[Federal Register Volume 77, Number 234 (Wednesday, December 5, 2012)]
[Rules and Regulations]
[Pages 72439-72509]
From the Federal Register Online via the Government Printing 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

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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.
     Exempt housing for public purposes from the requirement 
for a valuation. We did not categorically exempt leases for housing for 
public purposes on individually owned Indian land from valuations. BIA 
will waive the requirement for a valuation of individually owned land 
if all individual Indian landowners agree. We retained the requirement 
for 100 percent of the landowners to waive the valuation for 
individually owned Indian land to ensure that each owner who did not 
consent to leasing for less than fair market rental (``non-consenting 
owner'') obtains fair market rental, unless that non-consenting owner 
waived the right to a valuation. However, as described above, we added 
that, for all 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.
     Balance the risk of exploitation by unscrupulous 
developers against increased flexibility when allowing less than fair 
market rental for business leases of individually owned Indian land. We 
did not make any change to the regulations in response to this comment 
because the best interest determination of whether to waive fair market 
rental allows BIA to balance this risk on a case-by-case basis. The 
risk of exploitation is higher for business leases; therefore, we 
explicitly require the balancing test in 162.421, while for residential 
leases we automatically waive fair market rental if all landowners 
request the waiver.
10. Rental/Payment Requirements--Valuations
    Several tribes noted that requiring all landowners to waive the 
right to a valuation is unworkable in some instances, and may result in 
having to conduct a valuation in order to ensure that non-consenting 
landowners are paid fair market rental even when other landowners have 
agreed to less than fair market rental. Tribes stated that BIA is in 
effect forcing consent of all landowners for the lease. One tribe 
alleged that if this consent is required, homesite leasing on allotted 
land will stop. This tribe stated that the consent requirements will 
change the tribal members' way of life and will cause a hardship, 
especially where co-owners' whereabouts are unknown. The tribe has over 
400 leases that don't have proper consent, but which followed the 
procedures at the time, and tribal members constructed homes on those 
tracts. We added flexibility by allowing BIA to waive the requirement 
for valuation for non-consenting landowners in certain circumstances, 
described above.
     Apply the ILCA percentages to consent for waiving fair 
market rental and valuations. BIA has determined that these percentages 
in ILCA apply to consents for a lease, but has determined to require 
the payment of fair market rental to non-consenting landowners because 
we have a trust responsibility to all landowners, not just the 
consenting ones. Each individual can waive his or her own right to 
receive fair market rental; however, even if a majority waives their 
right to fair market rental, they may not waive the right of the other, 
non-consenting owners to fair market rental.
     Allow the option to use competitive bidding as a form of 
valuation. We added this option.
     Delete the provision stating what type of valuation may be 
used in 162.322, because appraisal costs and delays negatively affect 
the ability to provide homesites. We retained this provision, but note 
that it is drafted to allow as much flexibility as possible in allowing 
valuations other than appraisals.

[[Page 72457]]

     Ensure the appraiser meets education, licensure, and 
experience requirements. We agree with this requirement but did not 
make any change to the regulation since appraiser competence will be 
necessary to comply with the Uniform Standards of Professional 
Appraisal Practice (USPAP).
     Add provisions stating when an appraisal expires and how 
much time can lapse from its completion. We did not address this issue 
in the regulations because the Office of the Special Trustee for 
American Indians (OST), rather than BIA, is responsible for conducting 
and reviewing appraisals. We also received a number of other questions 
regarding payment for appraisals, preparation of income tax forms, 
timing of appraisals, and returning the appraisal function to BIA from 
OST that were beyond the scope of this rulemaking.
11. Rental/Payment Requirements--When Payment Is Due
     Revise 162.323 to apply only when rent is required 
periodically throughout the life of the lease, so that lessees may make 
a one-time (``lump'') rental payment when a home is constructed and 
incorporate the amount of the rental payment into their mortgage. We 
did not revise this section in response to these comments because the 
regulations, as written, allow for this situation. Section 162.323 
provides that a lease can provide for the timing of rental payments 
(which may include one lump sum) and that the lease can provide that 
payments be made more than a year in advance.
     Delete the provision that prohibits payments from being 
made more than one year in advance because lessees should be allowed to 
make advance payments. We did not delete the section because it 
implements 25 U.S.C. 415b, and the phrase ``unless the lease provides 
otherwise'' means the parties may include in the lease an allowance for 
payments more than one year in advance.
12. Rental/Payment Requirements--Direct Pay
     Delete provisions allowing for ``direct pay'' because the 
number of landowners should not have an impact on whether BIA is 
complying with its trust responsibility. Allowing for direct payment of 
rent to the landowners is not a derogation of the trust responsibility. 
We have limited direct pay to 10 or fewer landowners to ensure that 
direct pay is administratively workable.
     Delete direct pay provisions because they impose a burden 
on the lessee to know about the individual status of each landowner at 
all times throughout the lease. We did not make any changes in response 
to this comment because the regulations provide that direct pay is 
optional, and available under limited circumstances. The addresses to 
which the payments should be sent will be provided in the lease and, 
because direct pay is limited to 10 or fewer landowners, the burden on 
the lessee to know the status of each is limited.
     Delete the limit on the number of landowners and allow all 
landowners the option for direct pay. We did not incorporate this 
change because the Assistant Secretary made a policy decision to limit 
when direct pay is available to those situations when there are 10 or 
fewer landowners who all consent to direct pay for administrative 
efficiency.
     Exempt crop share leases from direct pay consent 
requirements. The direct pay requirements included in this final rule 
do not affect agricultural leases and therefore do not affect crop 
share leases.
     Clarify the timeframe for locating a landowner whose 
whereabouts are unknown so the lessee can send his or her direct pay to 
BIA instead. The lessee will know when a landowner's whereabouts are 
unknown because the direct payment will be returned as undeliverable. 
This commenter also asked when a lessee making direct payments will 
know that a landowner has been declared non compos mentis. A court of 
competent jurisdiction must make a determination of non compos mentis. 
Once BIA receives notice of a landowner's non compos mentis status, the 
BIA will notify the lessee that all future payments under the lease 
must be sent to BIA.
13. Rental/Payment Requirements--Payment Methods
     Allow cash rental payments for residential leases, and 
make any necessary adjustments to the lockbox system to accept cash, 
because the refusal to accept cash imposes a hardship. This request is 
outside the scope of this rulemaking, but BIA has passed the request on 
to the Office of the Special Trustee for American Indians (OST).
     Allow personal checks for business and WSR lease payments 
because BIA's refusal to accept personal checks for business and WSR 
leasing imposes a hardship. We accepted this comment by allowing for 
payment by personal check for all types of leasing because many lessees 
rely on personal checks as a form of payment.
14. Rental/Payment Requirements--Types of Compensation
     Clarify ``in-kind consideration'' to reduce the 
subjectivity in determining its value. We have allowed for alternative 
forms of consideration, such as ``in-kind consideration'' in order to 
afford the maximum flexibility to Indian landowners in negotiating 
leases. BIA will not determine the value of in-kind consideration. We 
have revised 162.326 to provide that we will defer to a tribe's 
determination that alternative forms of consideration are in its best 
interest, and we will determine whether the alternative forms of 
consideration are in individual Indian landowners' best interest on a 
case-by-case basis.
     Do not force lessees to provide in-kind consideration. The 
regulations provide the parties the freedom to negotiate for monetary 
or in-kind consideration.
     Consider, in 162.555 (PR 162.552), the value of the energy 
generated back to the community as in-kind consideration. In-kind 
consideration is not considered in the valuation because the valuation 
is a monetary figure. The final rule allows for alternative forms of 
compensation, and BIA will consider whether energy generated back to 
the community is an alternative form of compensation that is in the 
landowners' best interest for individually owned Indian land.
15. Rental/Payment Reviews and Adjustments
     Remove the requirement for rental reviews, in 162.328, 
where a tribe negotiates and certifies a rental amount. We addressed 
this comment by excluding residential, business, and WSR leases of 
tribal land from the periodic rental review and adjustment 
requirements, where the tribe states in its authorization or 
certification that it has determined that rental reviews and 
adjustments are not in its best interest. In addition, there are a 
number of circumstances in which rental reviews are not required for 
residential leases of individually owned Indian land, including where 
the lease provides for automatic adjustments and where the lease is for 
less than fair market rental.
     Exempt residential leases from rental review and 
adjustment requirements because it is burdensome when applied to tribes 
and TDHEs and NAHASDA already provides limits on the rent, its review 
and adjustment. In response, we added that no periodic review of the 
adequacy of rent or periodic adjustment is required if the lease is for 
housing for public purposes (or, as stated above, if the tribe's

[[Page 72458]]

authorization or certification states that it is in the tribe's best 
interest not to have these requirements for tribal land).
     Change the phrase ``at least every fifth year'' to ``no 
less frequently than every fifth year.'' We did not incorporate this 
change because these phrases are equally clear.
     Add a requirement for a landowner to consent to a waiver 
of rental adjustments in the lease, because when the lease is for 
housing for public purposes, the amount of rent affects the amount 
investors are willing to invest. We did not add this requirement 
because the landowner may refuse to waive rental adjustments as part of 
their lease negotiations.
     Revise the factors in 162.428(b)(3) and parallel WSR 
provisions (factors for determining that waiving the Federal review of 
the adequacy of compensation is in the landowners' best interest) to 
add a factor that reflects the needs of large investments that may only 
be recouped over a period of many years. We added a factor to account 
for these situations where ``the lease provides for graduated rent or 
non-monetary or various types of compensation.''
     Delete or limit 162.424(b)(4), which allows the lease to 
provide for payment to parties other than the Indian landowners. We 
retained this provision to allow the parties maximum flexibility in 
negotiating lease terms, but note that the parties may include limits 
on who receives payments in the lease. Other tribes requested that we 
revise this provision to add the phrase ``unless otherwise provided by 
these regulations.'' We did not incorporate this change because the 
regulations do not restrict to whom rental payments may be made.
16. Bonding & Insurance
    Commenters overwhelmingly opposed requiring insurance and bonding 
for residential leases because they create barriers to homeownership 
due to credit requirements, availability of liquid assets, and income 
thresholds. In response to these comments, we deleted the requirements 
in these regulations for insurance and bonding for residential leases. 
We received one other comment for residential leasing that requested we 
revise 162.369 (PR 162.366) (stating that landowners get proceeds from 
an insurance policy in the absence of lease provisions) to protect the 
lessee's interests. We did not revise the rule in response to this 
comment because the parties may agree to a different approach, while 
the rule provides a default rule in the absence of an agreed-to 
approach in the lease. In addition, we addressed the following comments 
regarding insurance and bonding for business and WSR leases:
     Clarify that a tribe may waive the insurance requirement 
upon certifying that a waiver is in its best interest. We added that 
BIA will defer to the tribe's determination that a waiver is in its 
best interest.
     Add alternative forms (other than performance bonds) of 
securing payment for lessee obligations, in order to avoid placing 
Indian lands at a disadvantage, to allow tribes to retain their 
sovereign immunity (some bonding companies require tribes to provide 
broad waivers of sovereign immunity for a bond), and to provide maximum 
flexibility. We incorporated this change by allowing for alternative 
forms of security.
     Revise business leasing provisions to state that any bond 
may be made payable to the tribe and that BIA may adjust the bond only 
based on consultation with the tribe. We incorporated these revisions 
at 162.434(b) by allowing a lease to include these requirements.
     Revise the process for waiving the bonding requirement, 
because BIA's decision to waive is based on its determination as to the 
best interest of the landowners, which introduces uncertainty and 
delay. To address this comment, the final rule provides that BIA will 
defer to the tribe, for tribal land, that the waiver is in its best 
interest, to the maximum extent possible.
     Allow cash as a form of security. We did not incorporate 
this change because the lockbox cannot accept cash, but clarified that 
it is not an acceptable form of security in the regulations. This 
commenter also stated that any interest earned on a security posted as 
a bond shall be payable to the lessee. We did not incorporate this 
change because the parties may negotiate this point.
     Revise 162.559(c) because allowing BIA to adjust security 
or bonding requirements at any time creates too much unpredictability. 
We revised this provision and the parallel provision in the business 
leasing subpart at 162.434(c) to state that the lease must specify 
conditions under which BIA may adjust security or bonding requirements, 
including consultation with the tribe for tribal land before making 
adjustments.
17. Approvals--Documents Required
    The final rule defines with as much certainty as possible exactly 
what documents BIA will require. We reviewed each category and provided 
as much specificity as possible while attempting to be flexible enough 
to account for all types of leases.
     Revise the requirement for a statement from the 
appropriate tribal authority that the proposed use is in compliance 
with tribal law because some tribes do not currently examine proposed 
leases to determine whether the lease complies with land use 
regulations and, further, do not consider such examination to be within 
the scope of their responsibility. To accommodate situations where the 
tribe may not require such a statement, we added the qualifier ``if 
required by the tribe.''
     Delete the requirement for environmental and archeological 
reports because this requirement causes lessees to expend resources 
before even knowing if a lease will be approved. One tribal corporation 
also stated that the documents required may cause a potential lessee to 
spend several months conducting due diligence and negotiating a lease, 
with no certainty of BIA approval. We did not delete this requirement 
because environmental and archeological assessments are required by 
statute. To help provide some guidance in the BIA approval process, we 
added an ``acknowledgment process'' whereby the parties may submit to 
BIA a proposed lease while still preparing NEPA documentation or 
obtaining a valuation. BIA will respond within 10 days identifying any 
provisions that may justify BIA's disapproval of a lease. Although this 
provision does not preclude BIA from identifying other issues at a 
later time in exceptional circumstances or disapproving the lease, it 
does provide some measure of certainty that the lease would be 
acceptable if NEPA, valuation, and any other issues BIA identifies are 
adequately addressed).

 Requiring a restoration and reclamation plan:
    [cir] Revise this requirement because this plan may not be 
appropriate, depending on the land use. We added that a restoration and 
reclamation plan is required only ``if appropriate.''
    [cir] Require only a preliminary plan. We did not incorporate this 
change because the plan will form the basis for setting the reclamation 
bond amount, if appropriate.
 A tribe stated that the requirements for a restoration and 
reclamation plan, bonding, and a survey may be overwhelming to a new 
entrepreneur and may cause delays, making it difficult to establish 
sustainable small Indian-owned businesses on tribal land. BIA requires 
plans and bonding, where

[[Page 72459]]

appropriate, to protect the Indian land and the interests of the Indian 
landowner. We have replaced the requirement for a survey with a 
requirement for a legal description of the land.
 Delete the requirement for providing documentation of the 
lessee's history with similar projects because many commercial lessees 
are single-project companies formed specifically for that project, with 
no previous development history, and, in the WSR context, many 
renewable energy companies are new and do not have such a history. We 
addressed this comment by replacing ``history in'' with ``ability to.''
 Explain BIA's authority to question a lessee's technical 
capability, especially given that the landowner investigates these 
factors in choosing a lessee. BIA will examine the technical capability 
only to determine if there is a compelling reason not to approve the 
lease, and will defer, to the maximum extent possible, to the Indian 
landowners' determination that the lease is in its best interest.
 Explain whether an aliquot part description based on a BLM 
survey will be acceptable without providing an additional survey. An 
aliquot part description will be acceptable; however, we have added 
flexibility to allow for other methods of obtaining a legal 
description.
 Delete the requirement for a preliminary plan of development 
because such a plan may be premature when a tribe or TDHE is working 
with lending institutions to arrange financing for housing for public 
purposes. We removed this requirement in those cases in which the tribe 
certifies the lease is for housing for public purposes.
 Delete the provision allowing BIA to request ``any additional 
documentation * * * reasonably necessary for approval'' or require BIA 
to provide a compelling reason for the additional documentation. We 
deleted this provision in an effort to better define what a complete 
lease proposal package includes.
     Allow tribes to waive the mandatory provisions where 
inappropriate. Tribes can seek a waiver of one or more of these 
provisions under 25 CFR 1.2.
     Revise the mandatory provisions to require compliance with 
all tribal business licensing, land use, permitting, and zoning laws. 
Compliance with these tribal laws is already required by section 
162.014 (PR 162.013).
     Allow the lessee and tribe the option to develop a 
cultural mitigation plan in case archeological resources are 
encountered. Tribes have the option of developing this plan under the 
NHPA. We did not revise the regulations to include this as it is 
outside the scope of this rulemaking.
18. Approval Process & Timelines
    Most commenters stated their strong support for including timelines 
for BIA decisions on lease documents. In addition, we received the 
following comments:
     Require BIA to provide notice to the landowner of the date 
it received the complete lease proposal package. We incorporated this 
change and now require BIA to notify the parties of the date of 
receipt, so all are aware of when the timeline for approval begins. The 
timeline will still begin upon BIA's receipt of the complete lease 
proposal package.
     Clarify that the timelines do not begin to run until BIA 
has received all supporting documents, and address the fact that it 
could take BIA years to determine that it has received all the 
documents. This comment is correct that the timelines do not begin to 
run until BIA has received all supporting documents. To provide 
certainty as to the timeline, BIA will provide the parties with the 
date on which the timeline begins to run. Also, the final rule 
establishes a limited list of documents that must be submitted in 
support of a lease. The final rule also includes new sections (see 
162.339, e.g.) to allow for BIA review of a lease pending completion of 
any required NEPA and valuation documentation. The intent of this new 
provision is to provide some guidance as to whether there are any red 
flags that would prevent BIA approval of the lease.
     Clarify how BIA will meet its timelines for approval when 
it may take much longer to obtain landowner consent. The timeline for 
BIA approval begins when BIA receives the lease and all supporting 
documents, including the required consents.
     Require BIA to show good cause for extending its review of 
a residential lease beyond 30 days because residential leases are 
generally not voluminous or complex; alternatively, delete the second 
review period or decrease both the initial and second review period. We 
addressed these comments by deleting the extra 30 days for residential 
lease review. We also deleted the extra 30-day review time for 
subleases and amendments to residential leases.
     Shorten the 60-day timeline to approve a residential lease 
plus the 30-day timeline for review of leasehold mortgages because it 
is too long, considering that the lessee may only submit a leasehold 
mortgage for approval after the lease has been approved. As stated 
earlier, we decreased the total time period for review of a residential 
lease to 30 days. In response to this comment, we also decreased the 
time period for leasehold mortgage approval for residential leases to 
20 days.
     Shorten the timelines for review of business leases (BIA 
has an initial 60-day period in which to issue a decision, plus 30 days 
if it exercises its option for additional time) because this time may 
cost the landowner almost 3 months of revenue while waiting for a BIA 
decision and may not be commercially feasible. Because these timelines 
are intended to be the outer bounds of the time it will take for BIA 
review of business leases and are intended to cover all business 
leases, from the simplest to the most complex, we did not make any 
changes to the timeline in response to these comments.
     Define the additional period for review as beginning 
either from the day BIA sends the notification that it needs more time, 
or from the end of the initial 60-day period, whichever is earlier. 
Because BIA is required to send its notification during the initial 60-
day period, the date BIA sends its notification will always be earlier 
than the end of the initial 60-day period. For this reason, we did not 
incorporate this change.
     Delete provisions allowing BIA to unilaterally decide it 
has an additional 30 days to issue a decision. We deleted this option 
for residential leasing and WEELs, but have retained it for business 
and WSR leases because we believe this option is necessary to account 
for particularly complex leases.
19. How BIA Decides To Approve Lease Documents
    Several tribes supported provisions exempting lease actions from 
further BIA approval where the lease so provides. A few tribes opposed 
the ``deemed approved'' result because it may result in uncertainty 
about whether a provision of the lease is consistent with Federal law. 
These tribes believe BIA must take affirmative action. Because most 
tribes support the ``deemed approved'' provisions, we are retaining 
them for amendments and subleases. In addition, we received the 
following comments:

[[Page 72460]]

     Extend ``deemed approved'' provisions to leases, 
assignments, and leasehold mortgages. We did not accept this request 
for leases because we are statutorily required to review and approve 
leases of Indian land. We did not accept this request for assignments 
because we believe we are also statutorily bound to review them as they 
are, in effect, new leases. Many of these commenters did not agree that 
lenders would rely only on affirmative BIA approval of leasehold 
mortgages. We did not incorporate ``deemed approved'' for leasehold 
mortgages because, based on our consultation with representatives of 
HUD, affirmative BIA approval is required by mortgagees and lenders 
even if the regulations were to provide for a deemed approved process.
     Include a written BIA approval with a ``deemed approved'' 
amendment or sublease. We did not make a change to the regulation in 
response to this comment but note that the parties may request written 
confirmation from BIA that a document has been deemed approved and/or 
that its provisions are consistent with Federal law.
     Clarify whether the qualification that a document is 
``deemed approved'' only ``to the extent consistent with Federal law'' 
devours the whole deemed approved process, such that there may be 
pieces of what has been ``deemed approved'' that are not actually 
approved. Our goal is to have affirmative approvals by BIA, so that the 
``deemed approval'' acts only as a guarantee that a decision will occur 
by a certain time. To reduce potential uncertainty that could result 
from a deemed approved action, we added a provision stating that any 
amendment or sublease provision that is inconsistent with Federal law 
will be severed and the remainder of the amendment or sublease will be 
enforceable.
     Clarify whether, after an amendment or sublease is deemed 
approved, BIA will review it to determine whether any provisions 
conflict with Federal law. We did not revise the regulation in response 
to this comment, but note that the deemed approval provisions are 
intended as backstops, and we anticipate that BIA will be actively 
reviewing amendments and subleases before the deadline to ensure 
consistency with Federal law.
     Delete the requirement for BIA to determine that a lease 
is in the best interest of the Indian landowners because leases should 
automatically be in the best interest of Indian landowners. In response 
to these comments, we clarified the approval process for leases. We 
were unable to provide that leases are always in the best interest of 
the Indian landowners because BIA is required to determine whether this 
is true.
     Always defer to the tribe's discretion that something is 
in its best interest, not just ``to the maximum extent possible.'' We 
retained this qualifier because it is necessary in light of our 
statutory obligation to review leases.
     Automatically consider leases for housing for public 
purposes to be in the best interest of the Indian landowner. We expect 
that BIA will determine that leases for housing for public purposes are 
in the best interest of the landowner. But in order to implement its 
statutory mandate to review leases, BIA must examine whether there is 
some reason the lease is not in the landowners' best interest, even 
while deferring to the landowners' determination to the maximum extent 
possible.
     Consider in the ``best interest'' determination factors 
beyond just fair market rental, including traditional and cultural 
values, the need for adequate housing in Indian country, and the 
ability of tribal member lessees to pay fair market rental for 
residential leases. We agree that the best interest determination 
includes factors beyond monetary compensation and that it will vary 
according to circumstances.
     Add a provision requiring BIA to approve leases unless 
there is a compelling reason not to do so. In response to this comment, 
we added a new section at 162.341 (and parallel sections for business, 
WEEL, and WSR leases) specifically addressing the standard by which BIA 
will determine whether to approve a lease. The rule requires BIA to 
approve leases unless there is a compelling reason not to do so and to 
provide a basis for its determination.
     Add examples of what a ``compelling reason'' to disapprove 
may be. We could not identify an example, but believe the provision is 
necessary if a unique situation arises that is not contemplated by 
these regulations but would clearly warrant disapproval. Two other 
tribal commenters objected to the ``compelling reason'' standard as 
paternalistic and effectively standard-less. The rule uses the 
``compelling reason'' standard as the highest administrative standard 
of review; the rule also requires that BIA articulate its basis for 
disapproval, so if it relies on a ``compelling reason,'' it must state 
what that reason is in writing. This determination may be appealed.
     Delete the factors of what BIA will consider in 
determining whether there is a compelling reason to disapprove a lease 
document to protect the best interest of the Indian landowners. We did 
not delete these factors because others had requested clarification of 
the ``compelling reason'' standard.
     Provide that short-term leases will be routinely approved 
but that BIA will find a compelling reason to withhold approval for 
long-term leases only when the lease could imperil the tribal land base 
or tribal community. Because there may be other compelling reasons to 
withhold approval, we did not incorporate this change. The timelines 
and standards for approval are intended to provide the certainty 
associated with routine approvals, while still allowing BIA the ability 
to fulfill its responsibilities in reviewing leases.
     Clarify that provisions governing the BIA approval process 
for amendments, assignments, subleases, and leasehold mortgages apply 
only to leases approved under part 162, and that documents that can be 
agreed to without BIA approval are exempt from these approval 
procedures. We did not make any change to the rule in response to this 
comment because the general provisions establish the applicability of 
part 162 to certain lease documents, including amendments, assignments, 
subleases, and leasehold mortgages. As written, the regulation does not 
allow BIA to require approval of amendments, assignments, subleases, 
and leasehold mortgages related to documents that are not otherwise 
governed by part 162.
     Require BIA to inquire into whether a lease applicant has 
complied with all pertinent tribal laws before approving a business 
lease. A tribe may choose to require the lessee to obtain a statement 
from the tribal authority that the proposed use is in conformance with 
tribal law. Where the tribe requires this, BIA will require the 
statement from the tribe to be included in the package submitted to 
BIA. See 162.438.
     Restrict BIA approval to a ``confirmation that the lease 
is within the tribe's authority under applicable tribal law,'' without 
considering compliance with Federal law, in those situations where BIA 
approval of a specified tribe's lease is not required under 25 U.S.C. 
415(b), but tribal law requires BIA approval of the lease. We did not 
accept this change. The criteria, if any, for approval of these leases 
will be those in the applicable tribal law.
20. Effective Date of Leases
     Clarify provisions regarding the effective date of lease 
documents, by adding that documents not requiring BIA approval are 
effective upon execution by the parties unless the document provides 
for a different effective date. We incorporated this

[[Page 72461]]

change (see 162.342, 162.442, 162.532, and 162.567).
21. Recording
     TDHEs and CDFIs stated that the requirement to record 
residential subleases should be removed as onerous. In response, we 
deleted the requirement to record residential subleases.
     Clarify that ``lease documents'' rather than just 
``leases'' must be recorded in 162.343, 162.434, 162.533, and 162.568. 
We clarified that all lease documents must be recorded except for 
residential subleases.
     Several tribes asked whether the LTRO will record a 
document that has been ``deemed approved'' or a lease document that 
does not require BIA approval (e.g., an assignment to a leasehold 
mortgage acquiring through foreclosure). BIA realty staff will work 
with the LTRO to ensure that these documents are recorded. One tribe 
stated that the absence of an affirmative BIA approval will prevent 
maintaining accurate records at county offices because the county 
recorder may not record something without BIA approval. We are working 
on implementation issues to ensure that it is clear on the face of a 
document that it has been approved (either through affirmative approval 
or deemed approval).
     Allow recording of an original memorandum of lease rather 
than the full lease. This is a broader issue regarding title records, 
which is governed by another regulation, 25 CFR 150.11.
     Address alternative recording with tribal and State 
recording offices because the tribe has had difficulty recording with 
the LTRO where the lease is on restricted fee lands. The LTRO records 
leases on restricted fee lands.
     Clarify whether there is a lease tracking system in place 
with lease amounts and details on each lease that is readily available 
to realty offices. BIA realty staff uses the Title Asset Accounting and 
Management System (TAAMS) as the lease tracking system.
22. Appeal Bonds
     Delete the proposed rule's requirement that the lessee 
post an appeal bond for residential leasing as unnecessary. We deleted 
this requirement.
     Revise appeal bond requirements for business leases to 
state that an appeal bond will not be required for an appeal of a 
decision on a leasehold mortgage or if the tribe is a party to the 
appeal and the tribe requests a waiver. We incorporated these changes 
and also simplified the definition of ``appeal bond'' and provisions 
regarding appeal bonds to refer to 25 CFR part 2.
23. Amendments
     Define ``amendment'' to clarify that it does not include 
an alteration of lease provisions that was expressly contemplated in 
the original lease. We did not incorporate this change because any 
amendment of the provisions of the original lease will be an amendment, 
whereas compliance with provisions of the original lease would not.
     Delete the provision stating that a lease may not be 
amended if the lease prohibits amendments because it is unlikely a 
lease would state this. We deleted this provision.
     Add that landowners may not be deemed to have consented, 
and their representatives may not consent on their behalf, to any 
amendments that would modify the dispute resolution provisions. We 
incorporated this change.
     Clarify that a lease may be amended to secure financing of 
the project that is the subject of the lease. We did not incorporate 
this change because a lease may be amended for any reason.
     Add that BIA will approve amendments where the lease is 
for housing for public purposes and is in the tribe's best interest. To 
address this comment, we added that we will defer, to the maximum 
extent possible, to the Indian landowner's determination that the 
amendment is in their best interest.
     Exempt amendments that are not material from the 
requirement for consent. We did not incorporate this change because, 
unless the lease provides for deemed consent or consent by 
representatives, the landowners must consent to all amendments.
24. Assignments
     Authorize assignments without further BIA approval or 
landowner consent if the lease is for housing for public purposes and 
the assignee is a TDHE or other tribal entity. We incorporated this 
change at 162.349 (PR 162.347).
     Delete the provision at 162.352(c) (PR 162.350) requiring 
the assignee to pay fair market rental to the landowner where the 
assignee is not a member of the landowner's immediate family, because 
it would limit assignments in the housing for public purposes context. 
The final rule provides that assignments of leases for housing for 
public purposes do not require BIA approval, so this restriction will 
not affect assignments of leases for housing for public purposes.
     Delete provisions allowing assignments to subsidiaries 
without consent or BIA approval because they circumvent due diligence 
to ensure the assignee is suitable and capable of performing; 
alternatively, limit these provisions to only those of lessee's 
subsidiaries that are solvent and in good standing in the State where 
the corporation is registered. We did not make any changes to this 
section because the regulations provide that assignments do not need 
consent or approval in these circumstances only if the lease so 
provides; the parties have the opportunity to negotiate this.
     Clarify that a lessee may assign the lease as collateral 
for any financing or refinancing of the project. We did not incorporate 
this change because a lease may be assigned for any reason.
     Add a process by which a financing party can obtain 
acknowledgment from the tribe that the assignment provisions are valid. 
Because this is a matter between the tribe, lessee, and mortgagee, we 
did not incorporate this change.
     Allow a lease to provide for assignments without BIA 
approval or landowner consent to any number of distinct legal entities 
identified in the lease. We rejected this change to keep BIA review of 
the original lease manageable, but increased the number of distinct 
legal entities that may be identified from two to three.
     Treat assignments of residential, business and WSR leases 
the same. We reorganized the provisions related to assignments of 
residential leases to address this comment.
25. Subleases
    Nearly all tribes opposed the conditions for residential subleasing 
without consent or BIA approval, which required an approved rent 
schedule, plan of development, and sublease form. They objected to 
these provisions because, for leases for housing for public purposes, 
HUD already regulates these items. We deleted these conditions so that 
a lessee may sublease without obtaining BIA approval or landowner 
consent, as long as the lease so provides.
    Several commenters expressed their concern with regard to tribes 
that operate their housing programs as departments, rather than as 
separate entities such as TDHEs. These tribes directly lease to 
individuals and, under the regulations, must obtain a BIA approval for 
each individual lease. While this is true of the proposed and final 
rule, it is also true of the current regulations. Because BIA is 
statutorily obligated to review and approve each lease, we could not 
identify a legally

[[Page 72462]]

permissible means of exempting these leases.
    In addition, we received the following comments:
     Exempt commercial leases of retail and office space within 
existing facilities from BIA review. The final rule provides that the 
lease may allow for subleasing without BIA review. A tribe noted that 
mall developers who sublease for retail or office space need 
flexibility to meet the needs of individual retailers, and asked that 
these types of review be exempted. While we did not categorically 
exempt these, they may be exempt from BIA approval if the lease so 
provides.
     Exempt subleases between parents and children from the 
requirement for BIA approval and landowner consent. Because the final 
rule states that all residential subleases are exempt from approval and 
consent where the lease provides, we determined this change was 
unnecessary.
     Establish a default rule that subleases do not need BIA 
approval unless the lease specifically requires. The regulations are 
intended to be as flexible as possible, consistent with our trust 
responsibility, by allowing for subleasing without further approval if 
the lease so provides.
     Delete the provision allowing lessees to sublease without 
BIA approval if the lease so provides, as inconsistent with the 
Department's trust responsibility. BIA did not incorporate this 
suggestion because of tribal comments stating that flexibility in 
subleasing is necessary to meet housing and economic development needs.
     Limit or prohibit subleasing because it can result in the 
lessee's obtaining rental income far in excess of what the landowner 
receives. The comment related to leasing for oil and gas, which is not 
subject to this rulemaking, whereas in the residential context this is 
generally not an issue.
     Involve the tribe in any assignment or sublease decision 
if it owns any portion of the affected land. We added a provision to 
require notification to all Indian landowners of these actions, unless 
the lease provides otherwise.
     Add that BIA will defer, to the maximum extent possible, 
to the Indian landowners' determination that the sublease is in their 
best interest. We added this provision.
     Delete the proposed rule's provision requiring the 
sublessee to be bound by the terms of the lease because it is overly 
restrictive and would prohibit partial subleases. We deleted this 
provision and instead included a provision requiring the lessee to 
remain liable under the lease.
26. Leasehold Mortgages
     Clarify what is meant by the lease providing a ``general 
authorization'' for leasehold mortgages, to exempt the leasehold 
mortgage from consent requirements. We clarified the final rule to 
state that no landowners' consent is required if the lease so provides.
     Delete the requirement for obtaining consent from all 
landowners for a leasehold mortgage because there may be privacy issues 
related to the lessee's financial situation. We clarified that the 
lease may allow for leasehold mortgages without landowner consent.
     Exempt leasehold mortgages from BIA approval where the 
lease is for housing for public purposes because of situations where a 
TDHE records a mortgage and may file an additional mortgage if the 
costs exceed the original projected amount. We did not include an 
exemption because BIA approval of leasehold mortgages is required in 
all instances to ensure that only the leasehold is encumbered.
     Add that where the leasehold mortgage is for a lease for 
housing for public purposes, BIA will defer, to the maximum extent 
possible, to the judgment of the tribe and will complete its review in 
30 days. Because we defer to the judgment of the tribe with regard to 
all leasehold mortgages, and we have reduced the timeline for BIA 
approval of leasehold mortgages to 20 days (see approvals and timelines 
section, above), we did not incorporate this suggested language.
     Clarify the role of BIA staff, and whether they have the 
knowledge to determine if a leasehold mortgage is in the lessee's best 
interest or are assuming the role of an underwriter. The scope of BIA's 
review of the leasehold mortgage is limited to determining whether the 
landowners have consented, the requirements of the subpart have been 
met, and there is a compelling reason to disapprove the leasehold 
mortgage. We deleted several factors and replaced them with a factor 
regarding whether mortgage proceeds would be used for purposes 
unrelated to the lease to clarify this limited scope of BIA's review. 
We also revised the provision stating that BIA ``will'' consider 
certain factors in determining whether there is a compelling reason to 
disapprove to instead state that BIA ``may'' consider those factors. 
This revision provides BIA with flexibility to rely on another Federal 
agency's approval or guarantee of the leasehold mortgage. Likewise, 
when a leasehold mortgage is associated with housing for public 
purposes, BIA's review of the compelling reasons will be less 
intensive.
27. Appeal From Inaction
     Include a different remedy for BIA's failure to act on a 
lease proposal package because the appeals process under 25 CFR part 2 
is so slow that it is not an effective remedy for delays in BIA's 
decisions on lease documents. In response, we added a new process to 
enforce timelines on BIA whereby the matter is first elevated from the 
Superintendent to the Regional Director, and from the Regional Director 
to the Director of BIA. This will instill more accountability for 
issuing timely decisions and will provide a more effective remedy for 
parties seeking a decision. These procedures are intended to supplant 
25 CFR 2.8 entirely, so a party is not required to submit a section 2.8 
demand letter giving the official a certain time period to act before 
allowing an appeal. We acknowledge that the formal adjudication process 
before the Interior Board of Indian Appeals may not be the most 
appropriate or expeditious process when a BIA official fails to meet 
regulatory deadlines. Our hope is that inserting a supervisory 
official, the BIA Director, into the process will obviate the need for 
any further relief; and we may consult with tribes on the Board's role 
with respect to instances of BIA inaction in the future.
     Revise the appeal process to allow for an informal 
conference process similar to 25 CFR 900.153, rather than the part 2 
process. We did not incorporate this process for appeals from inaction 
because an informal conference would likely further delay issuance of a 
decision. We did incorporate an abbreviated form of this process for 
appeals of disapprovals of WEELs because these are intended to be 
short-term leases on a particularly expedited approval schedule.
28. Compliance and Enforcement
     Clarify cancellation versus termination. We added 
definitions for each of these terms to clarify that only BIA may cancel 
a lease, but an Indian landowner may terminate a lease.
     Clarify how BIA will ``defer'' to tribal court judgments, 
because if BIA can take unilateral action regardless of tribal court 
proceedings addressing the same issue, then it will undermine parties' 
efforts to provide for appropriate forums to resolve disputes. If the 
parties are addressing a lease compliance issue in tribal court or 
other court of competent jurisdiction, through a tribal governing body 
or an alternative dispute resolution method, BIA generally will wait 
for those

[[Page 72463]]

proceedings to close and defer to the outcome.
     Restore the current rule's provision that BIA will assist 
Indian landowners in the enforcement of negotiated remedies. We added a 
provision in 162.365(d), 162.465(d), and 162.590(d) to provide that 
landowners may request BIA assistance in enforcing negotiated remedies.
     Delete the requirement for BIA to contact each individual 
Indian landowner to ensure removal of improvements because it is 
unrealistic. We did not change the rule in response to this comment 
because the rule provides that BIA will contact individual Indian 
landowners, where feasible, and other commenters had requested that BIA 
attempt to contact individual Indian landowners to ensure removal.
     Clarify the statement that BIA may order the lessee to 
``stop work.'' We revised this provision to clarify that BIA may order 
the lessee to ``cease operations under the lease.''
     Restrict BIA's ability to enforce leases so that BIA 
action is triggered only by a ``material'' violation. We did not 
restrict BIA's authority to material violations, but note that BIA will 
consult with Indian landowners regarding violations.
     Require written notice of nonpayment from Indian 
landowners in 162.366(c)(1)(ii) (PR 162.363). We did not incorporate 
this change because ``actual notice'' provides more flexibility to the 
Indian landowners, allowing them to notify BIA either in writing, in 
person, or by phone.
     Allow the tribe, rather than BIA, to establish fees. The 
fees referred to in 162.368 (PR 162.365) and parallel provisions are 
those due to the United States under the Debt Collection Act. This 
section does not affect whether tribes may impose their own fees. 
Another tribe stated that if a lessee doesn't have the resources to pay 
rent on time, they won't have the resources to pay the fees. These fees 
are required under the Debt Collection Act. The parties to a lease may 
agree not to charge late payment charges or other fees under the lease.
     Include mandatory language to force BIA to make a trespass 
finding or take other enforcement action. We did not incorporate this 
change in order to retain enforcement discretion.
     Require BIA, in 162.464 (PR 162.461), to coordinate with 
other Federal, tribal, or State law enforcement officials as needed to 
evict, in order to prevent litigation on this matter. We did not make a 
change to the regulation in response to this comment, but note that BIA 
may coordinate with other law enforcement officials, as necessary.
     Add timeframes for BIA to provide a notice of violation. 
We did not incorporate these changes because BIA has enforcement 
discretion in determining when to issue a notice of violation. This 
commenter requested that the timeframe for the lessee to cure a 
violation be extended from 10 days to 30 or 60 days. We did not 
incorporate this change because the regulations allow the lessee to 
request a longer time period to cure.
     Require the lessee to notify the tribe, in addition to 
BIA, that it has cured a violation. We incorporated this change.
     Add specific timeframes (rather than ``promptly'') for BIA 
to investigate a potential violation. Because BIA's ability to 
investigate potential violations varies with the availability of 
resources, we did not add a specific timeframe.
     Allow financing parties the right to cure on behalf of the 
lessee. The regulations allow financing parties this right, as they 
continue to be responsible for the obligations in the lease.
     Clarify that enforcement of program occupancy documents is 
left to the tribes. BIA does not enforce program occupancy documents.
     Provide that tribal courts should be the ultimate arbiter 
of land disputes. We did not make a change to the rule in response to 
this comment, but note that the parties may include in the lease that 
the tribal court is the ultimate arbiter of any lease disputes between 
the parties.
     Allow a one-time lump sum rental payment, to render much 
of the compliance and enforcement process unnecessary. The regulations 
do allow for a one-time lump sum rental payment, but the compliance and 
enforcement process is still necessary for violations other than 
failure to pay rent.
29. Miscellaneous
     Carefully consider the implication of the Helping Expedite 
and Advance Responsible Tribal Home Ownership Act of 2012 (HEARTH Act) 
on implementation of these regulations, to avoid two conflicting 
systems. These regulations would allow for two independent, consistent 
processes, if a tribe develops its own leasing regulations under the 
HEARTH Act. One tribe suggested that instead of promulgating leasing 
regulations, BIA should incorporate the essence of the HEARTH Act. BIA 
is statutorily required to approve leases; the HEARTH Act removes that 
requirement under certain conditions (e.g., the tribe develops its own 
leasing regulations). To the extent we can do so within the current 
statutory framework, we have attempted to remove BIA as a barrier to 
fostering business opportunities and economic development through 
leasing on Indian land.
     Add a new section to allow BIA to amend or correct a lease 
due to a mistake, such as an incorrect legal land description, a 
mistake allowing a party to avoid legal obligations under an approved 
mortgage, or other mistake as necessary to protect the interests of the 
Indian landowners. We did not add this section because the parties must 
agree to any amendments of the lease; BIA has no authority to interfere 
with the contractual agreement of the parties even where it determines 
that a ``mistake'' has occurred.
     Develop a model lease to expedite the review and approval 
process. A model lease has been developed for residential leases of 
tribal land. BIA has not developed a model lease for business or WSR 
because the leases vary widely; however, we will develop checklists for 
guidance.
     Allow for the right to receive lease income from exchange 
assignments, which had been encouraged by BIA. The parties may address 
exchange assignments in the lease.
     We received several comments regarding rights-of-way, 
utility easements, encouraging broadband network investment, 
agricultural leasing, BIA resources, assisting tribes in preparing 
their own tax regulations, LTROs, TAAMS, Government Performance and 
Results Act (GPRA) reporting, carbon sequestration and cap-and-trade 
programs, administration of individual Indian money (IIM) accounts, 
procedures for contacting landowners whose whereabouts are unknown, and 
background checks; we are not addressing these comments here because 
they are outside the scope of this rulemaking.

IV. Procedural Requirements

A. Regulatory Planning and Review (E.O. 12866 and 13563)

    Executive Order (E.O.) 12866 provides that the Office of 
Information and Regulatory Affairs (OIRA) at the Office of Management 
and Budget (OMB) will review all significant rules. OIRA has determined 
that this rule is significant because it raises novel legal or policy 
issues.
    E.O. 13563 reaffirms the principles of E.O. 12866 while calling for 
improvements in the nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome

[[Page 72464]]

tools for achieving regulatory ends. The E.O. directs agencies to 
consider regulatory approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public where these approaches 
are relevant, feasible, and consistent with regulatory objectives. E.O. 
13563 emphasizes further that regulations must be based on the best 
available science and that the rulemaking process must allow for public 
participation and an open exchange of ideas. We have developed this 
rule in a manner consistent with these requirements. This rule is also 
part of the Department's commitment under the Executive Order to reduce 
the number and burden of regulations.

B. Regulatory Flexibility Act

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

C. Small Business Regulatory Enforcement Fairness Act

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

D. Unfunded Mandates Reform Act

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

E. Takings (E.O. 12630)

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

F. Federalism (E.O. 13132)

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

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

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

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

    In accordance with the President's memorandum of April 29, 1994, 
``Government-to-Government Relations with Native American Tribal 
Governments,'' Executive Order 13175 (59 FR 22951, November 6, 2000), 
and 512 DM 2, we have evaluated the potential effects on federally 
recognized Indian tribes and Indian trust assets. During development of 
the proposed rule, the Department discussed the rule with tribal 
representatives at several consultation sessions. We distributed a 
preliminary draft of the rule to tribes in February 2011 and held three 
consultation sessions: Thursday, March 17, 2011 at the Reservation 
Economic Summit (RES) 2011 in Las Vegas; March 31, 2011 in Minnesota; 
and April 6, 2011, in Albuquerque, New Mexico. We requested that tribes 
submit written comments by April 18, 2011. We received written and oral 
comments from over 70 Indian tribes during tribal consultation. We 
reviewed each comment in depth and revised the rule accordingly. The 
proposed rule incorporated those revisions. We also compiled a summary 
of tribal comments received and our responses to those comments and are 
making that document available to tribes at http://www.bia.gov/WhoWeAre/AS-IA/Consultation/index.htm. We notified tribes of the 
publication of the proposed rule on November 28, 2011, provided them 
with a Web site link to responses to tribal comments and other 
materials, and announced additional consultation sessions. Following 
publication of the proposed rule, we held additional tribal 
consultation sessions on January 10, 2012, in Seattle, Washington; 
January 12, 2012, in Palm Springs, California; and January 18, 2012, in 
Rapid City, South Dakota. We received written and oral comments from 
approximately 50 tribes, and several tribal organizations and tribal 
members and took them into consideration in formulating this final 
rule, as described above.

I. Paperwork Reduction Act

    The Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., 
prohibits a Federal agency from conducting or sponsoring a collection 
of information that requires OMB approval, unless this approval has 
been obtained and the collection request displays a currently valid OMB 
control number. No person is required to respond to an information 
collection request that has not complied with the PRA.
    In the Federal Register of November 29, 2011, the Department 
published the proposed rule and invited comments on the proposed 
collection of information. The Department submitted the information 
collection request to the Office of Management and Budget (OMB) for 
review and approval. OMB did not approve this collection of 
information, but instead, filed comment. In filing comment on this 
collection of information, OMB requested that, before publication of 
the final rule, the Department provide all comments on the 
recordkeeping and reporting requirements in the proposed rule, the 
Department's response to these comments, and a summary of any changes 
to the information collections. We did not receive any public comments 
regarding the information collection burden estimates in response to 
publication of the proposed rule in

[[Page 72465]]

the Federal Register; however, some of the comments on the rule related 
to comments on information collections, including comments on NEPA 
documentation and supporting documents. These are discussed in Section 
III.C. under the heading for section 162.027, above, and Section 
III.H.17, above. Because the changes made as a result to these comments 
do not change the overall estimates of how long it takes to collect and 
provide information, these did not affect the burden estimates.
    OMB has approved the revision to the information collections 
approved under OMB Control No. 1076-0155 to reflect the information 
collections in this final rule. This approval will expire on XX/XX/
XXXX. Questions or comments concerning this information collection 
should be directed to the person listed in the FOR FURTHER INFORMATION 
CONTACT section of this preamble.
    OMB Control No. 1076-0155 currently authorizes the collections of 
information in 25 CFR part 162, totaling an estimated 106,065 annual 
burden hours. The final rule increases the annual burden hours by an 
estimated 2,910 hours. Because the sections where the information 
collections occur changes, we are including a table showing the section 
changes and whether a change to the information collection requirement 
associated with those sections has changed.

----------------------------------------------------------------------------------------------------------------
                                                                 Information collection
           Current CFR cite                  New CFR cite             requirement         Explanation of change
----------------------------------------------------------------------------------------------------------------
162.109, 162.204, 162.205............  162.109, 162.204,        Provide notice of        No change. Previously
                                        162.205, 162.338(e),     tribal leasing laws,     required, but now
                                        162.438(e),              regulations,             listed in specific
                                        162.528(d), 162.570(e).  exemptions.              subparts.
                                       162.320, 162.420,        Request for fair market  New.
                                        162,549.                 rental/valuation on
                                                                 tribal land.
                                       162.321, 162.421,        Request for waiver of    New.
                                        162.550.                 fair market rental/
                                                                 valuation for
                                                                 individually owned
                                                                 land.
                                       162.324, 162.424,        Agreement to suspend     New.
                                        162.553.                 direct pay.
                                       162.371, 162.471,        Notification of good     New.
                                        162.596.                 faith negotiations
                                                                 with holdover.
162.207, 162.242-244, 162.604(a),      162.009, 162.207,        Submit lease,            No change. Previously
 162.610.                               162.242-244, 162.347,    assignment, amendment,   required, but now
                                        351, 355, 359,           leasehold mortgage for   listed in separate
                                        162.447, 451, 455,       approval.                subparts.
                                        459, 162.529, 534,
                                        565, 572, 576, 580,
                                        584.
162.213, 162.604(a)..................  162.024 162.213,         Provide supporting       No change. Previously
                                        162.338, 162.438,        documentation.           required, but now
                                        162.528, 162.563.                                 listed in separate
                                                                                          subparts.
                                       162.007................  Submit permits to BIA    Permits must now be
                                                                 for file.                submitted to BIA for
                                                                                          file.
162.217, 162.246.....................  162.217, 162.246,        Submit lease for         No change. Previously
                                        162.343, 162.443,        recording.               required, but now
                                        162.568.                                          listed in separate
                                                                                          subparts.
162.234, 162.604(c)..................  162.234, 162.434,        Provide a bond.........  No change. Previously
                                        162.525, 162.559.                                 required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.237, 162.604(d)..................  162.237, 162.437,        Provide information for  No change. Previously
                                        162.527, 162.562.        acceptable insurance.    required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.241..............................  162.241................  Administrative fees....  No change.
162.247, 162.613.....................  162.247, 162.325, 329,   Pay rent...............  No change. Previously
                                        162.425, 429, 162.523,                            required, but now
                                        551.                                              listed in separate
                                                                                          subparts.
162.248, 162.616.....................  162.248, 162.368,        Pay penalties for late   No change. Previously
                                        162.468, 162.593.        payment.                 required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.212, 162.606.....................  162.009, 162.212.......  Bidding on advertised    No change. Previously
                                                                 lease.                   required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.603..............................  162.005(b)(2)..........  Use of minor's land....  No change. Previously
                                                                                          required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.251, 162.618.....................  162.251, 162.366,        Provide notice of        No change. Previously
                                        162.466, 162.591.        curing violation.        required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.256, 162.623.....................  162.256, 162.371,        Respond to notice of     No change. Previously
                                        162.471, 162.596.        trespass.                required, but now
                                                                                          listed in separate
                                                                                          subparts.
162.113..............................  162.025, 162.113.......  Appealing decisions....  No change. Previously
                                                                                          required, but now
                                                                                          listed in separate
                                                                                          subparts.
----------------------------------------------------------------------------------------------------------------

    The table showing the burden of the information collection is 
included below for your information.

[[Page 72466]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Number          Annual       Burden hours    Total annual
              CFR cite                     Description             Respondent type          respondents      responses     per response    burden hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
162.109, 162.204, 162.205,           Provide notice of       Tribal.....................             500             500            0.5              250
 162.338(e) 162.438(e), 162.528(d),   tribal leasing laws,
 162.570(e).                          regulations,
                                      exemptions.
162.320, 162.420, 162,549..........  Request for fair        Tribal.....................              50              50            0.5               25
                                      market rental/
                                      valuation on tribal
                                      land.
162.321, 162.421, 162.550..........  Request for waiver of   Individuals................           5,000           5,000            0.5            2,500
                                      fair market rental/
                                      valuation for
                                      individually-owned
                                      land.
162.324, 162.424 162.553...........  Agreement to suspend    Individuals................              20              20            0.5               10
                                      direct pay.
162.371, 162.471, 162.596..........  Notification of good    Tribal.....................             100             100            0.5               50
                                      faith negotiations
                                      with holdover.
                                                             Individuals................             500             500            0.5              250
162.009, 162.207, 242-244, 162,      Submit lease,           Individuals................          10,000          10,000            1             10,000
 347, 351, 355, 359, 162.447, 451,    assignment,
 455, 459, 162.529, 534, 565, 572,    amendment, leasehold
 576, 580, 584.                       mortgage for approval.
                                                             Businesses.................           2,500           2,500            1              2,500
                                                             Tribal.....................           2,000           2,000            1              2,000
162.024, 162.213, 162.338, 162.438,  Provide supporting      Individuals................           5,000           5,000            0.25           1,250
 162.528, 162.563.                    documentation.
                                                             Businesses.................           2,000           2,000            0.25             500
                                                             Tribal.....................             250             250            0.25            62.5
162.007............................  Submit permits to BIA   Individuals................             100             100            0.25              25
                                      for file.
                                                             Businesses.................             100             100            0.25              25
                                                             Tribal.....................             100             100            0.25              25
162.217, 162.246, 162.343, 162.443,  Submit lease for        Individuals................          10,000          10,000            0.5            5,000
 162.568.                             recording.
                                                             Businesses.................           2,500           2,500            0.5            1,250
                                                             Tribal.....................           2,000           2,000            0.5            1,000
162.234, 162.434, 162.525, 162.559.  Provide a bond........  Individuals................          10,000          10,000            0.5            5,000
                                                             Businesses.................           2,500           2,500            0.5            1,250
                                                             Tribal.....................           2,000           2,000            0.5            1,000
162.237, 162.437, 162.527, 162.562.  Provide information     Individuals................          10,000          10,000            0.25           2,500
                                      for acceptable
                                      insurance.
                                                             Businesses.................           2,500           2,500            0.25             625
                                                             Tribal.....................           2,000           2,000            0.25             500
162.241............................  Administrative fees...  Individuals................          10,000          10,000            2             20,000
                                                             Businesses.................           2,500           2,500            2              5,000
                                                             Tribal.....................           2,000           2,000            2              4,000
162.247, 162.325, 329, 162.425,      Pay rent..............  Individuals................          10,000          10,000            0.25           2,500
 429, 162.523, 551.
                                                             Businesses.................           2,500           2,500            0.25             625
                                                             Tribal.....................           2,000           2,000            0.25             500
162.248, 162.368, 162.468, 162.593.  Pay penalties for late  Individuals................           3,000           3,000            0.25             750
                                      payment.
                                                             Businesses.................             600             600            0.25             150
                                                             Tribal.....................              25              25            0.25               6
162.009, 162.212...................  Bidding on advertised   Individuals................          10,000          10,000            1             10,000
                                      lease.
                                                             Businesses.................           2,500           2,500            1              2,500
                                                             Tribal.....................           2,000           2,000            1              2,000
162.005(b)(2)......................  Use of a minor's land.  All........................           7,250           7,250            3             21,750
162.251, 162.366, 162.466, 162.591.  Provide notice of       Individuals................             100             100            0.5               50
                                      curing violation.
                                                             Businesses.................              45              45            0.5               23
162.256, 162.371, 162.471, 162.596.  Respond to notice of    Individuals................             100             100            0.5               50
                                      trespass.
                                                             Businesses.................              45              45            0.5               23
162.025, 162.113...................  Appealing decisions...  Individuals................             400             400            2                800
                                                             Businesses.................             225             225            2                450
                                                             Tribal.....................             100             100            2                200
                                                                                         ---------------------------------------------------------------

[[Page 72467]]

 
                                     Total.................  ...........................         127,110         127,110  ..............         108,975
--------------------------------------------------------------------------------------------------------------------------------------------------------

J. National Environmental Policy Act

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

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

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

List of Subjects in 25 CFR Part 162

    Indians--lands.

    For the reasons stated in the preamble, the Department of the 
Interior, Bureau of Indian Affairs, amends part 162 in Title 25 of the 
Code of Federal Regulations as follows:

PART 162--LEASES AND PERMITS

0
1. Revise the authority citation for part 162 to read as follows:

    Authority:  5 U.S.C. 301, R.S. 463 and 465; 25 U.S.C. 2 and 9. 
Interpret or apply sec. 3, 26 Stat. 795, sec. 1, 28 Stat. 305, secs. 
1, 2, 31 Stat. 229, 246, secs. 7, 12, 34 Stat. 545, 34 Stat. 1015, 
1034, 35 Stat. 70, 95, 97, sec. 4, 36 Stat. 856, sec. 1, 39 Stat. 
128, 41 Stat. 415, as amended, 751, 1232, sec. 17, 43 Stat. 636, 
641, 44 Stat. 658, as amended, 894, 1365, as amended, 47 Stat. 1417, 
sec. 17, 48 Stat. 984, 988, 49 Stat. 115, 1135, sec. 55, 49 Stat. 
781, sec. 3, 49 Stat. 1967, 54 Stat. 745, 1057, 60 Stat. 308, secs. 
1, 2, 60 Stat. 962, sec. 5, 64 Stat. 46, secs. 1, 2, 4, 5, 6, 64 
Stat. 470, 69 Stat. 539, 540, 72 Stat. 968, 107 Stat. 2011, 108 
Stat. 4572, March 20, 1996, 110 Stat. 4016; 25 U.S.C. 380, 393, 
393a, 394, 395, 397, 402, 402a, 403, 403a, 403b, 403c, 409a, 413, 
415, 415a, 415b, 415c, 415d, 416, 477, 635, 2201 et seq., 3701, 
3702, 3703, 3712, 3713, 3714, 3715, 3731, 3733, 4211; 44 U.S.C. 3101 
et seq.


Sec.  162.100  [Removed]

0
2. Remove Sec.  162.100.


Sec. Sec.  162.101 through 162.113  [Transferred to Subpart B]

0
3. Transfer Sec. Sec.  162.101 through 162.113 from subpart A to 
subpart B.

0
4. Revise subpart A to read as follows:
Subpart A--General Provisions

Purpose, Definitions, and Scope

Sec.
162.001 What is the purpose of this part?
162.002 How is this part subdivided?
162.003 What key terms do I need to know?
162.004 To what land does this part apply?

When To Get a Lease

162.005 When do I need a lease to authorize possession of Indian 
land?
162.006 To what types of land use agreements does this part apply?
162.007 To what permits does this part apply?
162.008 Does this part apply to lease documents I submitted for 
approval before January 4, 2013?
162.009 Do I need BIA approval of a subleasehold mortgage?

How To Get a Lease

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

Lease Administration

162.014 What laws apply to leases approved under this part?
162.015 May a lease contain a preference consistent with tribal law 
for employment of tribal members?
162.016 Will BIA comply with tribal laws in making lease decisions?
162.017 What taxes apply to leases approved under this part?
162.018 May tribes administer this part on BIA's behalf?
162.019 May a lease address access to the leased premises by roads 
or other infrastructure?
162.020 May a lease combine tracts with different Indian landowners?
162.021 What are BIA's responsibilities in approving leases?
162.022 What are BIA's responsibilities in administering and 
enforcing leases?
162.023 What if an individual or entity takes possession of or uses 
Indian land without an approved lease or other proper authorization?
162.024 May BIA take emergency action if Indian land is threatened?
162.025 May decisions under this part be appealed?
162.026 Who can answer questions about leasing?
162.027 What documentation may BIA require in approving, 
administering, and enforcing leases?
162.028 How may an Indian tribe obtain information about leases on 
its land?
162.029 How does BIA provide notice to the parties to a lease?

Subpart A--General Provisions

Purpose, Definitions, and Scope


Sec.  162.001  What is the purpose of this part?

    (a) The purpose of this part is to promote leasing on Indian land 
for housing, economic development, and other purposes.
    (b) This part specifies:
    (1) Conditions and authorities under which we will approve leases 
of Indian land and may issue permits on Government land;
    (2) How to obtain leases;
    (3) Terms and conditions required in leases;
    (4) How we administer and enforce leases; and
    (5) Special requirements for leases made under special acts of 
Congress that apply only to certain Indian reservations.
    (c) If any section, paragraph, or provision of this part is stayed 
or held invalid, the remaining sections, paragraphs, or provisions of 
this part remain in full force and effect.


Sec.  162.002  How is this part subdivided?

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

[[Page 72468]]

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

    Adult means a person who is 18 years of age or older.
    Appeal bond means a bond posted upon filing of an appeal.
    Approval means written authorization by the Secretary or a 
delegated official or, where applicable, the ``deemed approved'' 
authorization of an amendment or sublease.
    Assignment means an agreement between a lessee and an assignee, 
whereby the assignee acquires all or some of the lessee's rights, and 
assumes all or some of the lessee's obligations, under a lease.
    BIA means the Secretary of the Interior or the Bureau of Indian 
Affairs within the Department of the Interior and any tribe acting on 
behalf of the Secretary or Bureau of Indian Affairs under Sec.  
162.018.
    Business day means Monday through Friday, excluding federally 
recognized holidays and other days that the applicable office of the 
Federal Government is closed to the public.
    Cancellation means BIA action to end a lease.
    Consent or consenting means written authorization by an Indian 
landowner to a specified action.
    Constructive notice means notice:
    (1) Posted at the tribal government office, tribal community 
building, and/or the United States Post Office; and
    (2) Published in the local newspaper(s) nearest to the affected 
land and/or announced on a local radio station(s).
    Court of competent jurisdiction means a Federal, tribal, or State 
court with jurisdiction.
    Day means a calendar day, unless otherwise specified.
    Emancipated minor means a person less than 18 years of age who is 
married or who is determined by a court of competent jurisdiction to be 
legally able to care for himself or herself.
    Equipment installation plan means a plan that describes the type 
and location of any improvements to be installed by the lessee to 
evaluate the wind resources and a schedule showing the tentative 
commencement and completion dates for installation of those 
improvements.
    Fair market rental means the amount of rental income that a leased 
tract of Indian land would most probably command in an open and 
competitive market, or as determined by competitive bidding.
    Fee interest means an interest in land that is owned in 
unrestricted fee status, and is thus freely alienable by the fee owner.
    Fractionated tract means a tract of Indian land owned in common by 
Indian landowners and/or fee owners holding undivided interests 
therein.
    Government land means any tract, or interest therein, in which the 
surface estate is owned and administered by the United States, not 
including Indian land.
    Holdover means circumstances in which a lessee remains in 
possession of the leased premises after the lease term expires.
    Housing for public purposes means multi-family developments, 
single-family residential developments, and single-family residences:
    (1) Administered by a tribe or tribally designated housing entity 
(TDHE); or
    (2) Substantially financed using a tribal, Federal, or State 
housing assistance program or TDHE.
    Immediate family means, in the absence of a definition under 
applicable tribal law, a spouse, brother, sister, aunt, uncle, niece, 
nephew, first cousin, lineal ancestor, lineal descendant, or member of 
the household.
    Indian means:
    (1) Any person who is a member of any Indian tribe, is eligible to 
become a member of any Indian tribe, or is an owner as of October 27, 
2004, of a trust or restricted interest in land;
    (2) Any person meeting the definition of Indian under the Indian 
Reorganization Act (25 U.S.C. 479) and the regulations promulgated 
thereunder; and
    (3) With respect to the inheritance and ownership of trust or 
restricted land in the State of California under 25 U.S.C. 2206, any 
person described in paragraph (1) or (2) of this definition or any 
person who owns a trust or restricted interest in a parcel of such land 
in that State.
    Indian land means any tract in which any interest in the surface 
estate is owned by a tribe or individual Indian in trust or restricted 
status and includes both individually owned Indian land and tribal 
land.
    Indian landowner means a tribe or individual Indian who owns an 
interest in Indian land.
    Individually owned Indian land means any tract, or interest 
therein, in which the surface estate is owned by an individual Indian 
in trust or restricted status.
    Indian tribe means an Indian tribe under section 102 of the 
Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
    Interest, when used with respect to Indian land, means an ownership 
right to the surface estate of Indian land.
    Lease means a written contract between Indian landowners and a 
lessee, whereby the lessee is granted a right to possess Indian land, 
for a specified purpose and duration. The lessee's right to possess 
will limit the Indian landowners' right to possess the leased premises 
only to the extent provided in the lease.
    Lease document means a lease, amendment, assignment, sublease, or 
leasehold mortgage.
    Leasehold mortgage means a mortgage, deed of trust, or other 
instrument that pledges a lessee's leasehold interest as security for a 
debt or other obligation owed by the lessee to a lender or other 
mortgagee.
    Lessee means person or entity who has acquired a legal right to 
possess Indian land by a lease under this part.
    Life estate means an interest in property held only for the 
duration of a designated person(s)' life. A life estate may be created 
by a conveyance document or by operation of law.
    LTRO means the Land Titles and Records Office of the BIA.
    Mail means to send something by U.S. Postal Service or commercial 
delivery service.
    Minor means an individual who is less than 18 years of age.
    Mortgagee means the holder of a leasehold mortgage.
    NEPA means the National Environmental Policy Act of 1969, 42 U.S.C. 
4321 et seq.
    Nominal rental or nominal compensation means a rental amount that 
is so insignificant that it bears no relationship to the value of the 
property that is being leased.
    Non compos mentis means that the person to whom the term is applied 
has been legally determined by a court of competent jurisdiction to be 
of unsound mind or incapable of managing his or her own affairs.
    Notice of violation means a letter notifying the lessee of a 
violation of the lease and providing the lessee with a specified period 
of time to show cause why the lease should not be cancelled for the 
violation. A 10-day show cause letter is one type of notice of 
violation.
    Orphaned minor means a minor whose parents are deceased.
    Performance bond means security for the performance of certain 
lease obligations, as furnished by the lessee, or a guaranty of such 
performance as furnished by a third-party surety.
    Permanent improvements means buildings, other structures, and 
associated infrastructure attached to the leased premises.
    Permit means a written, non-assignable agreement between Indian 
landowners or BIA and the permittee, whereby the permittee is granted a

[[Page 72469]]

temporary, revocable privilege to use Indian land or Government land, 
for a specified purpose.
    Permittee means a person or entity who has acquired a privilege to 
use Indian land or Government land by a permit.
    Power of attorney means an authority by which one person enables 
another to act for him or her as attorney-in-fact.
    Remainder interest means an interest in Indian land that is created 
at the same time as a life estate, for the use and enjoyment of its 
owner after the life estate terminates.
    Restoration and reclamation plan means a plan that defines the 
reclamation, revegetation, restoration, and soil stabilization 
requirements for the project area, and requires the expeditious 
reclamation of construction areas and revegetation of disturbed areas 
to reduce invasive plant infestation and erosion.
    Secretary means the Secretary of the Interior.
    Single-family residence means a building with one to four dwelling 
units on a tract of land under a single residential lease, or as 
defined by applicable tribal law or other tribal authorization.
    Single-family residential development means two or more single-
family residences owned, managed, or developed by a single entity.
    Sublease means a written agreement by which the lessee grants to an 
individual or entity a right to possession no greater than that held by 
the lessee under the lease.
    Surety means one who guarantees the performance of another.
    TDHE means a tribally designated housing entity under 25 U.S.C. 
4103(22), a tribally-sponsored or tribally sanctioned not-for-profit 
entity, or any limited partnership or other entity organized for the 
purpose of developing or improving low-income housing utilizing tax 
credits.
    Termination means action by Indian landowners to end a lease.
    Trespass means any unauthorized occupancy, use of, or action on any 
Indian land or Government land.
    Tribal authorization means a duly adopted tribal resolution, tribal 
ordinance, or other appropriate tribal document authorizing the 
specified action.
    Tribal land means any tract, or interest therein, in which the 
surface estate is owned by one or more tribes in trust or restricted 
status, and includes such lands reserved for BIA administrative 
purposes. The term also includes the surface estate of lands held by 
the United States in trust for an Indian corporation chartered under 
section 17 of the Act of June 18, 1934 (48 Stat. 988; 25 U.S.C. 477).
    Tribal land assignment means a contract or agreement that conveys 
to tribal members or wholly owned tribal corporations any rights for 
the use of tribal lands, assigned by an Indian tribe in accordance with 
tribal laws or customs.
    Tribal law means the body of non-Federal law that governs lands and 
activities under the jurisdiction of a tribe, including ordinances or 
other enactments by the tribe, and tribal court rulings.
    Trust or restricted land means any tract, or interest therein, held 
in trust or restricted status.
    Trust or restricted status means:
    (1) That the United States holds title to the tract or interest in 
trust for the benefit of one or more tribes or individual Indians; or
    (2) That one or more tribes or individual Indians holds title to 
the tract or interest, but can alienate or encumber it only with the 
approval of the United States because of limitations in the conveyance 
instrument under Federal law or limitations in Federal law.
    Undivided interest means a fractional share in the surface estate 
of Indian land, where the surface estate is owned in common with other 
Indian landowners or fee owners.
    USPAP means the Uniform Standards of Professional Appraisal 
Practice promulgated by the Appraisal Standards Board of the Appraisal 
Foundation to establish requirements and procedures for professional 
real property appraisal practice.
    Us/we/our means the BIA.
    Violation means a failure to take an action, including payment of 
compensation, when required by the lease, or to otherwise not comply 
with a term of the lease. This definition applies for purposes of our 
enforcement of a lease under this part no matter how ``violation'' or 
``default'' is defined in the lease.


Sec.  162.004  To what land does this part apply?

    (a) This part applies to Indian land and Government land, including 
any tract in which an individual Indian or Indian tribe owns an 
interest in trust or restricted status.
    (1) We will not take any action on a lease of fee interests or 
collect rent on behalf of fee interest owners. We will not condition 
our approval of a lease of the trust and restricted interests on your 
having obtained a lease from the owners of any fee interests. The 
lessee will be responsible for accounting to the owners of any fee 
interests that may exist in the property being leased.
    (2) We will not include the fee interests in a tract in calculating 
the applicable percentage of interests required for consent to a lease 
document.
    (b) This paragraph (b) applies if there is a life estate on the 
land to be leased.
    (1) When all of the trust or restricted interests in a tract are 
subject to a single life estate, the life tenant may lease the land 
without the consent of the owners of the remainder interests or our 
approval, for the duration of the life estate.
    (i) The lease will terminate upon the death of the life tenant.
    (ii) The life tenant must record the lease in the LTRO.
    (iii) The lessee must pay rent directly to the life tenant under 
the terms of the lease unless the whereabouts of the life tenant are 
unknown, in which case we may collect rents on behalf of the life 
tenant.
    (iv) We may monitor the use of the land on behalf of the owners of 
the remainder interests, as appropriate, but will not be responsible 
for enforcing the lease on behalf of the life tenant.
    (v) We will not lease the remainder interests or join in a lease by 
the life tenant on behalf of the owners of the remainder interests 
except as needed to preserve the value of the land.
    (vi) We will be responsible for enforcing the terms of the lease on 
behalf of the owners of the remainder interests.
    (2) When less than all of the trust or restricted interests in a 
tract are subject to a single life estate, the life tenant may lease 
his or her interest without the consent of the owners of the remainder 
interests, but must obtain the consent of the co-owners and our 
approval.
    (i) We will not lease on the life tenant's behalf.
    (ii) The lease must provide that the lessee pays the life tenant 
directly, unless the life tenant's whereabouts are unknown in which 
case we may collect rents on behalf of the life tenant.
    (iii) The lease must be recorded in the LTRO, even where our 
approval is not required.
    (iv) We will be responsible for enforcing the terms of the lease on 
behalf of the owners of the remainder interests.
    (3) Where the remaindermen and the life tenant have not entered 
into a lease or other written agreement approved by the Secretary 
providing for the distribution of rent monies under the lease, the life 
tenant will receive payment in accordance with the

[[Page 72470]]

distribution and calculation scheme set forth in Part 179 of this 
chapter.
    (4) The life tenant may not cause or allow permanent injury to the 
land.
    (5) The life tenant must provide a copy of the executed lease to 
all owners of the remainder interests.

When to Get a Lease


Sec.  162.005  When do I need a lease to authorize possession of Indian 
land?

    (a) You need a lease under this part to possess Indian land if you 
meet one of the criteria in the following table, unless you are 
authorized to possess or use the Indian land by a land use agreement 
not subject to this part under Sec.  162.006(b) or by a permit.

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

     (b) You do not need a lease to possess Indian land if:
    (1) You are an Indian landowner who owns 100 percent of the trust 
or restricted interests in a tract; or
    (2) You meet any of the criteria in the following table.

------------------------------------------------------------------------
 You do not need a lease if you are . .    but the following conditions
                   .                               apply . . .
------------------------------------------------------------------------
(i) A parent or guardian of a minor      We may require you to provide
 child who owns 100 percent of the        evidence of a direct benefit
 trust or restricted interests in the     to the minor child and when
 land.                                    the child is no longer a
                                          minor, you must obtain a lease
                                          to authorize continued
                                          possession.
(ii) A 25 U.S.C. 477 corporate entity    You must record documents in
 that manages or has the power to         accordance with Sec.
 manage the tribal land directly under    162.343, Sec.   162.443, and
 its Federal charter or under a tribal    Sec.   162.568.
 authorization (not under a lease from
 the Indian tribe).
------------------------------------------------------------------------

Sec.  162.006  To what types of land use agreements does this part 
apply?

    (a) This part applies to leases of Indian land entered into under 
25 U.S.C. 380, 25 U.S.C. 415(a), and 25 U.S.C. 4211, and other tribe-
specific statutes authorizing surface leases of Indian land with our 
approval.
    (b) This part does not apply to:
    (1) Land use agreements entered into under other statutory 
authority, such as the following:

------------------------------------------------------------------------
   This part does not apply to . . .        which are covered by . . .
------------------------------------------------------------------------
(i) Contracts or agreements that         25 CFR part 84.
 encumber tribal land under 25 U.S.C.
 81.
(ii) Traders' licenses.................  25 CFR part 140.
(iii) Timber contracts.................  25 CFR part 163.
(iv) Grazing permits...................  25 CFR part 166.
(v) Rights-of-way......................  25 CFR part 169.
(vi) Mineral leases, prospecting         25 CFR parts 211, 212, 213,
 permits, or mineral development          225, 226, 227.
 agreements.
(vii) Tribal land assignments and        tribal laws.
 similar instruments authorizing uses
 of tribal land.
------------------------------------------------------------------------

     (2) Leases of water rights associated with Indian land, except to 
the extent the use of water rights is incorporated in a lease of the 
land itself.
    (3) The following leases, which do not require our approval, except 
that you must record these leases in accordance with Sec. Sec.  
162.343, 162.443, and 162.568:
    (i) A lease of tribal land by a 25 U.S.C. 477 corporate entity 
under its charter to a third party for a period not to exceed 25 years; 
and
    (ii) A lease of Indian land under a special act of Congress 
authorizing leasing without our approval.


Sec.  162.007  To what permits does this part apply?

    (a) Permits for the use of Indian land do not require our approval; 
however, you must fulfill the following requirements:
    (1) Ensure that permitted activities comply with all applicable 
environmental and cultural resource laws; and
    (2) Submit all permits to the appropriate BIA office to allow us to 
maintain a copy of the permit in our records. If we determine within 10 
days of submission that the document does not meet the definition of 
``permit'' and grants a legal interest in Indian land, we will notify 
you that a lease is required.
    (b) The following table provides examples of some common 
characteristics of permits versus leases.

------------------------------------------------------------------------
                 Permit                               Lease
------------------------------------------------------------------------
Does not grant a legal interest in       Grants a legal interest in
 Indian land.                             Indian land.
Shorter term...........................  Longer term.
Limited use............................  Broader use with associated
                                          infrastructure.

[[Page 72471]]

 
Permittee has non-possessory right of    Lessee has right of possession,
 access.                                  ability to limit or prohibit
                                          access by others.
Indian landowner may terminate at any    Indian landowner may terminate
 time.                                    under limited circumstances.
------------------------------------------------------------------------

     (c) We will not administer or enforce permits on Indian land.
    (d) We may grant permits for the use of Government land. The 
leasing regulations in this part will apply to such permits, as 
appropriate.


Sec.  162.008  Does this part apply to lease documents I submitted for 
approval before January 4, 2013?

    This part applies to all lease documents, except as provided in 
Sec.  162.006. If you submitted your lease document to us for approval 
before January 4, 2013, the qualifications in paragraphs (a) and (b) of 
this section also apply.
    (a) If we approved your lease document before January 4, 2013, this 
part applies to that lease document; however, if the provisions of the 
lease document conflict with this part, the provisions of the lease 
govern.
    (b) If you submitted a lease document but we did not approve it 
before January 4, 2013, then:
    (1) We will review the lease document under the regulations in 
effect at the time of your submission; and
    (2) Once we approve the lease document, this part applies to that 
lease document; however, if the provisions of the lease document 
conflict with this part, the provisions of the lease document govern.


Sec.  162.009  Do I need BIA approval of a subleasehold mortgage?

    Unless the lease provides otherwise, sublease, or by request of the 
parties, you do not need our approval of a subleasehold mortgage. If 
the lease or sublease requires, or parties request, our approval, we 
will use the procedures governing our review of leasehold mortgages.

How to Get a Lease


Sec.  162.010  How do I obtain a lease?

    (a) This section establishes the basic steps to obtain a lease.
    (1) Prospective lessees must:
    (i) Directly negotiate with Indian landowners for a lease; and
    (ii) For fractionated tracts, notify all Indian landowners and 
obtain the consent of the Indian landowners of the applicable 
percentage of interests, under Sec.  162.012; and
    (2) Prospective lessees and Indian landowners must:
    (i) Prepare the required information and analyses, including 
information to facilitate our analysis under applicable environmental 
and cultural resource requirements; and
    (ii) Ensure the lease complies with the requirements in subpart C 
for residential leases, subpart D for business leases, or subpart E for 
wind energy evaluation, wind resource, or solar resource leases; and
    (3) Prospective lessees or Indian landowners must submit the lease, 
and required information and analyses, to the BIA office with 
jurisdiction over the lands covered by the lease, for our review and 
approval.
    (b) Generally, residential, business, wind energy evaluation, wind 
resource, and solar resource leases will not be advertised for 
competitive bid.


Sec.  162.011  How does a prospective lessee identify and contact 
individual Indian landowners to negotiate a lease?

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


Sec.  162.012  What are the consent requirements for a lease?

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

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

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


Sec.  162.013  Who is authorized to consent to a lease?

    (a) Indian tribes, adult Indian landowners, and emancipated minors, 
may consent to a lease of their land,

[[Page 72472]]

including undivided interests in fractionated tracts.
    (b) The following individuals or entities may consent on behalf of 
an individual Indian landowner:
    (1) An adult with legal custody acting on behalf of his or her 
minor children;
    (2) A guardian, conservator, or other fiduciary appointed by a 
court of competent jurisdiction to act on behalf of an individual 
Indian landowner;
    (3) Any person who is authorized to practice before the Department 
of the Interior under 43 CFR 1.3(b) and has been retained by the Indian 
landowner for this purpose;
    (4) BIA, under the circumstances in paragraph (c) of this section; 
or
    (5) An adult or legal entity who has been given a written power of 
attorney that:
    (i) Meets all of the formal requirements of any applicable law 
under Sec.  162.014;
    (ii) Identifies the attorney-in-fact; and
    (iii) Describes the scope of the powers granted, to include leasing 
land, and any limits on those powers.
    (c) BIA may give written consent to a lease, and that consent must 
be counted in the percentage ownership described in Sec.  162.012, on 
behalf of:
    (1) The individual owner if the owner is deceased and the heirs to, 
or devisees of, the interest of the deceased owner have not been 
determined;
    (2) An individual whose whereabouts are unknown to us, after we 
make a reasonable attempt to locate the individual;
    (3) An individual who is found to be non compos mentis or 
determined to be an adult in need of assistance who does not have a 
guardian duly appointed by a court of competent jurisdiction, or an 
individual under legal disability as defined in part 115 of this 
chapter;
    (4) An orphaned minor who does not have a guardian duly appointed 
by a court of competent jurisdiction;
    (5) An individual who has given us a written power of attorney to 
lease their land; and
    (6) The individual Indian landowners of a fractionated tract where:
    (i) We have given the Indian landowners written notice of our 
intent to consent to a lease on their behalf;
    (ii) The Indian landowners are unable to agree upon a lease during 
a 3 month negotiation period following the notice; and
    (iii) The land is not being used by an Indian landowner under Sec.  
162.005(b)(1).

Lease Administration


Sec.  162.014  What laws will apply to leases approved under this part?

    (a) In addition to the regulations in this part, leases approved 
under this part:
    (1) Are subject to applicable Federal laws and any specific Federal 
statutory requirements that are not incorporated in this part;
    (2) Are subject to tribal law, subject to paragraph (b) of this 
section; and
    (3) Are not subject to State law or the law of a political 
subdivision thereof except that:
    (i) State law or the law of a political subdivision thereof may 
apply in the specific areas and circumstances in Indian country where 
the Indian tribe with jurisdiction has made it expressly applicable;
    (ii) State law may apply in the specific areas and circumstances in 
Indian country where Congress has made it expressly applicable; and
    (iii) State law may apply where a Federal court has expressly 
applied State law to a specific area or circumstance in Indian country 
in the absence of Federal or tribal law.
    (b) Tribal laws generally apply to land under the jurisdiction of 
the tribe enacting the laws, except to the extent that those tribal 
laws are inconsistent with these regulations or other applicable 
Federal law. However, these regulations may be superseded or modified 
by tribal laws, as long as:
    (1) The tribe has notified us of the superseding or modifying 
effect of the tribal laws;
    (2) The superseding or modifying of the regulation would not 
violate a Federal statute or judicial decision, or conflict with our 
general trust responsibility under Federal law; and
    (3) The superseding or modifying of the regulation applies only to 
tribal land.
    (c) Unless prohibited by Federal law, the parties to a lease may 
subject that lease to State or local law in the absence of Federal or 
tribal law, if:
    (1) The lease includes a provision to this effect; and
    (2) The Indian landowners expressly agree to the application of 
State or local law.
    (d) An agreement under paragraph (c) of this section does not waive 
a tribe's sovereign immunity unless the tribe expressly states its 
intention to waive sovereign immunity in the lease of tribal land.


Sec.  162.015  May a lease contain a preference consistent with tribal 
law for employment of tribal members?

    A lease of Indian land may include a provision, consistent with 
tribal law, requiring the lessee to give a preference to qualified 
tribal members, based on their political affiliation with the tribe.


Sec.  162.016  Will BIA comply with tribal laws in making lease 
decisions?

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


Sec.  162.017  What taxes apply to leases approved under this part?

    (a) Subject only to applicable Federal law, permanent improvements 
on the leased land, without regard to ownership of those improvements, 
are not subject to any fee, tax, assessment, levy, or other charge 
imposed by any State or political subdivision of a State. Improvements 
may be subject to taxation by the Indian tribe with jurisdiction.
    (b) Subject only to applicable Federal law, activities under a 
lease conducted on the leased premises are not subject to any fee, tax, 
assessment, levy, or other charge (e.g., business use, privilege, 
public utility, excise, gross revenue taxes) imposed by any State or 
political subdivision of a State. Activities may be subject to taxation 
by the Indian tribe with jurisdiction.
    (c) Subject only to applicable Federal law, the leasehold or 
possessory interest is not subject to any fee, tax, assessment, levy, 
or other charge imposed by any State or political subdivision of a 
State. Leasehold or possessory interests may be subject to taxation by 
the Indian tribe with jurisdiction.


Sec.  162.018  May tribes administer this part on BIA's behalf?

    A tribe or tribal organization may contract or compact under the 
Indian Self-Determination and Education Assistance Act (25 U.S.C. 450f 
et seq.) to administer any portion of this part that is not an approval 
or disapproval of a lease document, waiver of a requirement for lease 
approval (including but not limited to waivers of fair market rental 
and valuation, bonding, and insurance), cancellation of a lease, or an 
appeal.

[[Page 72473]]

Sec.  162.019  May a lease address access to the leased premises by 
roads or other infrastructure?

    A lease may address access to the leased premises by roads or other 
infrastructure, as long as the access complies with applicable 
statutory and regulatory requirements, including 25 CFR part 169. Roads 
or other infrastructure within the leased premises do not require 
compliance with 25 CFR part 169 during the term of the lease, unless 
otherwise stated in the lease.


Sec.  162.020  May a lease combine tracts with different Indian 
landowners?

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


Sec.  162.021  What are BIA's responsibilities in approving leases?

    (a) We will work to provide assistance to Indian landowners in 
leasing their land, either through negotiations or advertisement.
    (b) We will promote tribal control and self-determination over 
tribal land and other land under the tribe's jurisdiction, including 
through contracts and self-governance compacts entered into under the 
Indian Self-Determination and Education Assistance Act, as amended, 25 
U.S.C. 450f et. seq.
    (c) We will promptly respond to requests for BIA approval of 
leases, as specified in Sec. Sec.  162.340, 162.440, 162.530, and 
162.565.
    (d) We will work to ensure that the use of the land is consistent 
with the Indian landowners' wishes and applicable tribal law.


Sec.  162.022  What are BIA's responsibilities in administering and 
enforcing leases?

    (a) Upon written notification from an Indian landowner that the 
lessee has failed to comply with the terms and conditions of the lease, 
we will promptly take appropriate action, as specified in Sec. Sec.  
162.364, 162.464, and 162.589. Nothing in this part prevents an Indian 
landowner from exercising remedies available to the Indian landowners 
under the lease or applicable law.
    (b) We will promptly respond to requests for BIA approval of 
amendments, assignments, leasehold mortgages, and subleases, as 
specified in subparts C, D, and E.
    (c) We will respond to Indian landowners' concerns regarding the 
management of their land.
    (d) We will take emergency action as needed to preserve the value 
of the land under Sec.  162.024.


Sec.  162.023  What if an individual or entity takes possession of or 
uses Indian land without an approved lease or other proper 
authorization?

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


Sec.  162.024  May BIA take emergency action if Indian land is 
threatened?

    (a) We may take appropriate emergency action if there is a natural 
disaster or if an individual or entity causes or threatens to cause 
immediate and significant harm to Indian land. Emergency action may 
include judicial action seeking immediate cessation of the activity 
resulting in or threatening the harm.
    (b) We will make reasonable efforts to notify the individual Indian 
landowners before and after taking emergency action. In all cases, we 
will notify the Indian landowners after taking emergency action by 
actual or constructive notice. We will provide written notification of 
our action to the Indian tribe exercising jurisdiction over the Indian 
land before and after taking emergency action.


Sec.  162.025  May decisions under this part be appealed?

    Appeals from BIA decisions under this part may be taken under part 
2 of this chapter, except for deemed approvals and as otherwise 
provided in this part. For purposes of appeals from BIA decisions under 
this part, ``interested party'' is defined as any person whose own 
direct economic interest is adversely affected by an action or 
decision. Our decision to disapprove a lease may be appealed only by an 
Indian landowner. Our decision to disapprove any other lease document 
may be appealed only by the Indian landowners or the lessee.


Sec.  162.026  Who can answer questions about leasing?

    An Indian landowner or prospective lessee may contact the local BIA 
realty office (or of any tribe acting on behalf of BIA under Sec.  
162.018) with jurisdiction over the land for answers to questions about 
the leasing process.


Sec.  162.027  What documentation may BIA require in approving, 
administering, and enforcing leases?

    (a) We may require that the parties provide any pertinent 
environmental and technical records, reports, and other information 
(e.g., records of lease payments), related to approval of lease 
documents and enforcement of leases.
    (b) We will adopt environmental assessments and environmental 
impact statements prepared by another Federal agency, Indian tribe, 
entity, or person under 43 CFR 46.320 and 42 CFR 1506.3, including 
those prepared under 25 U.S.C. 4115 and 25 CFR part 1000, but may 
require a supplement. We will use any reasonable evidence that another 
Federal agency has accepted the environmental report, including but not 
limited to, letters of approval or acceptance.
    (c) Upon our request, the parties must make appropriate records, 
reports, or information available for our inspection and duplication. 
We will keep confidential any information that is marked confidential 
or proprietary and will exempt it from public release to the extent 
allowed by law and in accordance with 43 CFR part 2. We may, at our 
discretion, treat a lessee's failure to cooperate with such request, 
provide data, or grant access to information or records as a lease 
violation.


Sec.  162.028  How may an Indian tribe obtain information about leases 
on its land?

    Upon request of the Indian tribe with jurisdiction, BIA will 
promptly provide information on the status of leases on tribal land, 
without requiring a Freedom of Information Act request.


Sec.  162.029  How does BIA provide notice to the parties to a lease?

    (a) When this part requires us to notify the parties of the status 
of our review of a lease document (including but not limited to, 
providing notice to the parties of the date of receipt of a lease 
document, informing the parties of the need for additional review time, 
and informing the parties that a lease proposal package is not 
complete):

[[Page 72474]]

    (1) For leases of tribal land, we will notify the lessee and the 
tribe by mail; and
    (2) For leases of individually owned Indian land, we will notify 
the lessee by mail and, where feasible, the individual Indian 
landowners either by constructive notice or by mail.
    (b) When this part requires us to notify the parties of our 
determination to approve or disapprove a lease document, and to provide 
any right of appeal:
    (1) For leases of tribal land, we will notify the lessee and the 
tribe by mail; and
    (2) For leases of individually owned Indian land, we will notify 
the lessee by mail and the individual Indian landowners either by 
constructive notice or by mail.

Subpart B--Agricultural Leases

0
5. In newly transferred Sec.  162.101, revise the section heading and 
the introductory text to read as follows:


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

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


Sec. Sec.  162.102 through 162.104  [Removed]

0
6. Remove newly transferred Sec. Sec.  162.102 through 162.104.


Sec.  162.105  [Amended]

0
7a. In newly transferred Sec.  162.105, remove the word ``leasing'' 
from the section heading and add in its place the words ``agricultural 
leasing'' and remove the word ``lease'' and add in its place the words 
``agricultural lease'' wherever it appears.


Sec.  162.106  [Amended]

0
7b. In newly transferred Sec.  162.106, remove the word ``lease'' and 
add in its place the words ``agricultural lease'' wherever it appears.
0
8. In newly transferred Sec.  162.107, revise the section heading and 
add introductory text to read as follows:


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

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


Sec.  162.108  [Amended]

0
9a. In newly transferred Sec.  162.108, remove the word ``leases'' from 
the section heading and paragraph (b) and add in its place the words 
``agricultural leases'' in its place and remove the word ``lease'' in 
paragraph (b) and add in its place the words ``agricultural lease''.


Sec.  162.109  [Amended]

0
9b. In newly transferred Sec.  162.109, remove the word ``leases'' from 
the section heading and paragraph (a) and add in its place the words 
``agricultural leases'' in its place and remove the three occurrences 
of the word ``lease'' in paragraph (c) and add in their place the words 
``agricultural lease''.


Sec.  162.110  [Amended]

0
9c. In newly transferred Sec.  162.110, remove the word ``leases'' 
wherever it appears and add in its place the words ``agricultural 
leases''.
0
10. In newly transferred Sec.  162.111, revise the section heading, 
paragraph (a) introductory text, and paragraph (b) to read as follows:


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

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

0
11. Revise the heading for Sec.  162.112 to read as follows:


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

* * * * *


Sec.  162.113  [Amended]

0
12. In newly transferred Sec.  162.113 remove the word ``part'' 
wherever it appears and add in its place the word ``subpart''.
0
13. Add new subparts C through D to read as follows:
Subpart C--Residential Leases

Residential Leasing General Provisions

Sec.
162.301 What types of leases does this subpart cover?
162.302 Is there a model residential lease form?
162.303 Who needs a lease for housing for public purposes?

Lease Requirements

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

Rental Requirements

162.320 How much rent must be paid under a residential lease of 
tribal land?
162.321 How much rent must be paid under a residential lease of 
individually owned Indian land?
162.322 How will BIA determine fair market rental for a residential 
lease?
162.323 When are rental payments due under a residential lease?
162.324 Must a residential lease specify who receives rental 
payments?
162.325 What form of payment is acceptable under a residential 
lease?
162.326 May a residential lease provide for non-monetary or varying 
types of compensation?
162.327 Will BIA notify a lessee when a payment is due under a 
residential lease?
162.328 Must a residential lease provide for rental reviews or 
adjustments?
162.329 What other types of payments are required under a 
residential lease?

Bonding and Insurance

162.334 Is a performance bond required for a residential lease 
document?
162.335 Is insurance required for a residential lease document?
162.336 [Reserved]
162.337 [Reserved]

Approval

162.338 What documents are required for BIA approval of a 
residential lease?
162.339 Will BIA review a proposed residential lease before or 
during preparation of the NEPA review documentation?
162.340 What is the approval process for a residential lease?
162.341 How will BIA decide whether to approve a residential lease?
162.342 When will a residential lease be effective?
162.343 Must a residential lease document be recorded?
162.344 Will BIA require an appeal bond for an appeal of a decision 
on a residential lease document?

Amendments

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

Assignments

162.349 May a lessee assign a residential lease?
162.350 What are the consent requirements for an assignment of a 
residential lease?
162.351 What is the approval process for an assignment of a 
residential lease?

[[Page 72475]]

162.352 How will BIA decide whether to approve an assignment of a 
residential lease?

Subleases

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

Leasehold Mortgages

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

Effectiveness, Compliance, and Enforcement

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

Business Leasing General Provisions

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

Lease Requirements

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

Monetary Compensation Requirements

162.420 How much monetary compensation must be paid under a business 
lease of tribal land?
162.421 How much monetary compensation must be paid under a business 
lease of individually owned Indian land?
162.422 How will BIA determine fair market rental for a business 
lease?
162.423 When are monetary compensation payments due under a business 
lease?
162.424 Must a business lease specify who receives monetary 
compensation payments?
162.425 What form of monetary compensation payment is acceptable 
under a business lease?
162.426 May the business lease provide for non-monetary or varying 
types of compensation?
162.427 Will BIA notify a lessee when a payment is due under a 
business lease?
162.428 Must a business lease provide for compensation reviews or 
adjustments?
162.429 What other types of payments are required under a business 
lease?

Bonding and Insurance

162.434 Must a lessee provide a performance bond for a business 
lease?
162.435 What forms of security are acceptable under a business 
lease?
162.436 What is the release process for a performance bond or 
alternative form of security under a business lease?
162.437 Must a lessee provide insurance for a business lease?

Approval

162.438 What documents are required for BIA approval of a business 
lease?
162.439 Will BIA review a proposed business lease before or during 
preparation of the NEPA review documentation?
162.440 What is the approval process for a business lease?
162.441 How will BIA decide whether to approve a business lease?
162.442 When will a business lease be effective?
162.443 Must a business lease document be recorded?
162.444 Will BIA require an appeal bond for an appeal of a decision 
on a business lease document?

Amendments

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

Assignments

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

Subleases

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

Leasehold Mortgages

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

Effectiveness, Compliance, and Enforcement

162.461 When will an amendment, assignment, sublease, or leasehold 
mortgage of a business lease be effective?
162.462 What happens if BIA disapproves an amendment, assignment, 
sublease, or leasehold mortgage of a business lease?
162.463 What happens if BIA does not meet a deadline for issuing a 
decision on a lease document?
162.464 May BIA investigate compliance with a business lease?
162.465 May a business lease provide for negotiated remedies if 
there is a violation?
162.466 What will BIA do about a violation of a business lease?
162.467 What will BIA do if the lessee does not cure a violation of 
a business lease on time?
162.468 Will late payment charges or special fees apply to 
delinquent payments due under a business lease?
162.469 How will payment rights relating to a business lease be 
allocated?
162.470 When will a cancellation of a business lease be effective?
162.471 What will BIA do if a lessee remains in possession after a 
business lease expires or is terminated or cancelled?

[[Page 72476]]

162.472 Will BIA appeal bond regulations apply to cancellation 
decisions involving business leases?
162.473 When will BIA issue a decision on an appeal from a business 
leasing decision?
162.474 What happens if the lessee abandons the leased premises?

Subpart C--Residential Leases

Residential Leasing General Provisions


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

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


Sec.  162.302  Is there a model residential lease form?

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


Sec.  162.303  Who needs a lease for housing for public purposes?

    A TDHE or tribal housing authority must obtain an approved 
residential lease under this subpart from the Indian landowners if, 
under the terms of its charter, it is a legal entity independent from 
the tribe, regardless of whether it is owned and operated by the tribe. 
A TDHE or tribal housing authority does not need an approved 
residential lease under this subpart if the tribe has authorized the 
TDHE's or tribal housing authority's possession through a tribal land 
assignment.

Lease Requirements


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

    (a) A residential lease must provide for a definite lease term, 
state if there is an option to renew, and if so, provide for a definite 
term for the renewal period.
    (1) The maximum term of a lease approved under 25 U.S.C. 4211 may 
not exceed 50 years or may be month-to-month. The lease may provide for 
an initial term of less than 50 years with a provision for one or more 
renewals, so long as the maximum term, including all renewals, does not 
exceed 50 years.
    (2) The maximum term of a lease approved under 25 U.S.C. 415(a) may 
not exceed 50 years (consisting of an initial term not to exceed 25 
years and one renewal not to exceed 25 years), unless a Federal statute 
provides for a longer maximum term (e.g., 25 U.S.C. 415(a) allows for a 
maximum term of 99 years for certain tribes), a different initial term, 
renewal term, or number of renewals.
    (b) For tribal land, we will defer to the tribe's determination 
that the lease term, including any renewal, is reasonable. For 
individually owned Indian land, we will review the lease term, 
including any renewal, to ensure it is reasonable, given the:
    (1) Purpose of the lease;
    (2) Type of financing; and
    (3) Level of investment.
    (c) Unless the lease provides otherwise, a residential lease may 
not be extended by holdover.


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

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us, 
unless the lease provides for automatic renewal;
    (3) Whether Indian landowner consent to the renewal is required;
    (4) That the lessee must provide notice of the renewal to the 
Indian landowners and any mortgagees;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the start of the renewal term; and
    (6) Any other conditions for renewal (e.g., that the lessee not be 
in violation of the lease at the time of renewal).
    (b) We will record any renewal of a lease in the LTRO.


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

    (a) All residential leases must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The ownership of permanent improvements and the responsibility 
for constructing, operating, maintaining, and managing permanent 
improvements under Sec.  162.315; and
    (6) Payment requirements and late payment charges, including 
interest.
    (b) Where a representative executes a lease on behalf of an Indian 
landowner or lessee, the lease must identify the landowner or lessee 
being represented and the authority under which the action is taken.
    (c) All residential leases must include the following provisions:
    (1) The obligations of the lessee to the Indian landowners are also 
enforceable by the United States, so long as the land remains in trust 
or restricted status;
    (2) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (3) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.014;
    (4) If historic properties, archeological resources, human remains, 
or other cultural items not previously reported are encountered during 
the course of any activity associated with this lease, all activity in 
the immediate vicinity of the properties, resources, remains, or items 
will cease and the lessee will contact BIA and the tribe with 
jurisdiction to determine how to proceed and appropriate disposition;
    (5) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice in accordance with Sec.  162.364, 
to enter the leased premises for inspection and to ensure compliance; 
and
    (6) BIA may, at its discretion, treat as a lease violation any 
failure by the lessee to cooperate with a BIA request to make 
appropriate records, reports, or information available for BIA 
inspection and duplication.
    (d) Unless the lessee would be prohibited by law from doing so, the 
lease must also contain the following provisions:
    (1) The lessee holds the United States and the Indian landowners 
harmless from any loss, liability, or damages resulting from the 
lessee's use or occupation of the leased premises; and

[[Page 72477]]

    (2) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to use, handling, 
treatment, removal, storage, transportation, or disposal of hazardous 
materials, or release or discharge of any hazardous material from the 
leased premises that occurs during the lease term, regardless of fault, 
with the exception that the lessee is not required to indemnify the 
Indian landowners for liability or cost arising from the Indian 
landowners' negligence or willful misconduct.
    (e) We may treat any provision of a lease document that violates 
Federal law as a violation of the lease.


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

    (a) The lessee may construct permanent improvements under a 
residential lease if the residential lease authorizes the construction 
and generally describes the type and location of the permanent 
improvements to be constructed during the lease term.
    (b) The lessee must provide reasonable notice to the Indian 
landowners of the construction of any permanent improvements not 
generally described in the lease.


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

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


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

    We may take appropriate enforcement action to ensure removal of the 
permanent improvements and restoration of the premises at the lessee's 
expense:
    (a) In consultation with the tribe for tribal land or, where 
feasible, with Indian landowners for individually owned Indian land; 
and
    (b) Before or after expiration, termination, or cancellation of the 
lease.


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

    (a) A residential lease must describe the leased premises by 
reference to a public or private survey, if possible. If the land 
cannot be so described, the lease must include one or more of the 
following:
    (1) A legal description;
    (2) A survey-grade global positioning system description; or
    (3) Another description prepared by a registered land surveyor that 
is sufficient to identify the leased premises.
    (b) If the tract is fractionated, we will identify the undivided 
trust or restricted interests in the leased premises.

Rental Requirements


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

    (a) A residential lease of tribal land may allow for any payment 
amount negotiated by the tribe, and we will defer to the tribe and not 
require a valuation, if:
    (1) The lease is for housing for public purposes; or
    (2) The tribe submits a signed certification or tribal 
authorization stating that it has determined the negotiated amount to 
be in its best interest.
    (b) The tribe may request, in writing, that we determine fair 
market rental, in which case we will use a valuation in accordance with 
Sec.  162.322. After providing the tribe with the fair market rental, 
we will defer to a tribe's decision to allow for any payment amount 
negotiated by the tribe.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, we will require that the lease provide for fair market rental 
based on a valuation in accordance with Sec.  162.322.


Sec.  162.321  How much rent must be paid under a residential lease of 
individually owned Indian land?

    (a) A residential lease of individually owned Indian land must 
require payment of not less than fair market rental except that we may 
approve a lease of individually owned Indian land that provides for the 
payment of nominal rent, or less than a fair market rental, if:
    (1) One hundred percent of the Indian landowners execute a written 
waiver of the right to receive fair market rental; or
    (2) We waive the requirement under paragraph (c) of this section.
    (b) We will require a valuation in accordance with Sec.  162.322, 
unless:
    (1) One hundred percent of the Indian landowners submit to us a 
written request to waive the valuation requirement; or
    (2) We waive the requirement under paragraph (c) of this section.
    (c) If the owners of the applicable percentage of interests under 
Sec.  162.012 consent to a residential lease on behalf of all the 
Indian landowners of a fractionated tract, the lease must provide that 
the non-consenting Indian landowners (and those on whose behalf we have 
consented) receive fair market rental, as determined by a valuation, 
unless we waive the requirement because:
    (1) The lessee is a co-owner who, as of January 4, 2013, has been 
residing on the tract for at least 7 years, and no other co-owner 
raises an objection to BIA by July 3, 2013 to the lessee's continued 
possession of the tract; or
    (2) 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.


Sec.  162.322  How will BIA determine fair market rental for a 
residential lease?

    (a) We will use a market analysis, appraisal, or other appropriate 
valuation method to determine the fair market rental for residential 
leases of individually owned Indian land. We will also do this, at the 
request of the tribe, for tribal land.
    (b) We will either:
    (1) Prepare, or have prepared, a market analysis, appraisal, or 
other appropriate valuation method; or
    (2) Use an approved market analysis, appraisal, or other 
appropriate valuation method from the Indian landowners or lessee.
    (c) We will use or approve a market analysis, appraisal, or other 
appropriate valuation method for use only if it:
    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary under 25 U.S.C. 2214; and
    (2) Complies with Department policies regarding appraisals, 
including third-party appraisals.

[[Page 72478]]

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

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


Sec.  162.324  Must a residential lease specify who receives rental 
payments?

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


Sec.  162.325  What form of payment is acceptable under a residential 
lease?

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


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

    (a) A lease may provide for the following, subject to the 
conditions in paragraphs (b) and (c) of this section:
    (1) Alternative forms of rental, including, but not limited to in-
kind consideration; or
    (2) Varying types of compensation at specific stages during the 
life of the lease.
    (b) For tribal land, we will defer to the tribe's determination 
that the compensation under paragraph (a) of this section is in its 
best interest, if either:
    (1) The lease is for housing for public purposes; or
    (2) The tribe submits a signed certification or tribal 
authorization stating that it has determined the compensation under 
paragraph (a) of this section to be in its best interest.
    (c) For individually owned Indian land, we may approve a lease that 
provides for compensation under paragraph (a) of this section if we 
determine that it is in the best interest of the Indian landowners.


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

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


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

    (a) For a residential lease of tribal land, unless the lease 
provides otherwise, no periodic review of the adequacy of rent or 
rental adjustment is required if:
    (1) The tribe states in a tribal certification or authorization 
that it has determined that not having rental reviews and/or 
adjustments is in its best interest; or
    (2) The lease is for housing for public purposes.
    (b) For a residential lease of individually Indian owned land, 
unless the lease provides otherwise, no periodic review of the adequacy 
of rent or rental adjustment is required if:
    (1) The lease is for housing for public purposes;
    (2) The term of the lease is 5 years or less;
    (3) The lease provides for automatic rental adjustments; or
    (4) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, the following:
    (i) The lease provides for payment of less than fair market rental; 
or
    (ii) The lease provides for most or all rent to be paid during the 
first 5 years of the lease term or before the date the review would be 
conducted.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, a review of the adequacy of rent must occur at least every 
fifth year, in the manner specified in the lease. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who can make adjustments;
    (3) What the adjustments are based on; and
    (4) How to resolve disputes arising from the adjustments.
    (d) When a review results in the need for adjustment of rent, the 
Indian landowners must consent to the adjustment in accordance with 
Sec.  162.012, unless the lease provides otherwise.


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

    (a) The lessee may be required to pay additional fees, taxes, and 
assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.017. The 
lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. We will treat failure to make these payments as a violation 
of the lease.

[[Page 72479]]

Bonding and Insurance


Sec.  162.334  Is a performance bond required for a residential lease 
document?

    We will not require a lessee or assignee to provide a performance 
bond or alternative form of security for a residential lease document.


Sec.  162.335  Is insurance required for a residential lease document?

    We will not require a lessee or assignee to provide insurance for a 
residential lease document.


Sec.  162.336  [Reserved]


Sec.  162.337  [Reserved]

Approval


Sec.  162.338  What documents are required for BIA approval of a 
residential lease?

    A lessee or the Indian landowners must submit the following 
documents to us to obtain BIA approval of a residential lease:
    (a) A lease executed by the Indian landowners and the lessee that 
meets the requirements of this part;
    (b) For tribal land, a tribal authorization for the lease and, if 
applicable, meeting the requirements of Sec. Sec.  162.320(a), 
162.326(b), and 162.328(a), or a separate signed certification meeting 
the requirements of Sec. Sec.  162.320(a), 162.326(b), and 162.328(a);
    (c) A valuation, if required under Sec.  162.320 or Sec.  162.321;
    (d) A statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law, if required 
by the tribe;
    (e) Reports, surveys, and site assessments as needed to facilitate 
compliance with applicable Federal and tribal environmental and land 
use requirements, including any documentation prepared under Sec.  
162.027(b);
    (f) A preliminary site plan identifying the proposed location of 
residential development, roads, and utilities, if applicable, unless 
the lease is for housing for public purposes;
    (g) A legal description of the land under Sec.  162.317;
    (h) If the lease is being approved under 25 U.S.C. 415, information 
to assist us in our evaluation of the factors in 25 U.S.C. 415(a); and
    (i) If the lessee is a corporation, limited liability company, 
partnership, joint venture, or other legal entity, except a tribal 
entity, information such as organizational documents, certificates, 
filing records, and resolutions, that demonstrates that:
    (1) The representative has authority to execute a lease;
    (2) The lease will be enforceable against the lessee; and
    (3) The legal entity is in good standing and authorized to conduct 
business in the jurisdiction where the land is located.


Sec.  162.339  Will BIA review a proposed residential lease before or 
during preparation of the NEPA review documentation?

    Upon request of the Indian landowners, we will review the proposed 
residential lease after negotiation by the parties, before or during 
preparation of the NEPA review documentation and any valuation. Within 
10 days of receiving the proposed lease, we will provide an 
acknowledgement of the terms of the lease and identify any provisions 
that, based on this acknowledgment review, would justify disapproval of 
the lease, pending results of the NEPA review and any valuation.


Sec.  162.340  What is the approval process for a residential lease?

    (a) Before we approve a residential lease, we must determine that 
the lease is in the best interest of the Indian landowners. In making 
that determination, we will:
    (1) Review the lease and supporting documents;
    (2) Ensure compliance with applicable laws and ordinances;
    (3) If the lease is being approved under 25 U.S.C. 415, assure 
ourselves that adequate consideration has been given to the factors in 
25 U.S.C. 415(a); and
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements.
    (b) Upon receiving a residential lease package, we will promptly 
notify the parties whether the package is or is not complete. A 
complete package includes all the information and supporting documents 
required under this subpart, including but not limited to, NEPA review 
documentation and valuation documentation, where applicable.
    (1) If the residential lease package is not complete, our letter 
will identify the missing information or documents required for a 
complete package. If we do not respond to the submission of a 
residential lease package, the parties may take action under Sec.  
162.363.
    (2) If the residential lease package is complete, we will notify 
the parties of the date of receipt. Within 30 days of the receipt date, 
we will approve or disapprove the lease or return the package for 
revision.
    (c) If we do not meet the deadlines in this section, then the 
parties may take action under Sec.  162.363.
    (d) We will provide any lease approval or disapproval and the basis 
for the determination, along with notification of any appeal rights 
under part 2 of this chapter, in writing to the parties to the lease.
    (e) Any residential lease issued under the authority of the Native 
American Housing Assistance and Self-Determination Act, 25 U.S.C 
4211(a), whether on tribal land or on individually owned Indian land, 
must be approved by us and by the affected tribe.
    (f) We will provide approved residential leases on tribal land to 
the lessee and provide a copy to the tribe. We will provide approved 
residential leases on individually owned Indian land to the lessee, and 
make copies available to the Indian landowners upon written request.


Sec.  162.341  How will BIA decide whether to approve a residential 
lease?

    (a) We will approve a residential lease unless:
    (1) The required consents have not been obtained from the parties 
to the lease;
    (2) The requirements of this subpart have not been met; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the residential lease is in their best 
interest.
    (c) We may not unreasonably withhold approval of a lease.


Sec.  162.342  When will a residential lease be effective?

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


Sec.  162.343  Must a residential lease document be recorded?

    (a) Any residential lease, amendment, assignment, or leasehold 
mortgage must be recorded in the LTRO with jurisdiction over the leased 
land. A residential sublease need not be recorded.
    (1) We will record the lease or other document immediately 
following our approval.

[[Page 72480]]

    (2) When our approval of an assignment is not required, the parties 
must record the assignment in the LTRO with jurisdiction over the 
leased land.
    (b) The tribe must record lease documents for the following types 
of leases in the LTRO with jurisdiction over the leased lands, even 
though BIA approval is not required:
    (1) Leases of tribal land that a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval under certain conditions.


Sec.  162.344  Will BIA require an appeal bond for an appeal of a 
decision on a residential lease document?

    BIA will not require an appeal bond for an appeal of a decision on 
a residential lease document.

Amendments


Sec.  162.345  May the parties amend a residential lease?

    The parties may amend a residential lease by obtaining:
    (a) The lessee's signature;
    (b) The Indian landowners' consent under the requirements in Sec.  
162.346; and
    (c) BIA approval of the amendment under Sec. Sec.  162.347 and 
162.348.


Sec.  162.346  What are the consent requirements for an amendment of a 
residential lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed amendment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an amendment of a residential lease in the 
same percentages and manner as a new residential lease under Sec.  
162.012, unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented if they do not object in writing to the amendment within a 
specified period of time following Indian landowners' receipt of the 
amendment and the lease meets the requirements of paragraph (c) of this 
section;
    (2) Authorizes one or more representatives to consent to an 
amendment on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consent to an amendment.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed amendment or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for review.
    (d) Unless specifically authorized in the lease, a written power of 
attorney, or a court document, Indian landowners may not be deemed to 
have consented to, and an Indian landowner's designated representative 
may not negotiate or consent to, an amendment that would:
    (1) Reduce the payment obligations to the Indian landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or change the term of the lease.


Sec.  162.347  What is the approval process for an amendment of a 
residential lease?

    (a) When we receive an amendment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. We 
have 30 days from receipt of the executed amendment, proof of required 
consents, and required documentation to approve or disapprove the 
amendment. Our determination whether to approve the amendment will be 
in writing and will state the basis for our approval or disapproval.
    (b) If we do not send a determination within 30 days from receipt 
of the required documents, the amendment is deemed approved to the 
extent consistent with Federal law. Unless the lease provides 
otherwise, provisions of the amendment that are inconsistent with 
Federal law will be severed and unenforceable; all other provisions of 
the amendment will remain in force.


Sec.  162.348  How will BIA decide whether to approve an amendment of a 
residential lease?

    (a) We may disapprove a residential lease amendment only if at 
least one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees have not consented;
    (3) The lessee is in violation of the lease;
    (4) The requirements of this subpart have not been met; or
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the amendment is in their best interest.
    (c) We may not unreasonably withhold approval of an amendment.

Assignments


Sec.  162.349  May a lessee assign a residential lease?

    (a) A lessee may assign a residential lease by meeting the consent 
requirements in Sec.  162.350 and obtaining our approval of the 
assignment under Sec. Sec.  162.351 and 162.352 or by meeting the 
conditions in paragraph (b) of this section.
    (b) The lessee may assign the lease without our approval or meeting 
consent requirements if:
    (1) The lease is for housing for public purposes, or the assignee 
is a leasehold mortgagee or its designee, acquiring the lease either 
through foreclosure or by conveyance;
    (2) The assignee agrees in writing to assume all of the obligations 
and conditions of the lease; and
    (3) The assignee agrees in writing that any transfer of the lease 
will be in accordance with applicable law under Sec.  162.014.


Sec.  162.350  What are the consent requirements for an assignment of a 
residential lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed assignment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an assignment of a residential lease in the 
same percentages and manner as a new residential lease under Sec.  
162.012, unless the lease:
    (1) Provides for assignments without further consent of the Indian 
landowners or with consent in specified percentages and manner;
    (2) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the assignment within 
a specified period of time following the landowners' receipt of the 
assignment and the lease meets the requirements of paragraph (c) of 
this section;
    (3) Authorizes one or more of the Indian landowners to consent on 
behalf of all Indian landowners; or
    (4) Designates us as the Indian landowners' representative for the 
purposes of consenting to an assignment.
    (c) If the lease provides for deemed consent under paragraph (b)(2) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed assignment or other documentation of any 
Indian landowners' actual consent;

[[Page 72481]]

    (2) Proof of mailing of the assignment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.
    (d) The lessee must obtain the consent of the holders of any 
mortgages.


Sec.  162.351  What is the approval process for an assignment of a 
residential lease?

    (a) When we receive an assignment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. If 
our approval is required, we have 30 days from receipt of the executed 
assignment, proof of required consents, and required documentation to 
approve or disapprove the assignment. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we do not meet the deadline in this section, the lessee or 
Indian landowners may take appropriate action under Sec.  162.363.


Sec.  162.352  How will BIA decide whether to approve an assignment of 
a residential lease?

    (a) We may disapprove an assignment of a residential lease only if 
at least one of the following is true:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The lessee's mortgagees have not consented;
    (3) The lessee is in violation of the lease;
    (4) The assignee does not agree to be bound by the terms of the 
lease;
    (5) The requirements of this subpart have not been met; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether the value of any part of the leased 
premises not covered by the assignment would be adversely affected.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the assignment is in their best 
interest.
    (d) We may not unreasonably withhold approval of an assignment.

Subleases


Sec.  162.353  May a lessee sublease a residential lease?

    (a) A lessee may sublease a residential lease by meeting the 
consent requirements in Sec.  162.354 and obtaining our approval of the 
sublease under Sec. Sec.  162.355 and 162.356, or by meeting the 
conditions in paragraph (b) of this section.
    (b) The lessee may sublease without meeting consent requirements or 
obtaining BIA approval of the sublease, if:
    (1) The lease provides for subleasing without meeting consent 
requirements or obtaining BIA approval; and
    (2) The sublease does not relieve the lessee/sublessor of any 
liability.


Sec.  162.354  What are the consent requirements for a sublease of a 
residential lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed sublease.
    (b) The Indian landowners must consent to a sublease of a 
residential lease in the same percentages and manner as a new 
residential lease under Sec.  162.012, unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the sublease within a 
specified period of time following the landowners' receipt of the 
sublease and the lease meets the requirements of paragraph (c) of this 
section;
    (2) Authorizes one or more of the Indian landowners to consent on 
behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to a sublease.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed sublease or other documentation of any 
landowner's actual consent;
    (2) Proof of mailing of the sublease to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.
    (d) The lessee must obtain the consent of any mortgagees.


Sec.  162.355  What is the approval process for a sublease of a 
residential lease?

    (a) When we receive a sublease that meets the requirements of this 
subpart, we will notify the parties of the date we receive it. If our 
approval is required, we have 30 days from receipt of the executed 
sublease, proof of required consents, and required documentation to 
approve or disapprove the sublease.
    (b) If we do not send a determination within 30 days from receipt 
of required documents, the sublease is deemed approved to the extent 
consistent with Federal law. Unless the lease provides otherwise, 
provisions of the sublease that are inconsistent with Federal law will 
be severed and unenforceable; all other provisions of the sublease will 
remain in force.


Sec.  162.356  How will BIA decide whether to approve a sublease of a 
residential lease?

    (a) We may disapprove a sublease of a residential lease only if at 
least one of the following is true:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The lessee's mortgagees have not consented;
    (3) The lessee is in violation of the lease;
    (4) The lessee will not remain liable under the lease;
    (5) The requirements of this subpart have not been met; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether the value of any part of the leased 
premises not covered by the sublease would be adversely affected.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the sublease is in their best interest.
    (d) We may not unreasonably withhold approval of a sublease.

Leasehold Mortgages


Sec.  162.357  May a lessee mortgage a residential lease?

    (a) A lessee may mortgage a residential lease by meeting the 
consent requirements in Sec.  162.358 and obtaining BIA approval of the 
leasehold mortgage under in Sec. Sec.  162.359 and 162.360.
    (b) Refer to Sec.  162.349(b) for information on what happens if a 
sale or foreclosure under an approved mortgage of the leasehold 
interest occurs.


Sec.  162.358  What are the consent requirements for a leasehold 
mortgage of a residential lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed leasehold mortgage.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to a leasehold mortgage of a residential lease in 
the same percentages and manner as a new residential lease under Sec.  
162.012, unless the lease:
    (1) States that landowner consent is not required for a leasehold 
mortgage and identifies what law would apply in case of foreclosure;

[[Page 72482]]

    (2) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the leasehold mortgage 
within a specified period of time following the landowners' receipt of 
the leasehold mortgage and the lease meets the requirements of 
paragraph (c) of this section;
    (3) Authorizes one or more representatives to consent to a 
leasehold mortgage on behalf of all Indian landowners; or
    (4) Designates us as the Indian landowners' representative for the 
purposes of consenting to a leasehold mortgage.
    (c) If the lease provides for deemed consent under paragraph (b)(2) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed leasehold mortgage or other 
documentation of any Indian landowners' actual consent;
    (2) Proof of mailing of the leasehold mortgage to any Indian 
landowners who are deemed to have consented; and
    (3) Any other pertinent information for us to review.


Sec.  162.359  What is the approval process for a leasehold mortgage of 
a residential lease?

    (a) When we receive leasehold mortgage that meets the requirements 
of this subpart, we will notify the parties of the date we receive it. 
We have 20 days from receipt of the executed leasehold mortgage, proof 
of required consents, and required documentation to approve or 
disapprove the leasehold mortgage. Our determination whether to approve 
the leasehold mortgage will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we do not meet the deadline in this section, the lessee may 
take appropriate action under Sec.  162.363.


Sec.  162.360  How will BIA decide whether to approve a leasehold 
mortgage of a residential lease?

    (a) We may disapprove a leasehold mortgage of a residential lease 
only if at least one of the following is true:
    (1) The Indian landowners have not consented, and their consent is 
required;
    (2) The requirements of this subpart have not been met; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(3) of this 
section, we may consider whether:
    (1) The leasehold mortgage proceeds would be used for purposes 
unrelated to the leased premises; and
    (2) The leasehold mortgage is limited to the leasehold.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the leasehold mortgage is in their best 
interest.
    (d) We may not unreasonably withhold approval of a leasehold 
mortgage.

Effectiveness, Compliance, and Enforcement


Sec.  162.361  When will an amendment, assignment, sublease, or 
leasehold mortgage of a residential lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage of a 
residential lease will be effective when approved, even if an appeal is 
filed under part 2 of this chapter, except:
    (1) If the amendment or sublease was deemed approved under Sec.  
162.347(b) or Sec.  162.355(b), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review; and
    (2) An assignment that does not require our approval under Sec.  
162.349(b) or a sublease that does not require our approval under Sec.  
162.353(b) becomes effective on the effective date specified in the 
assignment or sublease. If the assignment or sublease does not specify 
the effective date, it becomes effective upon execution by the parties.
    (b) We will provide copies of approved documents to the party 
requesting approval, to the tribe for tribal land, and upon request, to 
other parties to the lease document.


Sec.  162.362  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage?

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


Sec.  162.363  What happens if BIA does not meet a deadline for issuing 
a decision on a lease document?

    (a) If a Superintendent does not meet a deadline for issuing a 
decision on a lease, assignment, or leasehold mortgage, the parties may 
file a written notice to compel action with the appropriate Regional 
Director.
    (b) The Regional Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Superintendent to issue a decision within the time 
set out in the order.
    (c) The parties may file a written notice to compel action with the 
BIA Director if:
    (1) The Regional Director does not meet the deadline in paragraph 
(b) of this section;
    (2) The Superintendent does not issue a decision within the time 
set by the Regional Director under paragraph (b)(2) of this section; or
    (3) The initial decision on the lease, assignment, or leasehold 
mortgage is with the Regional Director, and he or she does not meet the 
deadline for such decision.
    (d) The BIA Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Regional Director or Superintendent to issue a 
decision within the time set out in the order.
    (e) If the Regional Director or Superintendent does not issue a 
decision within the time set out in the order under paragraph (d)(2) of 
this section, then the BIA Director must issue a decision within 15 
days from the expiration of the time set out in the order.
    (f) The parties may file an appeal from our inaction to the 
Interior Board of Indian Appeals if the Director does not meet the 
deadline in paragraph (d) or (e) of this section.
    (g) The provisions of 25 CFR 2.8 do not apply to the inaction of 
BIA officials with respect to a decision on a lease, amendment, 
assignment, sublease, or leasehold mortgage under this subpart.


Sec.  162.364  May BIA investigate compliance with a residential lease?

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


Sec.  162.365  May a residential lease provide for negotiated remedies 
if there is a violation?

    (a) A residential lease of tribal land may provide either or both 
parties with negotiated remedies in the event of a lease violation, 
including, but not limited to, the power to terminate the lease. If the 
lease provides one or both parties with the power to terminate the 
lease:
    (1) BIA approval of the termination is not required;

[[Page 72483]]

    (2) The termination is effective without BIA cancellation; and
    (3) The Indian landowners must notify us of the termination so that 
we may record it in the LTRO.
    (b) A residential lease of individually owned Indian land may 
provide either or both parties with negotiated remedies, so long as the 
lease also specifies the manner in which those remedies may be 
exercised by or on behalf of the Indian landowners of the applicable 
percentage of interests under Sec.  162.012 of this part. If the lease 
provides one or both parties with the power to terminate the lease:
    (1) BIA concurrence with the termination is required to ensure that 
the Indian landowners of the applicable percentage of interests have 
consented; and
    (2) BIA will record the termination in the LTRO.
    (c) The parties must notify any mortgagee of any violation that may 
result in termination and the termination of a residential lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease. The 
landowners may request our assistance in enforcing negotiated remedies.
    (e) A residential lease may provide that lease violations will be 
addressed by the tribe, and that lease disputes will be resolved by a 
tribal court, any other court of competent jurisdiction, or by a tribal 
governing body in the absence of a tribal court, or through an 
alternative dispute resolution method. We may not be bound by decisions 
made in such forums, but we will defer to ongoing actions or 
proceedings, as appropriate, in deciding whether to exercise any of the 
remedies available to us.


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

    (a) In the absence of actions or proceedings described in Sec.  
162.365(e), or if it is not appropriate for us to defer to the actions 
or proceedings, we will follow the procedures in paragraphs (b), (c), 
and (d) of this section and, as applicable, ensure consistency with 25 
U.S.C. 4137.
    (b) If we determine there has been a violation of the conditions of 
a residential lease other than a violation of payment provisions 
covered by paragraph (c) of this section, we will promptly send the 
lessee and any mortgagee a notice of violation by certified mail, 
return receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) The notice of violation will advise the lessee that, within 10 
business days of the receipt of a notice of violation, the lessee must:
    (i) Cure the violation and notify us, and the tribe for tribal 
land, in writing that the violation has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) The notice of violation may order the lessee to cease 
operations under the lease.
    (c) A lessee's failure to pay rent in the time and manner required 
by a residential lease is a violation of the lease, and we will issue a 
notice of violation in accordance with this paragraph.
    (1) We will send the lessee and any mortgagee a notice of violation 
by certified mail, return receipt requested:
    (i) Promptly following the date on which the payment was due, if 
the lease requires that rental payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (3) The notice of violation will require the lessee to provide 
adequate proof of payment.
    (d) The lessee will continue to be responsible for the obligations 
in the lease until the lease expires or is terminated or cancelled.


Sec.  162.367  What will BIA do if the lessee does not cure a violation 
of a residential lease on time?

    (a) If the lessee does not cure a violation of a residential lease 
within the required time period, or provide adequate proof of payment 
as required in the notice of violation, we will consult with the tribe 
for tribal land or, where feasible, with Indian landowners for 
individually owned Indian land, and determine whether:
    (1) We should cancel the lease;
    (2) The Indian landowners wish to invoke any remedies available to 
them under the lease;
    (3) We should invoke other remedies available under the lease or 
applicable law, including collection on any available performance bond 
or, for failure to pay rent, referral of the debt to the Department of 
the Treasury for collection; or
    (4) The lessee should be granted additional time in which to cure 
the violation.
    (b) Following consultation with the tribe for tribal land or, where 
feasible, with Indian landowners for individually owned Indian land, we 
may take action to recover unpaid rent and any associated late payment 
charges.
    (1) We do not have to cancel the lease or give any further notice 
to the lessee before taking action to recover unpaid rent.
    (2) We may still take action to recover any unpaid rent if we 
cancel the lease.
    (c) If we decide to cancel the lease, we will send the lessee and 
any mortgagee a cancellation letter by certified mail, return receipt 
requested within 5 business days of our decision. We will send a copy 
of the cancellation letter to the tribe for tribal land, and will 
provide Indian landowners for individually owned Indian land with 
actual or constructive notice of the cancellation. The cancellation 
letter will:
    (1) Explain the grounds for cancellation;
    (2) If applicable, notify the lessee of the amount of any unpaid 
rent or late payment charges due under the lease;
    (3) Notify the lessee of the lessee's right to appeal under part 2 
of this chapter;
    (4) Order the lessee to vacate the property within 31 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time; and
    (5) Order the lessee to take any other action BIA deems necessary 
to protect the Indian landowners.
    (d) We may invoke any other remedies available to us under the 
lease, including collecting on any available performance bond, and the 
Indian landowners may pursue any available remedies under tribal law.
    (e) We will ensure that any action we take is consistent with 25 
U.S.C. 4137, as applicable.


Sec.  162.368  Will late payment charges or special fees apply to 
delinquent payments due under a residential lease?

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

[[Page 72484]]



------------------------------------------------------------------------
       The lessee will pay . . .                    For . . .
------------------------------------------------------------------------
(1) $50.00.............................  Any dishonored check.
(2) $15.00.............................  Processing of each notice or
                                          demand letter.
(3) 18 percent of balance due..........  Treasury processing following
                                          referral for collection of
                                          delinquent debt.
------------------------------------------------------------------------

Sec.  162.369  How will payment rights relating to a residential lease 
be allocated?

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


Sec.  162.370  When will a cancellation of a residential lease be 
effective?

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


Sec.  162.371  What will BIA do if a lessee remains in possession after 
a residential lease expires or is terminated or cancelled?

    If a lessee remains in possession after the expiration, 
termination, or cancellation of a residential lease, we may treat the 
unauthorized possession as a trespass under applicable law in 
consultation with the Indian landowners. Unless the Indian landowners 
of the applicable percentage of interests under Sec.  162.012 have 
notified us in writing that they are engaged in good faith negotiations 
with the holdover lessee to obtain a new lease, we may take action to 
recover possession on behalf of the Indian landowners, and pursue any 
additional remedies available under applicable law, such as a forcible 
entry and detainer action.


Sec.  162.372  Will BIA appeal bond regulations apply to cancellation 
decisions involving residential leases?

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


Sec.  162.373  When will BIA issue a decision on an appeal from a 
residential leasing decision?

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


Sec.  162.374  What happens if the lessee abandons the leased premises?

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

Subpart D--Business Leases

Business Leasing General Provisions


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

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


Sec.  162.402  Is there a model business lease form?

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

Lease Requirements


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

    (a) A business lease must provide for a definite term, state if 
there is an option to renew, and if so, provide for a definite term for 
the renewal period. The maximum term of a lease approved under 25 
U.S.C. 415(a) may not exceed 50 years (consisting of an initial term 
not to exceed 25 years and one renewal not to exceed 25 years), unless 
a Federal statute provides for a longer maximum term (e.g., 25 U.S.C. 
415(a) allows for a maximum term of 99 years for certain tribes), a 
different initial term, renewal term, or number of renewals.
    (b) For tribal land, we will defer to the tribe's determination 
that the lease term, including any renewal, is reasonable. For 
individually owned Indian land, we will review the lease term, 
including any renewal, to ensure it is reasonable, given the:
    (1) Purpose of the lease;
    (2) Type of financing; and
    (3) Level of investment.
    (c) The lease may not be extended by holdover.


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

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us, 
unless the lease provides for automatic renewal;
    (3) Whether Indian landowner consent to the renewal is required;
    (4) That the lessee must provide notice of the renewal to the 
Indian landowners and any sureties and mortgagees;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the start of the renewal term; and
    (6) Any other conditions for renewal (e.g., that the lessee not be 
in violation of the lease at the time of renewal).
    (b) We will record any renewal of a lease in the LTRO.


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

    (a) All business leases must identify:

[[Page 72485]]

    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The ownership of permanent improvements and the responsibility 
for constructing, operating, maintaining, and managing permanent 
improvements under Sec.  162.415;
    (6) Payment requirements and late payment charges, including 
interest;
    (7) Due diligence requirements under Sec.  162.417 (unless the 
lease is for religious, educational, recreational, cultural, or other 
public purposes);
    (8) Insurance requirements under Sec.  162.437; and
    (9) Bonding requirements under Sec.  162.434. If a performance bond 
is required, the lease must state that the lessee must obtain the 
consent of the surety for any legal instrument that directly affects 
their obligations and liabilities.
    (b) Where a representative executes a lease on behalf of an Indian 
landowner or lessee, the lease must identify the landowner or lessee 
being represented and the authority under which the action is taken.
    (c) All business leases must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (3) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.014;
    (4) If historic properties, archeological resources, human remains, 
or other cultural items not previously reported are encountered during 
the course of any activity associated with this lease, all activity in 
the immediate vicinity of the properties, resources, remains, or items 
will cease and the lessee will contact BIA and the tribe with 
jurisdiction over the land to determine how to proceed and appropriate 
disposition;
    (5) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice, in accordance with Sec.  162.464, 
to enter the leased premises for inspection and to ensure compliance; 
and
    (6) BIA may, at its discretion, treat as a lease violation any 
failure by the lessee to cooperate with a BIA request to make 
appropriate records, reports, or information available for BIA 
inspection and duplication.
    (d) Unless the lessee would be prohibited by law from doing so, the 
lease must also contain the following provisions:
    (1) The lessee holds the United States and the Indian landowners 
harmless from any loss, liability, or damages resulting from the 
lessee's use or occupation of the leased premises; and
    (2) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to the use, 
handling, treatment, removal, storage, transportation, or disposal of 
hazardous materials, or the release or discharge of any hazardous 
material from the leased premises that occurs during the lease term, 
regardless of fault, with the exception that the lessee is not required 
to indemnify the Indian landowners for liability or cost arising from 
the Indian landowners' negligence or willful misconduct.
    (e) We may treat any provision of a lease document that violates 
Federal law as a violation of the lease.


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

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


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

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


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

    (a) We may take appropriate enforcement action to ensure removal of 
the permanent improvements and restoration of the premises at the 
lessee's expense:
    (1) In consultation with the tribe, for tribal land or, where 
feasible, with Indian landowners for individually owned Indian land; 
and
    (2) Before or after expiration, termination, or cancellation of the 
lease.
    (b) We may collect and hold the performance bond or alternative 
form of security until removal and restoration are completed.


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

    (a) If permanent improvements are to be constructed, the business 
lease must include due diligence requirements that require the lessee 
to complete construction of any permanent improvements within the 
schedule specified in the lease or general schedule of construction, 
and a process for changing the schedule by mutual consent of the 
parties. If construction does not occur, or is not expected to be 
completed, within the time period specified in the lease, the lessee 
must provide the Indian landowners and BIA with an explanation of good 
cause as to the nature of any delay, the anticipated date of 
construction of facilities, and evidence of progress toward 
commencement of construction.
    (b) Failure of the lessee to comply with the due diligence 
requirements of the lease is a violation of the lease and may lead to 
cancellation of the lease under Sec.  162.467.
    (c) BIA may waive the requirements in this section if such waiver 
is in the best interest of the Indian landowners.
    (d) The requirements of this section do not apply to leases for 
religious, educational, recreational, cultural, or other public 
purposes.


Sec.  162.418  How must a business lease describe the land?

    (a) A business lease must describe the leased premises by reference 
to an official or certified survey, if possible. If

[[Page 72486]]

the land cannot be so described, the lease must include one or more of 
the following:
    (1) A legal description;
    (2) A survey-grade global positioning system description; or
    (3) Another description prepared by a registered land surveyor that 
is sufficient to identify the leased premises.
    (b) If the tract is fractionated we will identify the undivided 
trust or restricted interests in the leased premises.


Sec.  162.419  May a business lease allow compatible uses?

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

Monetary Compensation Requirements


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

    (a) A business lease of tribal land may allow for any payment 
amount negotiated by the tribe, and we will defer to the tribe and not 
require a valuation if the tribe submits a tribal authorization 
expressly stating that it:
    (1) Has negotiated compensation satisfactory to the tribe;
    (2) Waives valuation; and
    (3) Has determined that accepting such negotiated compensation and 
waiving valuation is in its best interest.
    (b) The tribe may request, in writing, that we determine fair 
market rental, in which case we will use a valuation in accordance with 
Sec.  162.422. After providing the tribe with the fair market rental, 
we will defer to a tribe's decision to allow for any payment amount 
negotiated by the tribe.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, we will require that the lease provide for fair market rental 
based on a valuation in accordance with Sec.  162.422.


Sec.  162.421  How much monetary compensation must be paid under a 
business lease of individually owned Indian land?

    (a) A business lease of individually owned Indian land must require 
payment of not less than fair market rental before any adjustments, 
based on a fixed amount, a percentage of the projected income, or some 
other method, unless paragraphs (b) or (c) of this section permit a 
lesser amount. The lease must establish how the fixed amount, 
percentage, or combination will be calculated and the frequency at 
which the payments will be made.
    (b) We may approve a lease of individually owned Indian land that 
provides for the payment of nominal compensation, or less than a fair 
market rental, if:
    (1) The Indian landowners execute a written waiver of the right to 
receive fair market rental; and
    (2) We determine it is in the Indian landowners' best interest, 
based on factors including, but not limited to:
    (i) The lessee is a member of the immediate family, as defined in 
Sec.  162.003, of an individual Indian landowner;
    (ii) The lessee is a co-owner in the leased tract;
    (iii) A special relationship or circumstances exist that we believe 
warrant approval of the lease;
    (iv) The lease is for religious, educational, recreational, 
cultural, or other public purposes;
    (v) We have waived the requirement for a valuation under paragraph 
(e) of this section.
    (c) We may approve a lease that provides for payment of less than a 
fair market rental during the pre-development or construction periods, 
if we determine it is in the Indian landowners' best interest. The 
lease must specify the amount of the compensation and the applicable 
periods.
    (d) We will require a valuation in accordance with Sec.  162.422, 
unless:
    (1) 100 percent of the Indian landowners submit to us a written 
request to waive the valuation requirement; or
    (2) We waive the requirement under paragraph (e) of this section.
    (e) If the owners of the applicable percentage of interests under 
Sec.  162.012 of this part execute a business lease on behalf of all of 
the Indian landowners of a fractionated tract, the lease must provide 
that the non-consenting Indian landowners, and those on whose behalf we 
have consented, receive a fair market rental, as determined by a 
valuation, unless we waive the requirement because 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.


Sec.  162.422  How will BIA determine fair market rental for a business 
lease?

    (a) We will use a market analysis, appraisal, or other appropriate 
valuation method to determine the fair market rental before we approve 
a business lease of individually owned Indian land or, at the request 
of the tribe, for tribal land.
    (b) We will either:
    (1) Prepare, or have prepared, a market analysis, appraisal, or 
other appropriate valuation method; or
    (2) Use an approved market analysis, appraisal, or other 
appropriate valuation method from the Indian landowners or lessee.
    (c) We will use or approve use of a market analysis, appraisal, or 
other appropriate valuation method only if it:
    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary under 25 U.S.C. 2214; and
    (2) Complies with Departmental policies regarding appraisals, 
including third-party appraisals.
    (d) Indian landowners may use competitive bidding as a valuation 
method.


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

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


Sec.  162.424  Must a business lease specify who receives monetary 
compensation payments?

    (a) A business lease must specify whether the lessee will make 
payments directly to the Indian landowners (direct pay) or to us on 
their behalf.
    (b) The lessee may make payments directly to the Indian landowners 
if:
    (1) The Indian landowners' trust accounts are unencumbered;
    (2) There are 10 or fewer beneficial owners; and
    (3) One hundred percent of the beneficial owners (including those 
on whose behalf we have consented) agree to receive payment directly 
from the lessee at the start of the lease.
    (c) If the lease provides that the lessee will directly pay the 
Indian landowners, then:
    (1) The lease must include provisions for proof of payment upon our 
request.
    (2) When we consent on behalf of an Indian landowner, the lessee 
must make payment to us on behalf of that landowner.
    (3) The lessee must send direct payments to the parties and 
addresses

[[Page 72487]]

specified in the lease, unless the lessee receives notice of a change 
of ownership or address.
    (4) Unless the lease provides otherwise, compensation payments may 
not be made payable directly to anyone other than the Indian 
landowners.
    (5) Direct payments must continue through the duration of the 
lease, except that:
    (i) The lessee must make all Indian landowners' payments to us if 
100 percent of the Indian landowners agree to suspend direct pay and 
provide us with documentation of their agreement; and
    (ii) The lessee must make that individual Indian landowner's 
payment to us if any individual Indian landowner who dies, is declared 
non compos mentis, owes a debt resulting in a trust account 
encumbrance, or his or her whereabouts become unknown.


Sec.  162.425  What form of monetary compensation payment is acceptable 
under a business lease?

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


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

    (a) A lease may provide for the following, subject to the 
conditions in paragraphs (b) and (c) of this section:
    (1) Alternative forms of compensation, including but not limited 
to, in-kind consideration and payments based on percentage of income; 
or
    (2) Varying types of compensation at specific stages during the 
life of the lease, including but not limited to fixed annual payments 
during construction, payments based on income during an operational 
period, and bonuses.
    (b) For tribal land, we will defer to the tribe's determination 
that the compensation under paragraph (a) of this section is in its 
best interest, if the tribe submits a signed certification or tribal 
authorization stating that it has determined the compensation under 
paragraph (a) of this section to be in its best interest.
    (c) For individually owned land, we may approve a lease that 
provides for compensation under paragraph (a) of this section if we 
determine that it is in the best interest of the Indian landowners.


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

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


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

    (a) For a business lease of tribal land, unless the lease provides 
otherwise, no periodic review of the adequacy of compensation or 
adjustment is required if the tribe states in its tribal certification 
or authorization that it has determined that not having compensation 
reviews and/or adjustments is in its best interest.
    (b) For a business lease of individually owned Indian land, unless 
the lease provides otherwise, no periodic review of the adequacy of 
compensation or adjustment is required if:
    (1) If the term of the lease is 5 years or less;
    (2) The lease provides for automatic adjustments; or
    (3) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, the following:
    (i) The lease provides for payment of less than fair market rental;
    (ii) The lease is for religious, educational, recreational, 
cultural, or other public purposes;
    (iii) The lease provides for most or all of the compensation to be 
paid during the first 5 years of the lease term or before the date the 
review would be conducted; or
    (iv) The lease provides for graduated rent or non-monetary or 
various types of compensation.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, a review of the adequacy of compensation must occur at least 
every fifth year, in the manner specified in the lease. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who can make adjustments;
    (3) What the adjustments are based on; and
    (4) How to resolve disputes arising from the adjustments.
    (d) When a review results in the need for adjustment of 
compensation, the Indian landowners must consent to the adjustment in 
accordance with Sec.  162.012, unless the lease provides otherwise.


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

    (a) The lessee may be required to pay additional fees, taxes, and 
assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.017. The 
lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. We will treat failure to make these payments as a violation 
of the lease.
    (c) Where the property is subject to at least one other lease for 
another compatible use, the lessees may agree among themselves how to 
allocate payment of the Indian irrigation operation and maintenance 
charges.

Bonding and Insurance


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

    The lessee must provide a performance bond or alternative form of 
security, except as provided in paragraph (f) of this section.
    (a) The performance bond or alternative form of security must be in 
an amount sufficient to secure the contractual obligations including:
    (1) No less than:
    (i) The highest annual rental specified in the lease, if 
compensation is paid annually; or
    (ii) If the compensation is not paid annually, another amount 
established by BIA in consultation with the tribe for tribal land or, 
where feasible, with Indian landowners for individually owned Indian 
land;
    (2) The construction of any required permanent improvements;
    (3) The operation and maintenance charges for any land located 
within an irrigation project; and
    (4) The restoration and reclamation of the leased premises, to 
their condition at the start of the lease term or some other specified 
condition.
    (b) The performance bond or other security:
    (1) Must be deposited with us and made payable only to us, and may 
not

[[Page 72488]]

be modified without our approval, except as provided in paragraph 
(b)(2) of this section; and
    (2) For tribal land, if the lease so provides, may be deposited 
with the tribe and made payable to the tribe, and may not be modified 
without the approval of the tribe.
    (c) The lease must specify the conditions under which we may adjust 
security or performance bond requirements to reflect changing 
conditions, including consultation with the tribal landowner for tribal 
land before the adjustment.
    (d) We may require that the surety provide any supporting documents 
needed to show that the performance bond or alternative forms of 
security will be enforceable, and that the surety will be able to 
perform the guaranteed obligations.
    (e) The performance bond or other security instrument must require 
the surety to provide notice to us at least 60 days before canceling a 
performance bond or other security. This will allow us to notify the 
lessee of its obligation to provide a substitute performance bond or 
other security and require collection of the bond or security before 
the cancellation date. Failure to provide a substitute performance bond 
or security is a violation of the lease.
    (f) We may waive the requirement for a performance bond or 
alternative form of security if either:
    (1) The lease is for religious, educational, recreational, 
cultural, or other public purposes; or
    (2) The Indian landowners request it and we determine a waiver is 
in the Indian landowners' best interest.
    (g) For tribal land, we will defer, to the maximum extent possible, 
to the tribe's determination that a waiver of a performance bond or 
alternative form of security is in its best interest.


Sec.  162.435  What forms of security are acceptable under a business 
lease?

    (a) We will accept a performance bond only in one of the following 
forms:
    (1) Certificates of deposit issued by a federally insured financial 
institution authorized to do business in the United States;
    (2) Irrevocable letters of credit issued by a federally insured 
financial institution authorized to do business in the United States;
    (3) Negotiable Treasury securities; or
    (4) Surety bonds issued by a company approved by the U.S. 
Department of the Treasury.
    (b) We may accept an alternative form of security approved by us 
that provides adequate protection for the Indian landowners and us, 
including but not limited to an escrow agreement and assigned savings 
account.
    (c) All forms of performance bonds or alternative security must, if 
applicable:
    (1) Indicate on their face that BIA approval is required for 
redemption;
    (2) Be accompanied by a statement granting full authority to BIA to 
make an immediate claim upon or sell them if the lessee violates the 
lease;
    (3) Be irrevocable during the term of the performance bond or 
alternative security; and
    (4) Be automatically renewable during the term of the lease.
    (d) We will not accept cash bonds.


Sec.  162.436  What is the release process for a performance bond or 
alternative form of security under a business lease?

    (a) Upon expiration, termination, or cancellation of the lease, the 
lessee may ask BIA in writing to release the performance bond or 
alternative form of security.
    (b) Upon receiving a request under paragraph (a) of this section, 
BIA will:
    (1) Confirm with the tribe, for tribal land or, where feasible, 
with the Indian landowners for individually owned Indian land, that the 
lessee has complied with all lease obligations; and
    (2) Release the performance bond or alternative form of security to 
the lessee, unless we determine that the bond or security must be 
redeemed to fulfill the contractual obligations.


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

    Except as provided in paragraph (c) of this section, a lessee must 
provide insurance necessary to protect the interests of the Indian 
landowners and in the amount sufficient to protect all insurable 
permanent improvements on the premises.
    (a) The insurance may include property, crop, liability, and 
casualty insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. For tribal land, we will defer, to the maximum 
extent possible, to the tribe's determination that a waiver is in its 
best interest.

Approval


Sec.  162.438  What documents are required for BIA approval of a 
business lease?

    A lessee or the Indian landowners must submit the following 
documents to us to obtain BIA approval of a business lease:
    (a) A lease executed by the Indian landowners and the lessee that 
meets the requirements of this part;
    (b) For tribal land, a tribal authorization for the lease and, if 
applicable, meeting the requirements of Sec. Sec.  162.420(a), 
162.426(b), and 162.428(a), or a separate signed certification meeting 
the requirements of Sec. Sec.  162.426(b) and 162.428(a));
    (c) A valuation, if required under Sec.  162.420 or Sec.  162.421;
    (d) Proof of insurance, if required under Sec.  162.437;
    (e) A performance bond or other security, if required under Sec.  
162.434;
    (f) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law, if required 
by the tribe;
    (g) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance with applicable Federal 
and tribal environmental and land use requirements, including any 
documentation prepared under Sec.  162.027(b);
    (h) A restoration and reclamation plan (and any subsequent 
modifications to the plan), if appropriate;
    (i) Where the lessee is not an entity owned and operated by the 
tribe, documents that demonstrate the technical capability of the 
lessee or lessee's agent to construct, operate, maintain, and terminate 
the proposed project and the lessee's ability to successfully design, 
construct, or obtain the funding for a project similar to the proposed 
project, if appropriate;
    (j) A preliminary plan of development that describes the type and 
location of any permanent improvements the lessee plans to construct 
and a schedule showing the tentative commencement and completion dates 
for those improvements, if appropriate;
    (k) A legal description of the land under Sec.  162.418;
    (l) If the lease is being approved under 25 U.S.C. 415, information 
to assist us in our evaluation of the factors in 25 U.S.C. 415(a); and
    (m) If the lessee is a corporation, limited liability company, 
partnership, joint venture, or other legal entity, except a tribal 
entity, information such as organizational documents, certificates, 
filing records, and resolutions, that demonstrates that:
    (1) The representative has authority to execute a lease;
    (2) The lease will be enforceable against the lessee; and
    (3) The legal entity is in good standing and authorized to conduct 
business in

[[Page 72489]]

the jurisdiction where the land is located.


Sec.  162.439  Will BIA review a proposed business lease before or 
during preparation of the NEPA review documentation?

    Upon request of the Indian landowners, we will review the proposed 
business lease after negotiation by the parties, before or during 
preparation of the NEPA review documentation and any valuation. Within 
60 days of receiving the proposed lease, we will provide an 
acknowledgement of the terms of the lease and identify any provisions 
that, based on this acknowledgment review, would justify disapproval of 
the lease, pending results of the NEPA review and any valuation.


Sec.  162.440  What is the approval process for a business lease?

    (a) Before we approve a business lease, we must determine that the 
lease is in the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the lease and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) If the lease is being approved under 25 U.S.C. 415, assure 
ourselves that adequate consideration has been given to the factors in 
25 U.S.C. 415(a); and
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements.
    (b) Upon receiving a business lease package, we will promptly 
notify the parties whether the package is or is not complete. A 
complete package includes all the information and supporting documents 
required under this subpart, including but not limited to, NEPA review 
documentation and valuation documentation, where applicable.
    (1) If the business lease package is not complete, our letter will 
identify the missing information or documents required for a complete 
package. If we do not respond to the submission of a business lease 
package, the parties may take action under Sec.  162.463.
    (2) If the business lease package is complete, we will notify the 
parties of the date of our receipt. Within 60 days of the receipt date, 
we will approve or disapprove the lease, return the package for 
revision, or inform the parties in writing that we need additional 
review time. If we inform the parties in writing that we need 
additional time, then:
    (i) Our letter informing the parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter; and
    (ii) We have 30 days from sending the letter informing the parties 
that we need additional time to approve or disapprove the lease.
    (c) If we do not meet the deadlines in this section, then the 
parties may take appropriate action under Sec.  162.463.
    (d) We will provide any lease approval or disapproval and the basis 
for the determination, along with notification of any appeal rights 
under part 2 of this chapter, in writing to the parties to the lease.
    (e) We will provide approved business leases on tribal land to the 
lessee and provide a copy to the tribe. We will provide approved 
business leases on individually owned Indian land to the lessee, and 
make copies available to the Indian landowners upon written request.


Sec.  162.441  How will BIA decide whether to approve a business lease?

    (a) We will approve a business lease unless:
    (1) The required consents have not been obtained from the parties 
to the lease;
    (2) The requirements of this subpart have not been met; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the lease is in their best interest.
    (c) We may not unreasonably withhold approval of a lease.


Sec.  162.442  When will a business lease be effective?

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


Sec.  162.443  Must a business lease document be recorded?

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


Sec.  162.444  Will BIA require an appeal bond for an appeal of a 
decision on a business lease document?

    (a) If a party appeals our decision on a lease, assignment, 
amendment, or sublease, then the official to whom the appeal is made 
may require the appellant to post an appeal bond in accordance with 
part 2 of this chapter. We will not require an appeal bond:
    (1) For an appeal of a decision on a leasehold mortgage; or
    (2) If the tribe is a party to the appeal and requests a waiver of 
the appeal bond.
    (b) The appellant may not appeal the appeal bond decision. The 
appellant may, however, request that the official to whom the appeal is 
made reconsider the bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.

Amendments


Sec.  162.445  May the parties amend a business lease?

    The parties may amend a business lease by obtaining:
    (a) The lessee's signature;
    (b) The Indian landowners' consent under the requirements in Sec.  
162.446; and
    (c) BIA approval of the amendment under Sec. Sec.  162.447 and 
162.448.


Sec.  162.446  What are the consent requirements for an amendment to a 
business lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed amendment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an amendment of a business lease in the same 
percentages and manner as a new business lease under Sec.  162.012, 
unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the amendment within a 
specified period of time following the landowners' receipt of the 
amendment and the lease meets the requirements of paragraph (c) of this 
section;

[[Page 72490]]

    (2) Authorizes one or more representatives to consent to an 
amendment on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to an amendment.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed amendment or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.
    (d) Unless specifically authorized in the lease, a written power of 
attorney, or a court document, Indian landowners may not be deemed to 
have consented to, and an Indian landowner's designated representative 
may not negotiate or consent to, an amendment that would:
    (1) Reduce the payment obligations to the Indian landowners;
    (2) Increase or decrease the lease area;
    (3) Terminate or change the term of the lease; or
    (4) Modify the dispute resolution procedures.


Sec.  162.447  What is the approval process for an amendment to a 
business lease?

    (a) When we receive an amendment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. We 
have 30 days from receipt of the executed amendment, proof of required 
consents, and required documentation to approve or disapprove the 
amendment or inform the parties in writing that we need additional 
review time. Our determination whether to approve the amendment will be 
in writing and will state the basis for our approval or disapproval.
    (b) Our letter informing the parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter. We have 30 days from 
sending the letter informing the parties that we need additional time 
to approve or disapprove the amendment.
    (c) If we do not meet the deadline in paragraph (a) or this 
section, or paragraph (b) of this section if applicable, the amendment 
is deemed approved to the extent consistent with Federal law. Unless 
the lease provides otherwise, provisions of the amendment that are 
inconsistent with Federal law will be severed and unenforceable; all 
other provisions of the amendment will remain in force.


Sec.  162.448  How will BIA decide whether to approve an amendment to a 
business lease?

    (a) We may disapprove a business lease amendment only if at least 
one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The requirements of this subpart have not been met; or
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible to the Indian 
landowners' determination that the amendment is in their best interest.
    (c) We may not unreasonably withhold approval of an amendment.

Assignments


Sec.  162.449  May a lessee assign a business lease?

    (a) A lessee may assign a business lease by meeting the consent 
requirements in Sec.  162.450 and obtaining our approval of the 
assignment under Sec. Sec.  162.451 and 162.452, or by meeting the 
conditions in paragraphs (b) or (c) of this section.
    (b) Where provided in the lease, the lessee may assign the lease to 
the following without meeting consent requirements or obtaining BIA 
approval of the assignment, as long as the lessee notifies BIA of the 
assignment within 30 days after it is executed:
    (1) Not more than three distinct legal entities specified in the 
lease; or
    (2) The lessee's wholly owned subsidiaries.
    (c) The lessee may assign the lease without our approval or meeting 
consent requirements if:
    (1) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance;
    (2) The assignee agrees in writing to assume all of the obligations 
and conditions of the lease; and
    (3) The assignee agrees in writing that any transfer of the lease 
will be in accordance with applicable law under Sec.  162.014.


Sec.  162.450  What are the consent requirements for an assignment of a 
business lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed assignment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an amendment of a business lease in the same 
percentages and manner as a new business lease under Sec.  162.012, 
unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the amendment within a 
specified period of time following the landowners' receipt of the 
amendment and the lease meets the requirements of paragraph (c) of this 
section;
    (2) Authorizes one or more representatives to consent to an 
amendment on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to an amendment.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed amendment or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.
    (d) The lessee must obtain the consent of the holders of any bonds 
or mortgages.


Sec.  162.451  What is the approval process for an assignment of a 
business lease?

    (a) When we receive an assignment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. If 
our approval is required, we have 30 days from receipt of the executed 
assignment, proof of required consents, and required documentation to 
approve or disapprove the assignment. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we do not meet the deadline in this section, the lessee or 
Indian landowners may take appropriate action under Sec.  162.463.


Sec.  162.452  How will BIA decide whether to approve an assignment of 
a business lease?

    (a) We may disapprove an assignment of a business lease only if at 
least one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;

[[Page 72491]]

    (3) The lessee is in violation of the lease;
    (4) The assignee does not agree to be bound by the terms of the 
lease;
    (5) The requirements of this subpart have not been met; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether:
    (1) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (2) If a performance bond is required, the assignee has posted the 
bond or security and provided supporting documents that demonstrate 
that:
    (i) The lease will be enforceable against the assignee; and
    (ii) The assignee will be able to perform its obligations under the 
lease or assignment.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the assignment is in their best 
interest.
    (d) We may not unreasonably withhold approval of an assignment.

Subleases


Sec.  162.453  May a lessee sublease a business lease?

    (a) A lessee may sublease a business lease by meeting the consent 
requirements in Sec.  162.454 and obtaining our approval of the 
sublease under Sec. Sec.  162.455 and 162.456, or by meeting the 
conditions in paragraph (b) of this section.
    (b) Where the sublease is part of a commercial development or 
residential development, the lessee may sublease without meeting 
consent requirements or obtaining BIA approval of the sublease, if:
    (1) The lease provides for subleasing without meeting consent 
requirements or obtaining BIA approval;
    (2) The sublease does not relieve the lessee/sublessor of any 
liability; and
    (3) The parties provide BIA with a copy of the sublease within 30 
days after it is executed.


Sec.  162.454  What are the consent requirements for a sublease of a 
business lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed sublease.
    (b) The Indian landowners must consent to a sublease of a business 
lease in the same percentages and manner as a new business lease under 
Sec.  162.012, unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the sublease within a 
specified period of time following the landowners' receipt of the 
sublease and the lease meets the requirements of paragraph (c) of this 
section;
    (2) Authorizes one or more representatives to consent to a sublease 
on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to a sublease.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed sublease or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the sublease to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.


Sec.  162.455  What is the approval process for a sublease of a 
business lease?

    (a) When we receive a sublease that meets the requirements of this 
subpart, we will notify the parties of the date we receive it. If our 
approval is required, we have 30 days from receipt of the executed 
sublease, proof of required consents, and required documentation to 
approve or disapprove the sublease or inform the parties in writing 
that we need additional review time. Our determination whether to 
approve the sublease will be in writing and will state the basis for 
our approval or disapproval.
    (b) Our letter informing the parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter. We have 30 days from 
sending the letter informing the parties that we need additional time 
to approve or disapprove the sublease.
    (c) If we do not meet the deadline in paragraph (a) of this 
section, or paragraph (b) of this section if applicable, the sublease 
is deemed approved to the extent consistent with Federal law. Unless 
the lease provides otherwise, provisions of the sublease that are 
inconsistent with Federal law will be severed and unenforceable; all 
other provisions of the sublease will remain in force.


Sec.  162.456  How will BIA decide whether to approve a sublease of a 
business lease?

    (a) We may disapprove a sublease of a business lease only if at 
least one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The lessee will not remain liable under the lease;
    (5) The requirements of this subpart have not been met; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether the value of any part of the leased 
premises not covered by the sublease would be adversely affected.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the sublease is in their best interest.
    (d) We may not unreasonably withhold approval of a sublease.

Leasehold Mortgages


Sec.  162.457  May a lessee mortgage a business lease?

    (a) A lessee may mortgage a business lease by meeting the consent 
requirements in Sec.  162.458 and obtaining our approval of the 
leasehold mortgage under Sec. Sec.  162.459 and 162.460.
    (b) Refer to Sec.  162.449(c) for information on what happens if a 
sale or foreclosure under an approved mortgage of the leasehold 
interest occurs.


Sec.  162.458  What are the consent requirements for a leasehold 
mortgage of a business lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed leasehold mortgage.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to a leasehold mortgage of a business lease in 
the same percentages and manner as a new business lease under Sec.  
162.012, unless the lease:
    (1) States that landowner consent is not required for a leasehold 
mortgage and identifies what law would apply in case of foreclosure;
    (2) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the leasehold mortgage 
within a specified period of time following the landowners' receipt of 
the leasehold mortgage and the lease meets the requirements of 
paragraph (c) of this section;
    (3) Authorizes one or more representatives to consent to a 
leasehold

[[Page 72492]]

mortgage on behalf of all Indian landowners; or
    (4) Designates us as the Indian landowners' representative for the 
purposes of consenting to a leasehold mortgage.
    (c) If the lease provides for deemed consent under paragraph (b)(2) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed leasehold mortgage or other 
documentation of any Indian landowners' actual consent;
    (2) Proof of mailing of the leasehold mortgage to any Indian 
landowners who are deemed to have consented; and
    (3) Any other pertinent information for us to review.


Sec.  162.459  What is the approval process for a leasehold mortgage of 
a business lease?

    (a) When we receive a leasehold mortgage that meets the 
requirements of this subpart, we will notify the parties of the date we 
receive it. We have 20 days from receipt of the executed leasehold 
mortgage, proof of required consents, and required documentation to 
approve or disapprove the leasehold mortgage. Our determination whether 
to approve the leasehold mortgage will be in writing and will state the 
basis for our approval or disapproval.
    (b) If we do not meet the deadline in this section, the lessee may 
take appropriate action under Sec.  162.463.


Sec.  162.460  How will BIA decide whether to approve a leasehold 
mortgage of a business lease?

    (a) We may disapprove a leasehold mortgage of a business lease only 
if at least one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The requirements of this subpart have not been met; or
    (4) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(4) of this 
section, we may consider whether:
    (1) The leasehold mortgage proceeds would be used for purposes 
unrelated to the leased premises; and
    (2) The leasehold mortgage is limited to the leasehold.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the leasehold mortgage is in their best 
interest.
    (d) We may not unreasonably withhold approval of a leasehold 
mortgage.

Effectiveness, Compliance, and Enforcement


Sec.  162.461  When will an amendment, assignment, sublease, or 
leasehold mortgage of a business lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage of a 
business lease will be effective when approved, even if an appeal is 
filed under part 2 of this chapter, except:
    (1) If the amendment or sublease was deemed approved under Sec.  
162.447(c) or Sec.  162.455(c), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review or, if we sent a letter informing the 
parties that we need additional time to approve or disapprove the 
lease, the amendment or sublease becomes effective 45 days from the 
date of the letter informing the parties that we need additional time 
to approve or disapprove the lease; and
    (2) An assignment that does not require our approval under Sec.  
162.449(b) or Sec.  162.449(c) or a sublease that does not require our 
approval under Sec.  152.453(b) becomes effective on the effective date 
specified in the assignment or sublease. If the assignment or sublease 
does not specify the effective date, it becomes effective upon 
execution by the parties.
    (b) We will provide copies of approved documents to the party 
requesting approval, to the tribe for tribal land, and upon request, to 
other parties to the lease document.


Sec.  162.462  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage of a business lease?

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


Sec.  162.463  What happens if BIA does not meet a deadline for issuing 
a decision on a lease document?

    (a) If a Superintendent does not meet a deadline for issuing a 
decision on a lease, assignment, or leasehold mortgage, the parties may 
file a written notice to compel action with the appropriate Regional 
Director.
    (b) The Regional Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Superintendent to issue a decision within the time 
set out in the order.
    (c) The parties may file a written notice to compel action with the 
BIA Director if:
    (1) The Regional Director does not meet the deadline in paragraph 
(b) of this section;
    (2) The Superintendent does not issue a decision within the time 
set by the Regional Director under paragraph (b)(2) of this section; or
    (3) The initial decision on the lease, assignment, or leasehold 
mortgage is with the Regional Director, and he or she does not meet the 
deadline for such decision.
    (d) The BIA Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Regional Director or Superintendent to issue a 
decision within the time set out in the order.
    (e) If the Regional Director or Superintendent does not issue a 
decision within the time set out in the order under paragraph (d)(2), 
then the BIA Director must issue a decision within 15 days from the 
expiration of the time set out in the order.
    (f) The parties may file an appeal from our inaction to the 
Interior Board of Indian Appeals if the Director does not meet the 
deadline in paragraph (d) or (e) of this section.
    (g) The provisions of 25 CFR 2.8 do not apply to the inaction of 
BIA officials with respect to a decision on a lease, amendment, 
assignment, sublease, or leasehold mortgage under this subpart.


Sec.  162.464  May BIA investigate compliance with a business lease?

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


Sec.  162.465  May a business lease provide for negotiated remedies if 
there is a violation?

    (a) A business lease of tribal land may provide either or both 
parties with negotiated remedies in the event of a lease violation, 
including, but not limited to, the power to terminate the lease. If the 
lease provides one or both parties with the power to terminate the 
lease:
    (1) BIA approval of the termination is not required;
    (2) The termination is effective without BIA cancellation; and
    (3) The Indian landowners must notify us of the termination so that 
we may record it in the LTRO.

[[Page 72493]]

    (b) A business lease of individually owned Indian land may provide 
either or both parties with negotiated remedies, so long as the lease 
also specifies the manner in which those remedies may be exercised by 
or on behalf of the Indian landowners of the applicable percentage of 
interests under Sec.  162.012 of this part. If the lease provides one 
or both parties with the power to terminate the lease:
    (1) BIA concurrence with the termination is required to ensure that 
the Indian landowners of the applicable percentage of interests have 
consented; and
    (2) BIA will record the termination in the LTRO.
    (c) The parties must notify any surety or mortgagee of any 
violation that may result in termination and the termination of a 
business lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease. The 
landowners may request our assistance in enforcing negotiated remedies.
    (e) A business lease may provide that lease violations will be 
addressed by a tribe, and that lease disputes will be resolved by a 
tribal court, any other court of competent jurisdiction, or by a tribal 
governing body in the absence of a tribal court, or through an 
alternative dispute resolution method. We may not be bound by decisions 
made in such forums, but we will defer to ongoing actions or 
proceedings, as appropriate, in deciding whether to exercise any of the 
remedies available to us.


Sec.  162.466  What will BIA do about a violation of a business lease?

    (a) In the absence of actions or proceedings described in Sec.  
162.465(e), or if it is not appropriate for us to defer to the actions 
or proceedings, we will follow the procedures in paragraphs (b) and (c) 
of this section.
    (b) If we determine there has been a violation of the conditions of 
a business lease, other than a violation of payment provisions covered 
by paragraph (c) of this section, we will promptly send the lessee and 
any surety and mortgagee a notice of violation by certified mail, 
return receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) The notice of violation will advise the lessee that, within 10 
business days of the receipt of a notice of violation, the lessee must:
    (i) Cure the violation and notify us, and the tribe for tribal 
land, in writing that the violation has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) The notice of violation may order the lessee to cease 
operations under the lease.
    (c) A lessee's failure to pay compensation in the time and manner 
required by a business lease is a violation of the lease, and we will 
issue a notice of violation in accordance with this paragraph.
    (1) We will send the lessees and any surety and mortgagee a notice 
of violation by certified mail, return receipt requested:
    (i) Promptly following the date on which the payment was due, if 
the lease requires that payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to the Indian landowners 
for individually owned Indian land.
    (3) The notice of violation will require the lessee to provide 
adequate proof of payment.
    (d) The lessee and its sureties will continue to be responsible for 
the obligations in the lease until the lease expires, or is terminated 
or cancelled.


Sec.  162.467  What will BIA do if the lessee does not cure a violation 
of a business lease on time?

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


Sec.  162.468  Will late payment charges or special fees apply to 
delinquent payments due under a business lease?

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

[[Page 72494]]



------------------------------------------------------------------------
       The lessee will pay . . .                    For . . .
------------------------------------------------------------------------
(1) $50.00.............................  Any dishonored check.
(2) $15.00.............................  Processing of each notice or
                                          demand letter.
(3) 18 percent of balance due..........  Treasury processing following
                                          referral for collection of
                                          delinquent debt.
------------------------------------------------------------------------

Sec.  162.469  How will payment rights relating to a business lease be 
allocated?

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


Sec.  162.470  When will a cancellation of a business lease be 
effective?

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


Sec.  162.471  What will BIA do if a lessee remains in possession after 
a business lease expires or is terminated or cancelled?

    If a lessee remains in possession after the expiration, 
termination, or cancellation of a business lease, we may treat the 
unauthorized possession as a trespass under applicable law in 
consultation with the Indian landowners. Unless the Indian landowners 
of the applicable percentage of interests under Sec.  162.012 have 
notified us in writing that they are engaged in good faith negotiations 
with the holdover lessee to obtain a new lease, we may take action to 
recover possession on behalf of the Indian landowners, and pursue any 
additional remedies available under applicable law, such as a forcible 
entry and detainer action.


Sec.  162.472  Will BIA appeal bond regulations apply to cancellation 
decisions involving business leases?

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


Sec.  162.473  When will BIA issue a decision on an appeal from a 
business leasing decision?

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


Sec.  162.474  What happens if the lessee abandons the leased premises?

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

Subpart F--[Removed]

0
14a. Remove subpart F, consisting of Sec. Sec.  162.600 through 
162.623.

Subpart E [Redesignated as Subpart F]

0
14b. Redesignate subpart E, consisting of Sec. Sec.  162.500 through 
162.503, as new subpart F under the following heading:

Subpart F--Special Requirements for Certain Reservations

0
15. Add a new subpart E to read as follows:
Subpart E--Wind and Solar Resource Leases

General Provisions Applicable to WEELs and WSR Leases

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

WEELs

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

WEEL Monetary Compensation Requirements

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

WEEL Bonding and Insurance

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

WEEL Approval

162.528 What documents are required for BIA approval of a WEEL?
162.529 Will BIA review a proposed WEEL before or during preparation 
of the NEPA review documentation?
162.530 What is the approval process for a WEEL?
162.531 How will BIA decide whether to approve a WEEL?
162.532 When will a WEEL be effective?
162.533 Must a WEEL lease document be recorded?

WEEL Administration

162.534 May the parties amend, assign, sublease, or mortgage a WEEL?

WEEL Compliance and Enforcement

162.535 What effectiveness, compliance, and enforcement provisions 
apply to WEELs?
162.536 Under what circumstance may a WEEL be terminated?
162.537 [Reserved]

WSR Leases

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

[[Page 72495]]

162.547 How must a WSR lease describe the land?
162.548 May a WSR lease allow compatible uses?

WSR Lease Monetary Compensation Requirements

162.549 How much monetary compensation must be paid under a WSR 
lease of tribal land?
162.550 How much monetary compensation must be paid under a WSR 
lease of individually owned Indian land?
162.551 How will BIA determine fair market rental for a WSR lease?
162.552 When are monetary compensation payments due under a WSR 
lease?
162.553 Must a WSR lease specify who receives monetary compensation 
payments?
162.554 What form of monetary compensation payment is acceptable 
under a WSR lease?
162.555 May a WSR lease provide for non-monetary or varying types of 
compensation?
162.556 Will BIA notify a lessee when a payment is due under a WSR 
lease?
162.557 Must a WSR lease provide for compensation reviews or 
adjustments?
162.558 What other types of payments are required under a WSR lease?

WSR Lease Bonding and Insurance

162.559 Must a lessee provide a performance bond for a WSR lease?
162.560 What forms of security are acceptable under a WSR lease?
162.561 What is the release process for a performance bond or 
alternative form of security under a WSR lease?
162.562 Must a lessee provide insurance for a WSR lease?

WSR Lease Approval

162.563 What documents are required for BIA approval of a WSR lease?
162.564 Will BIA review a proposed WSR lease before or during 
preparation of the NEPA review documentation?
162.565 What is the approval process for a WSR lease?
162.566 How will BIA decide whether to approve a WSR lease?
162.567 When will a WSR lease be effective?
162.568 Must a WSR lease document be recorded?
162.569 Will BIA require an appeal bond for an appeal of a decision 
on a WSR lease document?

WSR Lease Amendments

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

WSR Lease Assignments

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

WSR Lease Subleases

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

WSR Lease Leasehold Mortgages

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

WSR Lease--Effectiveness, Compliance, and Enforcement

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

Subpart E--Wind and Solar Resource Leases

General Provisions Applicable to WEELs and WSR Leases


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

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


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

    (a) Anyone seeking to possess Indian land to conduct activities 
associated with the evaluation of wind resources must obtain a WEEL, 
except that a WEEL is not required if use or possession of the Indian 
land to conduct wind energy evaluation activities is authorized:
    (1) Under Sec.  162.005(b);
    (2) By a permit from the Indian landowners under Sec.  162.007; or
    (3) By a tribe on its land under 25 U.S.C. 81.
    (b) Except as provided in Sec. Sec.  162.005(b), 162.501, and 
paragraph (c) of this section, anyone seeking to possess Indian land to 
conduct activities associated with the development of wind and/or solar 
resources must obtain a WSR lease.
    (c) A tribe that conducts wind and solar resource activities on its 
tribal land does not need a WEEL or WSR under this subpart.


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

    There is no model WEEL or WSR lease because of the need for 
flexibility in negotiating and writing WEELs and WSR leases; however, 
we may:
    (a) Provide other guidance, such as checklists and sample lease 
provisions,

[[Page 72496]]

to assist in the lease negotiation process; and
    (b) Assist the Indian landowners, upon their request, in developing 
appropriate lease provisions or in using tribal lease forms that 
conform to the requirements of this part.

WEELs


Sec.  162.511  What is the purpose of a WEEL?

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


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

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


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

    (a) All WEELs must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the WEEL and authorized uses of the leased 
premises;
    (3) The parties to the WEEL;
    (4) The term of the WEEL;
    (5) The ownership of permanent improvements and the responsibility 
for constructing, operating, maintaining, and managing permanent 
improvements, under Sec.  162.515;
    (6) Payment requirements and late payment charges, including 
interest; and
    (7) Due diligence requirements, under Sec.  162.517.
    (b) Where a representative executes a lease on behalf of an Indian 
landowner or lessee, the lease must identify the landowner or lessee 
being represented and the authority under which the action is taken.
    (c) All WEELs must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of leased premises;
    (3) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.014;
    (4) If historic properties, archeological resources, human remains, 
or other cultural items, not previously reported are encountered during 
the course of any activity associated with this lease, all activity in 
the immediate vicinity of the properties, resources, remains, or items 
will cease, and the lessee will contact BIA and the tribe with 
jurisdiction to determine how to proceed and appropriate disposition;
    (5) BIA has the right, at any reasonable time during the term of 
the lease, and upon reasonable notice, in accordance with Sec.  
162.589, to enter the leased premises for inspection; and
    (6) BIA may, at its discretion, treat as a lease violation any 
failure by the lessee to cooperate with a BIA request to make 
appropriate records, reports, or information available for BIA 
inspection and duplication.
    (d) Unless the lessee would be prohibited by law from doing so, the 
lease must also contain the following provisions:
    (1) The lessee holds the United States and the Indian landowners 
harmless from any loss, liability, or damages resulting from the 
lessee's use or occupation of the leased premises;
    (2) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to the use, 
handling, treatment, removal, storage, transportation, or disposal of 
hazardous materials, or the release or discharge of any hazardous 
material from the leased premises that occurs during the lease term, 
regardless of fault, with the exception that the lessee is not required 
to indemnify the Indian landowners for liability or cost arising from 
the Indian landowners' negligence or willful misconduct.


Sec.  162.514  May permanent improvements be made under a WEEL?

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


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

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


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

    We may take appropriate enforcement action to ensure removal of the 
permanent improvements and restoration of the premises at the lessee's 
expense:
    (a) In consultation with the tribe, for tribal land or, where 
feasible, with Indian landowners for individually owned Indian land; 
and
    (b) After termination, cancellation, or expiration of the WEEL.

[[Page 72497]]

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

    (a) A WEEL must include due diligence requirements that require the 
lessee to:
    (1) Install testing and monitoring facilities within 12 months 
after the effective date of the WEEL or other period designated in the 
WEEL and consistent with the plan of development; and
    (2) If installation does not occur, or is not expected to be 
completed, within the time period specified in paragraph (a)(1) of this 
section, provide the Indian landowners and BIA with an explanation of 
good cause for any delay, the anticipated date of installation of 
facilities, and evidence of progress toward installing or completing 
testing and monitoring facilities.
    (b) Failure of the lessee to comply with the due diligence 
requirements of the WEEL is a violation of the WEEL and may lead to:
    (1) Cancellation of the WEEL under Sec.  162.592; and
    (2) Application of the requirement that the lessee transfer 
ownership of energy resource information collected under the WEEL to 
the Indian landowners under Sec.  162.520.


Sec.  162.518  How must a WEEL describe the land?

    (a) A WEEL must describe the leased premises by reference to a 
public or private survey, if possible. If the land cannot be so 
described, the lease must include one or more of the following:
    (1) A legal description;
    (2) A survey-grade global positioning system description; or
    (3) Another description prepared by a registered land surveyor that 
is sufficient to identify the leased premises.
    (b) If the tract is fractionated, we will identify the undivided 
trust or restricted interests in the leased premises.


Sec.  162.519  May a WEEL allow for compatible uses by the Indian 
landowner?

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


Sec.  162.520  Who owns the energy resource information obtained under 
the WEEL?

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


Sec.  162.521  May a lessee incorporate its WEEL analyses into its WSR 
lease analyses?

    Any analyses a lessee uses to bring a WEEL activity into compliance 
with applicable laws, ordinances, rules, regulations under Sec.  
162.014 and any other legal requirements may be incorporated by 
reference, as appropriate, into the analyses of a proposed WSR lease.


Sec.  162.522  May a WEEL contain an option for the lessee to enter 
into a WSR lease?

    (a) A WEEL may provide for an option period following the 
expiration of the WEEL term during which the lessee and the Indian 
landowners may enter into a WSR lease.
    (b) Our approval of a WEEL that contains an option to enter into a 
WSR lease does not guarantee or imply our approval of any WSR lease.

WEEL Monetary Compensation Requirements


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

    (a) The WEEL must state how much compensation will be paid.
    (b) A WEEL must specify the date on which compensation will be due.
    (c) Failure to make timely payments is a violation of the WEEL and 
may lead to cancellation of the WEEL.
    (d) The lease compensation requirements of Sec. Sec.  162.552 
through 162.558 also apply to WEELs.


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

    We will not require a valuation for a WEEL.

WEEL Bonding and Insurance


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

    We will not require the lessee to provide a performance bond or 
alternative form of security for a WEEL.


Sec.  162.526  [Reserved]


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

    Except as provided in paragraph (d) of this section, a lessee must 
provide insurance necessary to protect the interests of Indian 
landowners and in the amount sufficient to protect all insurable 
permanent improvements on the leased premises.
    (a) The insurance may include property, crop, liability, and 
casualty insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) Lease insurance may be increased and extended for use as the 
required WSR lease insurance.
    (d) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. For tribal land, we will defer, to the maximum 
extent possible, to the tribe's determination that a waiver is in its 
best interest.

WEEL Approval


Sec.  162.528  What documents are required for BIA approval of a WEEL?

    A lessee or the Indian landowners must submit the following 
documents to us to obtain BIA approval of a WEEL:
    (a) A WEEL executed by the Indian landowners and the lessee that 
meets the requirements of this part;
    (b) For tribal land, a tribal authorization for the WEEL;
    (c) Proof of insurance, as required by Sec.  162.527;
    (d) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law, if required 
by the tribe;
    (e) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance with applicable Federal 
and tribal environmental and land use requirements, including any 
documentation prepared under Sec.  162.027(b);
    (f) An equipment installation plan;
    (g) A restoration and reclamation plan (and any subsequent 
modifications to the plan);
    (h) Where the lessee is not an entity owned and operated by the 
tribe, documents that demonstrate the technical capability of the 
lessee or lessee's agent to construct, operate, maintain, and terminate 
the proposed project and the lessee's ability to successfully design, 
construct, or obtain

[[Page 72498]]

the funding for a project similar to the proposed project, if 
appropriate;
    (i) A legal description of the land under Sec.  162.518;
    (j) If the lease is being approved under 25 U.S.C. 415, information 
to assist us in our evaluation of the factors in 25 U.S.C. 415(a); and
    (k) If the lessee is a corporation, limited liability company, 
partnership, joint venture, or other legal entity, except a tribal 
entity, information such as organizational documents, certificates, 
filing records, and resolutions, that demonstrates that:
    (1) The representative has authority to execute a lease;
    (2) The lease will be enforceable against the lessee; and
    (3) The legal entity is in good standing and authorized to conduct 
business in the jurisdiction where the land is located.


Sec.  162.529  Will BIA review a proposed WEEL before or during 
preparation of the NEPA review documentation?

    Upon request of the Indian landowners, we will review the proposed 
WEEL after negotiation by the parties, before or during preparation of 
the NEPA review documentation. Within 10 days of receiving the proposed 
WEEL, we will provide an acknowledgement of the terms of the lease and 
identify any provisions that, based on this acknowledgment review, 
would justify disapproval of the lease, pending results of the NEPA 
review.


Sec.  162.530  What is the approval process for a WEEL?

    (a) Before we approve a WEEL, we must determine that the WEEL is in 
the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the WEEL and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) If the lease is being approved under 25 U.S.C. 415, assure 
ourselves that adequate consideration has been given to the factors in 
25 U.S.C. 415(a); and
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements.
    (b) Upon receiving the WEEL package, we will promptly notify the 
parties whether the package is or is not complete. A complete package 
includes all the information and supporting documents required for a 
WEEL, including but not limited to, NEPA review documentation, where 
applicable.
    (1) If the WEEL package is not complete, our letter will identify 
the missing information or documents required for a complete package. 
If we do not respond to the submission of a WEEL package, the parties 
may take action under Sec.  162.588.
    (2) If the WEEL package is complete, we will notify the parties of 
the date we receive the complete package, and, within 20 days of the 
date of receipt of the package at the appropriate BIA office, approve 
or disapprove the WEEL or return the package for revision.
    (c) If we do not meet the deadline in this section, then the 
parties may take appropriate action under Sec.  162.588.
    (d) We will provide any WEEL approval determination and the basis 
for the determination, along with notification of appeal rights under 
part 2 of this chapter, in writing to the parties to the WEEL.
    (e) We will provide any WEEL disapproval determination and the 
basis for the determination, along with notification of rights to an 
informal conference, in writing to the parties. Within 30 days of 
receipt of the disapproval determination, the parties may request an 
informal conference with the official who issued the determination. 
Within 30 days of receiving this request, the official must hold the 
informal conference with the parties. Within 10 days of the informal 
conference, the official must issue a decision and the basis for the 
decision, along with a notification of appeal rights under part 2 of 
this chapter, in writing to the parties to the WEEL.
    (f) We will provide the approved WEEL on tribal land to the lessee 
and provide a copy to the tribe. We will provide the approved WEEL on 
individually owned Indian land to the lessee, and make copies available 
to the Indian landowners upon written request.


Sec.  162.531  How will BIA decide whether to approve a WEEL?

    (a) We will approve a WEEL unless:
    (1) The required consents have not been obtained from the parties 
to the WEEL;
    (2) The requirements applicable to WEELs have not been met; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the WEEL is in their best interest.
    (c) We may not unreasonably withhold approval of a WEEL.


Sec.  162.532  When will a WEEL be effective?

    (a) A WEEL will be effective on the date on which we approve the 
WEEL, even if an appeal is filed under part 2 of this chapter.
    (b) The WEEL may specify a date on which the obligations between 
the parties to a WEEL are triggered. Such date may be before or after 
the approval date under paragraph (a) of this section.
    (c) WEEL lease documents not requiring our approval are effective 
upon execution by the parties, or on the effective date specified in 
the lease document. If the WEEL lease document does not specify an 
effective date, it becomes effective upon execution by the parties.


Sec.  162.533  Must a WEEL lease document be recorded?

    (a) Any WEEL lease document must be recorded in our LTRO with 
jurisdiction over the leased land.
    (1) We will record the lease document immediately following our 
approval.
    (2) If our approval of an assignment or sublease is not required, 
the parties must record the assignment or sublease in the LTRO with 
jurisdiction over the leased land.
    (b) The tribe must record lease documents for the following types 
of leases in the LTRO with jurisdiction over the tribal lands, even 
though BIA approval is not required:
    (1) Leases of tribal land that a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval.

WEEL Administration


Sec.  162.534  May the parties amend, assign, sublease, or mortgage a 
WEEL?

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

WEEL Compliance and Enforcement


Sec.  162.535  What effectiveness, compliance, and enforcement 
provisions apply to WEELs?

    (a) The provisions at Sec.  162.586 apply to WEEL lease documents.
    (b) The provisions at Sec. Sec.  162.587 through 162.589 and 
162.591 through 162.599 apply to WEELs, except that any references to 
Sec.  162.590 will apply instead to Sec.  162.536.


Sec.  162.536  Under what circumstances may a WEEL be terminated?

    A WEEL must state whether, and under what conditions, the Indian 
landowners may terminate the WEEL.

[[Page 72499]]

Sec.  162.537  [Reserved]

WSR Leases


Sec.  162.538  What is the purpose of a WSR lease?

    A WSR lease authorizes a lessee to possess Indian land to conduct 
activities related to the installation, operation, and maintenance of 
wind and/or solar energy resource development projects. Activities 
include installing instrumentation facilities and infrastructure 
associated with the generation, transmission, and storage of 
electricity and other related activities. Leases for biomass or waste-
to-energy purposes are governed by subpart D of this part.


Sec.  162.539  Must I obtain a WEEL before obtaining a WSR lease?

    You may enter into a WSR lease without a WEEL. While you may enter 
into a lease as a direct result of energy resource information gathered 
from a WEEL activity, obtaining a WEEL is not a precondition to 
entering into a WSR lease.


Sec.  162.540  How long may the term of a WSR lease run?

    (a) A WSR lease must provide for a definite lease term, state if 
there is an option to renew, and if so, provide for a definite term for 
the renewal period. The maximum term of a lease approved under 25 
U.S.C. 415(a) may not exceed 50 years (consisting of an initial term 
not to exceed 25 years and one renewal not to exceed 25 years), unless 
a Federal statute provides for a longer maximum term (e.g., 25 U.S.C. 
415(a) allows for a maximum term of 99 years for certain tribes), a 
different initial term, renewal term, or number of renewals.
    (b) For tribal land, we will defer to the tribe's determination 
that the lease term, including any renewal, is reasonable. For 
individually owned Indian land, we will review the lease term, 
including any renewal, to ensure it is reasonable, given the:
    (1) Purpose of the lease;
    (2) Type of financing; and
    (3) Level of investment.
    (c) The lease may not be extended by holdover.


Sec.  162.541  What must the lease include if it contains an option to 
renew?

    (a) If the lease provides for an option to renew, the lease must 
specify:
    (1) The time and manner in which the option must be exercised or is 
automatically effective;
    (2) That confirmation of the renewal will be submitted to us, 
unless the lease provides for automatic renewal;
    (3) Whether Indian landowner consent to the renewal is required;
    (4) That the lessee must provide notice of the renewal to the 
Indian landowners and any sureties and mortgagees;
    (5) The additional consideration, if any, that will be due upon the 
exercise of the option to renew or the start of the renewal term; and
    (6) Any other conditions for renewal (e.g., that the lessee not be 
in violation of the lease at the time of renewal).
    (b) We will record any renewal of a lease in the LTRO.


Sec.  162.542  Are there mandatory provisions a WSR lease must contain?

    (a) All WSR leases must identify:
    (1) The tract or parcel of land being leased;
    (2) The purpose of the lease and authorized uses of the leased 
premises;
    (3) The parties to the lease;
    (4) The term of the lease;
    (5) The ownership of permanent improvements and the responsibility 
for constructing, operating, maintaining, and managing, WSR equipment, 
roads, transmission lines and related facilities under Sec.  162.543;
    (6) Who is responsible for evaluating the leased premises for 
suitability; purchasing, installing, operating, and maintaining WSR 
equipment; negotiating power purchase agreements; and transmission;
    (7) Payment requirements and late payment charges, including 
interest;
    (8) Due diligence requirements, under Sec.  162.546;
    (9) Insurance requirements, under Sec.  162.562; and
    (10) Bonding requirements under Sec.  162.559. If a performance 
bond is required, the lease must state that the lessee must obtain the 
consent of the surety for any legal instrument that directly affects 
their obligations and liabilities.
    (b) Where a representative executes a lease on behalf of an Indian 
landowner or lessee, the lease must identify the landowner or lessee 
being represented and the authority under which such action is taken.
    (c) All WSR leases must include the following provisions:
    (1) The obligations of the lessee and its sureties to the Indian 
landowners are also enforceable by the United States, so long as the 
land remains in trust or restricted status;
    (2) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises;
    (3) The lessee must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements under Sec.  162.014;
    (4) If historic properties, archeological resources, human remains, 
or other cultural items not previously reported are encountered during 
the course of any activity associated with the lease, all activity in 
the immediate vicinity of the properties, resources, remains, or items 
will cease and the lessee will contact BIA and the tribe with 
jurisdiction to determine how to proceed and appropriate disposition;
    (5) BIA has the right, at any reasonable time during the term of 
the lease and upon reasonable notice, in accordance with Sec.  162.589, 
to enter the leased premises for inspection and to ensure compliance; 
and
    (6) BIA may, at its discretion, treat as a lease violation any 
failure by the lessee to cooperate with a BIA request to make 
appropriate records, reports, or information available for BIA 
inspection and duplication.
    (d) Unless the lessee would be prohibited by law from doing so, the 
lease must also contain the following provisions:
    (1) The lessee holds the United States and the Indian landowners 
harmless from any loss, liability, or damages resulting from the 
lessee's use or occupation of the leased premises; and
    (2) The lessee indemnifies the United States and the Indian 
landowners against all liabilities or costs relating to the use, 
handling, treatment, removal, storage, transportation, or disposal of 
hazardous materials, or the release or discharge of any hazardous 
material from the leased premises that occurs during the lease term, 
regardless of fault, with the exception that the lessee is not required 
to indemnify the Indian landowners for liability or cost arising from 
the Indian landowners' negligence or willful misconduct.
    (e) We may treat any provision of a lease document that violates 
Federal law as a violation of the lease.


Sec.  162.543  May permanent improvements be made under a WSR lease?

    (a) A WSR lease must provide for the installation of a facility and 
associated infrastructure of a size and magnitude necessary for the 
generation and delivery of electricity, in accordance with Sec.  
162.019. These facilities and associated infrastructure are considered 
permanent improvements. A resource development plan must be submitted 
for approval with the lease under Sec.  162.563(h).
    (b) If the parties agree to any of the following changes to the 
resource development plan after lease approval, they must submit the 
revised plan to BIA for the file:

[[Page 72500]]

    (1) Location of permanent improvements;
    (2) Type of permanent improvements; or
    (3) Delay of 90 days or more in any phase of development.


Sec.  162.544  How must a WSR lease address ownership of permanent 
improvements?

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


Sec.  162.545  How will BIA enforce removal requirements in a WSR 
lease?

    (a) We may take appropriate enforcement action to ensure removal of 
the permanent improvements and restoration of the premises at the 
lessee's expense:
    (1) In consultation with the tribe, for tribal land or, where 
feasible, with Indian landowners for individually owned Indian land; 
and
    (2) Before or after expiration, termination, or cancellation of the 
lease.
    (b) We may collect and hold the performance bond until removal and 
restoration are completed.


Sec.  162.546  What requirements for due diligence must a WSR lease 
include?

    (a) A WSR lease must include due diligence requirements that 
require the lessee to:
    (1) Commence installation of energy facilities within 2 years after 
the effective date of the lease or consistent with a timeframe in the 
resource development plan;
    (2) If installation does not occur, or is not expected to be 
completed, within the time period specified in paragraph (a)(1) of this 
section, provide the Indian landowners and BIA with an explanation of 
good cause as to the nature of any delay, the anticipated date of 
installation of facilities, and evidence of progress toward 
commencement of installation;
    (3) Maintain all on-site electrical generation equipment and 
facilities and related infrastructure in accordance with the design 
standards in the resource development plan; and
    (4) Repair, place into service, or remove from the site within a 
time period specified in the lease any idle, improperly functioning, or 
abandoned equipment or facilities that have been inoperative for a 
continuous period specified in the lease (unless the equipment or 
facilities were idle as a result of planned suspension of operations, 
for example, for grid operations or during bird migration season).
    (b) Failure of the lessee to comply with the due diligence 
requirements of the lease is a violation of the lease and may lead to 
cancellation of the lease under Sec.  162.592.


Sec.  162.547  How must a WSR lease describe the land?

    (a) A WSR lease must describe the leased premises by reference to a 
private or public survey, if possible. If the land cannot be so 
described, the lease must include one or more of the following:
    (1) A legal description;
    (2) A survey-grade global positioning system description; or
    (3) Another description prepared by a registered land surveyor that 
is sufficient to identify the leased premises.
    (b) If the tract is fractionated, we will identify the undivided 
trust or restricted interests in the leased premises.


Sec.  162.548  May a WSR lease allow compatible uses?

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

WSR Lease Monetary Compensation Requirements


Sec.  162.549  How much monetary compensation must be paid under a WSR 
lease of tribal land?

    (a) A WSR lease of tribal land may allow for any payment negotiated 
by the tribe, and we will defer to the tribe and not require a 
valuation if the tribe submits a tribal authorization expressly stating 
that it:
    (1) Has negotiated compensation satisfactory to the tribe;
    (2) Waives valuation; and
    (3) Has determined that accepting such negotiated compensation and 
waiving valuation is in its best interest.
    (b) The tribe may request, in writing, that we determine fair 
market rental, in which case we will use a valuation in accordance with 
Sec.  162.551. After providing the tribe with the fair market rental, 
we will defer to a tribe's decision to allow for any payment amount 
negotiated by the tribe.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, we will require that the lease provide for fair market rental 
based on a valuation in accordance with Sec.  162.551.


Sec.  162.550  How much monetary compensation must be paid under a WSR 
lease of individually owned Indian land?

    (a) A WSR lease of individually owned Indian land must require 
payment of not less than fair market rental before any adjustments, 
based on a fixed amount, a percentage of the projected gross income, 
megawatt capacity fee, or some other method, unless paragraphs (b) or 
(c) of this section permit a lesser amount. The lease must establish 
how the fixed amount, percentage or combination will be calculated and 
the frequency at which the payments will be made.
    (b) We may approve a lease of individually owned Indian land that 
provides for the payment of nominal compensation, or less than a fair 
market rental, if:
    (1) The Indian landowners execute a written waiver of the right to 
receive fair market rental; and
    (2) We determine it is in the Indian landowners' best interest, 
based on factors including, but not limited to:
    (i) The lessee is a member of the immediate family, as defined in 
Sec.  162.003, of an Indian landowner;
    (ii) The lessee is a co-owner of the leased tract;
    (iii) A special relationship or circumstances exist that we believe 
warrant approval of the lease;
    (iv) The lease is for public purposes; or

[[Page 72501]]

    (v) We have waived the requirement for a valuation under paragraph 
(e) of this section.
    (c) We may approve a lease that provides for the payment of less 
than a fair market rental during the periods before the generation and 
transmission of electricity begins, if we determine it is in the Indian 
landowners' best interest. The lease must specify the amount of the 
compensation and the applicable periods.
    (d) We will require a valuation in accordance with Sec.  162.422, 
unless:
    (1) 100 percent of the landowners submit to us a written request to 
waive the valuation requirement; or
    (2) We waive the requirement under paragraph (e) of this section; 
or
    (3) We determine it is in the best interest of the Indian 
landowners to accept an economic analysis in lieu of an appraisal and:
    (i) The Indian landowners submit an economic analysis that is 
approved by the Office of Indian Energy & Economic Development (IEED); 
or
    (ii) IEED prepares an economic analysis at the request of the 
Indian landowners.
    (e) If the owners of the applicable percentage of interests under 
Sec.  162.011 of this part grant a WSR lease on behalf of all of the 
Indian landowners of a fractionated tract, the lease must provide that 
the non-consenting Indian landowners, and those on whose behalf we have 
consented, receive a fair market rental, as determined by a valuation, 
unless we waive the requirement because 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.


Sec.  162.551  How will BIA determine fair market rental for a WSR 
lease?

    (a) We will use a market analysis, appraisal, or other appropriate 
valuation method to determine the fair market rental before we approve 
a WSR lease of individually owned Indian land or, at the request of the 
tribe, for tribal land.
    (b) We will either:
    (1) Prepare, or have prepared, a market analysis, appraisal, or 
other appropriate valuation method; or
    (2) Use an approved market analysis, appraisal, or other 
appropriate valuation method from the Indian landowners or lessee.
    (c) We will use or approve use of a market analysis, appraisal, or 
other appropriate valuation method only if it:
    (1) Has been prepared in accordance with USPAP or a valuation 
method developed by the Secretary under 25 U.S.C. 2214; and
    (2) Complies with Department policies regarding appraisals, 
including third-party appraisals.
    (d) Indian landowners may use competitive bidding as a valuation 
method.


Sec.  162.552  When are monetary compensation payments due under a WSR 
lease?

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


Sec.  162.553  Must a WSR lease specify who receives monetary 
compensation payments?

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


Sec.  162.554  What form of monetary compensation payment is acceptable 
under a WSR lease?

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


Sec.  162.555  May a WSR lease provide for non-monetary or varying 
types of compensation?

    (a) A WSR lease may provide for the following, subject to the 
conditions in paragraphs (b) and (c) of this section:
    (1) Alternative forms of compensation, including but not limited 
to, in-kind consideration and payments based on percentage of income; 
or
    (2) Varying types of consideration at specific stages during the 
life of the lease, including but not limited to fixed annual payments 
during installation, payments based on income during an operational 
period, and bonuses.
    (b) For tribal land, we will defer to the tribe's determination 
that the compensation in paragraph (a) of this section is in its best 
interest, if the tribe submits a signed certification or tribal 
authorization stating that it has determined the compensation in 
paragraph (a) of this section to be in its best interest.
    (c) For individually owned land, we may approve a lease that 
provides for compensation under paragraph (a) of this section if we 
determine that it is in the best interest of the Indian landowners.


Sec.  162.556  Will BIA notify a lessee when a payment is due under a 
WSR lease?

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

[[Page 72502]]

Sec.  162.557  Must a WSR lease provide for compensation reviews or 
adjustments?

    (a) For a WSR lease of tribal land, unless the lease provides 
otherwise, no periodic review of the adequacy of compensation or 
adjustment is required if the tribe states in its tribal certification 
or authorization that it has determined that not having reviews and/or 
adjustments is in its best interest.
    (b) For a WSR lease of individually owned Indian land, unless the 
lease provides otherwise, no periodic review of the adequacy of 
compensation or adjustment is required if:
    (1) If the term of the lease is 5 years or less;
    (2) The lease provides for automatic adjustments; or
    (3) We determine it is in the best interest of the Indian 
landowners not to require a review or automatic adjustment based on 
circumstances including, but not limited to, the following:
    (i) The lease provides for payment of less than fair market rental;
    (ii) The lease is for public purposes;
    (iii) The lease provides for most or all of the compensation to be 
paid during the first 5 years of the lease term or before the date the 
review would be conducted; or
    (iv) The lease provides for graduated rent or non-monetary or 
various types of compensation.
    (c) If the conditions in paragraph (a) or (b) of this section are 
not met, a review of the adequacy of compensation must occur at least 
every fifth year, in the manner specified in the lease. The lease must 
specify:
    (1) When adjustments take effect;
    (2) Who can make adjustments;
    (3) What the adjustments are based on; and
    (4) How to resolve disputes arising from the adjustments.
    (d) When a review results in the need for adjustment of 
compensation, the Indian landowners must consent to the adjustment in 
accordance with Sec.  162.012, unless the lease provides otherwise.


Sec.  162.558  What other types of payments are required under a WSR 
lease?

    (a) The lessee may be required to pay additional fees, taxes, and 
assessments associated with the use of the land, as determined by 
entities having jurisdiction, except as provided in Sec.  162.017. The 
lessee must pay these amounts to the appropriate office.
    (b) If the leased premises are within an Indian irrigation project 
or drainage district, except as otherwise provided in part 171 of this 
chapter, the lessee must pay all operation and maintenance charges that 
accrue during the lease term. The lessee must pay these amounts to the 
appropriate office in charge of the irrigation project or drainage 
district. We will treat failure to make these payments as a violation 
of the lease.
    (c) Where the property is subject to at least one other lease for 
another compatible use, such as grazing, the lessees may agree among 
themselves how to allocate payment of the operation and maintenance 
charges.

WSR Lease Bonding and Insurance


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

    The lessee must provide a performance bond or alternative form of 
security, except as provided in paragraph (f) of this section.
    (a) The performance bond or alternative form of security must be in 
an amount sufficient to secure the contractual obligations including:
    (1) No less than:
    (i) The highest annual rental specified in the lease, if the 
compensation is paid annually; or
    (ii) If the compensation is not paid annually, another amount 
established by BIA in consultation with the tribe for tribal land or, 
where feasible, with Indian landowners for individually owned Indian 
land;
    (2) The installation of any required permanent improvements;
    (3) The operation and maintenance charges for any land located 
within an irrigation project; and
    (4) The restoration and reclamation of the leased premises, to 
their condition at the start of the lease term or some other specified 
condition.
    (b) The performance bond or other security:
    (1) Must be deposited with us and made payable only to us, and may 
not be modified without our approval, except as provided in paragraph 
(b)(2) of this section; and
    (2) For tribal land, if the lease so provides, may be deposited 
with the tribe and made payable to the tribe, and may not be modified 
without the approval of the tribe.
    (c) The lease must specify the conditions under which we may adjust 
security or performance bond requirements to reflect changing 
conditions, including consultation with the tribal landowner for tribal 
land before adjustment.
    (d) We may require that the surety provide any supporting documents 
needed to show that the performance bond or alternative forms of 
security will be enforceable, and that the surety will be able to 
perform the guaranteed obligations.
    (e) The performance bond or other security instrument must require 
the surety to provide notice to us at least 60 days before canceling a 
performance bond or other security. This will allow us to notify the 
lessee of its obligation to provide a substitute performance bond or 
other security and require collection of the bond or security before 
the cancellation date. Failure to provide a substitute performance bond 
or security is a violation of the lease.
    (f) We may waive the requirement for a performance bond or 
alternative forms of security if:
    (1) The lease is for public purposes; or
    (2) The Indian landowners request it and we determine a waiver is 
in the Indian landowners' best interest.
    (g) For tribal land, we will defer to the tribe's determination 
that a waiver of the performance bond or alternative form of security 
is in its best interest, to the maximum extent possible.


Sec.  162.560  What forms of security are acceptable under a WSR lease?

    (a) We will accept a performance bond only in one of the following 
forms:
    (1) Certificates of deposit issued by a federally insured financial 
institution authorized to do business in the United States;
    (2) Irrevocable letters of credit issued by a federally insured 
financial institution authorized to do business in the United States;
    (3) Negotiable Treasury securities; or
    (4) Surety bonds issued by a company approved by the U.S. 
Department of the Treasury.
    (b) We may accept an alternative form of security approved by us 
that provides adequate protection for the Indian landowners and us, 
including but not limited to an escrow agreement and assigned savings 
account.
    (c) All forms of performance bonds or alternative security must, if 
applicable:
    (1) Indicate on their face that BIA approval is required for 
redemption;
    (2) Be accompanied by a statement granting full authority to BIA to 
make an immediate claim upon or sell them if the lessee violates the 
terms of the lease;
    (3) Be irrevocable during the term of the performance bond or 
alternative security; and
    (4) Be automatically renewable during the term of the lease.
    (d) We will not accept cash bonds.


Sec.  162.561  What is the release process for a performance bond or 
alternative form of security under a WSR lease?

    (a) Upon expiration, termination, or cancellation of the lease, the 
lessee must

[[Page 72503]]

ask BIA in writing to release the performance bond or alternative form 
of security.
    (b) Upon receiving the request under paragraph (a) of this section, 
BIA will:
    (1) Confirm with the tribe, for tribal land or, where feasible, 
with the Indian landowners for individually owned Indian land, that the 
lessee has complied with all lease obligations; and
    (2) Release the performance bond or alternative form of security to 
the lessee unless we determine that the bond or security must be 
redeemed to fulfill the contractual obligations.


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

    Except as provided in paragraph (c) of this section, a lessee must 
provide insurance when necessary to protect the interests of Indian 
landowners and in the amount sufficient to protect all insurable 
permanent improvements on the leased premises.
    (a) The insurance may include property, liability, and casualty 
insurance, depending on the Indian landowners' interests to be 
protected.
    (b) Both the Indian landowners and the United States must be 
identified as additional insured parties.
    (c) We may waive the requirement for insurance upon the request of 
the Indian landowner, if a waiver is in the best interest of the Indian 
landowner, including if the lease is for less than fair market rental 
or nominal compensation. For tribal land, we will defer, to the maximum 
extent possible, to the tribe's determination that a waiver is in its 
best interest.

WSR Lease Approval


Sec.  162.563  What documents are required for BIA approval of a WSR 
lease?

    A lessee or the Indian landowners must submit the following 
documents to us to obtain BIA approval of a WSR lease:
    (a) A lease executed by the Indian landowners and the lessee that 
meets the requirements of this part;
    (b) For tribal land, a tribal authorization for the lease and, if 
applicable, meeting the requirements of Sec. Sec.  162.549(a), 
162.555(b), and 162.557(a), or a separate signed certification meeting 
the requirements of Sec. Sec.  162.555(b) and 162.557(a));
    (c) A valuation, if required under Sec.  162.549 or Sec.  162.550;
    (d) Proof of insurance, if required under Sec.  162.562;
    (e) A performance bond or other security, if required under Sec.  
162.559;
    (f) Statement from the appropriate tribal authority that the 
proposed use is in conformance with applicable tribal law, if required 
by the tribe;
    (g) Environmental and archeological reports, surveys, and site 
assessments as needed to facilitate compliance with applicable Federal 
and tribal environmental and land use requirements, including any 
documentation prepared under Sec.  162.027(b);
    (h) A resource development plan that describes the type and 
location of any permanent improvements the lessee plans to install and 
a schedule showing the tentative commencement and completion dates for 
those improvements;
    (i) A restoration and reclamation plan (and any subsequent 
modifications to the plan);
    (j) Where the lessee is not an entity owned and operated by the 
tribe, documents that demonstrate the technical capability of the 
lessee or lessee's agent to construct, operate, maintain, and terminate 
the proposed project and the lessee's ability to successfully design, 
construct, or obtain the funding for a project similar to the proposed 
project, if appropriate;
    (k) A legal description of the land under Sec.  162.547;
    (l) If the lease is being approved under 25 U.S.C. 415, information 
to assist us in our evaluation of the factors in 25 U.S.C. 415(a); and
    (m) If the lessee is a corporation, limited liability company, 
partnership, joint venture, or other legal entity, except a tribal 
entity, information such as organizational documents, certificates, 
filing records, and resolutions, that demonstrates that:
    (1) The representative has authority to execute a lease;
    (2) The lease will be enforceable against the lessee; and
    (3) The legal entity is in good standing and authorized to conduct 
business in the jurisdiction where the land is located.


Sec.  162.564  Will BIA review a proposed WSR lease before or during 
preparation of the NEPA review documentation?

    Upon request of the Indian landowners, we will review the proposed 
WSR lease after negotiation by the parties, before or during 
preparation of the NEPA review documentation and any valuation. Within 
60 days of receiving the proposed lease, we will provide an 
acknowledgement of the terms of the lease and identify any provisions 
that, based on this acknowledgment review, would justify disapproval of 
the lease, pending results of the NEPA review and any valuation.


Sec.  162.565  What is the approval process for a WSR lease?

    (a) Before we approve a WSR lease, we must determine that the lease 
is in the best interest of the Indian landowners. In making that 
determination, we will:
    (1) Review the lease and supporting documents;
    (2) Identify potential environmental impacts and ensure compliance 
with all applicable environmental laws, land use laws, and ordinances;
    (3) If the lease is being approved under 25 U.S.C. 415, assure 
ourselves that adequate consideration has been given to the factors in 
25 U.S.C. 415(a); and
    (4) Require any lease modifications or mitigation measures 
necessary to satisfy any requirements including any other Federal or 
tribal land use requirements.
    (b) Upon receiving a WSR lease package, we will promptly notify the 
parties whether the package is or is not complete. A complete package 
includes all the information and supporting documents required under 
this subpart, including but not limited to, NEPA review documentation 
and valuation documentation, where applicable.
    (1) If the WSR lease package is not complete, our letter will 
identify the missing information or documents required for a complete 
package. If we do not respond to the submission of a WSR lease package, 
the parties may take action under Sec.  162.588.
    (2) If the WSR lease package is complete, we will notify the 
parties of the date of receipt. Within 60 days of the receipt date, we 
will approve or disapprove the lease, return the package for revision, 
or inform the parties in writing that we need additional review time. 
If we inform the parties in writing that we need additional time, then:
    (i) Our letter informing the parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter; and
    (ii) We have 30 days from sending the letter informing the parties 
that we need additional time to approve or disapprove the lease.
    (c) If we do not meet the deadlines in this section, then the 
parties may take appropriate action under Sec.  162.588.
    (d) We will provide any lease approval or disapproval and the basis 
for the determination, along with notification of any appeal rights 
under part 2 of this chapter, in writing to the parties to the lease.
    (e) We will provide approved WSR leases on tribal land to the 
lessee and provide a copy to the tribe. We will provide approved WSR 
leases on

[[Page 72504]]

individually owned Indian land to the lessee, and make copies available 
to the Indian landowners upon written request.


Sec.  162.566  How will BIA decide whether to approve a WSR lease?

    (a) We will approve a WSR lease unless:
    (1) The required consents have not been obtained from the parties 
to the lease;
    (2) The requirements of this subpart have not been met; or
    (3) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the WSR lease is in their best interest.
    (c) We may not unreasonably withhold approval of a WSR lease.


Sec.  162.567  When will a WSR lease be effective?

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


Sec.  162.568  Must a WSR lease document be recorded?

    (a) Any WSR lease document must be recorded in the LTRO with 
jurisdiction over the leased land.
    (1) We will record the lease document immediately following our 
approval.
    (2) If our approval of an assignment or sublease is not required, 
the parties must record the assignment or sublease in the LTRO with 
jurisdiction over the leased land.
    (b) The tribe must record lease documents for the following types 
of leases in the LTRO with jurisdiction over the tribal lands, even 
though BIA approval is not required:
    (1) Leases of tribal land that a corporate entity leases to a third 
party under 25 U.S.C. 477; and
    (2) Leases of tribal land under a special act of Congress 
authorizing leases without our approval.


Sec.  162.569  Will BIA require an appeal bond for an appeal of a 
decision on a WSR lease document?

    (a) If a party appeals our decision on a WSR lease, assignment, 
amendment, or sublease, then the official to whom the appeal is made 
may require the appellant to post an appeal bond in accordance with 
part 2 of this chapter. We will not require an appeal bond:
    (1) For an appeal of a decision on a leasehold mortgage; or
    (2) If the tribe is a party to the appeal and requests a waiver of 
the appeal bond.
    (b) The appellant may not appeal the appeal bond decision. The 
appellant may, however, request that the official to whom the appeal is 
made reconsider the bond decision, based on extraordinary 
circumstances. Any reconsideration decision is final for the 
Department.

WSR Lease Amendments


Sec.  162.570  May the parties amend a WSR lease?

    The parties may amend a WSR lease by obtaining:
    (a) The lessee's signature;
    (b) The Indian landowners' consent under the requirements in Sec.  
162.571; and
    (c) BIA approval of the amendment under Sec. Sec.  162.572 and 
162.573.


Sec.  162.571  What are the consent requirements for an amendment to a 
WSR lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed amendment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an amendment of a WSR lease in the same 
percentages and manner as a new WSR lease under Sec.  162.012, unless 
the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented if they do not object in writing to the amendment within a 
specified period of time following the landowners' receipt of the 
amendment and the lease meets the requirements of paragraph (c) of this 
section;
    (2) Authorizes one or more representatives to consent to an 
amendment on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to an amendment.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed amendment or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the amendment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for review.
    (d) Unless specifically authorized in the lease, a written power of 
attorney, or a court document, Indian landowners may not be deemed to 
have consented to, and an Indian landowner's designated representative 
may not negotiate or consent to, an amendment that would:
    (1) Reduce the payment obligations to the Indian landowners;
    (2) Increase or decrease the lease area;
    (3) Terminate or change the term of the lease; or
    (4) Modify dispute resolution procedures.


Sec.  162.572  What is the approval process for an amendment to a WSR 
lease?

    (a) When we receive an amendment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. We 
have 30 days from receipt of the executed amendment, proof of required 
consents, and required documentation to approve or disapprove the 
amendment or inform the parties in writing that we need additional 
review time. Our determination whether to approve the amendment will be 
in writing and will state the basis for our approval or disapproval.
    (b) Our letter informing the parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter. We have 30 days from 
sending the letter informing the parties that we need additional time 
to approve or disapprove the amendment.
    (c) If we do not meet the deadline in paragraph (a) of this 
section, or paragraph (b) of this section if applicable, the amendment 
is deemed approved to the extent consistent with Federal law. Unless 
the lease provides otherwise, provisions of the amendment that are 
inconsistent with Federal law will be severed and unenforceable; all 
other provisions of the amendment will remain in force.


Sec.  162.573  How will BIA decide whether to approve an amendment to a 
WSR lease?

    (a) We may disapprove a WSR lease amendment only if at least one of 
the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The requirements of this subpart have not been met; or
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) We will defer, to the maximum extent possible, to the Indian

[[Page 72505]]

landowners' determination that the amendment is in their best interest.
    (c) We may not unreasonably withhold approval of an amendment.

WSR Lease Assignments


Sec.  162.574  May a lessee assign a WSR lease?

    (a) A lessee may assign a WSR lease by meeting the consent 
requirements in Sec.  162.575 and obtaining our approval of the 
assignment under Sec. Sec.  162.576 and 162.577 or by meeting the 
conditions in paragraphs (b) or (c) of this section.
    (b) Where provided in the lease, the lessee may assign the lease to 
the following without meeting consent requirements or obtaining BIA 
approval of the assignment, as long as the lessee notifies BIA of the 
assignment within 30 days after it is executed:
    (1) Not more than three distinct legal entities specified in the 
lease; or
    (2) The lessee's wholly owned subsidiaries.
    (c) The lessee may assign the lease without our approval or meeting 
consent requirements if:
    (1) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance;
    (2) The assignee agrees in writing to assume all of the obligations 
and conditions of the lease; and
    (3) The assignee agrees in writing that any transfer of the lease 
will be in accordance with applicable law under Sec.  162.014.


Sec.  162.575  What are the consent requirements for an assignment of a 
WSR lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed assignment.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to an assignment in the same percentages and 
manner as a new WSR lease under Sec.  162.012, unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the assignment within 
a specified period of time following the landowners' receipt of the 
assignment and the lease meets the requirements of paragraph (c) of 
this section;
    (2) Authorizes one or more representatives to consent to an 
assignment on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to an assignment.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed assignment or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the assignment to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.
    (d) The lessee must obtain the consent of the holders of any bonds 
or mortgages.


Sec.  162.576  What is the approval process for an assignment of a WSR 
lease?

    (a) When we receive an assignment that meets the requirements of 
this subpart, we will notify the parties of the date we receive it. If 
our approval is required, we have 30 days from receipt of the executed 
assignment, proof of required consents, and required documentation to 
approve or disapprove the assignment. Our determination whether to 
approve the assignment will be in writing and will state the basis for 
our approval or disapproval.
    (b) If we do not meet any of the deadlines in this section, the 
lessee or Indian landowners may take appropriate action under Sec.  
162.588.


Sec.  162.577  How will BIA decide whether to approve an assignment of 
a WSR lease?

    (a) We may disapprove an assignment of a WSR lease only if at least 
one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The assignee does not agree to be bound by the terms of the 
lease;
    (5) The requirements of this subpart have not been met; or
    (6) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(6) of this 
section, we may consider whether:
    (1) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (2) If a performance bond is required, the assignee has posted the 
bond or security and provided supporting documents that demonstrate 
that:
    (i) The lease will be enforceable against the assignee; and
    (ii) The assignee will be able to perform its obligations under the 
lease or assignment.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the assignment is in their best 
interest.
    (d) We may not unreasonably withhold approval of an assignment.

WSR Lease Subleases


Sec.  162.578  May a lessee sublease a WSR lease?

    (a) A lessee may sublease a WSR lease by meeting the consent 
requirements in Sec.  162.579 and obtaining our approval of the 
sublease under Sec. Sec.  162.580 and 162.581, or by meeting the 
conditions in paragraph (b) of this section.
    (b) The lessee may sublease without meeting consent requirements or 
obtaining BIA approval of the sublease, if:
    (1) The lease provides for subleasing without meeting consent 
requirements or obtaining BIA approval;
    (2) The sublease does not relieve the lessee/sublessor of any 
liability; and
    (3) The parties provide BIA with a copy of the sublease within 30 
days after it is executed.


Sec.  162.579  What are the consent requirements for a sublease of a 
WSR lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed sublease.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to a sublease in the same percentages and manner 
as a new WSR lease under Sec.  162.012, unless the lease:
    (1) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the sublease within a 
specified period of time following the landowners' receipt of the 
sublease and the lease meets the requirements in paragraph (c) of this 
section;
    (2) Authorizes one or more representatives to consent to a sublease 
on behalf of all Indian landowners; or
    (3) Designates us as the Indian landowners' representative for the 
purposes of consenting to a sublease.
    (c) If the lease provides for deemed consent under paragraph (b)(1) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed sublease or other documentation of any 
Indian landowners' actual consent;
    (2) Proof of mailing of the sublease to any Indian landowners who 
are deemed to have consented; and
    (3) Any other pertinent information for us to review.


Sec.  162.580  What is the approval process for a sublease of a WSR 
lease?

    (a) When we receive a sublease that meets the requirements of this 
subpart,

[[Page 72506]]

we will notify the parties of the date we receive it. If our approval 
is required, we have 30 days from receipt of the executed sublease, 
proof of required consents, and required documentation to approve or 
disapprove the sublease or inform the parties to the sublease and 
Indian landowners in writing that we need additional review time. Our 
determination whether to approve the sublease will be in writing and 
will state the basis for our approval or disapproval.
    (b) Our letter informing parties that we need additional review 
time must identify our initial concerns and invite the parties to 
respond within 15 days of the date of the letter. We have 30 days from 
sending the letter informing the parties that we need additional time 
to approve or disapprove the sublease.
    (c) If we do not meet the deadline in paragraph (a) of this 
section, or paragraph (b) of this section if applicable, the sublease 
is deemed approved to the extent consistent with Federal law. Unless 
the lease provides otherwise, provisions of the sublease that are 
inconsistent with Federal law will be severed and unenforceable; all 
other provisions of the sublease will remain in force.


Sec.  162.581  How will BIA decide whether to approve a sublease of a 
WSR lease?

    (a) We may disapprove a sublease of a WSR lease only if at least 
one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The lessee is in violation of the lease;
    (4) The lessee will not remain liable under the lease; and
    (5) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(5) of this 
section, we may consider whether the value of any part of the leased 
premises not covered by the sublease would be adversely affected.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the sublease is in their best interest.
    (d) We may not unreasonably withhold approval of a sublease.

WSR Leasehold Mortgages


Sec.  162.582  May a lessee mortgage a WSR lease?

    (a) A lessee may mortgage a WSR lease by meeting the consent 
requirements in Sec.  162.583 and obtaining our approval of the 
leasehold mortgage under Sec. Sec.  162.584 and 162.585.
    (b) Refer to Sec.  162.574(c) for information on what happens if a 
sale or foreclosure under an approved mortgage of the leasehold 
interest occurs.


Sec.  162.583  What are the consent requirements for a leasehold 
mortgage of a WSR lease?

    (a) Unless the lease provides otherwise, the lessee must notify all 
Indian landowners of the proposed leasehold mortgage.
    (b) The Indian landowners, or their representatives under Sec.  
162.013, must consent to a leasehold mortgage in the same percentages 
and manner as a new WSR lease under Sec.  162.012, unless the lease:
    (1) States that landowner consent is not required for a leasehold 
mortgage and identifies what law would apply in case of foreclosure;
    (2) Provides that individual Indian landowners are deemed to have 
consented where they do not object in writing to the leasehold mortgage 
within a specified period of time following the landowners' receipt of 
the leasehold mortgage and the lease meets the requirements of 
paragraph (c) of this section;
    (3) Authorizes one or more representatives to consent to a 
leasehold mortgage on behalf of all Indian landowners; or
    (4) Designates us as the Indian landowners' representative for the 
purposes of consenting to a leasehold mortgage.
    (c) If the lease provides for deemed consent under paragraph (b)(2) 
of this section, it must require the parties to submit to us:
    (1) A copy of the executed leasehold mortgage or other 
documentation of any Indian landowners' actual consent;
    (2) Proof of mailing of the leasehold mortgage to any Indian 
landowners who are deemed to have consented; and
    (3) Any other pertinent information for us to review.


Sec.  162.584  What is the approval process for a leasehold mortgage of 
a WSR lease?

    (a) When we receive a leasehold mortgage that meets the 
requirements of this subpart, we will notify the parties of the date we 
receive it. We have 20 days from receipt of the executed leasehold 
mortgage, proof of required consents, and required documentation to 
approve or disapprove the leasehold mortgage. Our determination whether 
to approve the leasehold mortgage will be in writing and will state the 
basis for our approval or disapproval.
    (b) If we do not meet the deadline in this section, the lessee may 
take appropriate action under Sec.  162.588.


Sec.  162.585  How will BIA decide whether to approve a leasehold 
mortgage of a WSR lease?

    (a) We may disapprove a leasehold mortgage of a WSR lease only if 
at least one of the following is true:
    (1) The Indian landowners have not consented and their consent is 
required;
    (2) The lessee's mortgagees or sureties have not consented;
    (3) The requirements of this subpart have not been met; or
    (4) We find a compelling reason to withhold our approval in order 
to protect the best interests of the Indian landowners.
    (b) In making the finding required by paragraph (a)(4) of this 
section, we may consider whether:
    (1) The leasehold mortgage proceeds would be used for purposes 
unrelated to the leased premises; and
    (2) The leasehold mortgage is limited to the leasehold.
    (c) We will defer, to the maximum extent possible, to the Indian 
landowners' determination that the leasehold mortgage is in their best 
interest.
    (d) We may not unreasonably withhold approval of a leasehold 
mortgage.

WSR Lease Effectiveness, Compliance, and Enforcement


Sec.  162.586  When will an amendment, assignment, sublease, or 
leasehold mortgage of a WSR lease be effective?

    (a) An amendment, assignment, sublease, or leasehold mortgage of a 
WSR lease will be effective when approved, even if an appeal is filed 
under part 2 of this chapter, except:
    (1) If the amendment or sublease was deemed approved under Sec.  
162.572(b) or Sec.  162.580(b), the amendment or sublease becomes 
effective 45 days from the date the parties mailed or delivered the 
document to us for our review or, if we sent a letter informing the 
parties that we need additional time to approve or disapprove the 
lease, the amendment or sublease becomes effective 45 days from the 
date of the letter informing the parties that we need additional time 
to approve or disapprove the lease; and
    (2) An assignment that does not require our approval under Sec.  
162.574(b) or a sublease that does not require our approval under Sec.  
162.578(b) becomes effective on the effective date specified in the 
assignment or sublease. If the assignment or sublease does not specify 
the effective date, it becomes effective upon execution by the parties.

[[Page 72507]]

    (b) We will provide copies of approved documents to the party 
requesting approval, to the tribe for tribal land, and upon request, to 
other parties to the lease document.


Sec.  162.587  What happens if BIA disapproves an amendment, 
assignment, sublease, or leasehold mortgage of a WSR lease?

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


Sec.  162.588  What happens if BIA does not meet a deadline for issuing 
a decision on a lease document?

    (a) If a Superintendent does not meet a deadline for issuing a 
decision on a lease, assignment, or leasehold mortgage, the parties may 
file a written notice to compel action with the appropriate Regional 
Director.
    (b) The Regional Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Superintendent to issue a decision within the time 
set out in the order.
    (c) The parties may file a written notice to compel action with the 
BIA Director if:
    (1) The Regional Director does not meet the deadline in paragraph 
(b) of this section;
    (2) The Superintendent does not issue a decision within the time 
set by the Regional Director under paragraph (b)(2) of this section; or
    (3) The initial decision on the lease, assignment, or leasehold 
mortgage is with the Regional Director, and he or she does not meet the 
deadline for such decision.
    (d) The BIA Director has 15 days from receiving the notice to:
    (1) Issue a decision; or
    (2) Order the Regional Director or Superintendent to issue a 
decision within the time set out in the order.
    (e) If the Regional Director or Superintendent does not issue a 
decision within the time set out in the order under paragraph (d)(2), 
then the BIA Director must issue a decision within 15 days from the 
expiration of the time set out in the order.
    (f) The parties may file an appeal from our inaction to the 
Interior Board of Indian Appeals if the Director does not meet the 
deadline in paragraph (d) or (e) of this section.
    (g) The provisions of 25 CFR 2.8 do not apply to the inaction of 
BIA officials with respect to a decision on a lease, amendment, 
assignment, sublease, or leasehold mortgage under this subpart.


Sec.  162.589  May BIA investigate compliance with a WSR lease?

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


Sec.  162.590  May a WSR lease provide for negotiated remedies if there 
is a violation?

    (a) A WSR lease of tribal land may provide either or both parties 
with negotiated remedies in the event of a lease violation, including, 
but not limited to, the power to terminate the lease. If the lease 
provides one or both parties with the power to terminate the lease:
    (1) BIA approval of the termination is not required;
    (2) The termination is effective without BIA cancellation; and
    (3) The Indian landowners must notify us of the termination so that 
we may record it in the LTRO.
    (b) A WSR lease of individually owned Indian land may provide 
either or both parties with negotiated remedies, so long as the lease 
also specifies the manner in which those remedies may be exercised by 
or on behalf of the Indian landowners of the applicable percentage of 
interests under Sec.  162.012 of this part. If the lease provides one 
or both parties with the power to terminate the lease:
    (1) BIA concurrence with the termination is required to ensure that 
the Indian landowners of the applicable percentage of interests have 
consented; and
    (2) BIA will record the termination in the LTRO.
    (c) The parties must notify any surety or mortgagee of any 
violation that may result in termination and the termination of a WSR 
lease.
    (d) Negotiated remedies may apply in addition to, or instead of, 
the cancellation remedy available to us, as specified in the lease. The 
landowners may request our assistance in enforcing negotiated remedies.
    (e) A WSR lease may provide that lease violations will be addressed 
by the tribe, and that lease disputes will be resolved by a tribal 
court, any other court of competent jurisdiction, or by a tribal 
governing body in the absence of a tribal court, or through an 
alternative dispute resolution method. We may not be bound by decisions 
made in such forums, but we will defer to ongoing actions and 
proceedings, as appropriate, in deciding whether to exercise any of the 
remedies available to us.


Sec.  162.591  What will BIA do about a violation of a WSR lease?

    (a) In the absence of actions or proceedings described in Sec.  
162.590(e), or if it is not appropriate for us to defer to the actions 
or proceedings, we will follow the procedures in paragraphs (b) and (c) 
of this section.
    (b) If we determine there has been a violation of the conditions of 
a WSR lease, other than a violation of payment provisions covered by 
paragraph (c) of this section, we will promptly send the lessee and any 
surety and mortgagee a notice of violation by certified mail, return 
receipt requested.
    (1) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to Indian landowners for 
individually owned Indian land.
    (2) The notice of violation will advise the lessee that, within 10 
business days of the receipt of a notice of violation, the lessee must:
    (i) Cure the violation and notify us, and the tribe for tribal 
land, in writing that the violation has been cured;
    (ii) Dispute our determination that a violation has occurred; or
    (iii) Request additional time to cure the violation.
    (3) The notice of violation may order the lessee to cease 
operations under the lease.
    (c) A lessee's failure to pay compensation in the time and manner 
required by a WSR lease is a violation of the lease, and we will issue 
a notice of violation in accordance with this paragraph.
    (1) We will send the lessees and any surety and mortgagee a notice 
of violation by certified mail, return receipt requested:
    (i) Promptly following the date on which payment was due, if the 
lease requires that payments be made to us; or
    (ii) Promptly following the date on which we receive actual notice 
of non-payment from the Indian landowners, if the lease provides for 
payment directly to the Indian landowners.
    (2) We will send a copy of the notice of violation to the tribe for 
tribal land, or provide constructive notice to the Indian landowners 
for individually owned Indian land.
    (3) The notice of violation will require the lessee to provide 
adequate proof of payment.
    (d) The lessee and its sureties will continue to be responsible for 
the

[[Page 72508]]

obligations in the lease until the lease expires or is terminated or 
cancelled.


Sec.  162.592  What will BIA do if a lessee does not cure a violation 
of a WSR lease on time?

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


Sec.  162.593  Will late payment charges or special fees apply to 
delinquent payments due under a WSR lease?

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

------------------------------------------------------------------------
       The lessee will pay . . .                    For . . .
------------------------------------------------------------------------
(1) $50.00.............................  Any dishonored check.
(2) $15.00.............................  Processing of each notice or
                                          demand letter.
(3) 18 percent of balance due..........  Treasury processing following
                                          referral for collection of
                                          delinquent debt.
------------------------------------------------------------------------

Sec.  162.594  How will payment rights relating to WSR leases be 
allocated?

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


Sec.  162.595  When will a cancellation of a WSR lease be effective?

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


Sec.  162.596  What will BIA do if a lessee remains in possession after 
a WSR lease expires or is terminated or cancelled?

    If a lessee remains in possession after the expiration, 
termination, or cancellation of a WSR lease, we may treat the 
unauthorized possession as a trespass under applicable law in 
consultation with the Indian landowners. Unless the Indian landowners 
of the applicable percentage of interests under Sec.  162.012 have 
notified us in writing that they are engaged in good faith negotiations 
with the holdover lessee to obtain a new lease, we may take action to 
recover possession on behalf of the Indian landowners, and pursue any 
additional remedies available under applicable law, such as a forcible 
entry and detainer action.


Sec.  162.597  Will BIA appeal bond regulations apply to cancellation 
decisions involving WSR leases?

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


Sec.  162.598  When will BIA issue a decision on an appeal from a WSR 
leasing decision?

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


Sec.  162.599  What happens if the lessee abandons the leased premises?

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

0
16. Add subpart G to read as follows:
Subpart G--Records
Sec.

[[Page 72509]]

162.701 Who owns the records associated with this part?
162.702 How must records associated with this part be preserved?
162.703 How does the Paperwork Reduction Act affect this part?

Subpart G--Records


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

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


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

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


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

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

    Dated: June 7, 2012.
Donald E. Laverdure,
Acting Assistant Secretary--Indian Affairs.
[FR Doc. 2012-28926 Filed 11-28-12; 4:15 pm]
BILLING CODE 4310-6W-P