtain BIA 
approval of a residential lease?

    A lessee or the Indian landowner must submit the following 
documents to us to obtain BIA approval of a residential lease:
    (a) A lease executed by the Indian landowner and the lessee that 
complies with the requirements of this part;
    (b) A valuation, if required under Sec.  162.321;
    (c) Organizational documents, certificates, filing records, and 
resolutions or other authorization documents, including evidence of the 
representative's authority to execute a lease, if the lessee is a 
corporation, limited liability company, partnership, joint venture, or 
other legal entity, except a tribal entity, to show that the lease will 
be enforceable and that the legal entity is in good standing and 
authorized to conduct business in the jurisdiction where the land is 
located;
    (d) A performance bond, where required;
    (e) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law;
    (f) Reports, surveys, and site assessments as needed to facilitate 
compliance with applicable Federal and tribal land use requirements;
    (g) A preliminary site plan identifying the proposed location of 
residential development, roads and utilities, if applicable;
    (h) Information to assist us in our evaluation of the factors in 25 
U.S.C. 415(a);
    (i) Information to facilitate BIA's analysis under applicable 
environmental and cultural resources laws; and
    (j) Any additional documentation we determine to be reasonably 
necessary for approval.


Sec.  162.339  What is the approval process for a residential lease?

    (a) Before we approve a residential lease, we must determine that 
the lease is in the best interest of the Indian landowners. In making 
that determination, we will:
    (1) Review the lease and supporting documents;
    (2) Ensure compliance with all applicable laws and ordinances;
    (3) Assure ourselves that adequate consideration has been given to 
the factors in 25 U.S.C. 415(a);
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements; and
    (5) If the lease is a negotiated lease, defer to the Indian 
landowners' determination that the lease is in their best interest, to 
the maximum extent possible.
    (b) When we receive a residential lease proposal and all of the 
supporting documents that conform to this part, we will, within 30 days 
of receiving the documents at the appropriate BIA office, approve, 
disapprove, return the submission for revision, or notify the parties 
in writing that we need additional time to review the lease. Our letter 
notifying the parties that we need additional time to review the lease 
must identify our initial concerns and invite the parties to respond 
within 15 days. We have 30 days from sending the notification to make a 
determination whether to approve or disapprove the lease.
    (c) If we fail to meet the deadlines in this section, then the 
parties may take appropriate action under part 2 of this chapter.
    (d) We will make any lease approval or disapproval determination 
and the

[[Page 73801]]

basis for the determination, along with notification of appeal rights 
under part 2 of this chapter, in writing and will send the 
determination and notification to the parties to the lease.
    (e) Any residential lease issued under the authority of the Native 
American Housing Assistance and Self-Determination Act, 25 U.S.C. 
4211(a), whether on tribal land or on individually owned Indian land, 
must be approved by us and by the affected tribe.
    (f) We will provide approved residential leases on tribal land to 
the lessee and provide a copy to the tribe. We will provide approved 
residential leases on individually owned Indian land to the lessee, and 
make copies available to the Indian landowners upon written request.


Sec.  162.340  When will a residential lease be effective?

    (a) A residential lease will be effective on the date that we 
approve the lease, notwithstanding any appeal that may be filed under 
part 2 of this chapter.
    (b) The lease may specify a date on which the obligations between 
the parties are triggered. Such date may be before or after the 
approval date under paragraph (a) of this section.


Sec.  162.341  Must residential lease documents be recorded?

    (a) A residential lease, amendment, assignment, leasehold mortgage, 
and sublease must be recorded in our Land Titles and Records Office 
with jurisdiction over the leased land.
    (1) We will record the lease or other document immediately 
following our approval.
    (2) When our approval of an assignment or sublease is not required, 
the parties must record the assignment or sublease in the Land Title 
and Records Office with jurisdiction over the leased land.
    (b) The tribe must record the following leases in the Land Titles 
and Records Office with jurisdiction over the leased lands, even though 
BIA approval is not required:
    (1) Leases of tribal land that a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval under certain conditions.


Sec.  162.342  What action may BIA take if a residential lease 
disapproval decision is appealed?

    (a) If a party appeals our decision to disapprove a lease, 
assignment, amendment, sublease, or leasehold mortgage, then the 
official to whom the appeal is made may require the lessee to post an 
appeal bond in an amount necessary to protect the Indian landowners 
against financial losses and damage to trust resources likely to result 
from the delay caused by an appeal. The requirement to post an appeal 
bond will apply in addition to all of the other requirements in part 2 
of this chapter.
    (b) The appellant may not appeal the appeal bond decision. The 
appellant may, however, request that the official to whom the appeal is 
made reconsider the bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.

Amendments


Sec.  162.343  May the parties amend a residential lease?

    (a) The parties may amend a residential lease by obtaining:
    (1) The lessee's signature;
    (2) The Indian landowners' consent pursuant to the requirements 
contained in Sec.  162.344; and
    (3) BIA approval of the amendment under Sec.  162.345 and Sec.  
162.346.
    (b) The parties may not amend a residential lease if the lease 
expressly prohibits amendments.


Sec.  162.344  What are the consent requirements for an amendment of a 
residential lease?

    (a) The Indian landowners, or their representatives under Sec.  
162.012, must consent to an amendment of a residential lease in the 
same percentages and manner as a new residential lease under Sec.  
162.011, unless the requirements in paragraphs (a)(1) or (a)(2) of this 
section are met.
    (1) The approved residential lease establishes that individual 
Indian landowners are deemed to have consented if they do not object in 
writing to the amendment after a specified period of time following 
Indian landowners' receipt of the amendment. If the lease provides for 
deemed consent, it must require the parties to submit to us: a copy of 
the executed amendment or other documentation of the Indian landowners' 
consent; proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and any other pertinent information to us 
for review.
    (2) The approved residential lease authorizes one or more 
representatives to consent to an amendment on behalf of all Indian 
landowners. The lease may also designate us as the Indian landowners' 
representative for the purposes of consent to an amendment.
    (b) Unless specifically authorized in the lease, the written power 
of attorney, or court document, Indian landowners may not be deemed to 
have consented to, and an Indian landowner's designated representative 
may not negotiate or consent to, an amendment that would:
    (1) Reduce the payment obligations or terms to the Indian 
landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or change the term of the lease.


Sec.  162.345  What is the approval process for an amendment of a 
residential lease?

    We have 30 days from receipt of the executed amendment, proof of 
required consents, and required documentation to make a determination 
whether to approve the amendment or notify the parties in writing that 
we need additional time to review the amendment.
    (a) Our letter notifying the parties that we need additional time 
to review the amendment must identify our initial concerns and invite 
the parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the amendment.
    (b) If we fail to send either a determination or notification 
within 30 days from receipt of the required documents or 30 days from 
sending the notification, the amendment is deemed approved to the 
extent consistent with Federal law. We will retain our full enforcement 
authority for amendments that are deemed approved.
    (c) Our determination whether to approve the amendment will be in 
writing and will state the basis for our approval or disapproval.


Sec.  162.346  How will BIA decide whether to approve an amendment of a 
residential lease?

    (a) We may only disapprove a residential lease amendment if:
    (1) The required consents have not been obtained from the parties 
to the lease and any mortgagees or sureties;
    (2) The lessee is in violation of the lease; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We may not unreasonably withhold approval of an amendment.

Assignments


Sec.  162.347  May a lessee assign a residential lease?

    A lessee may assign a residential lease by meeting the consent 
requirements in

[[Page 73802]]

Sec.  162.348 and obtaining our approval of the assignment under Sec.  
162.349 and Sec.  162.350, unless the lease expressly prohibits 
assignments.


Sec.  162.348  What are the consent requirements for an assignment of a 
residential lease?

    (a) The Indian landowners, or their representatives under Sec.  
162.012, must consent to an assignment of a residential lease in the 
same percentages and manner as a new residential lease under Sec.  
162.011, unless the requirements in paragraphs (a)(1), (a)(2), or 
(a)(3) of this section are met.
    (1) The assignee agrees in writing to assume all of the lessee's 
obligations under the lease, including bonding requirements, and:
    (i) The lease provides for assignments without further consent of 
the Indian landowners or with consent in specified percentages and 
manner; or
    (ii) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance.
    (2) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
assignment after a specified period of time following landowners' 
receipt of the assignment. If the lease provides for deemed consent, it 
must require the parties to submit to us: a copy of the executed 
assignment or other documentation of the Indian landowners' consent; 
proof of mailing of the assignment to any Indian landowners who are 
deemed to have consented; and any other pertinent information for us to 
review.
    (3) The lease authorizes one or more of the Indian landowners to 
consent on behalf of all Indian landowners. The lease may also 
designate us as the Indian landowners' representative for the purposes 
of consenting to an assignment.
    (b) The lessee must obtain the consent of the holders or any bonds 
or mortgages.


Sec.  162.349  What is the approval process for an assignment of a 
residential lease?

    (a) The lessee may assign the lease without our approval if:
    (1) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance;
    (2) The assignee agrees in writing to assume all of the obligations 
of the lease; and
    (3) The assignee agrees in writing that any transfer of the lease 
will be in accordance with applicable law under Sec.  162.013.
    (b) We have 30 days from receipt of the executed assignment, proof 
of required consents, and required documentation to make a 
determination whether to approve the assignment or notify the parties 
that we need additional information. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (c) If we fail to meet the deadline in this section, the lessee or 
Indian landowners may take appropriate action under part 2 of this 
chapter.


Sec.  162.350  How will BIA decide whether to approve an assignment of 
a residential lease?

    (a) We may only disapprove an assignment of a residential lease if:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The assignee does not agree to be bound by the terms of the 
lease;
    (5) The proposed use by the assignee will require an amendment to 
the lease; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether:
    (1) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (2) If a performance bond is required, the assignee has bonded its 
performance and provided supporting documents that demonstrate that the 
lease will be enforceable against the assignee, and that the assignee 
will be able to perform its obligations under the lease or assignment.
    (c) If the lease was approved at less than fair market rental and 
the assignee is not a co-owner or member of the Indian landowners' 
immediate family, the assignment must provide for the assignee to pay 
fair market rental to the Indian landowner.
    (d) We may not unreasonably withhold approval of an assignment.

Subleases


Sec.  162.351  May a lessee sublease a residential lease?

    (a) A lessee may sublease a residential lease by meeting the 
consent requirements in Sec.  162.352 and obtaining our approval of the 
sublease under Sec.  162.353 and Sec.  162.354, or by meeting the 
conditions in paragraph (b) of this section, unless the lease expressly 
prohibits subleases.
    (b) Where the sublease is part of a housing development for public 
purposes, the lessee may sublease without meeting consent requirements 
or obtaining BIA approval of the sublease, as long as:
    (1) The lease provides for subleasing without meeting consent 
requirements or obtaining BIA approval;
    (2) We have approved a general plan for the development; and
    (3) We have approved a sublease form and general rent schedule for 
use in the project.


Sec.  162.352  What are the consent requirements for a sublease of a 
residential lease?

    (a) The Indian landowners must consent to a sublease of a 
residential lease in the same percentages and manner as a new 
residential lease pursuant to Sec.  162.011, unless the requirements in 
paragraphs (a)(1) or (a)(2) of this section are met.
    (1) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
sublease after a specified period of time following landowners' receipt 
of the sublease. If the lease provides for deemed consent, it must 
require the parties to submit to us: a copy of the executed sublease or 
other documentation of the landowners' consent; proof of mailing of the 
sublease to any Indian landowners who are deemed to have consented; and 
any other pertinent information for us to review.
    (2) The lease authorizes one or more of the Indian landowners to 
consent on behalf of all Indian landowners. The lease may also 
designate us as the Indian landowners' representative for the purposes 
of consenting to a sublease.
    (b) The lessee must obtain the consent of any sureties.


Sec.  162.353  What is the approval process for a sublease of a 
residential lease?

    We have 30 days from receipt of the executed sublease, proof of 
required consents, and required documentation to make a determination 
whether to approve the sublease or notify the parties in writing that 
we need additional time to review the sublease.
    (a) Our letter notifying the parties that we need additional time 
to review the sublease must identify our initial concerns and invite 
the parties to respond within 15 days. We have 30 days from sending the 
notification to

[[Page 73803]]

make a determination whether to approve or disapprove the sublease. Our 
determination whether to approve the sublease will be in writing and 
will state the basis for our approval or disapproval.
    (b) If we fail to send either a determination or notification 
within 30 days from receipt of required documents or from sending the 
notification, the sublease is deemed approved to the extent consistent 
with Federal law. We will retain our full enforcement authority for 
subleases that are deemed approved.


Sec.  162.354  How will BIA decide whether to approve a sublease of a 
residential lease?

    (a) We may only disapprove a sublease of a residential lease if:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The lessee will not remain liable under the lease;
    (5) The sublessee does not agree to be bound by the terms of the 
lease;
    (6) The proposed use by the sublessee will require an amendment of 
the lease; or
    (7) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(7) of this 
section, we will consider whether:
    (1) The value of any part of the leased premises not covered by the 
sublease would be adversely affected; and
    (2) If a performance bond is required by the sublease, the 
sublessee has bonded its performance and provided supporting documents 
that demonstrate that the lease will be enforceable against the 
sublessee, and that the sublessee will be able to perform its 
obligations under the lease or sublease.
    (c) If the lease was approved at less than fair market rental, and 
the sublessee is not a co-owner or a member of the Indian landowner's 
immediate family, the sublease must provide for the sublessee to pay 
fair market rental to the Indian landowner.
    (d) We may not unreasonably withhold approval of a sublease.

Leasehold Mortgages


Sec.  162.355  May a lessee mortgage a residential lease?

    A lessee may mortgage a residential lease by meeting the consent 
requirements in Sec.  162.356 and obtaining BIA approval of the 
leasehold mortgage under in Sec.  162.357 and Sec.  162.358, unless the 
lease expressly prohibits leasehold mortgages.


Sec.  162.356  What are the consent requirements for a leasehold 
mortgage of a residential lease?

    The Indian landowners, or their representatives under Sec.  
162.012, must consent to a leasehold mortgage under a residential lease 
in the same percentages and manner as a new residential lease under 
Sec.  162.011, unless the requirements in paragraphs (a), (b), or (c) 
of this section are met.
    (a) The lease contains a general authorization for a leasehold 
mortgage and states what law would apply in case of foreclosure.
    (b) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
leasehold mortgage after a specified period of time following 
landowners' receipt of the leasehold mortgage. If the lease provides 
for deemed consent, it must require the parties to submit to us: A copy 
of the executed leasehold mortgage or other documentation of the Indian 
landowners' consent; proof of mailing of the leasehold mortgage to any 
Indian landowners who are deemed to have consented; and any other 
pertinent information for us to review.
    (c) The lease authorizes one or more representatives to consent to 
a leasehold mortgage on behalf of all Indian landowners. The lease may 
also designate us as the Indian landowners' representative for the 
purposes of consenting to a leasehold mortgage.


Sec.  162.357  What is the approval process for a leasehold mortgage of 
a residential lease?

    (a) We have 30 days from receipt of the executed leasehold 
mortgage, proof of required consents, and required documentation to 
make a determination whether to approve the leasehold mortgage or 
notify the parties that we need additional information. Our 
determination whether to approve the leasehold mortgage will be in 
writing and will state the basis for our approval or disapproval.
    (b) If we fail to meet the deadline in this section, the lessee may 
take appropriate action under part 2 of this chapter.


Sec.  162.358  How will BIA decide whether to approve a leasehold 
mortgage of a residential lease?

    (a) We may only disapprove the leasehold mortgage if:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The holders of lessee's bond have not consented; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(3) of this 
section, we will consider whether:
    (1) The lessee's ability to comply with the lease would be 
adversely affected by any new loan obligations;
    (2) Any lease provisions would require modification to be 
consistent with the mortgage;
    (3) The remedies available to us or to Indian landowners would be 
limited (beyond any additional notice and cure rights to be afforded to 
the mortgagee) in the event of a lease violation; and
    (4) Any rights of the Indian landowners would be subordinated or 
adversely affected in the event of a loan default by the lessee.
    (c) We may not unreasonably withhold approval of a leasehold 
mortgage.

Effectiveness, Compliance, and Enforcement


Sec.  162.359  When will an amendment, assignment, sublease, or 
leasehold mortgage under a residential lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage under 
a residential lease will be effective upon our approval, 
notwithstanding any appeal that may be filed under part 2 of this 
chapter, unless approval is not required under Sec.  162.008(b), Sec.  
162.349(a), or Sec.  162.351(b), or the conditions in paragraph (b) of 
this section apply. We will provide copies of approved documents to the 
party requesting approval, and upon request, to other parties to the 
agreement.
    (b) If the amendment or sublease was deemed approved pursuant to 
Sec.  162.345(b) or Sec.  162.353(b), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review.
    (c) An assignment or sublease that does not require landowner 
consent or BIA approval shall be effective upon execution by the 
parties.


Sec.  162.360  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage?

    If we disapprove an amendment, assignment, sublease, or leasehold 
mortgage of a residential lease, we will notify the parties immediately 
and advise them of their right to appeal the decision under part 2 of 
this chapter.

[[Page 73804]]

Sec.  162.361  May BIA investigate compliance with a residential lease?

    (a) We may enter the leased premises at any reasonable time, upon 
reasonable notice, to protect the interests of the Indian landowners 
and ensure that the lessee is in compliance with the requirements of 
the lease.
    (b) If the Indian landowner notifies us that a specific lease 
violation has occurred, we will promptly initiate an appropriate 
investigation.


Sec.  162.362  May a residential lease provide for negotiated remedies 
in the event of a violation?

    (a) A residential lease of tribal land may provide either or both 
parties with negotiated remedies in the event of a lease violation, 
including, but not limited to, the power to terminate the lease. If the 
lease provides the parties with the power to terminate the lease, BIA 
approval of the termination is not required and the termination is 
effective without BIA cancellation. The parties must notify us of the 
termination so that we may record it in the Land Titles and Records 
Office.
    (b) A residential lease of individually owned Indian land may 
provide either or both parties with negotiated remedies, so long as the 
lease also specifies the manner in which those remedies may be 
exercised by or on behalf of the Indian landowners of the applicable 
percentage of interests under Sec.  162.011 of this part. If the lease 
provides the parties with the power to terminate the lease, BIA 
concurrence with the termination is required to ensure that the Indian 
landowners of the applicable percentage of interests have consented. 
BIA will record the termination in the Land Titles and Records Office.
    (c) The parties must notify any surety or mortgagee of a 
termination of a residential lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease.
    (e) A residential lease may provide for lease disputes to be 
resolved in tribal court or any other court of competent jurisdiction, 
by a tribal governing body in the absence of a tribal court, or through 
an alternative dispute resolution method. We may not be bound by 
decisions made in such forums, but we will defer to ongoing 
proceedings, as appropriate, in deciding whether to exercise any of the 
remedies available to us.


162.363   What will BIA do about a violation of a residential lease?

    (a) If we determine there has been a violation of the conditions of 
a residential lease other than a violation of payment provisions 
covered by paragraph (b) of this section, we will promptly send the 
lessee and its sureties and any mortgagee a notice of violation by 
certified mail, return receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) Within 10 business days of the receipt of a notice of 
violation, the lessee must:
    (i) Cure the violation and notify us in writing that the violation 
has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) If a violation is determined to have occurred, we will make a 
reasonable attempt to notify the Indian landowners.
    (4) We may order the lessee to stop work.
    (b) A lessee's failure to pay rent in the time and manner required 
by a residential lease is a violation of the lease, and we will issue a 
notice of violation in accordance with this paragraph.
    (1) We will send the lessees and its sureties a notice of violation 
by certified mail, return receipt requested:
    (i) Promptly following the date on which the payment was due, if 
the lease requires that rental payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (3) The lessee must provide adequate proof of payment as required 
in the notice of violation.
    (c) The lessee and its sureties will continue to be responsible for 
the obligations contained in the lease until the lease is terminated, 
cancelled, or expires.


Sec.  162.364  What will BIA do if the lessee does not cure a violation 
of a residential lease on time?

    (a) If the lessee does not cure a violation of a residential lease 
within the requisite time period, or provide adequate proof of payment 
as required in the notice of violation, we will consult with the tribe 
for tribal land or, where feasible, with Indian landowners for 
individually owned Indian land, and determine whether:
    (1) We should cancel the lease;
    (2) The Indian landowners wish to invoke any remedies available to 
them under the lease;
    (3) We should invoke other remedies available under the lease or 
applicable law, including, collection on any available performance bond 
or, for failure to pay rent, referral of the debt to the Department of 
the Treasury for collection; or
    (4) The lessee should be granted additional time in which to cure 
the violation.
    (b) We may take action to recover unpaid rent and any associated 
late payment charges.
    (1) We do not have to cancel the lease or give any further notice 
to the lessee before taking action to recover unpaid rent.
    (2) We may still take action to recover any unpaid rent if we 
cancel the lease.
    (c) If we decide to cancel the lease, we will send the lessee and 
its sureties and any mortgagees a cancellation letter by certified 
mail, return receipt requested within 5 business days of our decision. 
We will send a copy of the cancellation letter to the tribe for tribal 
land, and will provide Indian landowners for individually owned Indian 
land with actual or constructive notice of the cancellation. The 
cancellation letter will:
    (1) Explain the grounds for cancellation;
    (2) If applicable, notify the lessee of the amount of any unpaid 
rent or late payment charges due under the lease;
    (3) Notify the lessee of their right to appeal under part 2 of this 
chapter, including the possibility that the official to whom the appeal 
is made may require the lessee to post an appeal bond;
    (4) Order the lessee to vacate the property within 31 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time; and
    (5) Require any other action BIA deems necessary to protect the 
Indian landowners.
    (d) We may invoke any other remedies available to us under the 
lease, including collecting on any available performance bond, and the 
Indian landowner may pursue any available remedies under tribal law.


Sec.  162.365  Will late payment charges or special fees apply to 
delinquent payments due under a residential lease?

    (a) Late payment charges will apply as specified in the lease. The 
failure to pay such amounts will be treated as a lease violation.

[[Page 73805]]

    (b) The following special fees may be assessed to cover 
administrative costs incurred by the United States in the collection of 
the debt, if rent is not paid in the time and manner required, in 
addition to late payment charges that must be paid to the Indian 
landowners under the lease:

------------------------------------------------------------------------
        The lessee will  pay . . .                    For . . .
------------------------------------------------------------------------
(a) $50.00................................  Dishonored checks.
(b) $15.00................................  Processing of each notice or
                                             demand letter.
(c) 18 percent of balance due.............  Treasury processing
                                             following referral for
                                             collection of delinquent
                                             debt.
------------------------------------------------------------------------

Sec.  162.366  How will payment rights relating to a residential lease 
be allocated between the Indian landowners and the lessee?

    The residential lease may allocate rights to payment for insurance 
proceeds, trespass damages, condemnation awards, settlement funds, and 
other payments between the Indian landowners and the lessee. If not 
specified in the insurance policy, order, award, judgment, or other 
document including the lease, the Indian landowners will be entitled to 
receive such payments.


Sec.  162.367  When will a cancellation of a residential lease be 
effective?

    (a) A cancellation involving a residential lease will not be 
effective until 31 days after the lessee receives a cancellation letter 
from us, or 41 days from the date we mailed the letter, whichever is 
earlier.
    (b) The cancellation decision will be stayed if an appeal is filed 
unless the cancellation is made immediately effective under part 2 of 
this chapter. While a cancellation decision is stayed, the lessee must 
continue to pay rent and comply with the other terms of the lease.


Sec.  162.368  What will BIA do if a lessee remains in possession after 
a residential lease expires or is cancelled?

    If a lessee remains in possession after the expiration or 
cancellation of a residential lease, we may treat the unauthorized 
possession as a trespass under applicable law. Unless the applicable 
percentage of Indian landowners under Sec.  162.011 have notified us in 
writing that they are engaged in good faith negotiations with the 
holdover lessee to obtain a new lease, we may take action to recover 
possession on behalf of the Indian landowners, and pursue any 
additional remedies available under applicable law, such as forcible 
entry and detainer action.


Sec.  162.369  Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving residential leases?

    (a) Except as provided in paragraph (b) of this section, the appeal 
bond provisions in part 2 of this chapter will apply to appeals from 
lease cancellation decisions.
    (b) The lessee may not appeal the appeal bond decision. The lessee 
may, however, request that the official to whom the appeal is made 
reconsider the appeal bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.


Sec.  162.370  When will BIA issue a decision on an appeal from a 
residential leasing decision?

    BIA will issue a decision on an appeal from a leasing decision 
within 30 days of receipt of all pleadings.


Sec.  162.371  What happens if the lessee abandons the leased premises?

    If a lessee abandons the leased premises, we will treat the 
abandonment as a violation of the lease. The lease may specify a period 
of non-use after which the lease premises will be considered abandoned.

Subpart D--Business Leases

Business Leasing General Provisions


Sec.  162.401  What types of leases does this subpart cover?

    (a) This subpart covers both ground leases (undeveloped land) and 
leases of developed land (together with the improvements thereon) on 
Indian land, including:
    (1) Leases for residential purposes that are not covered in subpart 
C;
    (2) Leases for business purposes that are not covered in subpart E;
    (3) Leases for religious, educational, recreational, cultural, or 
other public purposes; and
    (4) Commercial or industrial leases for retail, office, 
manufacturing, storage, biomass, waste-to-energy, or other business 
purposes.
    (b) Leases covered by this subpart may authorize the construction 
of single-purpose or mixed use projects designed for use by any number 
of lessees or occupants.


Sec.  162.402  Is there a model business lease form?

    There is no model business lease because of the need for 
flexibility in negotiating and writing business leases; however, we may 
provide other guidance, such as checklists and sample lease provisions 
to assist in the lease negotiation process. Additionally, we may assist 
the Indian landowners, upon their request, in developing appropriate 
lease provisions or in using tribal lease forms that conform to the 
requirements of this part.

Lease Requirements


Sec.  162.411  How long may the term of a business lease run?

    (a) A business lease must provide for a definite term, state if 
there is an option to renew and, if so, provide for a definite term for 
the renewal period. Unless authorized by paragraph (b), a business 
lease may have an initial term not to exceed 25 year and one renewal 
period not to exceed 25 years.
    (b) If a Federal statute provides for a longer maximum term (e.g., 
25 U.S.C. 415(a) allows for a maximum term of 99 years for certain 
tribes), the lease may provide for a primary term, and one renewal not 
to exceed 25 years, so long as the maximum term, including the renewal, 
does not exceed the maximum term established by statute.
    (c) The lease term, including any renewal, must be reasonable, 
given the:
    (1) Purpose of the lease;
    (2) Type of financing; and
    (3) Level of investment.
    (d) Where all of the trust or restricted interests in a tract are 
owned by a deceased Indian whose heirs and devisees have not yet been 
determined, the maximum term may not exceed two years.
    (e) The lease may not be extended by holdover.


Sec.  162.412  What must the lease include if it contains an option to 
renew?

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us;
    (3) Whether Indian landowner consent to the renewal is required;
    (4) That the lessee must provide notice to the Indian landowner and 
any mortgagees of the renewal;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the commencement of the renewal 
term;
    (6) That any change in the terms of the lease will be considered an 
amendment subject to consent and BIA approval requirements pursuant to 
Sec.  162.444; and
    (7) Any other conditions for renewal (e.g., the lessee may not be 
in violation of the lease at the time of renewal).

[[Page 73806]]

    (b) We must record any renewal of a lease in the Land Title and 
Records Office.


Sec.  162.413  Are there mandatory provisions that a business lease 
must contain?

    (a) All business leases must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The owner being represented and the authority under which such 
action is being taken, where one executes a lease in a representative 
capacity;
    (6) The citation of the statute that authorizes our approval;
    (7) Who is responsible for constructing, owning, operating, 
maintaining, and managing improvements pursuant to Sec.  162.415;
    (8) Payment requirements and late payment charges, including 
interest;
    (9) Due diligence requirements under Sec.  162.417 (unless the 
lease is for religious, educational, recreational, cultural, or other 
public purposes);
    (10) Insurance requirements under Sec.  162.437; and
    (11) Bonding requirements under Sec.  162.434. If a performance 
bond is required, the lease must state that the lessee must obtain the 
consent of the surety for any legal instrument that directly affects 
their obligations and liabilities.
    (b) All business leases must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) Nothing in the lease would prevent or delay termination of 
Federal trust responsibilities for the land during the lease's term;
    (3) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (4) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.013;
    (5) The lessee indemnifies and holds the United States and the 
Indian landowners harmless from any loss, liability, or damages 
resulting from the lessee's use or occupation of the leased premises 
(this provision is not mandatory if the lessee would be prohibited by 
law from making such an agreement);
    (6) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to the use, 
handling, treatment, removal, storage, transportation, or disposal of 
hazardous materials, or the release or discharge of any hazardous 
material from the leased premises that occurs during the lease term, 
regardless of fault, unless the liability or cost arises from the gross 
negligence or willful misconduct of the Indian landowner (this 
provision is not mandatory if the lessee would be prohibited by law 
from making such an agreement);
    (7) In the event that historic properties, archeological resources, 
human remains, or other cultural items not previously reported are 
encountered during the course of any activity associated with this 
lease, all activity in the immediate vicinity of the properties, 
resources, remains, or items will cease and the lessee will contact BIA 
and the tribe that has jurisdiction over the land to determine how to 
proceed and appropriate disposition;
    (8) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice, to enter upon the leased premises 
for inspection; and
    (9) Unless otherwise indicated, this is a lease of the trust and 
restricted interests in the property described and is not a lease of 
any undivided fee interests. All rental payments by the lessee will be 
distributed to the trust and restricted landowners and life estate 
holders on trust and restricted land only. The lessee will be 
responsible for accounting to the owners of any fee interests that may 
exist in the property being leased.
    (c) We may treat any provision of a lease, sublease, amendment, 
assignment, or leasehold mortgage that is in violation of Federal law 
as a violation of the lease.


Sec.  162.414  May improvements be made under a business lease?

    The lessee may construct improvements under a business lease if the 
business lease specifies, or provides for the development of:
    (a) A plan that describes the type and location of any improvements 
to be built by the lessee; and
    (b) A schedule for construction of the improvements.


Sec.  162.415  How must a business lease address ownership of 
improvements?

    (a) A business lease must specify who will own any improvements the 
lessee builds during the lease term and may specify that any 
improvements the lessee builds may be conveyed to the Indian landowners 
during the lease term. In addition, the lease must indicate whether 
each specific improvement the lessee builds will, upon the expiration 
or termination of the lease:
    (1) Remain on the leased premises, in a condition satisfactory to 
the Indian landowners, and become the property of the Indian 
landowners;
    (2) Be removed within a time period specified in the lease, at the 
lessee's expense, with the leased premises to be restored as close as 
possible to their condition before construction of such improvements; 
or
    (3) Be disposed of by other specified means.
    (b) A lease that requires the lessee to remove the improvements 
must also provide the Indian landowners with an option to take 
possession of and title to the improvements if the improvements are not 
removed within the specified time period.
    (c) Any permanent improvements on the leased land shall be subject 
to 25 CFR 1.4 and, in addition, shall not be subject to any fee, tax, 
assessment, levy, or other such charge imposed by any State or 
political subdivision of a State, without regard to ownership of those 
improvements. Improvements may be subject to taxation by the Indian 
tribe with jurisdiction.


Sec.  162.416  How will BIA enforce removal requirements in a business 
lease?

    We may take appropriate enforcement action in consultation with the 
tribe for tribal land or, where feasible, with Indian landowners for 
individually owned Indian land, to ensure removal of the improvements 
or restoration of the premises at the lessee's expense. We may take 
such enforcement action after termination or expiration of the lease. 
We may collect and hold the performance bond until removal and 
restoration are completed.


Sec.  162.417  What requirements for due diligence must a business 
lease include?

    (a) If improvements are to be built, the business lease must 
include due diligence requirements that require the lessee to complete 
construction of any improvements within the schedule specified in the 
lease. The lessee must provide the Indian landowners and BIA good cause 
as to the nature of any delay, the anticipated date of construction of 
facilities, and evidence of progress toward commencement of 
construction, if construction does not occur, or is not expected to be 
completed, within the time period specified in the lease.
    (b) Failure of the lessee to comply with the due diligence 
requirements of the lease is a violation of the lease and may lead to 
cancellation of the lease under Sec.  162.464.

[[Page 73807]]

    (c) BIA may waive the requirements in this section if such waiver 
is in the best interest of the Indian landowners.
    (d) The requirements of this section do not apply to leases for 
religious, educational, recreational, cultural, or other public 
purposes.


Sec.  162.418  May a business lease allow compatible uses?

    A business lease may provide for the Indian landowner to use, or 
authorize others to use, the leased premises for other uses compatible 
with the purpose of the business lease and consistent with the terms of 
the business lease. Any such use or authorization by the Indian 
landowner will not reduce or offset the monetary compensation for the 
business lease.


Sec.  162.419  How must a business lease describe the land?

    (a) A business lease must describe the leased premises by reference 
to an official or certified survey pursuant to Sec.  162.438(j) of this 
part.
    (b) If the tract is fractionated we will describe the undivided 
trust interest in the leased premises.

Monetary Compensation Requirements


Sec.  162.420  How much monetary compensation must be paid under a 
business lease?

    (a) A business lease of tribal land may allow for any payment 
amount negotiated by the tribe as long as the tribe provides the tribal 
authorization required by Sec.  162.421(a). The tribe may request, in 
writing, that we require fair market rental, in which case we will 
determine fair market rental in accordance with Sec.  162.422 and will 
approve the lease only if it requires payment of not less than fair 
market rental. Unless the tribe makes such a request, BIA will not 
require a valuation or appraisal or determine fair market rental, but 
instead will defer to the tribe's determination that the negotiated 
compensation is in its best interest.
    (b) A business lease of individually owned Indian land must require 
payment of not less than fair market rental before any adjustments, 
based on a fixed amount, a percentage of the projected income, or some 
other method, unless paragraphs (1) or (2) of this section permit a 
lesser amount. The lease must establish how the fixed amount, 
percentage, or combination will be calculated and the frequency at 
which the payments will be made.
    (1) We may approve a lease of individually owned Indian land that 
provides for the payment of nominal compensation, or less than a fair 
market rental, if:
    (i) The Indian landowners execute a written waiver of the right to 
receive fair market rental; and
    (ii) We determine it is in the Indian landowners' best interest, 
based on factors including, but not limited to:
    (A) The lessee is a member of the individual Indian landowner's 
immediate family as defined in Sec.  162.003;
    (B) The lessee is a co-owner in the leased tract;
    (C) A special relationship or circumstances exist that we believe 
warrant approval of the lease; or
    (D) The lease is for religious, educational, recreational, 
cultural, or other public purposes.
    (2) We may approve a lease that provides for payment of less than a 
fair market rental during the pre-development or construction periods, 
if we determine it is in the Indian landowners' best interest. The 
lease must specify the amount of the compensation and the applicable 
periods.
    (3) Where the owners of the applicable percentage of interests 
under Sec.  162.011 of this part execute a business lease on behalf of 
all of the Indian landowners of a fractionated tract, the lease must 
provide that the non-consenting Indian landowners, and those on whose 
behalf we have consented, receive a fair market rental.


Sec.  162.421  Will BIA require a valuation to determine fair market 
rental for a business lease?

    (a) We will not require valuations or appraisals for negotiated 
business leases of tribal land, or of any undivided tribal interest in 
a fractionated tract, if the tribe submits a tribal authorization 
expressly stating that it:
    (1) Has negotiated compensation satisfactory to the tribe;
    (2) Waives valuation and appraisal; and
    (3) Has determined that accepting such negotiated compensation and 
waiving valuation and appraisal is in its best interest.
    (b) The tribe may request that BIA require a valuation or 
appraisal, in which case BIA must determine fair market rental in 
accordance with Sec.  162.422.
    (c) We may only waive the valuation requirement for business leases 
on individually owned Indian land if:
    (1) The lease is for religious, educational, recreational, 
cultural, or other public purposes; and
    (2) 100 percent of the Indian landowners submit to us a written 
request to waive the valuation requirement; and
    (3) We determine that the waiver is in the best interest of the 
Indian landowners, taking into consideration the landowners' written 
request.
    (d) We have 30 days from receipt of the waiver request in paragraph 
(c) of this section to make a determination. Our determination whether 
to approve the request will be in writing and will state the basis for 
our approval or disapproval. If we fail to meet the 30-day deadline, 
the lessee or Indian landowners may take appropriate action under part 
2 of this chapter.


Sec.  162.422  What type of valuation may be used to determine fair 
market rental for a business lease?

    (a) We will use an appraisal to determine the fair market rental 
before we approve a business lease of individually owned Indian land, 
or at the request of the tribe for tribal land, unless we approve 
another type of valuation pursuant to paragraph (d).
    (b) We will either:
    (1) Prepare an appraisal; or
    (2) Use an approved appraisal from the Indian landowner or lessee.
    (c) We will approve an appraisal for use only if it:
    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary pursuant to 25 U.S.C. 2214; and
    (2) Complies with Departmental policies regarding appraisals, 
including third-party appraisals.
    (d) Upon receipt of a tribal authorization, we may use some other 
type of valuation for a business lease on tribal land, if it conforms 
to USPAP or a valuation method developed by the Secretary pursuant to 
25 U.S.C. 2214.


Sec.  162.423  When are monetary compensation payments due under a 
business lease?

    (a) A business lease must specify the dates on which all payments 
are due.
    (b) Unless otherwise provided in the lease, payments may not be 
made or accepted more than one year in advance of the due date.


Sec.  162.424  Must a business lease specify to whom monetary 
compensation payments may be made?

    (a) A business lease must specify whether the lessee will make 
payments directly to the Indian landowners (direct pay) or to us on 
their behalf.
    (b) The lessee may make payments directly to the Indian landowners 
whose trust accounts are unencumbered when there are 10 or fewer 
beneficial owners and 100 percent of the beneficial owners agree to 
receive payment directly from the lessee.
    (1) If the lease provides that the lessee will directly pay the 
Indian landowners,

[[Page 73808]]

the lease must also require that the lessee provide us with 
certification of payment.
    (2) When we consent on behalf of an Indian landowner, the lessee 
must make payment to us.
    (3) The lessee must send direct payments to the parties and 
addresses specified in the lease, unless the lessee receives notice of 
a change of ownership or address.
    (4) Unless otherwise provided in the lease, compensation payments 
may not be made payable directly to anyone other than the Indian 
landowners.
    (5) Direct payments must continue through the duration of the 
lease, except if:
    (i) 100 percent of the Indian landowners agree to suspend direct 
pay and provide us with documentation of their agreement, then the 
lessee must make all Indian landowners' payments to us; or
    (ii) If any individual Indian landowner dies, is declared non 
compos mentis, becomes whereabouts unknown, or owes a debt resulting in 
a trust account encumbrance, then the lessee must make that individual 
Indian landowner's payment to us.


Sec.  162.425  What form of monetary compensation payment may be 
accepted under a business lease?

    (a) When payments are made directly to Indian landowners, the form 
of payment must be acceptable to the Indian landowners.
    (b) When payments are made to us, we will accept:
    (1) Money orders;
    (2) Certified checks;
    (3) Cashier's checks; or
    (4) Electronic funds transfer payments.
    (c) We will not accept cash, personal checks, foreign currency, or 
third-party checks except for third-party checks from financial 
institutions.
    (d) The preferred method of payment is electronic funds transfer 
payments.


Sec.  162.426  May the business lease provide for non-monetary or 
varying types of compensation?

    (a) With our approval, the lease may provide for:
    (1) Alternative forms of compensation, including but not limited to 
payments based on percentage of income or in-kind consideration; or
    (2) Varying types of compensation at specific stages during the 
life of the lease, including but not limited to fixed annual payments 
during construction and payments based on income during an operational 
period.
    (b) For individually owned land, we will approve alternative forms 
of compensation and varying types of compensation if we determine that 
it is in the best interest of the Indian landowners. For tribal land, 
we will defer to the tribe's determination that the alternative forms 
of rental and varying types of consideration are in its best interest, 
if the tribe submits a signed certification stating that it has 
determined the alternative forms of rental and varying types of 
consideration to be in its best interest.


Sec.  162.427  Will BIA notify a lessee when a payment is due under a 
business lease?

    Upon request of the Indian landowner, we may issue invoices to a 
lessee in advance of the dates on which payments are due under a 
business lease, but the lessee's obligation to make such payments in a 
timely manner will not be excused if such invoices are not issued, 
delivered, or received.


Sec.  162.428  Must a business lease provide for compensation reviews 
or adjustments?

    (a) A review of the adequacy of compensation must occur at least 
every fifth year, in the manner specified in the lease, unless the 
conditions in paragraph (b) of this section are met. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who is authorized to make adjustments;
    (3) What the adjustments are based on; and
    (4) How disputes arising from the adjustments are resolved.
    (b) A review of the adequacy of compensation is not required if:
    (1) The lease provides for automatic adjustments; or
    (2) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, the following:
    (1) The lease provides for payment of less than fair market rental;
    (2) The lease is for religious, educational, recreational, 
cultural, or other public purposes; or
    (3) The lease provides for most or all of the compensation to be 
paid during the first five years of the lease term or prior to the date 
the review would be conducted.
    (c) When a review results in the need for adjustment of 
compensation, we must approve the adjustment and Indian landowners must 
consent to the adjustment in accordance with Sec.  162.011, unless 
otherwise provided in the lease.


Sec.  162.429  What other types of payments are required under a 
business lease?

    (a) The lessee may be required to pay additional fees, taxes, and/
or assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.415(c). 
The lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. Failure to make such payments will be treated as a violation 
of the lease.
    (c) Where the property is subject to at least one other lease for 
another compatible use, the lessees may agree among themselves as to 
how to allocate payment of the Indian irrigation operation and 
maintenance charges.

Bonding and Insurance


Sec.  162.434  Must a lessee provide a performance bond for a business 
lease?

    (a) Except as provided in paragraph (f) of this section, the lessee 
must provide a performance bond in an amount sufficient to secure the 
contractual obligations including:
    (1) No less than the highest annual rental specified in the lease, 
if compensation is paid annually, or other amount established by BIA in 
consultation with the tribe for tribal land or, where feasible, with 
Indian landowners for individually owned Indian land, if the 
compensation is to be paid on a non-annual schedule;
    (2) The construction of any required improvements;
    (3) The operation and maintenance charges for any land located 
within an irrigation project; and
    (4) The restoration and reclamation of the leased premises, to 
their condition at the commencement of the lease term or some other 
specified condition.
    (b) The performance bond must be deposited with us and made payable 
only to us, and may not be modified without our approval.
    (c) The lease must provide that we may adjust security or 
performance bond requirements at any time to reflect changing 
conditions.
    (d) We may require that the surety provide any supporting documents 
needed to show that the performance bond will be enforceable, and that 
the surety will be able to perform the guaranteed obligations.

[[Page 73809]]

    (e) The surety must provide notice to us at least 60 days before 
canceling a performance bond so that we may notify the lessee of its 
obligation to provide a substitute performance bond and require 
collection of the bond prior to the cancellation date. Failure to 
provide a substitute performance bond will be a violation of the lease.
    (f) We may waive the requirement for a performance bond if the 
lease is for religious, educational, recreational, cultural, or other 
public purposes, or upon the request of the Indian landowner, if a 
waiver is in the best interest of the Indian landowner. We may revoke 
the waiver and require a performance bond at any time if the waiver is 
no longer in the best interest of the Indian landowner.


Sec.  162.435  What forms of performance bond may be accepted under a 
business lease?

    (a) We will only accept a performance bond in one of the following 
forms:
    (1) Certificates of deposit issued by a federally insured financial 
institution authorized to do business in the United States;
    (2) Irrevocable letters of credit issued by a federally insured 
financial institution authorized to do business in the United States;
    (3) Negotiable Treasury securities; or
    (4) Surety bond issued by a company approved by the U.S. Department 
of the Treasury.
    (b) All forms of performance bonds must:
    (1) Indicate on their face that BIA approval is required for 
redemption;
    (2) Be accompanied by a statement granting full authority to BIA to 
make an immediate claim upon or sell them if the lessee violates the 
lease;
    (3) Be irrevocable during the term of the performance bond; and
    (4) Be automatically renewable during the term of the lease.


Sec.  162.436  What is the bond release process under a business lease?

    (a) Upon expiration, termination, or cancellation of the lease, the 
lessee may submit a written request for a performance bond release to 
BIA.
    (b) Upon receipt of a request under paragraph (a) of this section, 
BIA will confirm with the tribe, for tribal land or, where feasible, 
with the Indian landowners for individually owned Indian land, that the 
lessee has complied with all lease obligations, then release the 
performance bond to the lessee, unless we determine that the bond must 
be redeemed to fulfill the contractual obligations.


Sec.  162.437  Must a lessee provide insurance for a business lease?

    Except as provided in paragraph (c) of this section, a lessee must 
provide insurance necessary to protect the interests of the Indian 
landowners and in the amount sufficient to protect all insurable 
improvements on the premises, unless otherwise provided in the lease.
    (a) Such insurance may include property, crop, liability and/or 
casualty insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. We may revoke the waiver and require insurance 
at any time if the waiver is no longer in the best interest of the 
Indian landowner.

Approval


Sec.  162.438  What documents must the parties submit to obtain BIA 
approval of a business lease?

    A lessee or the Indian landowner must submit the following 
documents to us to obtain BIA approval of a business lease:
    (a) A lease executed by the Indian landowner and the lessee that 
complies with the requirements of this part;
    (b) An appraisal or other valuation under Sec.  162.421, if 
appropriate;
    (c) Organizational documents, certificates, filing records, and 
resolutions or other authorization documents, including evidence of the 
representative's authority to execute a lease, if the lessee is a 
corporation, limited liability company, partnership, joint venture, or 
other legal entity, to show that the lease will be enforceable and that 
the legal entity is in good standing and authorized to conduct business 
in the jurisdiction where the land is located;
    (d) A performance bond, where required:
    (e) Statement from appropriate tribal authority that the proposed 
use is in conformance with applicable tribal law;
    (f) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance with applicable Federal 
and tribal environmental and land use requirements;
    (g) A restoration and reclamation plan (and any subsequent 
modifications to the plan), if appropriate;
    (h) Documents that demonstrate the lessee's technical capability to 
construct, operate, maintain, and terminate the proposed project and 
the lessee's history in successfully designing, constructing, or 
obtaining the funding for a project similar to the proposed project, if 
appropriate;
    (i) A preliminary plan of development that describes the type and 
location of any improvements the lessee plans to construct and a 
schedule showing the tentative commencement and completion dates for 
those improvements, if appropriate;
    (j) An official or a certified survey of the leased premises that 
includes the legal description of the land encumbered by the lease and 
a description of each tract of trust or restricted land in the lease 
and the acreage of each. We will review the survey under the DOI 
Standards for Indian Trust Land Boundary Evidence;
    (k) Information to assist us in our evaluation of the factors in 25 
U.S.C. 415(a); and
    (l) Any additional documentation we determine to be reasonably 
necessary for approval.


Sec.  162.439  What is the approval process for a business lease?

    (a) Before we approve a business lease, we must determine that the 
lease is in the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the lease and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) Assure ourselves that adequate consideration has been given to 
the factors in 25 U.S.C. 415(a).
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements; and
    (5) If the lease is a negotiated lease, defer to the Indian 
landowners' determination that the lease is in their best interest, to 
the maximum extent possible.
    (b) When we receive a business lease and all of the supporting 
documents that conform to this part, we will, within 60 days of the 
date of receipt of the documents at the appropriate BIA office, 
approve, disapprove, return the submission for revision, or notify the 
parties in writing that we need additional time to review the lease. 
Our letter notifying the parties that we need additional time to review 
the lease must identify our initial concerns and invite

[[Page 73810]]

the parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the sublease.
    (c) If we fail to the deadlines in this section, then the parties 
may take appropriate action under part 2 of this chapter.
    (d) Any lease approval or disapproval determination and the basis 
for the determination, along with notification of appeal rights under 
part 2 of this chapter, will be made in writing and will be sent to the 
parties to the lease.
    (e) We will provide approved business leases on tribal land to the 
lessee and provide a copy to the tribe. We will provide approved 
business leases on individually owned Indian land to the lessee, and 
make copies available to the Indian landowners upon written request.


Sec.  162.440  When will a business lease be effective?

    (a) A business lease will be effective on the date on which we 
approve the lease, notwithstanding any appeal that may be filed under 
part 2 of this chapter.
    (b) The lease may specify a date on which the obligations between 
the parties to a business lease are triggered. Such date may be before 
or after the approval date under paragraph (a) of this section.


Sec.  162.441  Must business lease documents be recorded?

    (a) A business lease, amendment, assignment, leasehold mortgage, 
and sublease must be recorded in our Land Titles and Records Office 
with jurisdiction over the leased land.
    (1) We will record the lease or other document immediately 
following our approval.
    (2) If our approval is not required, the parties must record the 
assignment or sublease in the Land Title and Records Office with 
jurisdiction over the leased land.
    (b) The tribe must record the following leases in the Land Title 
and Records Office with jurisdiction over the leased lands, even though 
BIA approval is not required:
    (1) Leases of tribal land a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval under certain conditions.


Sec.  162.442  What action may BIA take if a lease disapproval decision 
is appealed?

    (a) If a party appeals our decision to disapprove a lease, 
assignment, amendment, sublease or leasehold mortgage, then the 
official to whom the appeal is made may require the lessee to post an 
appeal bond in an amount necessary to protect the Indian landowners 
against financial losses and damage to trust resources likely to result 
from the delay caused by an appeal. The requirement to post an appeal 
bond will apply in addition to all of the other requirements in part 2 
of this chapter.
    (b) The appellant may not appeal the appeal bond decision. The 
appellant may, however, request that the official to whom the appeal is 
made reconsider the bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.

Amendments


Sec.  162.443  May the parties amend a business lease?

    (a) The parties may amend a business lease by obtaining:
    (1) The lessee's signature;
    (2) The Indian landowners' consent pursuant to the requirements 
contained in Sec.  162.444; and
    (3) BIA approval of the amendment under Sec.  162.445 and Sec.  
162.446.
    (b) The parties may not amend a business lease if the lease 
expressly prohibits amendments.


Sec.  162.444  What are the consent requirements for an amendment to a 
business lease?

    (a) The Indian landowners, or their representatives under Sec.  
162.012, must consent to an amendment in the same percentages and 
manner as a new business lease pursuant to Sec.  162.011, unless the 
requirements in paragraphs (a)(1) or (a)(2) of this section are met.
    (1) The approved business lease establishes that individual Indian 
landowners are deemed to have consented where they do not object in 
writing to the amendment after a specified period of time following 
landowners' receipt of the amendment. If the lease provides for deemed 
consent, it must require the parties to submit to us: A copy of the 
executed amendment or other documentation of the Indian landowners' 
consent; proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and any other pertinent information for 
us to review.
    (2) The approved business lease authorizes one or more 
representatives to consent to an amendment on behalf of all Indian 
landowners. The lease may also designate us as the Indian landowners' 
representative for the purposes of consenting to an amendment.
    (b) Unless specifically authorized in the lease, the written power 
of attorney, or court document, Indian landowners may not be deemed to 
have consented, and an Indian landowner's designated representative may 
not negotiate or consent to an amendment that would:
    (1) Reduce the payment obligations or terms to the Indian 
landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or change the term of the lease.


Sec.  162.445  What is the approval process for an amendment to a 
business lease?

    We have 30 days from receipt of the executed amendment, proof of 
required consents, and required documentation to make a determination 
whether to approve the amendment or notify the parties in writing that 
we need additional time to review the amendment.
    (a) Our letter notifying the parties that we need additional time 
to review the amendment must identify our initial concerns and invite 
the parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the amendment.
    (b) If we fail to send either a determination or a notification 
within 30 days from receipt of required documents and completion of 
environmental reviews or 30 days from sending the notification, the 
amendment is deemed approved to the extent consistent with Federal law. 
We will retain our full enforcement authority for amendments that are 
deemed approved.
    (c) Our determination whether to approve the amendment will be in 
writing and will state the basis for our approval or disapproval.


Sec.  162.446  How will BIA decide whether to approve an amendment to a 
business lease?

    (a) We may only disapprove a business lease amendment if:
    (1) The required consents have not been obtained from the parties 
to the lease and any mortgagees or sureties;
    (2) The lessee is in violation of the lease; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We may not unreasonably withhold approval of an amendment.

Assignments


Sec.  162.447  May a lessee assign a business lease?

    (a) A lessee may assign a business lease by meeting the consent

[[Page 73811]]

requirements contained in Sec.  162.448 and obtaining our approval of 
the assignment under Sec.  162.449 and Sec.  162.450, or by meeting the 
conditions in paragraphs (b) or (c) of this section, unless the lease 
expressly prohibits assignments.
    (b) Where provided in the lease, the lessee may assign the lease to 
the following without meeting consent requirements or obtaining BIA 
approval of the assignment, as long as the lessee notifies BIA of the 
assignment within 30 days:
    (1) Not more than two distinct legal entities specified in the 
lease; or
    (2) The lessee's wholly owned subsidiaries.
    (c) If a sale or foreclosure under an approved mortgage of the 
leasehold interest occurs and the mortgagee is the purchaser, the 
mortgagee/purchaser may assign the leasehold interest without meeting 
the consent requirements or obtaining BIA approval, as long as the 
assignee accepts and agrees in writing to be bound by all the terms and 
conditions of the lease.


Sec.  162.448  What are the consent requirements for an assignment of a 
business lease?

    (a) The Indian landowners, or their representatives under Sec.  
162.012, must consent to an assignment of a business lease in the same 
percentages and manner as a new business lease pursuant to Sec.  
162.011, unless the requirements in paragraphs (a)(1) or (a)(2) of this 
section are met.
    (1) The approved business lease establishes that individual Indian 
landowners are deemed to have consented where they do not object in 
writing to the assignment after a specified period of time following 
landowners' receipt of the assignment. If the lease provides for deemed 
consent, it must require the parties to submit to us: A copy of the 
executed assignment or other documentation of the Indian landowners' 
consent; proof of mailing to any Indian landowners who are deemed to 
have consented; and any other pertinent information to us for review.
    (2) The approved business lease authorizes one or more 
representatives to consent to an assignment on behalf of all Indian 
landowners. The lease may also designate us as the Indian landowners' 
representative for the purposes of consenting to an assignment.
    (b) The lessee must obtain the consent of the holders of any bonds 
or mortgages.


Sec.  162.449  What is the approval process for an assignment of a 
business lease?

    (a) We have 30 days from receipt of the executed assignment, proof 
of required consents, and required documentation to make a 
determination whether to approve the assignment or notify the parties 
that we need additional information. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we fail to meet the deadline in this section, the lessee or 
Indian landowners may take appropriate action under part 2 of this 
chapter.


Sec.  162.450  How will BIA decide whether to approve an assignment of 
a business lease?

    (a) We may only disapprove an assignment of a business lease if:
    (1) The required consents have not been obtained from the parties 
to the lease or the lessee's mortgagees or sureties;
    (2) The lessee is in violation of the lease;
    (3) The assignee does not agree to be bound by the terms of the 
lease; or
    (4) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(4) of this 
section, we may consider whether:
    (1) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (2) If a performance bond is required, the assignee has bonded its 
performance and provided supporting documents that demonstrate that the 
lease will be enforceable against the assignee, and that the assignee 
will be able to perform its obligations under the lease or assignment.
    (c) We may not unreasonably withhold approval of an assignment.

Subleases


Sec.  162.451  May a lessee sublease a business lease?

    (a) A lessee may sublease a business lease by meeting the consent 
requirements contained in Sec.  162.452 and obtaining our approval of 
the sublease under Sec.  162.453 and Sec.  162.454, or by meeting the 
conditions in paragraph (b) of this section, unless the lease expressly 
prohibits subleases.
    (b) Where the sublease is part of a commercial development or 
residential development, the lessee may sublease without meeting 
consent requirements or obtaining BIA approval of the sublease, as long 
as:
    (1) The lease provides for subleasing without meeting consent 
requirements or obtaining BIA approval;
    (2) We have approved a general plan and rent schedule for the 
development;
    (3) We have approved a sublease form for use in the project; and
    (4) The parties provide BIA with a copy of the executed sublease 
within 30 days.


Sec.  162.452  What are the consent requirements for a sublease of a 
business lease?

    The Indian landowners must consent to a sublease of a business 
lease in the same percentages and manner as a new business lease under 
Sec.  162.011, unless the requirements in paragraphs (a) or (b) of this 
section are met.
    (a) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
sublease after a specified period of time following landowners' receipt 
of the sublease. If the lease provides for deemed consent, it must 
require the parties to submit to us: A copy of the executed sublease or 
other documentation of the Indian landowners' consent; proof of mailing 
of the sublease to any Indian landowners who are deemed to have 
consented; and any other pertinent information for us to review.
    (b) The lease authorizes one or more representatives to consent to 
a sublease on behalf of all Indian landowners. The lease may also 
designate us as the Indian landowners' representative for the purposes 
of consenting to a sublease.


Sec.  162.453  What is the approval process for a sublease of a 
business lease?

    BIA has 30 days from receipt of the executed sublease, proof of 
required consents, and required documentation to make a determination 
whether to approve the sublease or notify the parties in writing that 
we need additional time to review the sublease.
    (a) Our letter notifying the parties that we need additional time 
to review the sublease must identify our initial concerns and invite 
the parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the sublease.
    (b) If we fail to send either a determination or a notification 
within 30 days from receipt of required documents or 30 days from 
sending the notification, the sublease is deemed approved to the extent 
consistent with Federal law. We will retain our full enforcement 
authority for subleases that are deemed approved.

[[Page 73812]]

Sec.  162.454  How will BIA decide whether to approve a sublease of a 
business lease?

    (a) We may only disapprove a sublease of a business lease if:
    (1) The required consents have not been obtained from the parties 
to the lease and any mortgagees or sureties;
    (2) The lessee is in violation of the lease;
    (3) The lessee will not remain liable under the lease;
    (4) The sublessee does not agree to be bound by the terms of the 
lease; or
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding requirement by paragraph (a)(5) of this 
section, we will consider whether:
    (1) The value of any part of the leased premises not covered by the 
sublease would be adversely affected; and
    (2) If a performance bond is required by the sublease, the 
sublessee has bonded its performance and provided supporting documents 
that demonstrate that the lease will be enforceable by the lessee 
against the sublessee, and that the sublessee will be able to perform 
its obligations under the lease.
    (c) We may not unreasonably withhold approval of a sublease.

Leasehold Mortgages


Sec.  162.455  May a lessee mortgage a business lease?

    (a) A lessee may mortgage a business lease by meeting the consent 
requirements contained in Sec.  162.456 and obtaining our approval of 
the leasehold mortgage under Sec.  162.457 and Sec.  162.458, unless 
the lease expressly prohibits leasehold mortgages.
    (b) Refer to Sec.  162.447(c) for information on what happens if a 
sale or foreclosure under an approved mortgage of the leasehold 
interest occurs.


Sec.  162.456  What are the consent requirements for a leasehold 
mortgage under a business lease?

    The Indian landowners, or their representatives under Sec.  
162.012, must consent to a leasehold mortgage under a business lease in 
the same percentages and manner as a new business lease under Sec.  
162.011, unless the requirements in paragraphs (a), (b), or (c) of this 
section are met.
    (a) The lease contains a general authorization for a leasehold 
mortgage and states what law would apply in case of foreclosure.
    (b) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
leasehold mortgage after a specified period of time following 
landowners' receipt of the leasehold mortgage. If the lease provides 
for deemed consent, it must require the parties to submit to us: A copy 
of the executed leasehold mortgage or other documentation of the Indian 
landowners' consent; proof of mailing of the leasehold mortgage to any 
Indian landowners who are deemed to have consented; and any other 
pertinent information for us to review.
    (c) The lease authorizes one or more representatives to consent to 
a leasehold mortgage on behalf of all Indian landowners. The lease may 
also designate us as the Indian landowners' representative for the 
purposes of consenting to a leasehold mortgage.


Sec.  162.457  What is the approval process for a leasehold mortgage 
under a business lease?

    (a) We have 30 days from receipt of the executed leasehold 
mortgage, proof of required consents, and required documentation to 
make a determination whether to approve the leasehold mortgage or 
notify the parties in writing that we need additional time to review 
the leasehold mortgage. Our determination whether to approve the 
leasehold mortgage will be in writing and will state the basis for our 
approval or disapproval.
    (b) If we fail to meet the deadline in this section, the lessee may 
take appropriate action under part 2 of this chapter.


Sec.  162.458  How will BIA decide whether to approve a leasehold 
mortgage under a business lease?

    (a) We may only disapprove a leasehold mortgage under a business 
lease if:
    (1) The required consents have not been obtained from the parties 
to the lease and the lessee's sureties;
    (2) The leasehold mortgage covers more than the lessee's interest 
in the leased premises or encumbers unrelated collateral; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(3) of this 
section, we will consider whether:
    (1) The lessee's ability to comply with the lease would be 
adversely affected by any new loan obligations;
    (2) Any lease provisions would be modified by the leasehold 
mortgage;
    (3) The remedies available to us or to the Indian landowners would 
be limited (beyond any additional notice and cure rights to be afforded 
to the mortgagee), in the event of a lease violation; and
    (4) Any rights of the Indian landowners would be subordinated or 
adversely affected in the event of a loan default by the lessee.
    (c) We may not unreasonably withhold approval of a leasehold 
mortgage.

Effectiveness, Compliance, and Enforcement


Sec.  162.459  When will an amendment, assignment, sublease, or 
leasehold mortgage under a business lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage under 
a business lease will be effective when approved, notwithstanding any 
appeal that may be filed under part 2 of this chapter, unless approval 
is not required under Sec.  162.008(b), Sec.  162.447(b), or Sec.  
162.451(b), or the conditions in paragraph (b) of this section apply. 
We will provide the approved documents to the party requesting approval 
and, upon request, to the other parties to the agreement.
    (b) If the amendment or sublease was deemed approved pursuant to 
Sec.  162.445(b) or Sec.  162.453(b), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review.
    (c) An assignment or sublease that does not require landowner 
consent or BIA approval shall be effective upon execution by the 
parties.


Sec.  162.460  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage under a business lease?

    If we disapprove an amendment, assignment, sublease, or leasehold 
mortgage of a business lease, we will notify the parties immediately 
and advise them of their right to appeal the decision under part 2 of 
this chapter.


Sec.  162.461  May BIA investigate compliance with a business lease?

    (a) We may enter the leased premises at any reasonable time, upon 
reasonable notice, to protect the interests of the Indian landowners 
and to determine if the lessee is in compliance with the requirements 
of the lease.
    (b) If the Indian landowner notifies us that a specific lease 
violation has occurred, we will promptly initiate an appropriate 
investigation.


Sec.  162.462  May a business lease provide for negotiated remedies in 
the event of a violation?

    (a) A business lease of tribal land may provide either or both 
parties with negotiated remedies in the event of a lease violation, 
including, but not

[[Page 73813]]

limited to, the power to terminate the lease. If the lease provides the 
parties with the power to terminate the lease, BIA approval of the 
termination is not required and the termination is effective without 
BIA cancellation. The parties must notify us of the termination so that 
we may record it in the Land Titles and Records Office.
    (b) A business lease of individually owned Indian land may provide 
either or both parties with negotiated remedies, so long as the lease 
also specifies the manner in which those remedies may be exercised by 
or on behalf of the applicable percentage of Indian landowners under 
Sec.  162.011 of this part. If the lease provides the parties with the 
power to terminate the lease, BIA concurrence with the termination is 
required to ensure that the Indian landowners of the applicable 
percentage of interests have consented. BIA will record the termination 
in the Land Titles and Records Office.
    (c) The parties must notify any surety or mortgagee of a 
termination of a business lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease.
    (e) A business lease may provide for lease disputes to be resolved 
in tribal court or any other court of competent jurisdiction, by a 
tribal governing body in the absence of a tribal court, or through an 
alternative dispute resolution method. We may not be bound by decisions 
made in such forums, but we will defer to ongoing proceedings, as 
appropriate, in deciding whether to exercise any of the remedies 
available to us.


Sec.  162.463  What will BIA do about a violation of a business lease?

    (a) If we determine there has been a violation of the conditions of 
a business lease, other than a violation of payment provisions covered 
by paragraph (b) of this section, we will promptly send the lessee and 
its sureties and any mortgagee a notice of violation by certified mail, 
return receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) Within 10 business days of the receipt of a notice of 
violation, the lessee must:
    (i) Cure the violation and notify us in writing that the violation 
has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) If a violation is determined to have occurred, we will make a 
reasonable attempt to notify the Indian landowners.
    (4) We may order the lessee to stop work.
    (b) A lessee's failure to pay compensation in the time and manner 
required by a residential lease is a violation of the lease, and we 
will issue a notice of violation in accordance with this paragraph.
    (1) We will send the lessees and its sureties a notice of violation 
by certified mail, return receipt requested:
    (i) Promptly following the date on which the payment was due, if 
the lease requires that payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to the Indian landowners 
for individually owned Indian land.
    (3) The lessee must provide adequate proof of payment as required 
in the notice of violation.
    (c) The lessee and its sureties will continue to be responsible for 
the obligations contained in the lease until the lease is terminated, 
cancelled, or expires.


Sec.  162.464  What will BIA do if the lessee does not cure a violation 
of a business lease on time?

    (a) If the lessee does not cure a violation of a business lease 
within the requisite time period, or provide adequate proof of payment 
as required in the notice of violation, we will consult with the tribe 
for tribal land or, where feasible, Indian landowners for individually 
owned Indian land, and determine whether:
    (1) We should cancel the lease;
    (2) The Indian landowners wish to invoke any remedies available to 
them under the lease;
    (3) We should invoke other remedies available under the lease or 
applicable law, including, collection on any available performance bond 
or, for failure to pay compensation, referral of the debt to the 
Department of the Treasury for collection; or
    (4) The lessee should be granted additional time in which to cure 
the violation.
    (b) We may take action to recover unpaid compensation and any 
associated late payment charges.
    (1) We do not have to cancel the lease or give any further notice 
to the lessee before taking action to recover unpaid compensation.
    (2) We may still take action to recover any unpaid compensation if 
we cancel the lease.
    (c) If we decide to cancel the lease, we will send the lessee and 
its sureties and any mortgagees a cancellation letter by certified 
mail, return receipt requested, within 5 business days of our decision. 
We will send a copy of the cancellation letter to the tribe for tribal 
land, and will provide Indian landowners for individually owned Indian 
land with actual or constructive notice of the cancellation. The 
cancellation letter will:
    (1) Explain the grounds for cancellation;
    (2) If applicable, notify the lessee of the amount of any unpaid 
compensation or late payment charges due under the lease;
    (3) Notify the lessee of their right to appeal under part 2 of this 
chapter, including the possibility that the official to whom the appeal 
is made may require the lessee to post an appeal bond;
    (4) Order the lessee to vacate the property within 31 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time; and
    (5) Require any other action BIA deems necessary to protect the 
Indian landowners.
    (d) We may invoke any other remedies available to us under the 
lease, including collecting on any available performance bond, and the 
Indian landowner may pursue any available remedies under tribal law.


Sec.  162.465  Will late payment charges or special fees apply to 
delinquent payments due under a business lease?

    (a) Late payment charges will apply as specified in the lease. The 
failure to pay such amounts will be treated as a lease violation.
    (b) The following special fees may be assessed to cover 
administrative costs incurred by the United States in the collection of 
the debt, if compensation is not paid in the time and manner required, 
in addition to the late payment charges that must be paid to the Indian 
landowners under the lease:

------------------------------------------------------------------------
        The lessee will  pay . . .                    For . . .
------------------------------------------------------------------------
(a) $50.00................................  Dishonored checks.
(b) $15.00................................  Processing of each notice or
                                             demand letter.
(c) 18 percent of balance due.............  Treasury processing
                                             following referral for
                                             collection of delinquent
                                             debt.
------------------------------------------------------------------------


[[Page 73814]]

Sec.  162.466  How will payment rights relating to a business lease be 
allocated between the Indian landowners and the lessee?

    The business lease may allocate rights to payment for insurance 
proceeds, trespass damages, condemnation awards, settlement funds, and 
other payments between the Indian landowners and the lessee. If not 
specified in the insurance policy, order, award, judgment, or other 
document including the lease, the Indian landowners or lessees will be 
entitled to receive such payments.


Sec.  162.467  When will a cancellation of a business lease be 
effective?

    (a) A cancellation involving a business lease will not be effective 
until 31 days after the lessee receives a cancellation letter from us, 
or 41 days from the date we mailed the letter, whichever is earlier.
    (b) The cancellation decision will be stayed if an appeal is filed 
unless the cancellation is made immediately effective under part 2 of 
this chapter. While a cancellation decision is stayed, the lessee must 
continue to pay compensation and comply with the other terms of the 
lease.


Sec.  162.468  What will BIA do if a lessee remains in possession after 
a business lease expires or is cancelled?

    If a lessee remains in possession after the expiration or 
cancellation of a business lease, we may treat the unauthorized 
possession as a trespass under applicable law. Unless the applicable 
percentage of Indian landowners under Sec.  162.011 have notified us in 
writing that they are engaged in good faith negotiations with the 
holdover lessee to obtain a new lease, we may take action to recover 
possession on behalf of the Indian landowners, and pursue any 
additional remedies available under applicable law, such as forcible 
entry and detainer action.


Sec.  162.469  Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving business leases?

    (a) Except as provided in paragraph (b) of this section, the appeal 
bond provisions in part 2 of this chapter will apply to appeals from 
lease cancellation decisions.
    (b) The lessee may not appeal the appeal bond decision. The lessee 
may, however, request that the official to whom the appeal is made 
reconsider the appeal bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.


Sec.  162.470  When will BIA issue a decision on an appeal from a 
business leasing decision?

    BIA will issue a decision on an appeal from a business leasing 
decision within 60 days of receipt of all pleadings.


Sec.  162.471  What happens if the lessee abandons the leased premises?

    If a lessee abandons the leased premises, we will treat the 
abandonment as a violation of the lease. The lease may specify a period 
of non-use after which the lease premises will be considered abandoned.
    14. Remove subpart F in its entirety (Sec.  162.600-Sec.  162.623) 
and redesignate Sec.  162.500-Sec.  162.503 in subpart E as Sec.  
162.600-Sec.  162.603 in subpart F under the following heading:

Subpart F--Special Requirements for Certain Reservations

    15. Add a new subpart E to read as follows:
Subpart E--Wind and Solar Resource Leases

General Provisions Applicable to Both WEELs and WSR Leases

Sec.
162.501 What types of leases does this subpart cover?
162.502 Who must obtain a WEEL or WSR lease?
162.503 Is there a model WEEL or WSR lease?

WEELs

162.511 What is the purpose of a WEEL?
162.512 How long may the term of a WEEL run?
162.513 Are there mandatory provisions a WEEL must contain?
162.514 May improvements be made under a WEEL?
162.515 How must a WEEL address ownership of improvements?
162.516 How will BIA enforce removal requirements in a WEEL?
162.517 What requirements for due diligence must a WEEL include?
162.518 May a WEEL allow for compatible uses by the Indian 
landowner?
162.519 Who owns the energy resource information obtained under the 
WEEL?
162.520 May a lessee incorporate its WEEL analyses into its WSR 
lease analyses?
162.521 May a WEEL contain an option for a lessee to enter into a 
WSR lease?
162.522 How may a lessee obtain an extension of an option period?

Monetary Compensation Requirements

162.523 How much compensation must be paid under a WEEL?
162.524 Will BIA require a valuation for a WEEL?

Bonding and Insurance

162.525 Must a lessee provide a performance bond for a WEEL?
162.526 Reserved.
162.527 Must a lessee provide insurance for a WEEL?

Approval

162.528 What documents must the parties submit to obtain BIA 
approval of a WEEL?
162.529 What is the approval process for a WEEL?

Administration

162.530 May the parties amend, assign, sublease, or mortgage a WEEL?
162.531 Reserved.

Compliance and Enforcement

162.532 How does BIA ensure compliance with a WEEL?
162.533 What will BIA do if a lessee does not cure a violation of a 
WEEL on time?
162.534 Under what circumstance may a WEEL be terminated or 
cancelled?

WSR Leases

162.535 What is the purpose of a WSR lease?
162.536 Must I obtain a WEEL before obtaining a WSR lease?
162.537 How long may the term of a WSR lease run?
163.538 What must the lease include if it contains an option to 
renew?
162.539 Are there mandatory provisions a WSR lease must contain?
162.540 May improvements be made under a WSR lease?
162.541 How must a WSR lease address ownership of improvements?
162.542 How will BIA enforce removal requirements in a WSR lease?
162.543 What requirements for due diligence must a WSR lease 
include?
162.544 May a WSR lease allow compatible uses?
162.545 How must a WSR lease describe the land?

Monetary Compensation Requirements

162.546 How much monetary compensation must be paid under a WSR 
lease?
162.547 Will BIA require a valuation to determine fair market rental 
of a WSR lease?
162.548 What type of valuation may be used to determine fair market 
rental for a WSR lease?
162.549 When are monetary compensation payments due under a WSR 
lease?
162.550 Must a WSR lease specify to whom monetary compensation 
payments may be made?
162.551 What form of monetary compensation payment may be accepted 
under a WSR lease?
162.552 May the WSR lease provide for non-monetary or varying types 
of compensation?
162.553 Will BIA notify a lessee when a payment is due under a WSR 
lease?
162.554 Must a WSR lease provide for compensation reviews or 
adjustments?
162.555 What other types of payments are required under a WSR lease?

Bonding and Insurance

162.559 Must a lessee provide a performance bond for a WSR lease?

[[Page 73815]]

162.560 What forms of performance bond may be accepted under a WSR 
lease?
162.561 What is the bond release process under a WSR lease?
162.562 Must a lessee provide insurance for a WSR lease?

Approval

162.563 What documents must the parties submit to obtain BIA 
approval of a WSR lease?
162.564 What is the approval process for a WSR lease?
162.565 When will a WSR lease be effective?
162.566 Must WEEL and WSR lease documents be recorded?
162.567 What action may BIA take if a lease disapproval decision is 
appealed?

Amendments

162.568 May the parties amend a WSR lease?
162.569 What are the consent requirements for an amendment to a WSR 
lease?
162.570 What is the approval process for an amendment to a WSR 
lease?
162.571 How will BIA decide whether to approve an amendment to a WSR 
lease?

Assignments

162.572 May a lessee assign a WSR lease?
162.573 What are the consent requirements for an assignment of a WSR 
lease?
162.574 What is the approval process for an assignment of a WSR 
lease?
162.575 How will BIA decide whether to approve an assignment of a 
WSR lease?

Subleases

162.576 May a lessee sublease a WSR lease?
162.577 What are the consent requirements for a sublease of a WSR 
lease?
162.578 What is the approval process for a sublease of a WSR lease?
162.579 How will BIA decide whether to approve a sublease of a WSR 
lease?

Leasehold Mortgages

162.580 May a lessee mortgage a WSR lease?
162.581 What are the consent requirements for a leasehold mortgage 
of a WSR lease?
162.582 What is the approval process for a leasehold mortgage of a 
WSR lease?
162.583 How will BIA decide whether to approve a leasehold mortgage 
of a WSR lease?

Effectiveness, Compliance, and Enforcement

162.584 When will an amendment, assignment, sublease, or leasehold 
mortgage under a WSR lease be effective?
162.585 What happens if BIA disapproves an amendment, assignment, 
sublease, or leasehold mortgage of a WSR lease?
162.586 May BIA investigate compliance with a WSR lease?
162.587 May a WSR lease provide for negotiated remedies in the event 
of a violation?
162.588 What will BIA do about a violation of a WSR lease?
162.589 What will BIA do if a lessee does not cure a violation of a 
WSR lease on time?
162.590 Will late payment charges or special fees apply to 
delinquent payments due under a WSR lease?
162.591 How will payment rights relating to WSR leases be allocated 
between the Indian landowners and the lessee?
162.592 When will a cancellation of a WSR lease be effective?
162.593 What will BIA do if a lessee remains in possession after a 
WSR lease expires or is cancelled?
162.594 Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving WSR leases?
162.595 When will BIA issue a decision on an appeal from a WSR 
leasing decision?
162.596 What happens if the lessee abandons the leased premises?

Subpart E--Wind and Solar Resource Leases

General Provisions Applicable to WEELs and WSR Leases


Sec.  162.501  What types of leases does this subpart cover?

    (a) This subpart covers:
    (1) Wind energy evaluation leases (WEELs), which are short-term 
leases that authorize possession of Indian land for the purpose of 
installing, operating, and maintaining instrumentation, and associated 
infrastructure, such as meteorological towers, to evaluate wind 
resources for electricity generation; and
    (2) Wind and solar resource (WSR) leases, which are leases that 
authorize possession of Indian land for the purpose of installing, 
operating, and maintaining instrumentation, facilities, and associated 
infrastructure, such as wind turbines and solar panels, to harness wind 
and/or solar energy to generate and supply electricity:
    (i) For resale on a for-profit or non-profit basis;
    (ii) To a utility grid serving the public generally; or
    (iii) To users within the local community (e.g., on and adjacent to 
a reservation).
    (b) If the generation of electricity is solely to support a use 
approved under subpart B, Agricultural Leases; subpart C, Residential 
Leases; or subpart D Business Leases (including religious, educational, 
recreational, cultural, or other public purposes), for the same parcel 
of land, then the installation, operation, and maintenance of 
instrumentation, facilities, and associated infrastructure are governed 
by subpart B, C, or D, as appropriate.


Sec.  162.502  Who must obtain a WEEL or WSR lease?

    (a) Except as provided in Sec.  162.008(b) and 162.501, anyone 
seeking to possess Indian land to conduct activities associated with 
the evaluation of wind resources must obtain a WEEL.
    (b) Except as provided in Sec.  162.008(b) and 162.501, anyone 
seeking to possess Indian land to conduct activities associated with 
the development of wind and/or solar resources must obtain a WSR lease.
    (c) A tribe that conducts wind and solar resource activities on its 
tribal land does not need a WEEL or WSR under this subpart.


Sec.  162.503  Is there a model WEEL or WSR lease?

    There is no model WEEL or WSR lease because of the need for 
flexibility in negotiating and writing WEELs and WSR leases; however, 
we may provide other guidance, such as checklists and a sample lease to 
assist in the lease negotiation process. Additionally, we may assist 
the Indian landowners, upon their request, in developing appropriate 
lease provisions or in using tribal lease forms that conform to the 
requirements of this part.

WEELs


Sec.  162.511  What is the purpose of a WEEL?

    A WEEL is a short-term lease that allows the lessee to use trust or 
restricted lands for the purpose of evaluating wind resources. The 
lessee may use information collected under the WEEL to assess the 
potential for wind energy development, and determine future placement 
and type of wind energy technology to use in developing the energy 
resource potential of the leased area.


Sec.  162.512  How long may the term of a WEEL run?

    (a) A WEEL must provide for a definite term, state if there is an 
option to renew and, if so, provide for a definite term for the renewal 
period. WEELs are for project evaluation purposes, and therefore may 
have:
    (1) An initial term that is no longer than 3 years; and
    (2) One renewal period not to exceed 3 years.
    (b) The exercise of the option to renew must be in writing and the 
WEEL must specify:
    (1) The time and manner in which the option must be exercised; and
    (2) Additional consideration, if any, that will be due upon the 
exercise of the option to renew or the commencement of the renewal 
term.


Sec.  162.513  Are there mandatory provisions a WEEL must contain?

    (a) All WEELs must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the WEEL and authorized uses of the leased 
premises;

[[Page 73816]]

    (3) The parties to the WEEL;
    (4) The term of the WEEL;
    (5) The owner being represented and the authority under which such 
action is being taken, where one executes the WEEL in a representative 
capacity;
    (6) The citation of the statute that authorizes our approval;
    (7) Who is responsible for constructing, owning, operating, 
maintaining, and managing improvements, pursuant to Sec.  162.515;
    (8) Payment requirements and late payment charges, including 
interest; and
    (9) Due diligence requirements, pursuant to Sec.  162.517;
    (b) All WEELs must include the provisions:
    (1) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of leased premises;
    (2) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (3) Nothing in the lease would prevent or delay termination of 
Federal trust responsibilities for the land during the lease's term;
    (4) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.013;
    (5) The lessee indemnifies and holds the United States and the 
Indian landowners harmless from any loss, liability, or damages 
resulting from the lessee's use of the leased premises, unless the 
lessee would be prohibited by law from making such an agreement;
    (6) In the event that historic properties, archeological resources, 
human remains, or other cultural items, not previously reported are 
encountered during the course of any activity associated with this 
lease, all activity in the immediate vicinity of the properties, 
resources, remains, or items will cease, and the lessee will contact 
BIA and the tribe that has jurisdiction to determine how to proceed and 
appropriate disposition; and
    (7) BIA has the right, at any reasonable time during the term of 
the lease, and upon reasonable notice, to enter upon the leased 
premises for inspection.


Sec.  162.514  May improvements be made under a WEEL?

    (a) A WEEL anticipates the installation of facilities and 
associated infrastructure of a size and magnitude necessary for 
evaluation of wind resource capacity and potential effects of 
development. These facilities and associated infrastructure are 
considered improvements. An equipment installation plan must be 
submitted with the lease pursuant to Sec.  162.528(f).
    (b) If any of the following changes are made to the equipment 
installation plan, the Indian landowners must approve the revised plan 
and the lessee must provide a copy of the revised plan to BIA:
    (1) Location of improvements;
    (2) Type of improvements; or
    (3) Delay of 90 days or more in any phase of development.


Sec.  162.515  How must a WEEL address ownership of improvements?

    (a) A WEEL must specify who will own any improvements the lessee 
installs during the lease term. In addition, the WEEL must indicate 
whether any improvements the lessee installs:
    (1) Will remain on the premises upon expiration or termination of 
the lease whether or not there is conversion of the WEEL to a WSR 
lease, in a condition satisfactory to the Indian landowners;
    (2) May be conveyed to the Indian landowners during the WEEL term;
    (3) Will be removed within a time period specified in WEEL, at the 
lessee's expense, with the leased premises to be restored as close as 
possible to their condition before installation of such improvements; 
or
    (4) Will be disposed of by other specified means.
    (b) A WEEL that requires the lessee to remove the improvements must 
also provide the Indian landowners with an option to take possession 
and title to the improvements if the improvements are not removed 
within the specified time period.
    (c) Any permanent improvements on the leased land shall be subject 
to 25 CFR 1.4 and, in addition, shall not be subject to any fee, tax, 
assessment, levy, or other such charge imposed by any State or 
political subdivision of a State, without regard to ownership of those 
improvements. Improvements may be subject to taxation by the Indian 
tribe with jurisdiction.


Sec.  162.516  How will BIA enforce removal requirements in a WEEL?

    We may take appropriate enforcement action in consultation with the 
tribe for tribal land or, where feasible, Indian landowners for 
individually owned Indian land, to ensure removal of the improvements 
or restoration of the premises at the lessee's expense. We may take 
such enforcement action after termination or expiration of the WEEL.


Sec.  162.517  What requirements for due diligence must a WEEL include?

    (a) A WEEL must require the lessee to undertake the following due 
diligence:
    (1) Install testing and monitoring facilities within 12 months 
after the effective date of the WEEL or other period designated in the 
WEEL and consistent with the plan of development; and
    (2) Provide the Indian landowners and BIA with an explanation as to 
good cause for any delay, the anticipated date of installation of 
facilities, and evidence of progress toward installing or completing 
testing and monitoring facilities, if installation does not occur, or 
is not expected to be completed, within the time period specified in 
paragraph (a)(1) of this section.
    (b) Failure of the lessee to comply with the due diligence 
requirements of the WEEL is a violation of the WEEL and may lead to 
cancellation of the WEEL and the requirement that the lessee transfer 
of ownership of energy resource information collected under the WEEL to 
the Indian landowner under Sec.  162.519.


Sec.  162.518  May a WEEL allow for compatible uses by the Indian 
landowner?

    The WEEL may provide for the Indian landowner to use the leased 
premises for other noncompeting uses compatible with the purpose of the 
WEEL. This may include the right to lease the premises for other 
compatible purposes. Any such use by the Indian landowner will not 
reduce or offset the monetary compensation for the WEEL.


Sec.  162.519  Who owns the energy resource information obtained under 
the WEEL?

    (a) The WEEL must specify the ownership of any energy resource 
information the lessee obtains during the WEEL term.
    (b) Unless otherwise specified in the WEEL, the energy resource 
information the lessee obtains through the leased activity becomes the 
property of Indian landowner at the termination or expiration of the 
WEEL or upon failure by the lessee to diligently install testing and 
monitoring facilities on the leased premises in accordance with Sec.  
162.517.
    (c) BIA will keep confidential any information it is provided that 
is marked confidential or proprietary and that is exempt from public 
release, to the extent allowed by law.


Sec.  162.520  May a lessee incorporate its WEEL analyses into its WSR 
lease analyses?

    Any analyses a lessee uses to bring a WEEL activity into compliance 
with applicable laws, ordinances, rules, regulations under Sec.  
162.013 and any

[[Page 73817]]

other legal requirements may be incorporated by reference, as 
appropriate, into the analyses of a proposed WSR lease.


Sec.  162.521  May a WEEL contain an option for the lessee to enter 
into a WSR lease?

    (a) A WEEL may provide for an option period following the 
expiration of the WEEL term during which time the lessee and the Indian 
landowner have the option to enter into a WSR lease if:
    (1) The option period is no more than 3 years, except as provided 
in Sec.  162.522;
    (2) The intent to install energy resource development facilities is 
stated at the time of the initial WEEL application;
    (3) The WSR lease will be limited to the land covered by the WEEL, 
or a portion thereof;
    (4) The WEEL imposes due diligence requirements on the lessee;
    (5) The WEEL states the circumstances in which the option period 
may be terminated; and
    (6) The WSR lease will be the direct result of energy resource 
information gathered from the WEEL activities and associated data.
    (b) Our approval of a WEEL that contains an option to enter into a 
WSR lease does not guarantee or imply our approval of any WSR lease.


Sec.  162.522  How may a lessee obtain an extension of an option 
period?

    (a) A lessee may request extension of the option period for a term 
of no more than 3 years.
    (b) We will approve the extension if:
    (1) The parties agree in writing to the extension and have already 
submitted a proposed WSR lease to us for approval; and
    (2) The extension is necessary for us to complete the lease 
approval process.

Monetary Compensation Requirements


Sec.  162.523  How much compensation must be paid under a WEEL?

    (a) The WEEL must state how much compensation will be paid.
    (b) A WEEL must specify the date on which compensation will be due.
    (c) Failure to make timely payments is a violation of the WEEL and 
may lead to cancellation of the WEEL.
    (d) The lease compensation requirements of Sec. Sec.  162.549 
through 162.555, also apply to WEELs.


Sec.  162.524  Will BIA require a valuation for a WEEL?

    BIA will not require a valuation for a WEEL.

Bonding and Insurance


Sec.  162.525  Must a lessee provide a performance bond for a WEEL?

    The lessee is not required to provide a performance bond for a 
WEEL.


Sec.  162.526  [Reserved].


Sec.  162.527  Must a lessee provide insurance for a WEEL?

    Except as provided in paragraph (d) of this section, a lessee must 
provide insurance necessary to protect the interests of Indian 
landowners and in the amount sufficient to protect all insurable 
improvements on the leased premises, unless otherwise provided in the 
WEEL.
    (a) Such insurance may include property, crop, liability and/or 
casualty insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) Lease insurance may be increased and extended for use as the 
required WSR lease insurance.
    (d) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. We may revoke the waiver and require insurance 
at any time if the waiver is no longer in the best interest of the 
Indian landowner.

Approval


Sec.  162.528  What documents must the parties submit to obtain BIA 
approval of a WEEL?

    A lessee or the Indian landowner must submit the following 
documents to us to obtain BIA approval of a WEEL:
    (a) A WEEL executed by the Indian landowners and the lessee that 
complies with the requirements of this part;
    (b) Organizational documents, certificates, filing records, and 
resolutions or other authorization documents, including evidence of the 
representative's authority to execute a lease, if the lessee is a 
corporation, limited liability company, partnership, joint venture, or 
other legal entity, to show that the WEEL will be enforceable and that 
the legal entity is in good standing and authorized to conduct business 
in the jurisdiction where the land is located;
    (c) Proof of insurance, as required by Sec.  162.527;
    (d) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law;
    (e) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance with applicable Federal 
and tribal environmental and land use requirements;
    (f) An equipment installation plan;
    (g) A restoration and reclamation plan (and any subsequent 
modifications to the plan);
    (h) An official or certified survey of the leased premises that 
includes the legal description of the land encumbered by the WEEL and a 
description of each tract of trust or restricted land in the WEEL and 
the acreage of each. We will review the survey under the DOI Standards 
for Indian Trust Land Boundary Evidence;
    (i) Documents that demonstrate the technical capability of the 
lessee or lessee's agent to construct, operate, maintain, and terminate 
resource evaluation facilities and history in successfully designing, 
constructing, or obtaining the funding for a resource evaluation 
project (for example, documents evidencing lessee's actual ownership, 
development, or management of a successful similar size project within 
the last 5 years);
    (j) Information to assist us in our evaluation of the factors in 25 
U.S.C. 415(a); and
    (k) Any additional documentation we determine to be reasonably 
necessary for approval.


Sec.  162.529  What is the approval process for a WEEL?

    (a) Before we approve a WEEL, we must determine that the WEEL is in 
the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the WEEL and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) Assure ourselves that adequate consideration has been given to 
the factors in 25 U.S.C. 415(a); and
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements.
    (b) When we receive a WEEL and all of the supporting documents that 
conform to this part, we will, within 20 days of the date of receipt of 
the documents at the appropriate BIA office, approve, disapprove, 
return the submission for revision, or notify the parties in writing 
that we need additional time to review the WEEL. Our letter notifying 
the parties that we need additional time to review the WEEL must 
identify our initial concerns

[[Page 73818]]

and invite the parties to respond within 15 days. We have 30 days from 
sending the notification to make a determination whether to approve or 
disapprove the sublease.
    (c) If we fail to meet the deadline in this section, then the 
parties may take appropriate action under part 2 of this chapter.
    (d) In reviewing a WEEL for approval, we will defer to the Indian 
landowners' determination that the WEEL is in their best interest, to 
the maximum extent possible.
    (e) Any WEEL approval or disapproval determination and the basis 
for the determination, along with notification of rights to appeal the 
determination under part 2 of this chapter, will be made in writing and 
will be sent to the parties.

Administration


Sec.  162.530  May the parties amend, assign, sublease, or mortgage a 
WEEL?

    The parties may amend, assign, sublease, or mortgage a WEEL by 
following the procedures and requirements for amending, assigning, 
subleasing, or mortgaging a WSR lease.


Sec.  162.531  [Reserved]

Compliance and Enforcement


Sec.  162.532  How does BIA ensure compliance with a WEEL?

    (a) If we determine that a WEEL has been violated, we will promptly 
send the lessee and its sureties a notice of violation. We may also 
order the lessee to stop work. The notice of violation must be provided 
by certified mail, return receipt requested.
    (b) Within 5 days of the receipt of the notice of violation, the 
lessee must:
    (1) Cure the violation and notify us in writing that the violation 
has been cured;
    (2) Dispute our determination that a violation has occurred; or
    (3) Request additional time to cure the violation.
    (c) If we determine that a violation has occurred, we will make a 
reasonable attempt to notify the Indian landowners.


Sec.  162.533  What will BIA do if a lessee does not cure a violation 
of a WEEL on time?

    (a) If the lessee does not cure a violation of a WEEL within the 
requisite time period, we will consult with the tribe for tribal land 
or, where feasible, Indian landowners for individually owned Indian 
land, and determine whether:
    (1) We should cancel the WEEL, or
    (2) The Indian landowners wish to invoke any remedies available to 
them under the WEEL; or
    (3) We should invoke any other remedies available to us under the 
WEEL.
    (b) If we decide to cancel the WEEL, we will send the lessee and 
its sureties and any mortgagees a cancellation letter by certified 
mail, return receipt requested, within 5 business days of our decision. 
We will send a copy of the cancellation letter to the tribe for tribal 
land, and will provide Indian landowners for individually owned Indian 
land with actual or constructive notice of the cancellation. The 
cancellation letter will:
    (1) Explain the grounds for cancellation;
    (2) If applicable, notify the lessee of the amount of any unpaid 
compensation or late payment charges due under the WEEL;
    (3) Notify the lessee of their right to appeal under part 2 of this 
chapter;
    (4) Order the lessee to vacate the property within 31 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time; and
    (5) Order the lessee to take any other action we deem necessary to 
protect the Indian landowners.
    (c) The cancellation will not be effective until 31 days after the 
lessee receives a cancellation letter from us, or 41 days from the date 
the letter is mailed, whichever is earlier.
    (d) The cancellation decision will be stayed if the lessee files an 
appeal unless the cancellation is made immediately effective under part 
2 of this chapter. While a cancellation decision is stayed, the lessee 
must continue to pay compensation and comply with the other terms of 
the WEEL.
    (e) Nothing in this part affects BIA's ability to take emergency 
action to protect the leased premises under Sec.  162.021.


Sec.  162.534  Under what circumstances may a WEEL be terminated or 
cancelled?

    (a) A WEEL must state whether, and under what conditions, an Indian 
landowner may terminate the WEEL.
    (b) We may cancel the WEEL if we have determined cancellation is 
appropriate under Sec.  162.523 (failure to make timely payments) or 
Sec.  162.533 (failure to cure a violation within the requisite time).

WSR Leases


Sec.  162.535  What is the purpose of a WSR lease?

    A WSR lease authorizes a lessee to possess Indian land to conduct 
activities related to the installation, operation, and maintenance of 
wind and/or solar energy resource development projects. Activities 
include installing instrumentation facilities, and infrastructure 
associated with the generation, transmission, and storage of 
electricity and other related activities.


Sec.  162.536  Must I obtain a WEEL before obtaining a WSR lease?

    You may enter into a WSR lease independent of a WEEL. While you may 
enter into a lease as a direct result of energy resource information 
gathered from a WEEL activity, obtaining a WEEL is not a precondition 
to entering into a WSR lease.


Sec.  162.537  How long may the term of a WSR lease run?

    (a) A WSR lease must provide for a definite lease term, state if 
there is an option to renew and, if so, provide for a definite term for 
the renewal period. Unless authorized by paragraph (b), leases for WSR 
development purposes may have an initial term not to exceed 25 years 
and one renewal period not to exceed 25 years.
    (b) If a statute provides for a longer maximum term (e.g., 25 
U.S.C. 415(a) allows for a maximum term of 99 years for certain 
tribes), the lease may provide for a primary term, and one renewal not 
to exceed 25 years, so long as the maximum term, including the renewal, 
does not exceed the maximum term established by statute.
    (c) The lease term, including any renewal, must be reasonable, 
given the
    (1) Purpose of the lease;
    (2) Type of financing; and
    (3) Level of investment.
    (d) Where all of the trust or restricted interests in a tract are 
owned by a deceased Indian whose heirs and devisees have not yet been 
determined, the maximum term may not exceed two years.
    (e) The lease may not be extended by holdover.


Sec.  162.538  What must the lease include if it contains an option to 
renew?

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us;
    (3) Whether Indian landowner consent to the renewal is required;
    (4) That the lessee must provide notice to the Indian landowner and 
any mortgagees of the renewal;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the commencement of the renewal 
term; and

[[Page 73819]]

    (6) That any change in the terms of the lease will be considered an 
amendment subject to consent and BIA approval requirements pursuant to 
Sec. Sec.  162.568 to 162.571; and
    (7) Any other conditions for renewal (e.g., the lessee may not be 
in violation of the lease at the time of renewal).
    (b) We must record any renewal of a lease in the Land Titles and 
Records Office.


Sec.  162.539  Are there mandatory provisions a WSR lease must contain?

    (a) All WSR leases must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The owner being represented and the authority under which such 
action is being taken, where one executes a lease in a representative 
capacity;
    (6) The citation of the statute that authorizes our approval;
    (7) Who is responsible for constructing, owning, operating, 
maintaining, and managing, WSR equipment, roads, transmission lines and 
related facilities;
    (8) Who is responsible for evaluating the leased premises for 
suitability; purchasing, installing, operating, and maintaining WSR 
equipment; negotiating power purchase agreements; and transmission;
    (9) Payment requirements and late payment charges, including 
interest;
    (10) Due diligence requirements, pursuant to Sec.  162.543;
    (11) Insurance requirements; and
    (12) Bonding requirements under Sec.  162.559. If a performance 
bond is required, the lease must state that the lessee must obtain the 
consent of the surety or guarantor for any legal instrument that 
directly affects their obligations and liabilities.
    (b) All WSR leases must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) Nothing in the lease would prevent or delay termination of 
Federal trust responsibilities for the land during the lease's term;
    (3) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (4) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.013;
    (5) The lessee indemnifies and holds the United States and the 
Indian landowners harmless from any loss, liability, or damages 
resulting from the lessee's use or occupation of the leased premises 
(this provision is not mandatory if the lessee would be prohibited by 
law from making such an agreement);
    (6) In the event that historic properties, archeological resources, 
human remains, or other cultural items not previously reported are 
encountered during the course of any activity associated with the 
lease, all activity in the immediate vicinity of the properties, 
resources, remains, or items will cease and the lessee will contact BIA 
and the tribe that has jurisdiction to determine how to proceed and 
appropriate disposition;
    (7) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice, to enter upon the leased premises 
for inspection; and
    (8) Unless otherwise indicated, this is a lease of the trust and 
restricted interests in the property described and is not a lease of 
any undivided fee interests. All compensation payments by the lessee 
will be distributed to the trust and restricted landowners and life 
estate holders on trust and restricted land only. The lessee will be 
responsible for accounting to the owners of any fee interests that may 
exist in the property being leased.
    (c) We may treat any provision of a lease, sublease, assignment, 
amendment or mortgage that is in violation of Federal law as a 
violation of the lease.


Sec.  162.540  May improvements be made under a WSR lease?

    (a) A WSR lease must provide for the installation of a facility and 
associated infrastructure of a size and magnitude necessary for the 
generation and delivery of electricity. These facilities and associated 
infrastructure are considered improvements. A resource development plan 
must be submitted for approval with the lease pursuant to Sec.  
162.563(g).
    (b) If any of the following changes are made to the resource 
development plan, the Indian landowner and BIA must approve the revised 
plan:
    (1) Location of improvements;
    (2) Type of improvements; or
    (3) Delay of 90 days or more in any phase of development.


Sec.  162.541  How must a WSR lease address ownership of improvements?

    (a) A WSR lease must specify who will own any improvements the 
lessee installs during the lease term and may specify that any 
improvements the lessee installs may be conveyed to the Indian 
landowners during the lease term and under what conditions the 
improvements may be conveyed. In addition, the lease must indicate 
whether each specific improvement the lessee installs will, upon the 
expiration or termination of the lease:
    (1) Remain on the leased premises, in a condition satisfactory to 
the Indian landowners and become the property of the Indian landowner;
    (2) Be removed within a time period specified in the lease, at the 
lessee's expense, with the leased premises to be restored as close as 
possible to their condition before installation of such improvements; 
or
    (3) Be disposed of by other specified means.
    (b) A lease that requires the lessee to remove the improvements 
must also provide the Indian landowners with an option to take 
possession of and title to the improvements if the improvements are not 
removed within the specified time period.


Sec.  162.542  How will BIA enforce removal requirements in a WSR 
lease?

    We may take appropriate enforcement action in consultation with the 
tribe, for tribal land or, where feasible, Indian landowners for 
individually owned Indian land, to ensure removal of the improvements 
or restoration of the premises at the lessee's expense. We may take 
such enforcement action after termination or expiration of the lease. 
We may collect and hold the performance bond until removal and 
restoration are completed.


Sec.  162.543  What requirements for due diligence must a WSR lease 
include?

    (a) A WSR lease must include due diligence requirements that 
require the lessee to:
    (1) Commence installation of energy facilities within 2 years after 
the effective date of the lease or consistent with a timeframe 
contained in the resource development plan;
    (2) Provide the Indian landowners and BIA good cause as to the 
nature of any delay, the anticipated date of installation of 
facilities, and evidence of progress toward commencement of 
installation, if installation does not occur, or is not expected to be 
completed, within the time period specified in paragraph (a)(1) of this 
section;
    (3) Maintain all on-site electrical generation equipment and 
facilities and related infrastructure in accordance with the design 
standards in the resource development plan; and

[[Page 73820]]

    (4) Repair, place into service, or remove from the site within 30 
days any idle, improperly functioning, or abandoned equipment or 
facilities that have been inoperative for any continuous period of 3 
months (unless the equipment or facilities were idle as a result of 
planned suspension of operations, for example, for grid operations or 
during bird migration season).
    (b) Failure of the lessee to comply with the due diligence 
requirements of the lease is a violation of the lease and may lead to 
cancellation of the lease under Sec.  162.589.


Sec.  162.544  May a WSR lease allow compatible uses?

    The lease may provide for the Indian landowner to use, or authorize 
others to use, the leased premises for other uses compatible with the 
purpose of the WSR lease and consistent with the terms of the WSR 
lease. This may include the right to lease the premises for other 
compatible purposes. Any such use or authorization by the Indian 
landowner will not reduce or offset the monetary compensation for the 
WSR lease.


Sec.  162.545  How must a WSR lease describe the land?

    (a) A WSR lease must describe the leased premises by reference to 
an official or certified survey as required by Sec.  162.563(i) of this 
part.
    (b) If the tract is fractionated, we will describe the undivided 
trust interest in the leased premises.

Monetary Compensation Requirements


Sec.  162.546  How much monetary compensation must be paid under a WSR 
lease?

    (a) A WSR lease of tribal land may allow for any payment negotiated 
by the tribe as long as the tribe provides the tribal authorization 
required by Sec.  162.547(a). The tribe may request, in writing, that 
we require fair market rental, in which case we will determine fair 
market rental in accordance with Sec.  162.548 and will approve the 
lease only if it requires payment of not less than fair market rental. 
Unless the tribe makes such a request, BIA will not require a valuation 
or appraisal or determine fair market rental, but instead will defer to 
the tribe's determination that the negotiated compensation is in its 
best interest.
    (b) A WSR lease of individually owned Indian land must require 
payment of not less than fair market rental before any adjustments, 
based on a fixed amount, a percentage of the projected gross income, 
megawatt capacity fee, or some other method, unless paragraphs (a)(1) 
or (a)(2) of this section permit a lesser amount. The lease must 
establish how the fixed amount, percentage or combination will be 
calculated and the frequency at which the payments will be made.
    (1) We may approve a lease of individually owned Indian land that 
provides for the payment of nominal compensation, or less than a fair 
market rental, if:
    (i) The Indian landowners execute a written waiver of the right to 
receive fair market rental; and
    (ii) We determine it is in the Indian landowners' best interest, 
based on factors including, but not limited to:
    (A) The lessee is a member of the Indian landowners' immediate 
family as defined in Sec.  162.003;
    (B) The lessee is a co-owner of the leased tract;
    (C) A special relationship or circumstances exist that we believe 
warrant approval of the lease; or
    (D) The lease is for public purposes.
    (2) We may approve a lease that provides for the payment of less 
than a fair market rental during the periods before the generation and 
transmission of electricity begins, if we determine it is in the Indian 
landowners' best interest. The lease must specify the amount of the 
compensation and the applicable periods.
    (3) Where the owners of the applicable percentage of interests 
under Sec.  162.011 of this part grant a WSR lease on behalf of all of 
the Indian landowners of a fractionated tract, the lease must provide 
that the non-consenting Indian landowners, and those on whose behalf we 
have consented, receive a fair market rental.


Sec.  162.547  Will BIA require a valuation to determine fair market 
rental of a WSR lease?

    (a) We will not require valuations or appraisals for negotiated WSR 
leases of tribal land, or of any undivided tribal interest in a 
fractionated tract, if the tribe submits a tribal authorization 
expressly stating that it:
    (1) Has negotiated compensation satisfactory to the tribe;
    (2) Waives valuation and appraisal; and
    (3) Has determined that accepting such negotiated compensation and 
waiving valuation and appraisal is in its best interest.
    (b) The tribe may request that BIA require a valuation or 
appraisal, in which case BIA must determine fair market rental in 
accordance with Sec.  162.548.
    (c) We will not waive the valuation requirement for WSR leases on 
individually owned Indian land, but we may accept an economic analysis 
in lieu of an appraisal if we determine it to be in the best interest 
of the Indian landowners and:
    (1) The Indian landowners submit a written statement to us 
requesting an economic analysis in lieu of an appraisal and explaining 
the basis for the request and their willingness to accept nominal or 
less than fair market rental;
    (2) After receiving an estimated timeframe for completion of the 
analysis from the Office of Indian Energy & Economic Development 
(IEED), the Indian landowner submits a written request for economic 
analysis to IEED; and
    (3) IEED prepares an economic analysis of the project.


Sec.  162.548  What type of valuation may be used to determine fair 
market rental for a WSR lease?

    (a) We will use an appraisal to determine the fair market rental 
before we approve a WSR lease of individually owned Indian land, or at 
the request of the tribe for tribal land, unless we approve another 
type of valuation under paragraph (d) of this section.
    (b) We will either:
    (1) Prepare an appraisal; or
    (2) Use an approved appraisal from the Indian landowner or lessee.
    (c) We will approve an appraisal for use only if it:
    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary pursuant to 25 U.S.C. 2214; and
    (2) Complies with Department policies regarding appraisals, 
including third-party appraisals.
    (d) Upon receipt of a tribal authorization, we may use some other 
type of valuation for a WSR lease on tribal land, if it conforms to 
USPAP or a valuation method developed by the Secretary pursuant to 25 
U.S.C. 2214.


Sec.  162.549  When are monetary compensation payments due under a WSR 
lease?

    (a) A WSR lease must specify the dates on which all payments are 
due.
    (b) Unless otherwise provided in the lease, payments may not be 
made or accepted more than one year in advance of the due date.
    (c) Payments are due at the time specified in the lease, regardless 
of whether the lessee receives an advance billing or other notice that 
a payment is due.

[[Page 73821]]

Sec.  162.550  Must a WSR lease specify to whom monetary compensation 
payments may be made?

    (a) A WSR lease must specify whether the lessee will make payments 
directly to the Indian landowners (direct pay) or to us on their 
behalf.
    (b) The lessee may make payments directly to the Indian landowners 
whose trust accounts are unencumbered when there are 10 or fewer 
beneficial owners and 100 percent of the beneficial owners agree to 
receive payment directly from the lessee.
    (1) If the lease provides that the lessee will directly pay the 
Indian landowners, the lease must also require that the lessee provide 
us with certification of payment.
    (2) When we consent on behalf of an Indian landowner, the lessee 
must make payment to us.
    (3) The lessee must send direct payments to the parties and 
addresses specified in the lease, unless the lessee receives notice of 
a change of ownership or address.
    (4) Unless otherwise provided in the lease, payments may not be 
made payable directly to anyone other than the Indian landowners.
    (5) Direct payments must continue through the duration of the 
lease, except if:
    (i) 100 percent of the Indian landowners agree to suspend direct 
pay and provide us with documentation of their agreement, then the 
lessee must make all Indian landowners' payments to us; or
    (ii) If any individual Indian landowner dies, is declared non 
compos mentis, becomes whereabouts unknown, or owes a debt resulting in 
a trust account encumbrance, then the lessee must make that individual 
Indian landowner's payment to us.


Sec.  162.551  What form of monetary compensation payment may be 
accepted under a WSR lease?

    (a) When payments are made directly to Indian landowners, the form 
of payment must be acceptable to the Indian landowners.
    (b) When payments are made to us, we will accept:
    (1) Money orders;
    (2) Certified checks;
    (3) Cashier's checks; or
    (4) Electronic funds transfer payments.
    (c) We will not accept cash, foreign currency, or third-party 
checks except for third-party checks from financial institutions.
    (d) The preferred method of payment is electronic funds transfer 
payments.


Sec.  162.552  May the WSR lease provide for non-monetary or varying 
types of compensation?

    (a) With our approval, the lease may provide for:
    (1) Alternative forms of compensation, including but not limited to 
in-kind consideration and payments based on percentage of income; or
    (2) Varying types of consideration at specific stages during the 
life of the lease, including but not limited to fixed annual payments 
during installation, payments based on income during an operational 
period, and bonuses.
    (b) For individually owned land, we will approve alternative forms 
of compensation and varying types of consideration if we determine that 
it is in the best interest of the Indian landowners. For tribal land, 
we will defer to the tribe's determination that the alternative forms 
of rental and varying types of consideration are in its best interest, 
if the tribe submits a signed certification stating that it has 
determined the alternative forms of rental and varying types of 
consideration to be in its best interest.


Sec.  162.553  Will BIA notify a lessee when a payment is due under a 
WSR lease?

    Upon request of the Indian landowner, we may issue invoices to a 
lessee in advance of the dates on which payments are due under a WSR 
lease, but the lessee's obligation to make such payments in a timely 
manner will not be excused if such invoices are not delivered or 
received.


Sec.  162.554  Must a WSR lease provide for compensation reviews or 
adjustments?

    (a) A review of the adequacy of compensation must occur at least 
every fifth year, in the manner specified in the lease, unless the 
conditions in paragraph (b) of this section are met. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who is authorized to make adjustments;
    (3) What the adjustments are based on; and
    (4) How to resolve disputes arising from the adjustments.
    (b) A review of the adequacy of compensation is not required if:
    (1) The lease provides for automatic adjustments; or
    (2) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, the following:
    (i) The lease provides for payment of less than fair market rental;
    (ii) The lease is for public purposes; or
    (iii) The lease provides for most or all of the compensation to be 
paid during the first five years of the lease term or prior to the date 
the review would be conducted.
    (c) When a review results in the need for adjustment of 
compensation, we must approve the adjustment and Indian landowners must 
consent to the adjustment in accordance with Sec.  162.011, unless 
otherwise provided in the lease.


Sec.  162.555  What other types of payments are required under a WSR 
lease?

    (a) The lessee may be required to pay additional fees, taxes, and/
or assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.515(c). 
The lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. Failure to make such payments will be treated as a violation 
of the lease.
    (c) Where the property is subject to at least one other lease for 
another compatible use, such as grazing, the lessees may agree among 
themselves as to how to allocate payment of the operation and 
maintenance charges.

Bonding and Insurance


Sec.  162.559  Must a lessee provide a performance bond for a WSR 
lease?

    (a) Except as provided in paragraph (f) of this section, the lessee 
must provide a performance bond in an amount sufficient to secure the 
contractual obligations including:
    (1) No less than the highest annual rental specified in the lease, 
if the compensation is paid annually, or other amount established by 
BIA in consultation with the tribe, for tribal land or, where feasible, 
with Indian landowners for individually owned Indian land, if the 
compensation is to be paid on a non-annual schedule;
    (2) The performance and payment for the installation of any 
required improvements;
    (3) The operation and maintenance charges for any land located 
within an irrigation project; and
    (4) The restoration and reclamation of the leased premises, to 
their condition at the commencement of the lease term or some other 
specified condition.

[[Page 73822]]

    (b) The performance bond must be deposited with us and made payable 
only to us, and may not be modified without our approval.
    (c) The lease must provide that we may adjust security or 
performance bond requirements at any time to reflect changing 
conditions.
    (d) We may require that the surety provide any supporting documents 
needed to show that the performance bond will be enforceable, and that 
the surety will be able to perform the guaranteed obligations.
    (e) The surety must provide notice to us at least 60 days before 
canceling a performance bond so that we may notify the lessee of its 
obligation to provide a substitute performance bond and require 
collection of the bond prior to the cancellation date. Failure to 
provide a substitute performance bond will be a violation of the lease.
    (f) We may waive the requirement for a performance bond upon the 
request of the Indian landowner, if a waiver is in the best interest of 
the Indian landowner, including if the lease is for less than fair 
market rental or nominal compensation. We may revoke the waiver and 
require a performance bond at any time if the waiver is no longer in 
the best interest of the Indian landowner.


Sec.  162.560  What forms of performance bond may be accepted under a 
WSR lease?

    (a) We will only accept a performance bond in one of the following 
forms:
    (1) Certificates of deposit issued by a federally insured financial 
institution authorized to do business in the United States;
    (2) Irrevocable letters of credit issued by a federally insured 
financial institution authorized to do business in the United States;
    (3) Negotiable Treasury securities; or
    (4) Surety bond issued by a company approved by the U.S. Department 
of the Treasury.
    (b) All forms of performance bonds must:
    (1) Indicate on their face that BIA approval is required for 
redemption;
    (2) Be accompanied by a statement granting full authority to BIA to 
make an immediate claim upon or sell them if the lessee violates the 
terms of the lease;
    (3) Be irrevocable during the term of the performance bond; and
    (4) Be automatically renewable during the term of the lease.


Sec.  162.561  What is the bond release process under a WSR lease?

    (a) Upon expiration, termination, or cancellation of the lease, the 
lessee must submit a written request for a performance bond release to 
BIA.
    (b) Upon receipt of the request under paragraph (a) of this 
section, BIA will confirm with the tribe, for tribal land or, where 
feasible, with the Indian landowners for individually owned Indian 
land, that the lessee has complied with all lease obligations, then 
release the performance bond to the lessee unless we determine that the 
performance bond must be redeemed to fulfill the contractual 
obligations.


Sec.  162.562  Must a lessee provide insurance for a WSR lease?

    Except as provided in paragraph (c) of this section, a lessee must 
provide insurance when necessary to protect the interests of Indian 
landowners and in the amount sufficient to protect all insurable 
improvements on the leased premises.
    (a) Such insurance may include property, liability and/or casualty 
insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. We may revoke the waiver and require insurance 
at any time if the waiver is no longer in the best interest of the 
Indian landowner.

Approval


Sec.  162.563  What documents must the parties submit to obtain BIA 
approval of a WSR lease?

    A lessee or the Indian landowner must submit the following 
documents to us to obtain BIA approval of a WSR lease:
    (a) A lease executed by the Indian landowner and the lessee that 
complies with the requirements of this part;
    (b) An appraisal or other valuation under Sec.  162.547, if 
appropriate;
    (c) Organizational documents, certificates, filing records, and 
resolutions or other authorization documents, including evidence of the 
representative's authority to execute a lease, if the lessee is a 
corporation, limited liability company, partnership, joint venture, or 
other legal entity, to show that the lease will be enforceable and that 
the legal entity is in good standing and authorized to conduct business 
in the jurisdiction where the land is located;
    (d) A performance bond, where required;
    (e) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law;
    (f) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance applicable Federal and 
tribal environmental and land use requirements;
    (g) A resource development plan that describes the type and 
location of any improvements the lessee plans to install and a schedule 
showing the tentative commencement and completion dates for those 
improvements;
    (h) A restoration and reclamation plan (and any subsequent 
modifications to the plan);
    (i) An official or a certified survey of the leased premises that 
includes the legal description of the land encumbered by the lease and 
a description of each tract of trust or restricted land in the lease 
and the acreage of each. We will review the survey under the DOI 
Standards for Indian Trust Land Boundary Evidence;
    (j) Documents that demonstrate the technical capability of the 
lessee or lessee's agent to construct, operate, maintain, and terminate 
resource development facilities and the lessee's history in 
successfully designing, constructing, or obtaining the funding for a 
resource development project (for example, documents evidencing 
lessee's actual ownership, development, or management of a successful 
similarly-sized project within the last 5 years);
    (k) Information to assist us in our evaluation of the factors in 25 
U.S.C. 415(a); and
    (l) Any additional documentation we determine to be reasonably 
necessary for approval.


Sec.  162.564  What is the approval process for a WSR lease?

    (a) Before we approve a WSR lease, we must determine that the lease 
is in the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the lease and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) Assure ourselves that adequate consideration has been given to 
the factors in 25 U.S.C. 415(a);
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements; and
    (5) If the lease is a negotiated lease, defer to the Indian 
landowners' determination that the lease is in their

[[Page 73823]]

best interest, to the maximum extent possible.
    (b) When we receive a WSR lease proposal and all of the supporting 
documents that conform to this part, we will, within 60 days of the 
date of receipt of the documents at the appropriate BIA office, 
approve, disapprove, return the submission for revision, or notify the 
parties in writing that we need additional time to review the lease. 
Our letter notifying the parties that we need additional time to review 
the lease must identify our initial concerns and invite the parties to 
respond within 15 days. We have 30 days from sending the notification 
to make a determination whether to approve or disapprove the sublease.
    (c) If we fail to meet the deadlines in this section, then the 
parties may take appropriate action under part 2 of this chapter.
    (d) We will make any lease approval or disapproval determination 
and the basis for the determination, along with notification of appeal 
rights under part 2 of this chapter, in writing and will send the 
determination and notification to the parties to the lease.
    (e) We will provide approved WSR leases on tribal land to the 
lessee and provide a copy to the tribe. We will provide approved WSR 
leases on individually owned Indian land to the lessee, and make copies 
available to the Indian landowners upon written request.


Sec.  162.565  When will a WSR lease be effective?

    (a) A WSR lease will be effective on the date on which we approve 
the lease, notwithstanding any appeal that may be filed under part 2 of 
this chapter.
    (b) The lease may specify a date on which the obligations between 
the parties to a WSR lease are triggered. Such date may be before or 
after the approval date under paragraph (a).


Sec.  162.566  Must WEEL and WSR lease documents be recorded?

    (a) A WEEL and WSR lease, amendment, assignment, leasehold 
mortgage, and sublease must be recorded in our Land Titles and Records 
Office with jurisdiction over the leased land.
    (1) We will record the lease or other document immediately 
following our approval.
    (2) If our approval is not required, the parties must record the 
assignment or sublease in the Land Title and Records Office with 
jurisdiction over the leased land.
    (b) The tribe must record the following leases in the Land Titles 
and Records Office with jurisdiction over the tribal lands, even though 
BIA approval is not required:
    (1) Leases of tribal land that a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval.


Sec.  162.567  What action may BIA take if a lease disapproval decision 
is appealed?

    (a) If a party appeals our decision to disapprove a lease, 
assignment, amendment, sublease or leasehold mortgage, then the 
official to whom the appeal is made may require the lessee to post an 
appeal bond in an amount necessary to protect the Indian landowners 
against financial losses and damage to trust resources likely to result 
from the delay caused by an appeal. The requirement to post an appeal 
bond will apply in addition to all of the other requirements in part 2 
of this chapter.
    (b) The appellant may not appeal the appeal bond decision. The 
appellant may, however, request that the official to whom the appeal is 
made reconsider the bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.

Amendments


Sec.  162.568  May the parties amend a WSR lease?

    (a) The parties may amend a WSR lease by obtaining:
    (1) The lessee's signature;
    (2) The Indian landowners' consent pursuant to the requirements 
contained in Sec.  162.569; and
    (3) BIA approval of the amendment under Sec.  162.570 and Sec.  
162.571.
    (b) The parties may not amend a WSR lease if the lease expressly 
prohibits amendments.


Sec.  162.569  What are the consent requirements for an amendment to a 
WSR lease?

    (a) The Indian landowners, or their representatives under Sec.  
162.012, must consent to an amendment of a WSR lease in the same 
percentages and manner as a new WSR lease pursuant to Sec.  162.011, 
unless the requirements in paragraphs (a)(1) or (a)(2) are met.
    (1) The approved WSR lease establishes that individual Indian 
landowners are deemed to have consented if they do not object in 
writing to the amendment after a specified period of time following 
landowners' receipt of the amendment. If the lease provides for deemed 
consent, it must require the parties to submit to us: A copy of the 
executed amendment or other documentation of the Indian landowners' 
consent; proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and any other pertinent information to us 
for review.
    (2) The approved WSR lease authorizes one or more representatives 
to consent to an amendment on behalf of all Indian landowners. The 
lease may also designate us as the Indian landowners' representative 
for the purposes of consenting to an amendment.
    (b) Unless specifically authorized in the lease, the written power 
of attorney, or court document, Indian landowners may not be deemed to 
have consented, and an Indian landowner's designated representative may 
not negotiate or consent to an amendment that would:
    (1) Reduce the payment obligations or terms to the Indian 
landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or change the term of the lease.


Sec.  162.570  What is the approval process for an amendment to a WSR 
lease?

    We have 30 days from receipt of the executed assignment, proof of 
required consents, and required documentation to make a determination 
whether to approve the amendment or notify the parties in writing that 
we need additional time to review the amendment.
    (a) Our letter notifying the parties that we need additional time 
to review the amendment must identify our initial concerns and invite 
the parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the amendment.
    (b) If we fail to send either a determination or a notification 
within 30 days from receipt of required documents and the completion of 
any environmental reviews or 30 days from sending the notification, the 
amendment is deemed approved to the extent consistent with Federal law. 
We will retain our full enforcement authority for amendments that are 
deemed approved.
    (c) Our determination whether to approve the amendment will be in 
writing and will state the basis for our approval or disapproval.


Sec.  162.571  How will BIA decide whether to approve an amendment to a 
WSR lease?

    (a) We may only disapprove a WSR lease amendment if:
    (1) The required consents have not been obtained from the parties 
to the lease and any mortgagees or sureties;
    (2) The lessee is in violation of the lease; or

[[Page 73824]]

    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We may not unreasonably withhold approval of an amendment.

Assignments


Sec.  162.572  May a lessee assign a WSR lease?

    (a) A lessee may assign a WSR lease by meeting the consent 
requirements contained in Sec.  162.573 and obtaining our approval of 
the assignment under Sec.  162.574 and Sec.  162.575 or by meeting the 
conditions in paragraphs (b) or (c) of this section, unless the lease 
expressly prohibits assignments.
    (b) Where provided in the lease, the lessee may assign the lease to 
the following without meeting consent requirements or obtaining BIA 
approval of the assignment, as long as the lessee notifies BIA of the 
assignment within 30 days:
    (1) Not more than two distinct legal entities specified in the 
lease; or
    (2) The lessee's wholly owned subsidiaries.
    (c) If a sale or foreclosure under an approved mortgage of the 
leasehold interest occurs and the mortgagee is the purchaser, the 
mortgagee/purchaser may assign the leasehold interest without meeting 
the consent requirements or obtaining our approval, as long as the 
assignee accepts and agrees in writing to be bound by all the terms and 
conditions of the lease.


Sec.  162.573  What are the consent requirements for an assignment of a 
WSR lease?

    The Indian landowners, or their representatives under Sec.  
162.012, must consent to an assignment in the same percentages and 
manner as a new WSR lease, unless the requirements in paragraphs (a) or 
(b) of this section are met.
    (a) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
assignment after a specified period of time following landowners' 
receipt of the assignment. If the lease provides for deemed consent, it 
must require the parties to submit to us: a copy of the executed 
assignment or other documentation of the Indian landowners' consent; 
proof of mailing of the assignment to any Indian landowners who are 
deemed to have consented; and any other pertinent information for us to 
review.
    (b) The approved WSR lease authorizes one or more representatives 
to consent to an assignment on behalf of all Indian landowners. The 
lease may also designate us as the Indian landowners' representative 
for the purposes of consenting to an assignment.


Sec.  162.574  What is the approval process for an assignment of a WSR 
lease?

    (a) We have 30 days from receipt of the executed assignment, proof 
of required consents, and required documentation to make a 
determination whether to approve the assignment or notify the parties 
that we need additional information. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we fail to meet any of the deadlines in this section, the 
lessee or Indian landowners may take appropriate action under part 2 of 
this chapter.


Sec.  162.575  How will BIA decide whether to approve an assignment of 
a WSR lease?

    (a) We may only disapprove an assignment of a WSR lease if:
    (1) The required consents have not been obtained from the parties 
to the lease or the lessee's mortgagees or sureties;
    (2) The lessee is in violation of the lease;
    (3) The assignee does not agree to be bound by the terms of the 
lease; or
    (4) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(4) of this 
section, we will consider whether:
    (1) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (2) If a performance bond is required, the assignee has bonded its 
performance and provided supporting documents that demonstrate that the 
lease will be enforceable against the assignee, and that the assignee 
will be able to perform its obligations under the lease or assignment.
    (c) We may not unreasonably withhold approval of an assignment.

Subleases


Sec.  162.576  May a lessee sublease a WSR lease?

    A lessee may sublease a WSR lease by meeting the consent 
requirements contained in Sec.  162.577 and obtaining our approval of 
the sublease under Sec.  162.578 and Sec.  162.579, unless the lease 
expressly prohibits subleases.


Sec.  162.577  What are the consent requirements for a sublease of a 
WSR lease?

    The Indian landowners, or their representatives under Sec.  
162.012, must consent to a sublease in the same percentages and manner 
as a new WSR lease under Sec.  162.011, unless the requirements in 
paragraphs (a) or (b) of this section are met.
    (a) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
sublease after a specified period of time following landowners' receipt 
of the sublease. If the lease provides for deemed consent, it must 
require the parties to submit to us: a copy of the executed sublease or 
other documentation of the Indian landowners' consent; proof of mailing 
of the sublease to any Indian landowners who are deemed to have 
consented; and any other pertinent information for us to review.
    (b) The approved WSR lease authorizes one or more representatives 
to consent to a sublease on behalf of all Indian landowners. The lease 
may also designate us as the Indian landowners' representative for the 
purposes of consenting to a sublease.


Sec.  162.578  What is the approval process for a sublease of a WSR 
lease?

    We have 30 days from receipt of the executed sublease, proof of 
required consents, and required documentation to make a determination 
whether to approve the sublease or notify the parties to the sublease 
and Indian landowners in writing that we need additional time to review 
the sublease. Our determination whether to approve the sublease will be 
in writing and will state the basis for our approval or disapproval.
    (a) Our letter notifying parties that we need additional time to 
review the sublease must identify our initial concerns and invite the 
parties to respond within 15 days. We have 30 days from sending the 
notification to make a determination whether to approve or disapprove 
the sublease.
    (b) If we fail to send either a determination or a notification 
within 30 days from receipt of required documents or 30 days from 
sending the notification, the sublease is deemed approved to the extent 
consistent with Federal law. We will retain our full enforcement 
authority for subleases that are deemed approved.


Sec.  162.579  How will BIA decide whether to approve a sublease of a 
WSR lease?

    (a) We will only disapprove a sublease of a WSR lease if:

[[Page 73825]]

    (1) The required consents have not been obtained from the parties 
to the lease and the lessee's mortgagees or sureties;
    (2) The lessee is in violation of the lease;
    (3) The lessee will not remain liable under the lease;
    (4) The sublessee does not agree to be bound by the terms of the 
lease; and
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(5) of this 
section, we will consider whether:
    (1) The value of any part of the leased premises not covered by the 
sublease would be adversely affected; and
    (2) The sublessee has bonded its performance and provided 
supporting documents that demonstrate that the lease will be 
enforceable against the sublessee, and that the sublessee will be will 
be able to perform its obligations under the lease or sublease.
    (c) We may not unreasonably withhold approval of a sublease.

Leasehold Mortgages


Sec.  162.580  May a lessee mortgage a WSR lease?

    A lessee may mortgage a WSR lease by meeting the consent 
requirements contained in Sec.  162.581 and obtaining our approval of 
the leasehold mortgage under Sec.  162.582 and Sec.  162.583, unless 
the lease expressly prohibits leasehold mortgages.


Sec.  162.581  What are the consent requirements for a leasehold 
mortgage of a WSR lease?

    The Indian landowners, or their representatives under Sec.  
162.012, must consent to a leasehold mortgage in the same percentages 
and manner as a new WSR lease under Sec.  162.011, unless the 
requirements in paragraphs (a), (b), or (c) of this section are met.
    (a) The lease contains a general authorization for a leasehold 
mortgage and states what law would apply in case of foreclosure.
    (b) The lease establishes that individual Indian landowners are 
deemed to have consented where they do not object in writing to the 
leasehold mortgage after a specified period of time following 
landowners' receipt of the leasehold mortgage. If the lease provides 
for deemed consent, it must require the parties to submit to us: a copy 
of the executed leasehold mortgage or other documentation of the Indian 
landowners' consent; proof of mailing of the leasehold mortgage to any 
Indian landowners who are deemed to have consented; and any other 
pertinent information for us to review.
    (c) The approved WSR lease authorizes one or more representatives 
to consent to a leasehold mortgage on behalf of all Indian landowners. 
The lease may also designate us as the Indian landowners' 
representative for the purposes of consenting to a leasehold mortgage.


Sec.  162.582  What is the approval process for a leasehold mortgage of 
a WSR lease?

    (a) We have 30 days from receipt of the executed leasehold 
mortgage, proof of required consents, and required documentation to 
make a determination whether to approve the leasehold mortgage or 
notify the parties in writing that we need additional time to review 
the leasehold mortgage. Our determination whether to approve the 
leasehold mortgage will be in writing and will state the basis for our 
approval or disapproval.
    (b) If we fail to meet the deadline in this section, the lessee may 
take appropriate action under part 2 of this chapter.


Sec.  162.583  How will BIA decide whether to approve a leasehold 
mortgage of a WSR lease?

    (a) We may only disapprove a leasehold mortgage under a WSR lease 
if:
    (1) The required consents have not been obtained from the parties 
to the lease under or the lessee's sureties;
    (2) The leasehold mortgage covers more than the lessee's interest 
in the leased premises collateral or encumbers unrelated collateral; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(3) of this 
section, we will consider whether:
    (1) The lessee's ability to comply with the lease would be 
adversely affected by any new loan obligations;
    (2) Any lease provisions would be modified by the leasehold 
mortgage;
    (3) The remedies available to us or to the Indian landowners would 
be limited (beyond any additional notice and cure rights to be afforded 
to the mortgagee), in the event of a lease violation; and
    (4) Any rights of the Indian landowners would be subordinated or 
adversely affected in the event of a loan default by the lessee.
    (c) We may not unreasonably withhold approval of a leasehold 
mortgage.

Effectiveness, Compliance, and Enforcement


Sec.  162.584  When will an amendment, assignment, sublease, or 
leasehold mortgage under a WSR lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage under 
a WSR lease will be effective when approved, notwithstanding any appeal 
that may be filed under part 2 of this chapter, unless approval is not 
required under Sec.  162.008(b) or the conditions in paragraph (b) 
apply. We will provide copies of approved documents to the party 
requesting approval and, upon request, to the other parties to the 
agreement.
    (b) If the amendment or sublease was deemed approved pursuant to 
Sec.  162.570(b) or Sec.  162.578(b), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review.
    (c) An assignment that has does not require landowner consent or 
BIA approval shall be effective upon execution by the parties.


Sec.  162.585  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage of a WSR lease?

    If we disapprove an amendment, assignment, sublease, or leasehold 
mortgage of a WSR lease, we will notify the parties immediately and 
advise them of their right to appeal the decision under part 2 of this 
chapter.


Sec.  162.586  May BIA investigate compliance with a WSR lease?

    (a) We may enter the leased premises at any reasonable time, upon 
reasonable notice, to protect the interests of the Indian landowners 
and to determine if the lessee is in compliance with the requirements 
of the lease.
    (b) If the Indian landowner notifies us that a specific lease 
violation has occurred, we will promptly initiate an appropriate 
investigation.


Sec.  162.587  May a WSR lease provide for negotiated remedies in the 
event of a violation?

    (a) A WSR lease of tribal land may provide either or both parties 
with negotiated remedies in the event of a lease violation, including, 
but not limited to, the power to terminate the lease. If the lease 
provides the parties with the power to terminate the lease, BIA 
approval of the termination is not required and the termination is 
effective without BIA cancellation. The parties must notify us of the 
termination so that we may record it in the Land Titles and Records 
Office.

[[Page 73826]]

    (b) A WSR lease of individually owned Indian land may provide 
either or both parties with negotiated remedies, so long as the lease 
also specifies the manner in which those remedies may be exercised by 
or on behalf of the applicable percentage of Indian landowners under 
Sec.  162.011 of this part. If the lease provides the parties with the 
power to terminate the lease, BIA concurrence with the termination is 
required to ensure that the Indian landowners of the applicable 
percentage of interests have consented. BIA will record the termination 
in the Land Titles and Records Office.
    (c) The parties must notify any surety or mortgagee of a 
termination of a WSR lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease.
    (e) A WSR lease may provide for lease disputes to be resolved in 
tribal court or any other court of competent jurisdiction, by a tribal 
governing body in the absence of a tribal court, or through an 
alternative dispute resolution method. We may not be bound by decisions 
made in such forums, but we will defer to ongoing proceedings, as 
appropriate, in deciding whether to exercise any of the remedies 
available to us.


Sec.  162.588  What will BIA do about a violation of a WSR lease?

    (a) If we determine there has been a violation of the conditions of 
a WSR lease, other than a violation of payment provisions covered by 
paragraph (b) of this section, we will promptly send the lessee and its 
sureties and any mortgagee a notice of violation. The notice of 
violation must be provided by certified mail, return receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) Within 10 business days of the receipt of a notice of 
violation, the lessee must:
    (i) Cure the violation and notify us in writing that the violation 
has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) If a violation is determined to have occurred, we will make a 
reasonable attempt to notify the Indian landowners.
    (4) We may order the lessee to stop work.
    (b) A lessee's failure to pay compensation in the time and manner 
required by a residential lease is a violation of the lease, and we 
will issue a notice of violation in accordance with this paragraph.
    (1) We will send the lessees and its sureties a notice of violation 
by certified mail, return receipt requested:
    (i) Promptly following the date on which payment was due, if the 
lease requires that payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to the Indian landowners 
for individually owned Indian land.
    (3) The lessee must provide adequate proof of payment as required 
in the notice of violation.
    (c) The lessee and its sureties will continue to be responsible for 
the obligations contained in the lease until the lease is terminated, 
cancelled, or expires.
    (d) Nothing in this part affects BIA's ability to take emergency 
action to protect the leased premises under Sec.  162.021.


Sec.  162.589  What will BIA do if a lessee does not cure a violation 
of a WSR lease on time?

    (a) If the lessee does not cure a violation of a WSR lease within 
the requisite time period, or provide adequate proof of payment as 
required in the notice of violation, we will consult with the tribe for 
tribal land or, where feasible, Indian landowners for individually 
owned Indian land, and determine whether:
    (1) We should cancel the lease;
    (2) The Indian landowners wish to invoke any remedies available to 
them under the lease;
    (3) We should invoke other remedies available under the lease or 
applicable law, including collection on any available performance bond 
or, for failure to pay compensation, referral of the debt to the 
Department of the Treasury for collection; or
    (4) The lessee should be granted additional time in which to cure 
the violation.
    (b) We may take action to recover unpaid compensation and any 
associated late payment charges.
    (1) We do not have to cancel the lease or give any further notice 
to the lessee before taking action to recover unpaid compensation.
    (2) We may still take action to recover any unpaid compensation if 
we cancel the lease.
    (c) If we decide to cancel the lease, we will send the lessee and 
its sureties and any mortgagees a cancellation letter by certified 
mail, return receipt requested, within 5 business days of our decision. 
We will send a copy of the cancellation letter to the tribe for tribal 
land, and will provide Indian landowners for individually owned Indian 
land with actual or constructive notice of the cancellation. The 
cancellation letter will:
    (1) Explain the grounds for cancellation;
    (2) If applicable, notify the lessee of the amount of any unpaid 
compensation or late payment charges due under the lease;
    (3) Notify the lessee of their right to appeal under part 2 of this 
chapter, including the possibility that the official to whom the appeal 
is made may require the lessee to post an appeal bond;
    (4) Order the lessee to vacate the property within 31 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time; and
    (5) Require any other action BIA deems necessary to protect the 
Indian landowners.
    (d) We may invoke any other remedies available to us under the 
lease, including collecting on any available performance bond, and the 
Indian landowner may pursue any available remedies under tribal law.


Sec.  162.590  Will late payment charges or special fees apply to 
delinquent payments due under a WSR lease?

    (a) Late payment charges will apply as specified in the lease. The 
failure to pay such amounts will be treated as a lease violation.
    (b) The following special fees may be assessed to cover 
administrative costs incurred by the United States in the collection of 
the debt, if compensation is not paid in the time and manner required, 
in addition to late payment charges that must be paid to the Indian 
landowners under the lease:

------------------------------------------------------------------------
         The lessee will pay . . .                    For . . .
------------------------------------------------------------------------
(a) $50.00................................  Dishonored checks.
(b) $15.00................................  Processing of each notice or
                                             demand letter.
(c) 18 percent of balance due.............  Treasury processing
                                             following referral for
                                             collection of delinquent
                                             debt.
------------------------------------------------------------------------

Sec.  162.591  How will payment rights relating to WSR leases be 
allocated between the Indian landowners and the lessee?

    The WSR lease may allocate rights to payment for insurance 
proceeds,

[[Page 73827]]

trespass damages, compensation awards, settlement funds, and other 
payments between the Indian landowners and the lessee. If not specified 
in the insurance policy, order, award, judgment, or other document 
including the lease, the Indian landowners will be entitled to receive 
such payments.


Sec.  162.592  When will a cancellation of a WSR lease be effective?

    (a) A cancellation involving a WSR lease will not be effective 
until 31 days after the lessee receives a cancellation letter from us, 
or 41 days from the date we mailed the letter, whichever is earlier.
    (b) The cancellation decision will be stayed if an appeal is filed 
unless the cancellation is made immediately effective under part 2 of 
this chapter. While a cancellation decision is stayed, the lessee must 
continue to pay compensation and comply with the other terms of the 
lease.


Sec.  162.593  What will BIA do if a lessee remains in possession after 
a WSR lease expires or is cancelled?

    If a lessee remains in possession after the expiration or 
cancellation of a lease, we may treat the unauthorized possession as a 
trespass under applicable law. Unless the applicable percentage of 
Indian landowners under Sec.  162.011 have notified us in writing that 
they are engaged in good faith negotiations with the holdover lessee to 
obtain a new lease, we may take action to recover possession on behalf 
of the Indian landowners, and pursue any additional remedies available 
under applicable law, such as forcible entry and detainer action.


Sec.  162.594  Will BIA regulations concerning appeal bonds apply to 
cancellation decisions involving WSR leases?

    (a) Except as provided in paragraph (b) of this section, the appeal 
bond provisions in part 2 of this chapter will apply to appeals from 
lease cancellation decisions.
    (b) The lessee may not appeal the appeal bond decision. The lessee 
may, however, request that the official to whom the appeal is made 
reconsider the appeal bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.


Sec.  162.595  When will BIA issue a decision on an appeal from a WSR 
leasing decision?

    BIA will issue a decision on an appeal from a leasing decision 
within 60 days of receipt of all pleadings.


Sec.  162.596  What happens if the lessee abandons the leased premises?

    If a lessee abandons the leased premises, we will treat the 
abandonment as a violation of the lease. The lease may specify a period 
of non-use after which the lease premises will be considered abandoned.
    16. Add a new subpart G to read as follows:
Subpart G--Records
Sec.
162.701 Who owns the records associated with this part?
162.702 How must records associated with this part be preserved?
162.703 How does the Paperwork Reduction Act affect this part?

Subpart G--Records


Sec.  162.701  Who owns the records associated with this part?

    (a) Records are the property of the United States if they:
    (1) Are made or received by a tribe or tribal organization in the 
conduct of a Federal trust function under 25 U.S.C. 450f et. seq., 
including the operation of a trust program; and
    (2) Evidence the organization, functions, policies, decisions, 
procedures, operations, or other activities undertaken in the 
performance of a Federal trust function under this part.
    (b) Records not covered by paragraph (a) of this section that are 
made or received by a tribe or tribal organization in the conduct of 
business with the Department of the Interior under this part are the 
property of the tribe.


Sec.  162.702  How must records associated with this part be preserved?

    (a) Any organization, including tribes and tribal organizations, 
that has records identified in Sec.  162.701(a) of this part, must 
preserve the records in accordance with approved Departmental records 
retention procedures under the Federal Records Act, 44 U.S.C. Chapters 
29, 31 and 33. These records and related records management practices 
and safeguards required under the Federal Records Act are subject to 
inspection by the Secretary and the Archivist of the United States.
    (b) A tribe or tribal organization should preserve the records 
identified in Sec.  162.701(b) of this part, for the period of time 
authorized by the Archivist of the United States for similar Department 
of the Interior records in accordance with 44 U.S.C. Chapter 33. If a 
tribe or tribal organization does not preserve records associated with 
its conduct of business with the Department of the Interior under this 
part, it may prevent the tribe or tribal organization from being able 
to adequately document essential transactions or furnish information 
necessary to protect its legal and financial rights or those of persons 
directly affected by its activities.


Sec.  162.703  How does the Paperwork Reduction Act affect this part?

    The collections of information contained in this part, have been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned OMB Control Number 1076-0155. Response is required to 
obtain a benefit. A Federal agency may not conduct or sponsor, and you 
are not required to respond to, a collection of information unless it 
displays a currently valid OMB Control Number.

    Dated: September 22, 2011.
Larry Echo Hawk,
Assistant Secretary--Indian Affairs.
[FR Doc. 2011-29991 Filed 11-28-11; 8:45 am]
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