[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Rules and Regulations]
[Pages 72440-72509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28926]
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Vol. 77
Wednesday,
No. 234
December 5, 2012
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; Final Rule
Federal Register / Vol. 77 , No. 234 / Wednesday, December 5, 2012 /
Rules and Regulations
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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: Final rule.
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SUMMARY: The Bureau of Indian Affairs (BIA) is revising its regulations
addressing non-agricultural surface leasing of Indian land. This rule
adds new regulations to address residential leases, business leases,
wind energy evaluation leases, and wind and solar development leases on
Indian land, and removes the existing regulations for non-agricultural
leases.
DATES: This rule is effective on January 4, 2013.
FOR FURTHER INFORMATION CONTACT: Elizabeth Appel, Acting Director,
Office of Regulatory Affairs & Collaborative Action, (202) 273-4680;
elizabeth.appel@bia.gov.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
II. Summary of Substantive Revisions
III. Responses to Comments on the Proposed Rule
A. Overview
B. Format of Regulations
C. General Provisions
162.002--How the Part Is Subdivided
162.003--Definitions
162.004 (PR 162.006)--Applicability to Indian Land and Life
Estates
162.005 (PR 162.008)--When a Lease Is Needed
162.006 (PR 162.007)--Land Use Agreements Subject to This Part
162.007 (PR 162.004)--Permits
162.008 (PR 162.005)--Applicability to Documents Submitted
Before Effective Date
162.009 (PR N/A)--Approval of Subleasehold Mortgages (New
Section)
162.010 (PR 162.009)--How To Obtain a Lease
162.011 (PR 162.010)--Identifying and Contacting Indian
Landowners
162.013 (PR 162.012)--Consent
162.014 (PR 162.013)--What Laws Apply to Leases
162.015 (PR N/A) --Tribal Employment Preference Laws (New
Section)
162.016 (PR 162.014)--BIA Compliance With Tribal Laws
162.017 (PR N/A)--What Taxes Apply (New Section)
162.018 (PR 162.015)--Tribal Administration of Part 162
162.019 (PR 162.016)--Access to Leased Premises
162.020 (PR 162.017)--Unitized Leases
162.021 (PR 162.018)--BIA Responsibilities in Approving Leases
162.022 (PR 162.019)--BIA Responsibilities in Enforcing Leases
162.023 (PR 162.020)--Trespass
162.024 (PR 162.021)--Emergency Action
162.025 (PR 162.022)--Appeals
162.026 (PR 162.023)--Contact for Questions
162.027 (PR 162.024)--NEPA & Records
162.028 (PR N/A)--Obtaining Information on Leased Land (New
Section)
D. Residential Leases
E. Business Leases
F. WEELs
G. WSR Leases
H. Cross-Cutting Comments
1. Lease Term
2. Option To Renew
3. Mandatory Lease Provisions
4. Improvements
5. Due Diligence
6. Legal Description--Surveys
7. Compatible Uses
8. Rental/Payment Requirements--Tribal Land
9. Rental/Payment Requirements--Individually Owned Indian Land
10. Rental/Payment Requirements--Valuations
11. Rental/Payment Requirements--When Payment Is Due
12. Rental/Payment Requirements--Direct Pay
13. Rental/Payment Requirements--Payment Methods
14. Rental/Payment Requirements--Types of Compensation
15. Rental/Payment Reviews & Adjustments
16. Bonding & Insurance
17. Approvals--Documents Required
18. Approval Process & Timeline
19. How BIA Decides To Approve Lease Documents
20. Effective Date of Leases
21. Recording
22. Appeal Bonds
23. Amendments
24. Assignments
25. Subleases
26. Leasehold Mortgages
27. Appeals From Inaction
28. Compliance and Enforcement
29. Miscellaneous
IV. Procedural Requirements
A. Regulatory Planning and Review (E.O. 12866 and E.O. 13563)
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)
I. Executive Summary
Federal statutes require the Secretary to approve leases of Indian
land. The rule establishing the procedures for obtaining Secretarial
approval of leases and administration and enforcement of surface leases
is at 25 CFR part 162, Leases and Permits. Currently, part 162 contains
a subpart addressing all non-agricultural leases. This rule replaces
that general subpart with subparts specifically addressing the
following categories of leasing on Indian land: residential, business,
and wind resource evaluation and wind and solar resource development.
Specifically, this rule:
Revises Subpart A, General Provisions;
Creates a new Subpart C, Residential Leases;
Creates a new Subpart D, Business Leases;
Creates a new Subpart E, Wind Energy Evaluation Leases
(WEELs) and Wind and Solar Resource (WSR) Leases;
Deletes Subpart F, Non-agricultural Leases (because that
subpart was intended to address residential and business leasing, which
this rule addresses specifically in subparts C and D, respectively);
Moves the current Subpart E, Special Requirements for
Certain Indian Reservations, to Subpart F; and
Creates a new Subpart G, Records.
The 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 section is being moved to Subpart B,
where they apply only to agricultural leases. Minor edits were made to
the General Provision section to delete redundancies and clarify that
they now apply only to agricultural leases.
This rule contains new provisions on residential, business, and
wind and solar resource leasing that:
Clarify the procedures for obtaining BIA approval of
residential, business, and wind and solar resource lease documents;
Establish deadlines for BIA to issue decision on complete
residential, business, and wind and solar resource lease applications;
Define what information and documents are necessary for a
complete application; and
Provide greater deference to tribes for tribal land
leasing decisions.
II. Summary of Substantive Revisions
This rule makes the procedures for obtaining BIA approval of
residential, business, and wind and solar resource lease documents
(leases, amendments, assignments, subleases, and leasehold mortgages)
as explicit and transparent as
[[Page 72441]]
possible. The current regulations provide for the approval of these
instruments, but do not specify the approval procedures, leading to
possible inconsistencies nationwide, to the detriment of Indian
landowners, lessees and lenders.
This rule continues to require Indian landowner consent for leases,
consistent with the Indian Long Term Leasing Act and the Indian Land
Consolidation Act of 2000 (ILCA), as amended by the American Indian
Probate Reform Act (AIPRA). Because ILCA does not apply to tribes in
Alaska, the consent requirements for Alaska remain the same as in the
previous regulations governing leasing. The regulations also establish
the standard for rental rates, providing that leases on tribal land may
be approved for the compensation negotiated by the tribe and 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 regulations
provide for a 30-day time frame within which BIA must issue a decision
on a complete residential lease application. The final rule eliminates
the requirement for bonds and insurance for residential leases. 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 regulations provide for a
60-day time frame within which BIA must issue a decision on a complete
business lease application.
Subpart E, WEELs and WSR Leases, establishes procedures for
obtaining BIA review and approval of WEELs and WSR leases. For wind
energy, this rule establishes a two-part process whereby developers may
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 evaluate only the impacts of the
evaluation equipment, not the full development of the wind project, may
be incorporated by reference, as appropriate, 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 resource evaluation does not require possession of the
land. The regulations provide for a 20-day time frame within which BIA
must issue a decision on a complete WEEL and a 60-day time frame within
which BIA must issue a decision on a complete WSR lease application.
Some of the more notable cross-cutting substantive changes include
the following.
General Provisions
Clarifying when BIA approval of a lease is required
Clarifying what taxes apply in the context of leasing
Indian land
Clarifying the applicability of the regulations
Clarifying that leases may include a provision giving a
preference to qualified tribal members, based on their political
affiliation with the tribe
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
leases, lease assignments, 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 leases, amendments,
assignments, leasehold mortgages, and subleases unless it finds a
compelling reason not to do so, 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 valuations of
tribal land
Automatically waiving valuation for leases of individually
owned land if the individual landowners provide 100 percent consent
Allowing for BIA waiver of compensation and valuation for
residential leases of individually owned land under certain
circumstances if the lessee is a co-owner that has been living on the
tract for the past 7 years without objection
Allowing for BIA waiver of valuation for leases where the
lessee or tribe will provide infrastructure improvements to the leased
premises and BIA determines it is in the best interest of the
landowners
Allowing short-term leases for wind resource evaluation
purposes at the value negotiated by the Indian landowners (whether
tribal or individual Indians)
Providing that BIA will defer to the tribe's determination
that allowing alternative forms of rental (other than monetary)
compensation for tribal land is in its best interest
Allowing alternative forms of rental (other than monetary)
compensation for individually owned Indian land if the if BIA
determines it is in the best interest of the Indian landowners
Allowing market analysis, competitive bidding, and other
appropriate types of valuation, in addition to appraisals
For tribal land, requiring BIA to defer to the tribe's
determination that rental reviews and adjustments are not necessary
For individually owned land, 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
Direct Pay
Allowing for direct pay (i.e., to the Indian landowners,
rather than to BIA) for residential, business, and wind and solar
resource leasing 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 under
certain circumstances
These changes are intended to increase the efficiency and
transparency of the BIA approval process for the residential, business,
wind energy evaluation, and wind and solar resource leasing of Indian
land, support landowner decisions regarding the use of their land,
support tribal self-determination, increase flexibility in compensation
and valuations, and facilitate management of direct pay. These changes
do not affect agricultural leasing.
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III. Responses to Comments on the Proposed Rule
Tribal consultation on the proposed leasing rule, published
November 29, 2011 (76 FR 73784), occurred during January 2012. We held
three consultation sessions on the proposed rule: January 10, 2012, in
Seattle, Washington; January 12, 2012, in Palm Springs, California; and
January 18, 2012, in Rapid City, South Dakota. The comment deadline was
January 30, 2012. We received over 80 written submissions, and received
written and oral comments from approximately 50 Indian tribes during
this round of tribal consultation, as well as comments from tribal
organizations, tribal housing authorities, and tribal corporations. We
also received comments from community development financial
institutions (CDFIs), tribal members, and members of the public.
The following is a summary of comments received during consultation
and the public comment period on the proposed rule, and an explanation
of how we addressed those comments in the final rule. We accepted a
number of wording changes that are incorporated into the final rule,
but may not be specifically mentioned here.
Note: The section numbers in this preamble refer to section
numbers in the final rule. We have included a ``PR'' for ``proposed
rule'' to indicate the corresponding proposed rule section where it
differs from the final rule section number and may be helpful to the
reader.
A. Overview
Many tribes and tribal organizations stated that they generally
supported the proposed rule, and that the proposed rule was a
significant improvement over the previous draft (which was released for
consultation) because it more accurately reflected the intent of BIA to
streamline and expedite the leasing process, advance economic
development, and spur renewable energy development. Tribes stated that
they supported the steps BIA took in the proposed rule to recognize
tribal sovereignty and tribes' achievements in terms of their ability
to manage their own affairs on critical leasing issues. Tribes were
particularly supportive of provisions for tribal waiver of appraisals,
deadlines for BIA action, and BIA's deference to the Indian landowners'
determination that the lease is in their best interest.
While tribes supported the proposed rule overall, they had
suggestions for improvement, which are summarized below. A tribal
organization stated, broadly, that the regulations should better
reflect an updated concept of trust responsibility that defers to
tribes in financial matters. We have reviewed the regulation to ensure
that the final rule requires BIA to defer to tribes in all possible
cases, consistent with our trust responsibility.
One tribe suggested we review the regulation to reconsider each and
every regulatory burden it imposes. Likewise, another tribe asked that
we review the regulation to ensure tribes' sovereign rights are
recognized. We followed these recommendations and have deleted
regulatory burdens that are not necessary for BIA to meet its statutory
and trust responsibilities and have included provisions supporting
tribes' sovereign rights.
Several tribes stated that revision of the business leasing
regulations was long overdue. Tribes had suggestions for limiting BIA's
role in the leasing process to an administrative role by, for example,
limiting BIA's independent review of tribal leasing decisions for
financial prudence. Another tribe said that tribes should be able to
rely on BIA to process lease documents but not make decisions affecting
substantive lease contents or negotiations. We have limited BIA's
involvement in substantive lease contents, and left lease provisions
and issue resolutions to negotiation, to the extent possible and
consistent with our trust responsibility.
A few tribes requested deferring finalization of the residential
leasing subpart, to allow for further consultation and more time for
all comments to be considered. We will discuss these tribes' comments
in more detail, below.
Tribes had suggestions for communicating the final rule's changes,
including the following:
Create a Web page dedicated solely to the new leasing
regulations including a repository of guidance and informational
materials. We are developing a Web site accessible from www.bia.gov and
will populate the Web site with guidance and informational materials as
they are developed.
Provide checklists and sample lease provisions to assist
in the lease negotiation process. We will develop checklists and make
them available on the Web site.
B. Format of Regulations
A few tribes commented on the format of the regulations. The
majority stated that they believe the common provisions of separate
subparts should be kept separate because it is more user-friendly. A
minority stated that this format results in regulations that are too
lengthy and redundant. We retained the separate subparts for user-
friendliness.
Several tribes stated that the proposed rule made little
distinction between individual Indian landowners and tribes or tribal
agencies, and noted that BIA should defer to the tribe and tribal
agency and exercise a lesser degree of oversight than for individual
Indian landowners. To the extent consistent with the trust
responsibility, we treated tribal and individual Indian landowners
differently, providing more deference to tribal landowners in the lease
approval process and in the lease enforcement process. We highlighted
this difference in the final rule by breaking out questions regarding
rental compensation and valuation according to whether the lease is of
tribal land or individually owned Indian land.
C. Subpart A--General Provisions
We received the following comments on sections within subpart A.
162.002--How the Part Is Subdivided
Clarify the provision in 162.002 stating that Subpart F
(Special Requirements for Certain Reservations) is subject to subparts
A and G. In response, we added a sentence to 162.002 to clarify which
provisions apply if there is a conflict between Subpart F (or any act
of Congress under which a Subpart F lease is made) and Subparts A
through G. Note that Subpart F is merely a redesignation of what was
Subpart E.
Explain the effect of deleting the former subpart
addressing non-agricultural leases on tribal regulations modeled after
that subpart. There will be no effect; the tribal regulations stand
independent of Federal regulations.
162.003--Definitions
``Amendment''--Define this term to include any changes to
the terms of a lease approved by BIA under part 162 that are not
contemplated by or provided for in the lease during its initial or
renewal period. We did not add this definition because it is self-
evident.
``Business day''--Include tribally recognized holidays out
of respect for tribal sovereignty and to provide consistency for
individuals and businesses dealing with tribes. We determined not to
include tribally recognized holidays because the wide variation in
tribally recognized holidays would make administration of the Federal
regulations unworkable.
``Court of competent jurisdiction''--Add that nothing in
the definition alters preexisting allocations of jurisdiction over any
matter as among State, Federal,
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and tribal courts. While we agree this is true, we determined that
explicitly including this in the definition could imply that, where
this statement is not made explicitly, preexisting allocations of
jurisdiction are altered.
``Fee interest''--Clarify this definition to state when
restrictions on alienation attach, if at all, to tribally acquired fee
land. We determined that this request is outside the scope of this
rulemaking.
``Government lands''--Clarify that this definition does
not include tribal lands. We incorporated this change.
``Housing for public purposes''--Clarify that this term
includes programs administered or substantially financed by any entity
(not just not-for-profit entities) organized for the purpose of
developing or improving low income housing using tax credits. We
incorporated this change.
``Immediate family''--Leave this definition to tribes'
discretion. We incorporated this change by providing that the
definition will apply only in the absence of a tribal law definition.
``Indian landowner''--Include tribal corporations
organized under 25 U.S.C. 477 (``section 17 corporations'') in this
definition, to the extent they have the authorization to lease Indian
land to third parties. We did not incorporate this change because
section 17 corporations are exempt from the requirement to obtain BIA
approval of leases under part 162. A few commenters also suggested
defining ``individual Indian landowner'' and ``tribal landowner'' to
emphasize their differences. We determined that these definitions were
unnecessary.
``Inherent Federal function''--See discussion of 162.018,
below.
``Lease''--Add that a lessee's right to possession will
limit the landowner's right only to the extent provided in the lease to
avoid any possible argument that common law definitions requiring
exclusive right of possession be applied to part 162. We incorporated
the suggested change.
``Lease''--Expand the definitions of ``lease'' and
``lessee'' to include subleases and assignments from sublessees and
assignees. We did not incorporate this change because it would expand
the application of the regulations beyond what is intended.
``Lease document''--Add a definition for this term (the
proposed rule used this term without a definition) to expressly include
a lease, amendment, assignment, sublease, and leasehold mortgage. We
added this definition.
``LTRO''--Revise to clarify that a tribe contracting or
compacting LTRO functions may be included in this definition. We did
not make this change because these tribes are already included in the
definition, as part of ``BIA.''
``Notice of violation''--Revise to account for situations
in which a notice of violation is issued against the Indian landowner/
lessor. We did not incorporate this change because BIA's obligation is
to the Indian landowner, not to enforce the lease on behalf of the
lessee.
``Orphaned minor''--Revise because the proposed rule's
definition inaccurately suggests that every minor without a court-
appointed guardian is orphaned. We revised the definition to match the
common understanding of this term.
``Permit''--Revise to clarify that this term does not
include tribal grazing permits. Because grazing permits are governed by
another CFR part, 25 CFR part 166, this definition does not apply to
them; therefore, we determined that no change to this definition is
necessary.
``Single family residence''--Restrict this term to one
dwelling unit. We did not revise the definition, but the definition
allows tribes to define the term differently. This definition is
consistent with the scope of financing available under section 184 of
the Housing and Community Development Act of 1992 (12 U.S.C. 1715z-
13a). We also added this term to the definition of ``housing for public
purposes'' to clarify that this housing may include a single family
residence, rather than just developments. We incorporated a tribal
housing authority's suggestion that we add ``or other tribal law'' to
allow tribal law beyond just zoning law to define this term.
``Sublease''--Revise to indicate that the interest held by
the sublessee should be ``no greater than'' that of the lessee, since
the sublessee may hold the same rights as the lessee. We incorporated
this change.
``Tribal law''--Revise to add that the body of non-Federal
law is ``defined by each tribe.'' We did not incorporate this change
because it would be redundant, given that the definition clearly
establishes that the tribe defines its own body of law.
``TDHE'' (tribally designated housing entity)--Expand to
include tribally sponsored or tribally sanctioned not-for-profit
entities. We incorporated this requested change. Expand to include a
tribal council or other tribal departments fulfilling TDHE services. We
did not incorporate this change because a tribal council or tribal
department that fulfills the function of a TDHE, but is not separate
from the tribe, does not have to obtain a lease of tribal land (the
tribe cannot lease to itself) while entities separate from the tribe
must obtain a lease of tribal land.
162.004 (PR 162.006)--Applicability to Indian Land and Life Estates
Clarify how BIA addresses leases of life estates where the
land is fractionated. We revised this section to clarify the difference
between a life estate that includes all of the interests in a tract,
and a life estate of a fractional interest in a tract--including
clarifying whose consent is required for the life tenant to lease in
each case, and whether BIA approval of the lease is required in each
case. Where the life estate covers only a fractional interest in a
tract, the life tenant must obtain the consent of the co-owners and BIA
approval.
Restrict BIA services in collecting rents on behalf of a
life tenant so that they do not exceed services provided to trust
beneficiaries. In response, BIA is not responsible for collecting the
rents on behalf of the life tenant, but may where the life tenant's
whereabouts are unknown. In these situations, the Trust Fund Accounting
System (TFAS) will distribute rent to an account for the life tenant.
Do not assume that all life estates are held by non-
Indians, because tribes use life estates as a form of estate planning
for tribal members. The revised regulations clarify that BIA treats
life estates the same whether they are held by Indians or non-Indians;
BIA's trust responsibility is to the remaindermen.
Delete provisions requiring lessees to pay life tenants
directly, because that requirement exposes the life tenant's rental
income to State court judgments; whereas if BIA collected rent on
behalf of the life tenant, the rental income would be protected from
these judgments by an individual Indian money (IIM) account. While we
note this point, the rule allows life tenants to enter into leases
without BIA approval, and BIA does not administer such leases on behalf
of life tenants. The requirement that lessees pay life tenants directly
is consistent with the rights and responsibilities afforded to life
tenants in the rule. As stated above, this rule treats life estates the
same whether they are held by Indians or non-Indians.
Reflect Congress's intent to extend BIA's trust
responsibility to protect Indian descendants who are life tenants,
without removing property from trust. BIA will protect the trust asset,
but does not agree that Congress expressed its
[[Page 72444]]
intent to extend the fiduciary duty to life tenants.
Protect remaindermen from a situation where a life tenant
enters into a long-term lease for the duration of his or her life and
receives up-front payments such that the life tenant enjoys the income
to the detriment of the remaindermen. If a life tenant enters into a
lease only for the duration of his or her life, he or she is entitled
to enjoy the income, whether paid in a lump sum or over time, to the
exclusion of the remaindermen. The rule protects remaindermen by making
it clear that, upon the death of the life tenant, any lease of a life
estate terminates. The remaindermen could evict the life tenant's
lessee or negotiate a new lease with new payment terms. If either the
lessee or the remainderman believed they had grounds to do so, they
could attempt to recoup losses from the life tenant's estate.
162.005 (PR 162.008)--When Lease Is Needed
Add that an entity using a tribal land assignments or
similar instruments and permit holders do not need a lease to possess
Indian land. We incorporated this change.
Exempt owners of a fractional interest from the
requirement to obtain a lease from the owners of the other fractional
interests in the same tract. We did not incorporate this change.
Section 162.005(a)(2) allows the co-owner to use the tract if the other
fractional co-owners agree; otherwise, the co-owner must obtain a lease
from the other fractional owners to ensure that they consent (if
leased, rent may not be necessary, as this situation is one in which
fair market rental may be waived). We disagree with the commenters'
claim that each owner has full rights to use the property in any
manner, because one co-owner does not have the right to exclude the
others without their consent. For this reason, we reject the
commenters' claim that requiring a lease is diminishing the property
rights of each co-owner by requiring him or her to pay rent for use of
his or her own property.
Clarify how 162.005(a)(2), which states that co-owners may
agree to allow one co-owner to use the tract without a lease, will work
and when a lease, rather than an informal agreement, is required. While
a lease documenting the agreement is preferable, the rule provides for
maximum flexibility by allowing for informal agreements. A lease is
required if all the co-owners cannot agree to an informal agreement.
Section 162.005(a)(2) is consistent with existing regulations, allowing
for owners' use when 100 percent of the landowners agree. If not all
100 percent agree, then a lease is required. The informal agreement may
continue throughout the lives of the landowners, or for whatever period
they agreed to, until they no longer agree.
Incorporate the current language of 162.102(d) (regarding
section 17 corporations) into the new subpart A. This provision is
incorporated at 162.005(b)(3).
162.006 (PR 162.007)--Land Use Agreements Subject to This Part
Clarify whether the regulations apply to those tribes with
tribe-specific statutory authority for leasing. We added provisions to
162.006 to clarify that tribes leasing Indian land under a special act
of Congress that authorizes leasing without BIA approval are not
subject to part 162.
Clarify that tribes with special Federal statutory
authority to lease under tribal regulations approved by the Secretary
may adopt any of the part 162 regulations subject to Secretarial
approval of the amendment to tribal regulations. We agree this is the
case.
Make Federal approval requirements, but not recording and
enforcement provisions, inapplicable to leases issued by section 17
corporations. We clarified in 162.006 that leases of tribal land issued
by section 17 corporations under their charters are not subject to the
regulations (including enforcement provisions) for leases of 25 years
or less, but the leases must be recorded.
State that a land use agreement that encumbers tribal land
and is authorized by 25 U.S.C. 81 is governed by 25 CFR part 84, rather
than, as the proposed rule stated, that a land use agreement that
encumbers tribal land is governed by 25 U.S.C 81. We incorporated this
change.
Correct the erroneous suggestion in the table in 162.006
that all land use agreements that can be called by a certain name are
governed by the corresponding CFR parts, because the statutory
authority determines what the land use agreement is, and what the
corresponding CFR part is. We considered adding the statutory
authorities to this table but determined that it would be too
voluminous and ultimately unhelpful. Instead, we clarified the
statutory authorities for part 162 leases and provide that other
statutory authority governs the agreements in the table.
Add that tribal laws and customs must be deferred to in
determining whether a use is ``temporary'' under a ``tribal land
assignment.'' We addressed this comment by deleting the word
``temporary,'' because a tribal land assignment may be for any
appropriate period of time under tribal law.
Clarify whether declarations of tribal land set-asides
must be submitted to BIA for a determination that they are not leases,
as permits must. Tribal land assignments and similar instruments
allowing use of tribal land cannot be subject to part 162, and
therefore do not need to be submitted to BIA for BIA's file or a
determination that they are not leases.
Clarify that tribal ``dedications to a public use'' and
other means of setting aside tribal land for particular purposes do not
require an approved lease under this part. Instruments such as these
would fall under ``tribal land assignments and similar instruments
authorizing uses of tribal land,'' which are not subject to part 162.
Clarify the applicability of the regulations to section 17
corporations. We have added provisions to 162.006 to clarify that part
162 does not apply to leases of tribal land by a section 17 corporation
under its charter to a third party for a period not to exceed 25 years,
and to 162.005 to clarify that a section 17 corporation managing or
having the power to manage tribal land directly under its Federal
charter or under a tribal authorization (not under a lease from the
Indian tribe) does not need a lease under part 162 to do so. Several
tribes stated that they disagree with the exemption for section 17
corporations leasing to third parties, because tribes would have to
obtain BIA approval to lease to a third party. This exemption is
established in 25 U.S.C. 477 and applies to BIA approval of any lease
document that would otherwise fall under part 162.
162.007 (PR 162.004)--Permits
Tribes nearly unanimously supported the proposed rule's removal of
the requirement to obtain BIA approval of permits. The tribes stated
that eliminating BIA permit approval increases tribal self-
determination and streamlines the process. Some tribes also stated that
requirements for the landowners to follow relevant environmental and
cultural resource laws, and for BIA to confirm the document is a
permit, protect Indian land without burdening landowners with an
onerous approval process. In addition, we received the following
comments:
Reconcile 162.007's explanation as to what qualifies as a
``permit'' with the grazing regulations. Because grazing permits are
issued under a separate statutory authority and are governed by
[[Page 72445]]
separate regulations at 25 CFR part 166, the description in part 162
does not affect grazing permits.
Clarify that the requirement that permits comply with
applicable environmental laws does not mean the National Environmental
Policy Act (NEPA) applies. Because there is no Federal approval of
permits, neither NEPA nor Section 106 of the National Historic
Preservation Act applies to permits.
Add a timeline or process by which BIA ``confirms''
whether a document is a permit or a lease. We incorporated this change
by adding a 10-day timeline by which BIA may notify the Indian
landowners that a lease is required because the permit grants an
interest in Indian land.
Clarify in the introductory paragraph to the table that
the characteristics are merely ``examples of common characteristics,''
to ensure that permits that lack one or more characteristics are not
necessarily excluded from being considered a permit. We incorporated
this change.
Delete the permit characteristic ``does not grant an
interest in Indian land'' because permits typically grant non-
possessory use rights, which are, in effect, an ``interest.'' BIA
disagrees that a non-possessory use privilege is a ``legal interest''
in the Indian land. For this reason, we did not make the requested
change.
Narrow the permit characteristic, ``unlimited access by
others,'' because it is too broad. Tribal members retain rights of
access on permitted lands, including hunting privileges, cultural and
spiritual use access, and easements. We revised this to clarify that a
permittee has a ``non-possessory right of access.''
Clarify that BIA will no longer police compliance with
permits or collect and distribute permit payments, and allow landowners
to opt-in or opt-out of BIA approval for permits. BIA understands this
is a significant change for some areas that heavily rely on permits.
Once this final rule is effective, the landowner will be responsible
for collecting permit payments, rather than BIA. BIA will not collect
permit income from permittees, and BIA will not distribute permit
income to Indian landowners. If there is a dispute regarding the permit
or whether the permittees have made timely payments, the Indian
landowners' remedy is with a court of competent jurisdiction. We added
a provision to clarify that BIA will not administer or enforce permits.
Limit tribes' ability to establish compensation and
conditions to prevent permitting from being a separate revenue
opportunity for tribes beyond leases and rights-of-way. BIA did not
incorporate this change because tribal landowners have the right to
receive compensation for granting access through a permit, and tribal
landowners may establish whatever compensation they like.
Clarify whether 162.007 allows BIA to grant permits on
tribal land, without tribal approval. The final 162.007 does not allow
BIA to grant permits on tribal land, only on U.S. Government land
covered by part 162.
162.008 (PR 162.005)--Applicability to Documents Submitted Before
Effective Date
Clarify that those leases that were submitted to BIA
before the effective date of the rule, but not approved by BIA before
the effective date of the rule, are governed by the rules in effect at
the time of the submission. We reworded 162.008 to clarify that this is
the case.
Clarify what version of the regulations will apply to
leases approved before the effective date of the rule. We reworded
162.008 to clarify that new regulations will apply to leases approved
before the effective date of the rule, except that where the provisions
of the lease conflict with the provisions of the regulation, the
provisions of the lease will govern. Likewise, options to renew in
leases approved by BIA before the effective date of the final rule will
continue to be governed by the lease terms. Renewals after the
effective date of the final rule of leases that were approved by BIA
before the effective date of the final rule will not have to contain
the final rule's mandatory lease provisions.
Add a qualifying clause in the beginning of 162.008
stating that it applies ``except as provided in 162.006'' (``To what
land use agreements does this part apply?'') for clarity. We
incorporated this change.
Delete the provision in 162.008 stating that BIA has the
right to amend the regulations at any time, because it may create
uncertainty. BIA accepted the request to delete this provision since
BIA retains the right to amend through the Administrative Procedure Act
public notice and comment process, regardless of whether this right is
stated in the regulations.
Address the rule's applicability to leases issued by
section 17 corporations that are exempt from Federal approval. As
stated below, we clarified in 162.006 that part 162 does not apply to
these leases where the term is 25 years or less.
Address the rule's applicability to leases that a tribe or
tribal corporation is obligated to issue upon exercise of a legally
binding option to lease on the effective date of the new rules. The
fact that a party is obligated to issue a lease will not change the
applicability of the regulations.
162.009 (PR N/A)--Approval of Subleasehold Mortgages (New Section)
We added a new section to clarify whether subleasehold
mortgages require BIA approval, in response to comments on subleases
and leasehold mortgages.
162.010 (PR 162.009)--How To Obtain a Lease
Narrow 162.010 so that only a tribe may submit a lease to
BIA for approval. We did not add this restriction because a lease of
Indian land must be signed by the Indian landowners (or the BIA on
behalf of landowners in limited circumstances) and the lessee. BIA will
accept the lease document from either the prospective lessee or the
Indian landowner.
162.011 (PR 162.010)--Identifying and Contacting Indian Landowners
Require prospective lessees to contact tribes directly,
rather than going through BIA first in 162.011. We addressed this
comment by narrowing application of this section to individual Indian
landowners.
Add language to this section requiring the prospective
lessee to provide a written explanation of the need for obtaining
Indian landowner information. We added this requirement.
162.013 (PR 162.012)--Consent
One tribe submitted extensive comments regarding its situation,
wherein tribal members constructed homes without a lease so long as the
member had a fractional interest in the tract. Any person who owns a
fractional interest in a tract must obtain consent from all of the
other owners (co-owners) of fractional interests in that tract in order
to possess that tract without a lease, or must obtain consent from the
co-owners representing the appropriate percentage of ownership in the
tract to lease the tract. See 162.005(a) (PR 162.008(a)). Where a lease
is required, and consent to lease cannot be obtained within 90 days,
BIA may issue a lease under paragraph 162.013(c)(6) (PR 162.012(c)(6)).
One Alaska tribe with a unique situation stated that BIA should add a
provision to part 162 addressing consent requirements specifically for
that tribe. Because the Indian Land Consolidation Act (ILCA) and its
consent provisions do not apply to Alaska, we were unable to
incorporate this requested change.
[[Page 72446]]
In addition, we received the following comments:
Clarify that a section 17 corporation may consent to a
lease. Because part 162 does not apply to section 17 corporations
granting others the right to possess Indian land, we did not
incorporate this change.
A few tribes noted that where the consent of the
landowners of 100 percent of the interests is required, it is difficult
to obtain a lease. Under ILCA, if there are one to five landowners in a
tract, then the owners of 90 percent of the interests in that tract
must consent. In some cases, depending on the percentage of interests
owned by each, this may mean that all of the landowners must consent.
BIA recognizes the practical problems that are caused in those cases
where all landowners must consent, but is constrained by statutory
parameters.
Clarify what tribal consent is needed for tribal lands and
for fractionated lands where individual landowners owning the required
percentage of interests under the ILCA have consented. If the tract is
one in which 100 percent of the interests are owned by the tribe, the
tribe must be a party to the lease of tribal land, and will need to
authorize (i.e., consent to) the lease. If the tract is fractionated,
and less than 100 percent of the interests are owned by the tribe and
the lease is authorized by the Native American Housing and Self-
Determination Act (NAHASDA), tribal consent is still required. If the
lease for a fractionated tract is entered into under another statutory
authority, then tribal consent is not needed; Congress provided for
this situation in stating that where a tribe did not consent to a lease
of fractionated land, it is not considered a party to the lease. See 25
U.S.C. 2218(d)(2).
Revise the consent provisions to apply to tribes, in
addition to individual Indian landowners. Because the term ``Indian
landowners'' includes both tribal landowners and individual Indian
landowners, we did not revise these provisions. Another tribe asked
that we add ``individual'' before ``Indian landowner'' everywhere the
rule discusses consent. We did not incorporate this change because a
tribal landowner must also consent to a lease of its land.
Limit the parties' ability to allow for ``deemed consent''
in a lease to individual landowners. The regulations limit deemed
consent lease provisions to individual Indian landowners only. One
tribe requested adding tribes to allow for tribes to be deemed to have
consented. We did not incorporate this change out of respect for tribal
sovereignty and because other comments requested that it be limited to
individual Indian landowners.
Replace the term ``consent'' with ``grant'' because the
landowners actually ``grant'' the lease. While it is true that
landowners grant the lease, we adopted the language of ILCA in
referring to ``consent'' to avoid potential confusion where there are
several owners of fractional interests and one ``grants'' the lease but
the others do not.
Delete paragraph (c)(6), which empowers BIA to consent to
a lease if the landowners have been unable to reach an agreement for 3
months, because it favors the prospective lessee rather than the
landowner where a non-consenting landowner has legitimate reasons for
not consenting. We did not delete this paragraph because it implements
statutory authority (25 U.S.C. 380) and BIA will determine whether the
lease is in the best interest of the landowners before exercising this
authority.
162.014 (PR 162.013)--What Laws Apply to Leases
Clarify when tribal laws apply to leases under part 162,
and when BIA may waive part 162 due to conflicting or inconsistent
tribal law. We revised this section by incorporating the tribes'
suggested language to allow tribal laws to supersede or modify part 162
provisions, as long as certain conditions are fulfilled (e.g., the
tribe notifies BIA of the modifying or superseding effect).
Revise the proposed rule's language about when State law
would be applied because a Federal court could read the proposed rule's
provisions as providing authority for a court to apply State law. We
revised the section to clarify that State law may apply where a Federal
court made it applicable in the absence of Federal or tribal law.
Another concern was that tribes should have the flexibility to apply
State law in certain circumstances. The final rule's language clarifies
that a tribe may apply State law.
Clarify that the phrase ``parties to a specific lease may
subject it to State or local law in the absence * * *'' does not give
individuals the authority to establish that the State or locality has
jurisdiction. We added language to clarify that the individuals will be
subjecting only their lease to this jurisdiction.
Add provisions that require BIA to recognize and
acknowledge tribal laws regulating activities on land under a lease,
including land use, environmental protection, and historic
preservation, as in the 2004 draft regulations. The additional language
in 162.016 regarding the applicability of tribal law covers this.
162.015 (PR N/A)--Tribal Employment Preference Laws (New Section)
Add language recognizing the applicability of tribal
preference laws to lessees. To clarify this applicability, we added a
new section 162.015. Tribe-specific employment preferences as provided
in these regulations are political preferences, not based on race or
national origin. They run to members of a particular federally-
recognized tribe or tribes whose trust or restricted lands are at issue
and with whom the United States holds a political relationship. These
preferences are rationally connected to the fulfillment of the federal
government's trust relationship with the tribe that holds equitable or
restricted title to the land at issue. These preferences also further
the United States' political relationship with Indian tribes. Tribes
have a sovereign interest in achieving and maintaining economic self-
sufficiency, and the federal government has an established policy of
encouraging tribal self-governance and tribal economic self-
sufficiency. A tribe-specific preference in accord with tribal law
ensures that the economic development of a tribe's land inures to the
tribe and its members. Tribal sovereign authority, which carries with
it the right to exclude non-members, allows the tribe to regulate
economic relationships on its reservation between itself and non-
members. See, generally, Equal Employment Opportunity Commission v.
Peabody Western Coal Company, No. 2:01-cv-01050 JWS (D. Ariz., Oct. 18,
2012) (upholding tribal preferences in leases of coal held in trust for
the Navajo Nation and Hopi Tribe, but also citing with approval the use
of such preferences in business leases). These regulations implement
the established policy of encouraging tribal self-governance and tribal
economic self-sufficiency by explicitly allowing for tribal employment
preferences.
162.016 (PR 162.014)--BIA Compliance With Tribal Laws
Restrict when BIA will defer to tribal law by changing
``making decisions regarding leases'' to ``making the decision to
approve or disapprove the proposed lease.'' We did not incorporate this
change because BIA will defer to tribal law in decisions regarding
leases beyond just the approval decision.
[[Page 72447]]
162.017 (PR N/A)--What Taxes Apply (New Section)
All tribal commenters supported proposed provisions clarifying that
improvements on trust or restricted land are not taxable by non-tribal
entities; however, many tribes requested clarification regarding other
taxation arising in the context of leasing Indian land. For this
reason, we separated this topic into its own section and moved it from
the residential, business, and WSR leasing subparts to subpart A. This
section now addresses not only taxation of improvements on leased
Indian land, but also taxation of the leasehold or possessory interest,
and taxation of activities (e.g., excise or severance taxes) occurring
or services performed on leased Indian land.
Tribes have inherent plenary and exclusive power over their
citizens and territory, which has been subject to limitations imposed
by Federal law, including but not limited to Supreme Court decisions,
but otherwise may not be transferred except by the tribe affirmatively
granting such power. See, Cohen's Handbook of Federal Indian Law, 2012
Edition, Sec. 4.01[1][b]. The U.S. Constitution, as well as treaties
entered into between the United States and Indian tribes, executive
orders, statutes, and other Federal laws recognize tribes' inherent
authority and power of self-government. See, Worcester v. Georgia, 31
U.S. 515 (1832); U.S. v. Winans, 198 U.S. 371, 381 (1905)(``[T]he
treaty was not a grant of rights to the Indians, but a grant of rights
from them--a reservation of those not granted.''); Cohen's Handbook of
Federal Indian Law, 2012 Edition, Sec. 4.01[1][c] (``Illustrative
statutes * * * include [but are not limited to] the Indian Civil Rights
Act of 1968, the Indian Financing Act of 1974, the Indian Self-
Determination and Education Assistance Act of 1975 * * * [and] the
Tribe Self-Governance Act * * * In addition, congressional recognition
of tribal authority is [also] reflected in statutes requiring that
various administrative acts of[hellip] the Department of the Interior
be carried out only with the consent of the Indian tribe, its head of
government, or its council.''); Id. (``Every recent president has
affirmed the governmental status of Indian nations and their special
relationship to the United States'').
With a backdrop of ``traditional notions of Indian self-
government,'' Federal courts apply a balancing test to determine
whether State taxation of non-Indians engaging in activity or owning
property on the reservation is preempted. White Mountain Apache Tribe
v. Bracker, 448 U.S. 136, 143 (1980). The Bracker balancing test
requires a particularized examination of the relevant State, Federal,
and tribal interests. In the case of leasing on Indian lands, the
Federal and tribal interests are very strong.
The Federal statutes and regulations governing leasing on Indian
lands (as well as related statutes and regulations concerning business
activities, including leases, by Indian traders) occupy and preempt the
field of Indian leasing. The Federal statutory scheme for Indian
leasing is comprehensive, and accordingly precludes State taxation. In
addition, the Federal regulatory scheme is pervasive and leaves no room
for State law. Federal regulations cover all aspects of leasing:
Whether a party needs a lease to authorize possession of
Indian land;
How to obtain a lease;
How a prospective lessee identifies and contacts Indian
landowners to negotiate a lease;
Consent requirements for a lease and who is authorized to
consent;
What laws apply to leases;
Employment preference for tribal members;
Access to the leased premises by roads or other
infrastructure;
Combining tracts with different Indian landowners in a
single lease;
Trespass;
Emergency action by us if Indian land is threatened;
Appeals;
Documentation required in approving, administering, and
enforcing leases;
Lease duration;
Mandatory lease provisions;
Construction, ownership, and removal of permanent
improvements, and plans of development;
Legal descriptions of the leased land;
Amount, time, form, and recipient of rental payments
(including non-monetary rent), and rental reviews or adjustments;
Valuations;
Performance bond and insurance requirements;
Secretarial approval process, including timelines, and
criteria for approval of leases;
Recordation;
Consent requirements, Secretarial approval process,
criteria for approval, and effective date for lease amendments, lease
assignments, subleases, leasehold mortgages, and subleasehold
mortgages;
Investigation of compliance with a lease;
Negotiated remedies;
Late payment charges or special fees for delinquent
payments;
Allocation of insurance and other payment rights;
Secretarial cancellation of a lease for violations; and
Abandonment of the leased premises.
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, ultimately
contributing to tribal well-being and self-government. The legislative
history of section 415 demonstrates that Congress intended to maximize
income to Indian landowners and encourage all types of economic
development on Indian lands. See Sen. Rpt. No. 84-375 at 2 (May 24,
1955). Assessment of State and local taxes would obstruct Federal
policies supporting tribal economic development, self-determination,
and strong tribal governments. State and local taxation also threatens
substantial tribal interests in effective tribal government, economic
self-sufficiency, and territorial autonomy. The leasing of trust or
restricted land is an instrumental tool in fulfilling ``the traditional
notions of sovereignty and [] the federal policy of encouraging tribal
independence.'' Bracker, 448 U.S. at 145 (citing McClanahan v. Arizona
State Tax Comm'n, 411 U.S. 164, 174-75 (1973)). The leasing of trust or
restricted lands facilitates the implementation of the policy
objectives of tribal governments through vital residential, economic,
and governmental services. Tribal sovereignty and self-government are
substantially promoted by leasing under these regulations, which
require significant deference, to the maximum extent possible, to
tribal determinations that a lease provision or requirement is in its
best interest. See Joseph P. Kalt and Joseph William Singer, The Native
Nations Institute for Leadership, Management, and Policy & The Harvard
Project on American Indian Economic Development, Joint Occasional
Papers on Native Affairs, Myths and Realities of Tribal Sovereignty:
The Law and Economics of Indian Self-Rule, No. 2004-03 (2004)
(``economically and culturally, sovereignty is a key lever that
provides American Indian communities with institutions and practices
that can protect and promote their citizens interests and well-being
[and] [w]ithout that lever, the social, cultural, and economic
viability of American Indian communities and, perhaps, even identities
is untenable over the long run'').
Another important aspect of tribal sovereignty and self-governance
is taxation. Permanent improvements and
[[Page 72448]]
activities on the leased premises and the leasehold interest itself may
be subject to taxation by the Indian tribe with jurisdiction over the
leased property. The Supreme Court has recognized that ``[t]he power to
tax is an essential attribute of Indian sovereignty because it is a
necessary instrument of self-government and territorial management.''
Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 137 (1982). State and
local taxation of lessee-owned improvements, activities conducted by
the lessee, and the leasehold interest also has the potential to
increase project costs for the lessee and decrease the funds available
to the lessee to make rental payments to the Indian landowner.
Increased project costs can impede a tribe's ability to attract non-
Indian investment to Indian lands where such investment and
participation are critical to the vitality of tribal economies. An
increase in project costs is especially damaging to economic
development on Indian lands given the difficulty Indian tribes and
individuals face in securing access to capital. A 2001 study by the
U.S. Department of the Treasury found that Indians' lack of access to
capital and financial services is a key barrier to economic
advancement. U.S. Dept. of the Treasury, Community Development and
Financial Institutions Fund, The Report of the Native American Lending
Study at 2 (Nov. 2001). Along the same line, 66 percent of survey
respondents stated that private equity is difficult or impossible to
obtain for Indian business owners. Id.
In many cases, tribes contractually agree to reimburse the non-
Indian lessee for the expense of the tax, resulting in the economic
burden of the tax ultimately being borne directly by the tribe.
Accordingly, the very possibility of an additional State or local tax
has a chilling effect on potential lessees as well as the tribe that as
a result might refrain from exercising its own sovereign right to
impose a tribal tax to support its infrastructure needs. Such dual
taxation can make some projects less economically attractive, further
discouraging development in Indian country. Economic development on
Indian lands is critical to improving the dire economic conditions
faced by American Indians and Alaska Natives. The U.S. Census Report
entitled We the People: American Indians and Alaska Natives in the
United States, issued February 2006, documented that a higher ratio of
American Indians and Alaska Natives live in poverty compared to the
total population, that participation in the labor force by American
Indians and Alaska Natives was lower than the total population, and
that those who worked full-time earned less than the general
population.
162.017(a). Subject only to applicable Federal law, permanent
improvements on trust or restricted land are not taxable by States or
localities, regardless of who owns the improvements. Permanent
improvements are, by their very definition, affixed to the land.
Accordingly, a property tax on the improvements burdens the land,
particularly if a State or local government were to attempt to place a
lien on the improvement. Numerous provisions in the regulations address
all aspects of improvements, requiring the Secretary to ensure himself
that adequate consideration has been given to the enumerated factors
under section 415(a). These include the height, safety, and quality of
improvements; provisions requiring the lease to address ownership,
construction, and removal of improvements; provisions imposing due
diligence requirements on the construction of improvements, and
provisions requiring plans of development for business and WSR leases.
See, e.g.,162.314 through 162.316, 162.414 through 162.416, 162.514
through 162.516, and 162.543 through 162.545. In addition, the
regulations require the BIA to comply with tribal law, including tribal
laws regulating improvements, when making decisions concerning leases
of trust or restricted land. See 162.016. State and local taxation of
improvements undermine Federal and tribal regulation of improvements.
162.017(b). Subject only to applicable Federal law, activities
conducted under a lease of trust or restricted land that occur on the
leased premises are not taxable by States or localities, regardless of
who conducts the activities. An example of this principle is in the
trading business where the courts have held that taxation of such
activities is preempted by the Indian Trader Statutes, see 25 U.S.C.
261, and the all-inclusive regulations under them, see 25 CFR
140.1-.26. Federal statutes and regulations are ``sufficient to show
that Congress has taken the business of Indian trading on reservations
so fully in hand that no room remains for State laws imposing
additional burdens upon traders.'' Warren Trading Post Co. v. Arizona
State Tax Comm'n, 38 U.S. 685, 690 (1995) (precluding imposition of
State sales taxes); Central Machinery Co. v. Arizona State Tax Comm'n,
448 U.S. 160 (1980) (preemption applies even if vendor is not licensed
as long as goods or services are traded to a tribe or its members in a
transaction occurring predominately on the reservation). As a general
matter, myriad activities on leased lands related to economic
development, infrastructure building, and governmental operations
provide important revenue and services to the tribal economy and the
generation of economic activity on leased land is an essential
component of tribal self-sufficiency. State and local taxation
undermines that important objective of federal regulation of the
leasing of Indian lands. This subsection, like 162.017(a), is intended
to achieve the dual purposes of supporting tribal economic development
and promoting tribal self-government. The additional burden of State
and local taxation on lease activities would significantly affect the
marketability of Indian land for economic development, as noted above
in the introductory paragraphs. In addition, tribes, as sovereigns,
have inherent authority to regulate zoning and land use on Indian trust
and restricted land, and the regulations require BIA to comply with
tribal laws relating to land use. See 162.016. Such regulation is
undermined by State and local taxation.
162.017(c). Subject only to applicable Federal law, the leasehold
or possessory interest itself is not taxable by States or local
governments. The ability of a tribe or individual Indian to convey an
interest in trust or restricted land arises under Federal law, not
State law; Federal legislation has left the State with no duties or
responsibilities for such interests, even recordation (25 U.S.C. 5);
and the leasehold interest is exhaustively regulated by this rule, as
noted above. For example, a leasehold interest may not be conveyed,
mortgaged, assigned, or subleased without Secretarial approval, with
limited exceptions. Compelling Federal interests in self-determination,
economic self-sufficiency, and self-government, as well as strong
tribal interests in sovereignty and economic self-sufficiency, are
undermined by State and local taxation of the leasehold interest.
Nothing in these regulations is intended to preclude tribes,
States, and local governments from entering into cooperative agreements
to address these taxation issues, and in fact, the Department strongly
encourages such agreements.
In addition, we received the following comments:
Move the language regarding the justification for the
taxation provisions to the regulatory text. We did not make this change
because the justification is explanatory and therefore more
[[Page 72449]]
appropriate in the preamble than in the regulatory text.
Correct the ambiguity caused by the location of the phrase
``without regard to ownership'' in the proposed rule, because it could
be construed as describing the State tax such that the section would
bar only those State taxes imposed without regard to ownership of the
improvements. Because that interpretation was not the intent of this
provision, we have clarified the provision by moving the phrase
``without regard to ownership'' to indicate that no improvements on
leased Indian land are subject to State taxation, regardless of who
owns the improvements.
Delete the language following the provision stating that
improvements are subject to 25 CFR 1.4. We deleted the cross-reference
to 25 CFR 1.4 and instead added the crux of section 1.4 directly into
162.014.
162.018 (PR 162.015)--Tribal Administration of Part 162
Clarify the phrase ``inherent Federal function.'' We
accepted this comment by deleting the phrase and instead providing a
list of functions that cannot be contracted or compacted by tribes in
the leasing context.
162.019 (PR 162.016)--Access to Leased Premises
Exempt roads and other infrastructure lease provisions
from requiring part 169 approval where the access is incidental to the
development and use of the leased lands. Rights-of-way across Indian
land require Secretarial approval, by statute. If access to the leased
premises is a new right-of-way across Indian land, then the access will
require Secretarial approval through a right-of-way permit. If the
leased premises include access roads, then no separate right-of-way
permit is needed. We added the sentence ``[r]oads or other
infrastructure within the leased premises do not require compliance
with 25 CFR part 169, unless otherwise stated in the lease'' to clarify
this.
Provide for review of infrastructure for roads, etc.,
within the leased premises under part 162 because it can be done more
efficiently than under part 169. Section 162.019 allows for the lease
to cover roads and other infrastructure that are on the leased
premises.
Account for ``implied access.'' Section 162.019 states
that a lease may expressly address access. It is the obligation of the
parties to a lease (not BIA) to ensure access to leased premises. We
anticipate addressing other rights-of-way issues in future revisions to
part 169.
162.020 (PR 162.017)--Unitized Leases
Delete provisions basing rent of a unitized lease on
acreage because different tracts may have different value. We did not
make any change to the regulation in response to this comment because
the regulation states ``unless the lease provides otherwise,'' which
allows the lease to establish a different rental scheme. The appraised
value of an individual tract may be identified when consent is obtained
or upon request.
162.021 (PR 162.018)--BIA Responsibilities in Approving Leases
Add ``and applicable tribal law'' to recognize the need to
comply with tribal law. We accepted this change.
162.022 (PR 162.019)--BIA Responsibilities in Enforcing Leases
Add that an Indian landowner may exercise remedies
available under a lease or applicable law. To address this comment, we
added a provision clarifying that nothing in the section prevents an
Indian landowner from exercising remedies available under applicable
law.
Add a cross-reference to 162.024 (PR 162.021) (regarding
emergency action) in paragraph (d). We added this cross-reference.
Add a new paragraph stating that BIA will carry out the
duties assigned to it in the lease provisions. Because BIA's mission
and duties are established by statute, we were unable to add this
provision.
Add a statement that tribes and TDHEs have independent
authority to administer and enforce subleases, to prevent sublessees
from arguing that only BIA can take enforcement action. We did not add
a statement to this section, because BIA does not enforce subleases and
therefore will always defer to the TDHE's enforcement of a sublease. We
have clarified in each of the subparts (see 162.365, 162.366, 162.465,
162.466, 162.590, and 162.591) that BIA will defer to ongoing lease
enforcement actions by the tribes where the lease provides for the
tribe to address violations.
Limit BIA's role in enforcing residential leases where its
enforcement overlaps with enforcement by tribes and TDHEs, in the
context of residential leasing. As stated above, TDHEs may enforce
subleases without BIA interference, and each of the subparts clarifies
that BIA will defer to ongoing enforcement actions to avoid overlap.
Add a new paragraph stating that BIA will take prompt
action to evict trespassers after lease expiration and upon
consultation with the Indian landowner, to include an explicit duty to
act and prevent situations like those that have led to litigation.
Section 162.023 of the final rule addresses this situation. In that
section, we did not assume a duty to evict because the circumstances
may require different approaches (e.g., where there is a holdover in
negotiation with the landowner); however, we did add an explicit
mention of eviction as an action BIA may take.
Expand the rule to provide that BIA will enforce the lease
against the Indian landowner if the landowner does not comply with the
terms and conditions of the lease. Because BIA is the trustee for the
Indian landowner, rather than the lessee, we did not incorporate this
change.
162.023 (PR 162.020)--Trespass
Change the sentence stating that the Indian landowners may
pursue any remedies under ``tribal law'' to ``applicable law'' to
ensure that the landowners are not restricted to tribal law remedies.
We incorporated this change.
Provide that BIA will act when the Indian landowners make
a written request. This provision is already included in each specific
subpart at 162.364, 162.464, and 162.589; therefore, we did not add it
to 162.023.
162.024 (PR 162.021)--Emergency Action
Notify individual Indian landowners, but contact the
Indian tribe with jurisdiction before taking emergency action. We
incorporated this change.
Require BIA to make reasonable efforts to give actual
notice to all Indian landowners before taking emergency action, not
just constructive notice. The final rule requires BIA to provide
written notification to the tribe before taking emergency action, but
not individual Indian landowners because of the practical difficulties
in contacting all Indian landowners quickly enough to take emergency
action.
Require notification ``in writing'' to individual Indian
landowners after taking emergency action. Because the requirement for
``constructive notice'' already means that the notice must be in
writing, we did not incorporate this wording; however, we added that
BIA may choose to give actual notice in lieu of constructive notice.
162.025 (PR 162.022)--Appeals
Several tribes supported the proposed rule's limitation of
``interested party'' in 162.025 to those whose direct economic interest
is adversely affected. A few
[[Page 72450]]
tribes prefer a more expansive definition allowing for non-economic
interests. We retained the proposed rule's limitation to direct
economic interests. In response to comments regarding deemed approval
and appeals, we note that deemed approvals occur by operation of law,
and because there is no BIA action, the parties may not appeal under
part 2. We also clarified that BIA decisions to disapprove a lease are
appealable only by the Indian landowner, and decisions to disapprove
any other lease document are appealable only by the Indian landowners
and lessee.
162.026 (PR 162.023)--Contact for Questions
Add that the prospective lessee should contact the tribe
for a lease of tribal land, to encourage early communication. If BIA is
fulfilling the leasing function, BIA will direct the prospective lessee
to the tribe, for tribal land. We added that the prospective lessee
should contact the tribe that is contracting or compacting the leasing
function for answers to questions about the leasing process.
162.027 (PR 162.024)--NEPA & Records
Expressly include the Department of Housing and Urban
Development (HUD) in paragraph (b), which states that BIA will adopt
environmental assessments and environmental impact statements of other
Federal agencies, etc. We incorporated this change by including
documents prepared under NAHASDA (25 U.S.C. 4115).
Allow BIA to accept NEPA documentation from tribes, in
addition to other Federal agencies. We added this requested language.
Allow the use of pre-existing NEPA documentation, when
appropriate. BIA encourages the use of pre-existing NEPA documentation,
when appropriate, but we did not explicitly add this to 162.027(b)
since the statement allowing the use of NEPA documentation from other
entities addresses this.
State that environmental review for an amendment will be
required only if the amendment adds lands to the leased premises. We
did not incorporate this change because an amendment may trigger the
need for environmental review even if it does not add land (e.g.,
change in use).
Restrict the WEEL phase of environmental review to study
only the actual site locations used to install facilities and
equipment, which is a fraction of the land studied at the WSR lease
phase. BIA agrees this may be the case, depending on the circumstances,
but encourages the parties to discuss each lease's scope with the BIA,
as early as possible, to ensure the environmental review process is as
focused as possible.
Streamline the environmental review process to allow for
expedited review under NEPA, the National Historic Preservation Act
(NHPA), the Endangered Species Act, and other Federal laws. While we
are bound by statutory requirements, BIA will use categorical
exclusions where applicable, and has proposed a categorical exclusion
for leasing and funding for single family homesites on Indian land,
including associated improvements and easements, that encompass five
acres or less of contiguous land. See 77 FR 26314 (May 3, 2012).
Instead of stating in this section that all approved
leases must include disclosure provisions, move the disclosure
provisions to the sections in each subpart listing mandated lease
terms. We incorporated this change.
Add language requiring BIA to return documents once a
lease is approved. Under the Federal Records Act, once a Federal agency
is provided documents, the agency must archive and retain them in
accordance with the Federal records schedule, although certain
originals may be returned (e.g., BIA will return the deed of trust for
recording in the county land titles and records office). For this
reason, we could not accept this requested change.
Define documents submitted to BIA in a way that they would
fall under a Freedom of Information Act (FOIA) exemption from
disclosure, to ensure that they are kept confidential. We did not
incorporate this change. Even if we define the category of documents as
``confidential'' in part 162, it will not guarantee their exemption
from disclosure because the final rule cannot override the FOIA
statute; rather, we encourage each party submitting documents to
clearly indicate whether they fall under a FOIA exemption.
Provide a mechanism for BIA review that would not place
the documents into BIA custody. Because BIA needs a record of the
documents on which it makes its decision, generally, BIA will need
custody of the documents.
Add a cross-reference to FOIA rules (43 CFR part 2) to
clarify that tribes and tribal entities will be given advance notice
and opportunity to challenge any disclosure of their documents. We
incorporated this suggested change in paragraph (c).
Require a reasonable nexus between a BIA request for
disclosure and an opportunity to consult if the lessee or tribe
objects, to alleviate any negative impacts on project financing,
constructability, and operational issues from the language that
documents marked confidential propriety are protected from disclosure
``to the extent allowed by law.'' The FOIA rules require BIA to consult
with the tribes before disclosure. Much of the information may be
subject to the fourth FOIA exemption covering trade secrets or
commercial or financial information. See, Utah v. U.S. Department of
the Interior, 256 F.3d 967 (10th Cir. 2001).
Make it mandatory for BIA to exempt confidential
information to the extent allowed by law. The regulation states that
BIA will exempt confidential information to the extent allowed by law.
162.028 (PR N/A)--Obtaining Information on Leased Land (New Section)
Clarify how tribes may obtain information about leases on
their land so that they do not have to file FOIA requests for basic
information regarding leases on trust land. We added a new 162.028 to
clarify how a tribe may obtain information about leases on its land.
D. Residential Leases
A number of tribes, tribal organizations, and tribal housing
authorities requested further revision to the residential leasing
regulations to ensure they are compatible with the low-income housing
programs carried out by tribes and TDHEs and avoid a ``substantial
disruption of longstanding Indian housing programs.'' One tribe
requested that we withdraw the residential leasing subpart because of
the requirement for valuations and fair market rental payments to non-
consenting owners, periodic rental reviews, and bonding and insurance
requirements. Some other tribes requested we defer promulgation pending
further consultation and a comprehensive examination of the existing
statutory and regulatory framework governing Native American housing
and consideration of real world constraints. Withdrawal or deferral of
promulgation of this subpart would leave in place on-size-fits-all non-
agricultural leasing regulations that have been in place since 1961. We
find that to be unacceptable and not at all supportive of Indian
housing programs. While we are not withdrawing or deferring
promulgation of this subpart, we incorporated many of the requested
revisions and made additional revisions to address these concerns,
including:
Adding that a lease for housing for public purposes is a
basis for granting a waiver of fair market value on individually owned
Indian land (the
[[Page 72451]]
tribe may waive fair market value on tribal land--see 162.320(a));
Deleting the requirement for periodic rental reviews for
leases for housing for public purposes on individually owned Indian
land (the tribe may waive periodic rental reviews on tribal land--see
162.328(a));
Allowing for waiver of valuations and fair market rental
for non-consenting landowners under certain circumstances--see
162.321(c); and
Deleting the requirement for bonding and insurance for all
residential leases--see 162.334 and 162.335.
One tribe stated that these regulations will do more harm than good
by being administratively and financially burdensome, impractical, and
heavy handed. We have made the revisions noted above to remove the
specified administrative and financial burdens. Because we incorporated
as many changes as legally possible to address these concerns, we
decided to move forward with finalizing these regulations.
A tribe requested that we delete the requirement to obtain a
valuation and pay fair market rental to owners who did not consent to
the lease because the requirement to obtain 100 percent consent to
waive a valuation is not feasible in many circumstances. We are unable
to delete this requirement because all Indian landowners are entitled
to just compensation for use of their land (and a valuation is required
to determine what just compensation is), not just consenting
landowners. However, we added provisions in 162.321(c) for a waiver of
valuations and fair market rental under certain circumstances to
account for the practical issues. Specifically, we added that we may
waive the requirement for valuation and fair market rental for
residential leases if:
The lessee is a co-owner who, has been residing on the
tract for at least 7 years as of the final rule's effective date, and
no other co-owner raises an objection to his or her continued
possession of the tract within 180 days after the final rule's
effective date; or
The tribe or lessee will construct infrastructure
improvements on, or serving, the leased premises, and we determine it
is in the best interest of all the landowners.
The tribe that was the biggest opponent of the residential leasing
subpart also requested that BIA approve and record consent lists from
before 2003; date them the year the home was constructed; and provide
the lessees with a 50-year lease with renewal. Ultimately, this tribe's
concern was the practical obstacle posed by requiring all landowners to
consent to waiving the requirement for a valuation. Because it is
sometimes impossible to obtain consent of all the landowners, the
proposed rule would have required that the lessee/homeowner obtain a
valuation and pay fair market rental to all the nonconsenting
landowners, which the tribe argued was beyond what the lessee/homeowner
could afford.
To address this situation, we are allowing in the final rule for
waiver of valuations and fair market rental in the circumstance
described above, where the lessee is a co-owner who has been living on
the tract without objection from the other co-owners. In these cases,
the co-owner will need to obtain the consent of the owners of the
appropriate percentage of interests in the tract under ILCA, as amended
by AIPRA. The lease may provide for less than fair market value if
certain conditions are met, and the lessee need not obtain a valuation
or pay non-consenting landowners fair market value.
In addition, we received the following comments specific to
residential leasing:
Add an expedited review and approval of leases for housing
for public purposes and exempting subleases, assignments, and
amendments of leases for housing for public purposes from BIA review.
We made several revisions to expedite review of leases for housing for
public purposes, but we did not include a separate approval timeline
because the timeline established by this regulation is intended to be
expedited for all residential leases, including leases for housing for
public purposes.
Make leases for housing for public purposes, as well as
assignments, ``deemed approved.'' Although we agree that allowing for
``deemed approved'' leases and assignments in these instances would
expedite the process, we cannot incorporate this change because we are
statutorily required to review and approve leases of Indian land.
Defer to the Indian landowners' determination that the
lease is in their best interest when the lease is for housing for
public purposes. The proposed rule stated that BIA would defer where
the lease is negotiated; we deleted this limitation and now provide
that BIA will defer in all instances. (Note that we moved this
provision to a new 162.341 addressing the standard BIA will use to
determine whether to approve a lease).
Clarify the applicability of the leasing regulations to
tribal housing entities. We added a new 162.303 to address this. A
number of housing authorities noted that if a public housing program is
part of a tribal government (rather than a separate TDHE), each lease
with an individual lessee must be approved by BIA. We note that this is
the case, but we are statutorily required to review and approve leases
of Indian land. One tribal housing authority asked what happens to
tribal leases with a TDHE if the tribe abolishes the TDHE. The tribal
documentation creating the TDHE would govern what happens with the
leases and whether they merge with the tribal ownership and terminate
by law.
Revise 162.301(a)(2) to allow for office complexes
supporting housing for public purposes. This would allow the current
practice of TDHEs developing offices to house their operations within
the housing project and subleasing office space to community
development financial institutions (CDFIs). We incorporated this
change.
In 162.302, include the Department of Treasury as a
partner in developing a model lease template to ensure inclusion of
CDFIs and tax credit financing tools. This section refers to a form
that was developed in coordination with HUD. We plan to engage the
Department of Treasury, Federal Reserve, and tribes (in addition to the
agencies listed in this section) in revising this form. Another tribe
suggested the development of numerous model forms to improve processing
times, including one for low-income housing tax credit-financed
projects in which the general partner is a tribe or TDHE. BIA will
consider this comment in implementation of the final rule.
Clarify why, in 162.338, which requires submission of a
lessee business's organizational documents, a business would obtain a
residential lease. The purpose of the lease, rather than the lessee's
identification, dictates whether residential or business leasing
procedures apply; for example, a business that is obtaining a lease of
Indian land to develop housing for public purposes would need to follow
residential leasing procedures.
Delete 162.340(e) (PR 162.339), which requires NAHASDA
leases to be approved by both BIA and the tribe because it could be
construed to require BIA to approve agreements between TDHEs and
tenants. We did not delete this provision because it properly reflects
statutory requirements, while other provisions of the rule exempt
subleases for housing for public purposes between TDHEs and tenants
from BIA approval. Another commenter asked whether this provision
requires a tribe to approve leases even on individually-owned Indian
land. Where the authority for the lease is NAHASDA,
[[Page 72452]]
NAHASDA requires that the tribe approve the lease.
Include provisions requiring BIA to recognize tribal laws
regulating activities on land under a residential lease, including laws
governing land use, environmental protection, and historic or cultural
preservation. This provision is included in the general provisions at
162.016.
Adopt a standard for residential leasing to acknowledge
the role of the United States in helping tribes improve housing
conditions and socioeconomic status. We added an explicit standard for
the approval of residential and other leases.
Better account for the landlord-tenant relationships in
the housing for public purposes context. Where public housing is
provided through a TDHE that has leased land from the tribe, BIA will
not be involved in enforcement of the individual subleases (because BIA
does not enforce subleases). Where public housing is provided directly
by a tribe (or TDHE, where the TDHE holds the land through some
mechanism that is not a lease), BIA may be involved in enforcing
individual leases, but the final rule provides that BIA will consult
with the tribe before taking action and will defer to ongoing
proceedings. These provisions should ensure that BIA does not interfere
with tribal enforcement.
Revise residential leasing provisions to require BIA to
assist TDHEs in enforcing subleases. We did not incorporate this change
because TDHEs will be responsible for enforcing their own subleases.
BIA does not enforce subleases.
Revise provisions treating individuals who stay after
cancellation of a lease as ``trespassers'' because it is contrary to
tribal law that provides for a hearing before eviction. To address this
comment, in 162.371 (PR 162.368), we added that BIA will consult with
the Indian landowners in determining whether to treat the unauthorized
possession as a trespass.
Require BIA to defer to the tribe's determination that a
violation has occurred because tribes often know of violations before
BIA, and a tribe's determination that a violation has occurred should
be dispositive. We did not incorporate this change because BIA retains
independent authority to determine whether there has been a violation.
If a tribe learns of a violation, it may notify BIA that a violation
has occurred (see 162.364).
Require BIA to defer to applicable tribal law regarding
landlord-tenant relations and due process in 162.366 (PR 162.363). BIA
will first look to whether the lease allows tribal proceedings to
address violations under 162.365(e) (PR 162.362), and whether these
proceedings are occurring or have occurred. If there are no such
proceedings, or if it is not appropriate for BIA to defer to the
proceedings, then BIA will take action to address the violation. We
clarified this process in 162.366 (PR 162.363).
Include in 162.370 (PR 162.367) (governing effective date
of a lease cancellation) language indicating that a tribe or TDHE may
terminate a lease. Section 162.365 (PR 162.362), governing negotiated
remedies, provides that the parties may include this option.
Amend residential provisions to allow for incorporation of
specific enforcement terms for tribes, TDHEs and others without BIA
approval. The section allowing the lease to provide for negotiated
remedies allows this; therefore, we did not revise the regulation as a
result of this comment.
Clarify whether BIA plans to evict individuals who are
living on land but are in trespass. This commenter also asked who will
undertake eviction of trespassers where the tribe contracts the realty
program. If the tribe is contracting the realty functions, the tribe
will be responsible for enforcement actions. Otherwise, we will
implement and enforce our regulations, including eviction in
appropriate cases.
E. Business Leases
Most tribes stated their support for the business leasing
revisions. One commenter stated that clarifying and making uniform the
business leasing regulations injects more predictability, reduces
costs, and increases transparency for investors. One tribe stated that
the regulations will frustrate Congress's desire to promote orderly and
expeditious development through their long-term leasing authority. The
regulations allow for long-term leasing where statutorily authorized,
and we have reviewed the regulations and revised them where needed to
ensure that they will not frustrate orderly and expeditious
development. In addition, we received the following comments.
Clarify, in 162.401, the scope of what is included in the
business leasing subpart. We added language clarifying that any lease
that is subject to part 162 but does not fit under another subpart is
considered a ``business lease.''
Clarify proposed 162.412(a)(6) (``any change to the terms
of the lease will be considered an amendment''). We deleted this
provision as unnecessary.
Amend business leasing requirements for telecommunications
facilities on tribal lands to better serve tribal people. The intent of
these regulations is to streamline and clarify business leasing
procedures for all intended uses to better serve tribes and individual
Indian landowners.
Clarify what effect the business leasing regulations will
have on overlapping regulatory regimes for power generation,
infrastructure, and transmission. We have limited our involvement in
these matters under part 162 to what is required by statute and our
trust responsibility. This commenter also had questions about the
applicability of the regulations to leases under the Tribal Energy
Resource Agreements (TERAs). These leases are not subject to part 162
(see 162.006), providing that land use agreements entered into under a
special act of Congress are not subject to part 162.)
Treat reviews of business leases of retail and office
space within existing facilities on tribal land differently by
exempting them from BIA approval. We have included a provision at
162.451(b) allowing for subleases without our approval. Leases of space
within existing facilities on tribal land that is not already leased
(i.e., not subleases) require BIA approval because they are a lease of
the underlying land.
F. WEELs
Several tribes requested that we preserve the tribal permit option
in the context of wind energy evaluation. We addressed this comment in
162.502 to clarify that a WEEL is not required in certain
circumstances, including when the Indian landowners have granted a
permit under 162.007 (PR 162.004) or a tribe authorizes wind energy
evaluation activities on its own land under 25 U.S.C. 81. It is
conceivable that there may be instances where possession to evaluate
wind energy resources does not rise to the level of requiring a lease;
parties should look to the guidance in 162.007 (PR 162.004) in light of
planned activities and infrastructure. Several tribes stated their
support for the two-phase WEEL/WSR lease process, and one stated that
the WEEL approach is flexible and workable in the present environment,
allowing a short-term lease while parties are engaging in due diligence
and resource analysis. In addition, we received the following comments:
Expand WEELS to include any type of evaluation for
alternative energy uses (e.g., solar or biomass). We did not include
other alternative energy uses in the WEEL because, generally, one does
not need possession of the land to evaluate solar or biomass resources.
This commenter also requested clarification on whether WSR leases
include other alternative energies, such
[[Page 72453]]
as biomass. We added a cross-reference in 162.538 to clarify that
leases for biomass are addressed in business leasing.
Explain how the leasing process for a WEEL is
fundamentally different from that of a WSR lease and why parties would
have the incentive to pursue a WEEL. The process for a WEEL is
different from a WSR lease in the following ways: (1) To obtain
approval of a WEEL, as opposed to a WSR lease, the parties need not
obtain a valuation or justify compensation at less than fair market
rental; (2) BIA has a shorter timeframe for its review of a WEEL; and
(3) obtaining a WEEL allows for a limited NEPA review, so BIA conducts
a NEPA review only of the wind energy evaluation activities. This NEPA
review can then be incorporated by reference, as appropriate, into a
broader WSR review, whereas if no WEEL is obtained, the full NEPA
review would be necessary at the time BIA reviews the WSR lease.
Clarify whether there is an acreage limit to a WEEL. There
is no acreage limit.
Strengthen 162.520 (PR 162.519) to force the lessee to
submit any wind energy data gathered if the WEEL is terminated. We did
not make any change to the proposed rule in response. As written, the
rule allows the parties to negotiate this point in order to afford
maximum flexibility; but it provides that if they don't, then the
information becomes the property of the Indian landowner.
Clarify how BIA will enforce the provision in 162.520 (PR
162.519), establishing that wind energy data becomes the property of
the Indian landowners in the absence of lease provisions stating
otherwise. BIA may enforce this provision by refusing to release the
bond.
Delete provisions regulating the option to enter into a
WSR lease because the time needed for the option period should be
subject to negotiation and the option agreement is separate from a
``lease'' that BIA is statutorily required to approve. These commenters
also stated that the provision limiting the WSR lease to only that land
covered by the WEEL is unreasonable because the parties do not have
enough information as to what land is needed at the time the option is
entered into and would result in overly expansive WEELs. We addressed
these comments by deleting conditions for approval of an option in
162.522 (PR 162.521).
Limit the scope of environmental and archeological reports
required by 162.528(f) to only the actual testing and monitoring
locations and access routes for WEELs. We agree with this comment, but
determined that no change to the regulation is necessary.
Limit the total time allotted to BIA for review of a WEEL
to 30 days. The final rule limits the time allotted to BIA to 20 days.
G. WSR Leases
A few tribes stated that BIA appears to bootstrap authority over
business matters commonly governed by other agreements. In response to
this comment, we made several revisions to limit BIA's role to only
what is necessary for leasing approval. We deleted the requirement for
BIA approval of option agreements, expressly provide for alternatives
to WEELs (such as section 81 agreements), and loosened BIA review of
technical capability where the lessee is owned and operated by the
tribe.
One tribe asked whether a tribe could use business leasing
procedures rather than WSR leasing procedures for a wind or solar
energy project. Other tribes stated that WSR should not be treated
separately from business leasing. We note the need for maximum
flexibility, but we have tailored the WSR subpart to the unique issues
raised by wind and solar energy projects; therefore, this subpart will
generally provide the more appropriate procedures. While many of the
business leasing and WSR provisions are the same, our intent in making
WSR leasing a separate subpart is to encourage future WSR development
of Indian land through making the procedures as transparent as
possible.
One commenter questioned the efficacy of having the Office of
Indian Energy and Economic Development (IEED) involved in valuation of
a WSR lease and asked whether a landowner could instead obtain a
valuation from a private entity with expertise in the economics of wind
energy development. We addressed this comment by adding that a
landowner may obtain its own economic analysis, as long as IEED
approves it. Because tribes may negotiate their own compensation for
tribal land, this will generally apply only to individually owned
Indian land.
One commenter requested that BIA issue a policy statement exempting
agreements with carbon offset sales from part 162. Whether an agreement
is subject to part 162 depends upon whether the specific terms of the
agreement meet the requirements for a lease in this part. This
commenter also requested that BIA take a clear position on whether
State rules apply to tribes seeking to sell carbon credits generated on
Indian lands. We are not taking a position on these issues at this
time.
One public commenter expressed concern that wind farms will result
in bird kills. The NEPA analysis will consider this issue on a case-by-
case basis.
In addition, we received the following comments:
Add language allowing a tribe to enter into a simplified
agreement with allottees, where a tribe is considering a wind or solar
energy project that covers both tribal and individually owned Indian
land. Tribes and individual Indian landowners are encouraged to enter
into these agreements; however, the tribe will still be required to
lease the land from the individual Indian landowners.
Lengthen the 90-day delay in any phase of development
before requiring a revised resource development plan. We revised this
provision to require only submission of a revised plan to BIA, rather
than requiring re-approval by BIA. We retained the 90-day period to
ensure that BIA is kept apprised of any major delays.
Waive the requirement for documents demonstrating
technical capability for tribal corporations. We incorporated this
change by limiting the requirement to instances where the lessee is not
an entity owned and operated by the tribe. We also note that documents
from an entity's parent corporation may fulfill this requirement.
Clarify how these leases will interact with 169.27, which
provides a process for obtaining approvals of rights-of-way for
electric poles and lines greater than 66 kilovolts. This commenter
requested language to allow part 162 to encompass transmission
facilities directly associated with the WSR infrastructure. As written,
162.543 (PR 162.540) contemplates that the lease will include
associated infrastructure necessary for the generation and delivery of
electricity. We added a cross-reference to 162.019 (PR 162.016) to
clarify that no rights-of-way approval is needed for infrastructure
addressed in the lease and on the leased premises.
Define the ``resource development plan.'' Since this term
is used so infrequently, we included the definition with the term at
162.563(i). This commenter also requested that we add a process for
obtaining BIA approval if changes to the plan are made after approval
of the lease. One tribe stated that requiring BIA to approve plan
changes would be burdensome. In response to these comments, we revised
162.543(b) (PR 162.540) to require only submission of the revised plan
for BIA's
[[Page 72454]]
file, rather than requiring BIA approval of the plan changes.
H. Cross-Cutting Comments
1. Lease Term
Specifically allow a month-to-month term for residential
leases authorized by NAHASDA. In response to these comments, we
clarified the term of NAHASDA leases (leases approved under 25 U.S.C.
4211) versus the term of leases approved under 25 U.S.C. 415(a). Note
also that many of these month-to-month arrangements are actually
occupancy agreements not requiring BIA approval because they are
essentially tribal land assignments.
Remove the restriction to one renewal for tribes with
authority to lease lands up to 99 years because this one-size-fits-all
approach does not work for many lease situations. We revised this
provision to allow for flexibility in the number of renewals where
authorized by statute.
Remove the two-year term restriction where the owners of
trust and restricted interests are deceased and their heirs and
devisees have not yet been determined. We deleted this provision as
unnecessary.
Allow parties the flexibility to negotiate holdover
provisions for residential leases. We added this flexibility by adding
that the prohibition on holdovers applies only if the residential lease
does not provide otherwise.
Clarify whether a lease amendment that extends the term of
the lease is limited to a 25-year term and whether this amendment could
include an option term. An amendment can amend the lease and include an
option term, as long as the term meets statutory constraints.
Restrict long lease terms because they may result in more
permanent uses by non-Indian lessees that threaten preservation of
tribal culture and society. There are statutory limitations to lease
terms, but to the maximum extent possible, BIA will defer to the Indian
landowners' decision that a lease is in their best interest.
2. Option To Renew
Add to the requirement for providing BIA with a
confirmation of a renewal the phrase ``unless the lease provides for
automatic renewal.'' We accepted this language.
Clarify the proposed rule's provision requiring a lease
with an option to renew to state that ``any change in the terms of the
lease will be considered an amendment,'' including whether this means
that BIA must approve of payments due upon exercise of a renewal
option. We deleted this provision as unnecessary.
3. Mandatory Lease Provisions
Delete the provision requiring the lease to cite the
authority under which BIA is approving the lease under because BIA,
rather than the parties to the lease, should know the citation. We
deleted this provision because we agree that it is BIA's responsibility
to know its authority.
Delete the mandatory lease provision stating that nothing
would prevent termination of the Federal trust responsibility because
there is no statutory requirement that this provision be included in
leases and it reflects an offensive and outdated approach to tribal
relations. In response, we deleted this provision.
Clarify that wind energy projects shall not be deemed a
``nuisance'' for the purposes of BIA's review. While this statement is
true, we did not add it to the mandatory lease provisions. These
regulations anticipate and encourage the development of wind energy
projects; BIA does not deem wind energy projects to be a nuisance.
Restrict the mandatory provision stating that BIA has the
right to enter the leased premises upon reasonable notice to allow BIA
to enter only when it is consistent with notice requirements under
applicable tribal law and lease requirements. We incorporated this
language.
Delete the mandatory provision stating that the lease is
not a lease of fee interests because it places responsibility on the
lessee to pay fee owners. Although this is the case, we deleted this
provision from the mandatory provisions as unnecessary to include in
the lease.
Regarding the mandatory provisions requiring lessee to
indemnify and hold harmless the Indian landowners and the United
States:
[cir] Make it discretionary whether to include them in a lease
because their inclusion could be contrary to law in certain contexts.
We did not make inclusion of these provisions discretionary, but we
moved these provisions to a new paragraph to clarify that they are not
required where prohibited by law.
[cir] Make it discretionary whether to include the provision
related to hazardous materials where there is no evidence that
hazardous materials are present on the land. We retained this as a
mandatory lease provision to account for any instances in which
hazardous materials are discovered after the lease is signed or the
lessee or other party introduces hazardous materials onto the leased
premises during the term of the lease.
[cir] Delete the provision requiring lessees to indemnify the
United States and Indian landowners for loss, liability, and damages
because many lessees are not willing to assume liability for a tribe's
simple negligence, and the indemnity provision requires the lessee to
assume liability except in cases of gross negligence by the tribe. We
narrowed the indemnification provision, in response.
[cir] Exempt leases for housing for public purposes from having to
include these provisions because a tribal member seeking affordable
housing may hesitate to enter into a lease with this requirement. We
did not add an exemption because this provision is necessary to protect
trust assets, the Indian landowners, and the United States.
[cir] Loosen these provisions because they are too restrictive and
should be subject to negotiation. We retained the indemnification
provisions, as revised, to protect the trust assets, the Indian
landowners, and the United States.
Delete the provision stating that BIA may treat any lease
provision that violates Federal law as a violation of the lease, and
instead provide that the parties may elect to terminate the lease or
agree that Federal law will replace the superseded provisions. We did
not incorporate this suggested change. We cannot approve a lease that
violates Federal law and, during the cure period, the parties may agree
to address the provision; and if, after the fact, we discover that a
lease provision violates Federal law, we need the ability to correct
the problem. Using the lease violation regulations (e.g., 162.366 and
162.367) affords the parties notice and an opportunity to either cure
or dispute the violation. As part of this process, the parties are free
to agree that Federal law will replace the offending lease provision.
4. Improvements
Delete the requirement for the lease to generally describe
the location of the improvements to be constructed. We require this
information because it is necessary for NEPA and NHPA review and we are
statutorily required to review, among other things, the relationship of
the use of neighboring lands, the height, quality, and safety of any
structures or other facilities to be constructed on these lands. See 25
U.S.C. 415(a).
Allow lessees the right to make improvements on their
houses without having to get the consent of other
[[Page 72455]]
owners. Nothing in the final rule states that lessees must obtain the
consent of other landowners to make improvements to their houses;
however, the lease may require consent for the construction of
permanent improvements. The regulations require only that the lessee
provide reasonable notice to the landowners of the construction of any
permanent improvements not generally described in the lease.
Clarify that the lessee does not have to obtain consent
for replacement air conditioners, etc. We agree and clarified that the
regulations are addressing ``permanent improvements.'' A few tribes
suggested including a new term, ``major improvements,'' with a dollar
limit, but we instead are referring to permanent improvements, which
are affixed to the real property.
Clarify whether a lease with phased development would
require amendments to the lease for development phases after the
initial phase. The lease may provide for development of a plan to avoid
having to amend the lease to update the plan. The plan only needs to be
as detailed as necessary for us to do a NEPA and NHPA review.
Add that the lease may provide that improvements may
remain on the leased premises ``in compliance with minimum building and
health and safety requirements of the tribe with jurisdiction.'' The
lease may specify this, but we did not prescribe it in the regulation.
Delete provisions regarding removal of improvements
because they may dissuade outside developers. We did not delete the
regulatory provisions because they apply as a default, only in the
absence of lease provisions. The parties may negotiate other
requirements regarding removal of improvements in the lease.
5. Due Diligence
Revise due diligence provisions to confirm that the
``schedule for construction of improvements'' in the business leasing
subpart requires only tentative commencement and completion dates,
rather than a detailed schedule. We incorporated this change at 162.414
by adding ``general'' before ``schedule for construction.''
Allow more flexibility in the construction schedule,
including allowing a way for the construction schedule to be modified
at later phases, as the parties may not be able to identify all
improvements to be constructed over the course of a phased development
and a construction schedule may lock them into an uneconomic schedule.
We incorporated this suggestion at 162.417, by clarifying that the
schedule may be a separate document from the business lease, and that
the parties must agree to a process for modifying the schedule. For WSR
leases, the resource development plan sets out the schedule for
improvements. We revised 162.543 (PR 162.540) to provide that parties
may make changes to the resource development plan, and they merely have
to provide BIA with a copy if the changes affect certain items (rather
than having to wait for BIA approval of the changes). Through these
revisions, we added flexibility by allowing for a separate construction
schedule and allow a process for obtaining the landowners' consent to
changes in the schedule.
Delete requirements for construction schedules, as BIA's
interest in the timing of improvements should be minimal. We did not
delete the requirements for providing a construction schedule (although
we clarified that only a general schedule is necessary) because BIA's
interest in the timing of the construction is to ensure that
anticipated development occurs.
Revise 162.417 to make it discretionary for the parties to
include due diligence provisions in the lease. We did not incorporate
this change because these provisions protect the Indian landowners by
ensuring development consistent with landowners' intent when they
signed the lease.
Delete the requirement for BIA approval of a waiver of due
diligence obligations because the time involved in obtaining a waiver
could chill investment and requiring BIA approval of a waiver is
paternalistic. We did not delete this provision because any waiver of
the requirements will occur at the time of lease approval, so the
waiver process will not cause a delay and BIA will defer to the
landowners' determination that the lease (including the waiver) is in
their best interest, to the maximum extent possible.
Loosen the timelines in 162.546 (PR 162.543) for wind
energy projects because it can take up to 9 months in northern climates
to replace a substation. We addressed this comment by allowing the
lease to define the time periods during which facilities or equipment
must be repaired, placed into service, or removed.
6. Legal Description--Surveys
Allow the use of survey grade global positioning system
(GPS) for land descriptions. We revised the regulations to allow this
because the Land Title and Records Office (LTRO) is now capable of
accepting these descriptions.
Delete the requirement for an official or certified
survey, to be reviewed under the DOI Standards for Indian Trust Land
Boundary Evidence, because it will be too costly to implement, result
in fewer leases, and is redundant where BIA already has survey data
available. In response to these comments, we added flexibility to the
survey requirements, providing that where reference to an official or
certified survey is not possible, the lease must include a legal
description, a survey-grade GPS description, or other description
prepared by a registered land surveyor that is sufficient to identify
the leased premises.
7. Compatible Uses
Retain the flexibility allowed by the proposed rule's
wording because it leaves room for the lease to define compatible uses.
We accepted this suggestion.
Revise to allow for compatible uses by the landowner or
someone authorized by the landowner, regardless of whether the lease
specifies that the compatible use is allowed. We did not incorporate
this change because the lease should specify if the Indian landowners
will allow compatible uses. Another commenter suggested requiring the
lease to identify what uses the landowner is reserving. While the lease
may specify the uses, the final rule is not requiring it.
8. Rental/Payment Requirements--Tribal Land
Nearly all the tribal commenters supported the proposed rule's
provisions allowing a tribe to negotiate its own rental amount and
determine whether it wants a valuation, stating that they make the
rules more workable, especially for housing for public purposes. One
tribe did not support these provisions, stating that the tribe should
not have to request a valuation in writing and BIA should require
valuations to meet its trust responsibilities. Because most tribes were
in support, we retained this provision. A tribal commenter stated its
support of the language allowing for less than fair market rental
during predevelopment stages of a business lease. Several tribes
expressed their support of the proposed rule's flexibility for
valuations of tribal land and allowing for alternative valuations in
lieu of appraisals. Another tribe stated their support of the
provisions requiring waivers to be in writing, to clarify the
landowners' intent. In addition, we received the following comments:
[[Page 72456]]
Allow a tribe to submit a certification, rather than a
tribal authorization, stating that it determined that receiving less
than fair market rental is in its best interest, for business and WSR
leases (in addition to residential leases). We have addressed this
comment by providing that the tribe may submit either a certification
(meaning a statement signed by the appropriate tribal official or
officials) or a tribal authorization.
Remove the requirement for a tribal certification or
authorization stating that the tribe has determined the amount to be in
its best interest because it is an additional layer of bureaucracy. We
added a provision to each of the subparts to clarify that one tribal
authorization may meet several purposes (see 162.338, 162.438, and
162.563). The tribe need not submit multiple tribal authorizations; in
fact, we encourage the tribe to provide this information and any other
tribal authorization statements in the same authorization that it
passes to authorize the lease (e.g., a single tribal authorization may
authorize the lease and do any or all of the following: Allow for less
than fair market rental, waive valuation, allow for alternative forms
of compensation, waive rental reviews, and waive rental adjustments).
Remove the requirement for the tribe to provide a
certification or authorization to set the rental amount where the lease
is for housing for public purposes. Many tribes noted that tribes use
NAHASDA programs to provide housing for public purposes and that HUD
already has provisions regarding rent. We incorporated this change at
162.320(a).
Clarify that a tribe may use market analyses or other
methods of determining fair market value. We incorporated this change.
Encourage tribes to pursue a ``zero charge'' policy for
permits and leases to service providers to place communications
facilities infrastructure in tribal communities. BIA did not make any
change to the regulation in response to this comment because tribes
determine whether such a policy is appropriate for them. This commenter
also requested a mechanism for adopting a market-based appraisal's
determination of fair market rental where the Indian landowners and
lessees cannot agree on compensation. We did not incorporate this
change because a lease requires the agreement of the Indian landowners
and the lessees to all terms of the lease, including compensation. This
commenter stated its concern that allowing tribes to establish their
own rental rates could cause an impasse between the lessee and the
tribe. BIA notes that tribal landowners have the right to establish
compensation.
9. Rental/Payment Requirements--Individually Owned Indian Land
Add ``the land is to be used for housing for public
purposes'' as a basis for BIA to waive fair market value for
individually owned Indian land. We incorporated this change.
Remove the requirement for non-consenting individual
Indian landowners to receive fair market rental. We have determined
that all non-consenting landowners are entitled to fair market value,
as our trust responsibility is to all landowners, not just those who
have consented. This requires a valuation to determine the amount of
the fair market rental. However, as described above, we added that, for
residential leases, BIA may waive valuation and fair market rental if
the lessee is a co-owner who has been living on the tract for at least
7 years and no other co-owner raises an objection to his or her
continued possession of the tract by a certain date. In addition, for
all leases, we added that BIA may waive valuation and fair market
rental if the lessee or tribe will provide infrastructure improvements
and it is in the best interest of the landowners.