Vol. 77 Wednesday, 

No. 234 December 5, 2012 

Part II 

Department of the Interior 

Bureau of Indian Affairs 

25 CFR Part 162 

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

Land; Final Rule 


tkelley on DSK3SPTVN1PROD with 
72440 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

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 nonagricultural 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72441 

possible. The current regulations 

provide for the approval of these 

instruments, but do not specify the 

approval procedures, leading to possible 

inconsistencies nationwide, to the 

detriment of Indian landowners, lessees 

and lenders. 

This rule continues to require Indian 

landowner consent for leases, consistent 

with the Indian Long Term Leasing Act 

and the Indian Land Consolidation Act 

of 2000 (ILCA), as amended by the 

American Indian Probate Reform Act 

(AIPRA). Because ILCA does not apply 

to tribes in Alaska, the consent 

requirements for Alaska remain the 

same as in the previous regulations 

governing leasing. The regulations also 

establish the standard for rental rates, 

providing that leases on tribal land may 

be approved for the compensation 

negotiated by the tribe and leases for 

less than fair market rental may be 

approved on individually owned Indian 

land under certain circumstances. 

Subpart C, Residential Leases, 

addresses leasing for single-family 

homes and housing for public purposes 

on Indian land. The regulations provide 

for a 30-day time frame within which 

BIA must issue a decision on a complete 

residential lease application. The final 

rule eliminates the requirement for 

bonds and insurance for residential 

leases. Subpart C also includes 

provisions for enforcement of lease 

violations. 

Subpart D, Business Leases, addresses 

leasing for business purposes, 

including: (1) Leases for residential 

purposes that are not covered in Subpart 

C; (2) leases for business purposes not 

covered by Subpart E (wind energy 

evaluation and wind and solar resource 

development); (3) leases for religious, 

educational, recreational, cultural, and 

other public purposes; and (4) 

commercial or industrial leases for 

retail, office, manufacturing, storage, 

biomass, waste-to-energy, and/or other 

business purposes. The regulations 

provide for a 60-day time frame within 

which BIA must issue a decision on a 

complete business lease application. 

Subpart E, WEELs and WSR Leases, 

establishes procedures for obtaining BIA 

review and approval of WEELs and 

WSR leases. For wind energy, this rule 

establishes a two-part process whereby 

developers may obtain BIA approval of 

a short-term lease for possession of 

Indian land for the purposes of 

installation and maintenance of wind 

evaluation equipment, such as 

meteorological towers. The WEEL may 

provide the developer with an option to 

lease the Indian land for wind energy 

development purposes. The 

environmental reviews conducted for 

the short-term lease, which would 

evaluate only the impacts of the 

evaluation equipment, not the full 

development of the wind project, may 

be incorporated by reference, as 

appropriate, into environmental reviews 

conducted for a lease for full 

development of the wind project. This 

two-part process is not necessary for 

solar resource development because 

solar resource evaluation does not 

require possession of the land. The 

regulations provide for a 20-day time 

frame within which BIA must issue a 

decision on a complete WEEL and a 60- 

day time frame within which BIA must 

issue a decision on a complete WSR 

lease application. 

Some of the more notable crosscutting 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 selfdetermination, increase flexibility in 

compensation and valuations, and 

facilitate management of direct pay. 

These changes do not affect agricultural 

leasing. 


tkelley on DSK3SPTVN1PROD with 
72442 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 userfriendly. 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 nonagricultural 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 selfevident. 

• ‘‘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, 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72443 

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 


tkelley on DSK3SPTVN1PROD with 
72444 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 coowners 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 optout 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. 


tkelley on DSK3SPTVN1PROD with 
72446 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 nonconsenting 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. Tribespecific 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 tribespecific 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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, § 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 selfgovernment. 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, § 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 SelfDetermination 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... 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 nonmonetary 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 wellbeing 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 


tkelley on DSK3SPTVN1PROD with 
72448 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 selfgovernment 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 nonIndian 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 allinclusive 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 selfsufficiency. 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 selfgovernment, 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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-ofway across Indian land require 

Secretarial approval, by statute. If access 

to the leased premises is a new right-ofway 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 


tkelley on DSK3SPTVN1PROD with 
72450 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 nonconsenting 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 nonagricultural 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 nonconsenting 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, 


tkelley on DSK3SPTVN1PROD with 
72452 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 landlordtenant 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 twophase 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 


tkelley on DSK3SPTVN1PROD with 
72454 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

file, rather than requiring BIA approval 

of the plan changes. 

H. Cross-Cutting Comments 

1. Lease Term 

• Specifically allow a month-tomonth 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 onesize-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: 

Æ 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. 

Æ 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. 

Æ 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. 

Æ 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. 

Æ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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: 


tkelley on DSK3SPTVN1PROD with 
72456 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

• 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 nonconsenting individual Indian 

landowners to receive fair market rental. 

We have determined that all nonconsenting 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 coowner who has been living on the tract 

for at least 7 years and no other coowner 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 inkind 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 


tkelley on DSK3SPTVN1PROD with 
72458 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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: 

Æ 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.’’ 

Æ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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: 


tkelley on DSK3SPTVN1PROD with 
72460 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

• 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 standardless. 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 


tkelley on DSK3SPTVN1PROD with 
72462 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 capand-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 


tkelley on DSK3SPTVN1PROD with 
72464 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

Current CFR cite New CFR cite Information collection requirement Explanation of change 

162.109, 162.204, 162.205 162.109, 162.204, 

162.205, 162.338(e), 

162.438(e), 162.528(d), 

162.570(e).

Provide notice of tribal leasing laws, regulations, exemptions.No change. Previously required, but now 

listed in specific subparts. 

162.320, 162.420, 162,549 Request for fair market rental/valuation 

on tribal land.

New. 

162.321, 162.421, 162.550 Request for waiver of fair market rental/ 

valuation for individually owned land.

New. 

162.324, 162.424, 162.553 Agreement to suspend direct pay ........... New. 

162.371, 162.471, 162.596 Notification of good faith negotiations 

with holdover.

New. 

162.207, 162.242–244, 

162.604(a), 162.610.

162.009, 162.207, 

162.242–244, 162.347, 

351, 355, 359, 162.447, 

451, 455, 459, 162.529, 

534, 565, 572, 576, 580, 

584.

Submit lease, assignment, amendment, 

leasehold mortgage for approval.

No change. Previously required, but now 

listed in separate subparts. 

162.213, 162.604(a) ............ 162.024 162.213, 162.338, 

162.438, 162.528, 

162.563.

Provide supporting documentation .......... No change. Previously required, but now 

listed in separate subparts. 

162.007 .............................. Submit permits to BIA for file .................. Permits must now be submitted to BIA 

for file. 

162.217, 162.246 ................. 162.217, 162.246, 

162.343, 162.443, 

162.568.

Submit lease for recording ...................... No change. Previously required, but now 

listed in separate subparts. 

162.234, 162.604(c) ............ 162.234, 162.434, 

162.525, 162.559.

Provide a bond ........................................ No change. Previously required, but now 

listed in separate subparts. 

162.237, 162.604(d) ............ 162.237, 162.437, 

162.527, 162.562.

Provide information for acceptable insurance.No change. Previously required, but now 

listed in separate subparts. 

162.241 ................................ 162.241 .............................. Administrative fees .................................. No change. 

162.247, 162.613 ................. 162.247, 162.325, 329, 

162.425, 429, 162.523, 

551.

Pay rent ................................................... No change. Previously required, but now 

listed in separate subparts. 

162.248, 162.616 ................. 162.248, 162.368, 

162.468, 162.593.

Pay penalties for late payment ............... No change. Previously required, but now 

listed in separate subparts. 

162.212, 162.606 ................. 162.009, 162.212 .............. Bidding on advertised lease .................... No change. Previously 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, 

162.466, 162.591.

Provide notice of curing violation ............ No change. Previously required, but now 

listed in separate subparts. 

162.256, 162.623 ................. 162.256, 162.371, 

162.471, 162.596.

Respond to notice of trespass ................ No change. Previously 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. 


tkelley on DSK3SPTVN1PROD with 
72466 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

CFR cite Description Respondent 

type 

Number 

respondents 

Annual 

responses 

Burden hours 

per response 

Total annual 

burden hours 

162.109, 162.204, 

162.205, 162.338(e) 

162.438(e), 162.528(d), 

162.570(e).

Provide notice of tribal 

leasing laws, regulations, exemptions.

Tribal ................ 500 500 0 .5 250 

162.320, 162.420, 

162,549.

Request for fair market 

rental/valuation on tribal 

land.

Tribal ................ 50 50 0 .5 25 

162.321, 162.421, 

162.550.

Request for waiver of fair 

market rental/valuation 

for individually-owned 

land.

Individuals ......... 5,000 5,000 0 .5 2,500 

162.324, 162.424 162.553 Agreement to suspend direct pay.Individuals ........ 20 20 0 .5 10 

162.371, 162.471, 

162.596.

Notification of good faith 

negotiations with holdover.

Tribal ................ 100 100 0 .5 50 

Individuals ......... 500 500 0 .5 250 

162.009, 162.207, 242– 

244, 162, 347, 351, 

355, 359, 162.447, 451, 

455, 459, 162.529, 534, 

565, 572, 576, 580, 584.

Submit lease, assignment, 

amendment, leasehold 

mortgage for approval.

Individuals ......... 10,000 10,000 1 10,000 

Businesses ....... 2,500 2,500 1 2,500 

Tribal ................ 2,000 2,000 1 2,000 

162.024, 162.213, 

162.338, 162.438, 

162.528, 162.563.

Provide supporting documentation.Individuals ......... 5,000 5,000 0 .25 1,250 

Businesses ....... 2,000 2,000 0 .25 500 

Tribal ................ 250 250 0 .25 62.5 

162.007 ............................ Submit permits to BIA for 

file.

Individuals ........ 100 100 0 .25 25 

Businesses ....... 100 100 0 .25 25 

Tribal ................ 100 100 0 .25 25 

162.217, 162.246, 

162.343, 162.443, 

162.568.

Submit lease for recording 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 

162.234, 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 for acceptable insurance.Individuals ......... 10,000 10,000 0 .25 2,500 

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, 429, 162.523, 

551.

Pay rent ............................ Individuals ........ 10,000 10,000 0 .25 2,500 

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 payment.Individuals ......... 3,000 3,000 0 .25 750 

Businesses ....... 600 600 0 .25 150 

Tribal ................ 25 25 0 .25 6 

162.009, 162.212 ............. Bidding on advertised 

lease.

Individuals ......... 10,000 10,000 1 10,000 

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 curing 

violation.

Individuals ........ 100 100 0 .5 50 

Businesses ....... 45 45 0 .5 23 

162.256, 162.371, 

162.471, 162.596.

Respond to notice of trespass.Individuals ........ 100 100 0 .5 50 

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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72467 

CFR cite Description Respondent 

type 

Number 

respondents 

Annual 

responses 

Burden hours 

per response 

Total annual 

burden hours 

............................... 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-bycase.’’ 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 

■ 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. 

§ 162.100 [Removed] 

■ 2. Remove § 162.100. 

§§ 162.101 through 162.113 [Transferred to 

Subpart B] 

■ 3. Transfer §§ 162.101 through 

162.113 from subpart A to subpart B. 

■ 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 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
72468 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

§ 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 § 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, singlefamily 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, nonassignable agreement between Indian 

landowners or BIA and the permittee, 

whereby the permittee is granted a 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 nonFederal 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with 
72470 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 

§ 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 

§ 162.006(b) or by a permit. 

If you are . . . then you must obtain a lease under this part . . . 

(1) A person or legal entity (including an independent legal entity 

owned and operated by a tribe) who is not an owner of the Indian 

land.

from the owners of the land before taking possession of the land or 

any portion thereof. 

(2) An Indian landowner of a fractional interest in the land ..................... from the owners of other trust 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 child who owns 100 percent of the 

trust or restricted interests in the land.

We may require you to provide evidence of a direct benefit to the 

minor child and when 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 that manages or has the power to 

manage the tribal land directly under its Federal charter or under a 

tribal authorization (not under a lease from the Indian tribe).

You must record documents in accordance with § 162.343, § 162.443, 

and § 162.568. 

§ 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 encumber tribal land under 25 U.S.C. 

81.

25 CFR part 84. 

(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 permits, or mineral development agreements.25 CFR parts 211, 212, 213, 225, 226, 227. 

(vii) Tribal land assignments and similar instruments authorizing uses 

of tribal land.

tribal laws. 

(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 §§ 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. 

§ 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 Indian land .......................................... Grants a legal interest in Indian land.

Shorter term .............................................................................................. Longer term. 

Limited use ............................................................................................... Broader use with associated infrastructure. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72471 

Permit Lease 

Permittee has non-possessory right of access ........................................ Lessee has right of possession, ability to limit or prohibit access by 

others. 

Indian landowner may terminate at any time ........................................... Indian landowner may terminate under limited circumstances. 

(c) We 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. 

§ 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 

§ 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. 

§ 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 

§ 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 

§ 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. 

§ 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. 

§ 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 undivided trust or restricted interest in 

the tract is . . . 

Then the required percentage of the undivided trust or 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 nonconsenting 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 nonconsenting 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. 

§ 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, 


tkelley on DSK3SPTVN1PROD with 
72472 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 § 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 § 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 § 162.005(b)(1). 

Lease Administration 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72473 

§ 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. 

§ 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. 

§ 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 selfgovernance 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 §§ 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. 

§ 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 §§ 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 § 162.024. 

§ 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. 

§ 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. 

§ 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. 

§ 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 § 162.018) with 

jurisdiction over the land for answers to 

questions about the leasing process. 

§ 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. 

§ 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. 

§ 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): 


tkelley on DSK3SPTVN1PROD with 
72474 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

(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 

■ 5. In newly transferred § 162.101, 

revise the section heading and the 

introductory text to read as follows: 

§ 162.101 What key terms do I need to 

know for this subpart? 

For the purposes of this subpart: 

* * * * * 

§§ 162.102 through 162.104 [Removed] 

■ 6. Remove newly transferred 

§§ 162.102 through 162.104. 

§ 162.105 [Amended] 

■ 7a. In newly transferred § 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. 

§ 162.106 [Amended] 

■ 7b. In newly transferred § 162.106, 

remove the word ‘‘lease’’ and add in its 

place the words ‘‘agricultural lease’’ 

wherever it appears. 

■ 8. In newly transferred § 162.107, 

revise the section heading and add 

introductory text to read as follows: 

§ 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 

§§ 162.102 through 162.256: 

* * * * * 

§ 162.108 [Amended] 

■ 9a. In newly transferred § 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’’. 

§ 162.109 [Amended] 

■ 9b. In newly transferred § 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’’. 

§ 162.110 [Amended] 

■ 9c. In newly transferred § 162.110, 

remove the word ‘‘leases’’ wherever it 

appears and add in its place the words 

‘‘agricultural leases’’. 

■ 10. In newly transferred § 162.111, 

revise the section heading, paragraph (a) 

introductory text, and paragraph (b) to 

read as follows: 

§ 162.111 Who owns the records 

associated with this subpart? 

(a) Records associated with this 

subpart are the property of the United 

States if they: 

* * * * * 

(b) Records associated with this 

subpart not covered by paragraph (a) of 

this section that are made or received by 

a tribe or tribal organization in the 

conduct of business with the 

Department of the Interior under this 

subpart are the property of the tribe. 

■ 11. Revise the heading for § 162.112 to 

read as follows: 

§ 162.112 How must records associated 

with this part be preserved? 

* * * * * 

§ 162.113 [Amended] 

■ 12. In newly transferred § 162.113 

remove the word ‘‘part’’ wherever it 

appears and add in its place the word 

‘‘subpart’’. 

■ 13. Add new subparts C through D to 

read as follows: 

Subpart C—Residential Leases 

Residential Leasing General Provisions 

Sec. 

162.301 What types of leases does this 

subpart cover? 

162.302 Is there a model residential lease 

form? 

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? 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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? 


tkelley on DSK3SPTVN1PROD with 
72476 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 

§ 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 multifamily developments that are not 

housing for public purposes) are 

covered under subpart D of this part. 

§ 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. 

§ 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 

§ 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-tomonth. 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. 

§ 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. 

§ 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 § 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 § 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 § 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 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 § 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 § 162.322. 

§ 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 § 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 § 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
72478 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 162.012, unless the lease provides 

otherwise. 

§ 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 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72479 

Bonding and Insurance 

§ 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. 

§ 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. 

§ 162.336 [Reserved] 

§ 162.337 [Reserved] 

Approval 

§ 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 

§§ 162.320(a), 162.326(b), and 

162.328(a), or a separate signed 

certification meeting the requirements 

of §§ 162.320(a), 162.326(b), and 

162.328(a); 

(c) A valuation, if required under 

§ 162.320 or § 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 

§ 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 § 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. 

§ 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. 

§ 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 § 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 § 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 SelfDetermination 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. 

§ 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. 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
72480 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

(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. 

§ 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 

§ 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 § 162.346; 

and 

(c) BIA approval of the amendment 

under §§ 162.347 and 162.348. 

§ 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 § 162.013, must 

consent to an amendment of a 

residential lease in the same percentages 

and manner as a new residential lease 

under § 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. 

§ 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. 

§ 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 

§ 162.349 May a lessee assign a residential 

lease? 

(a) A lessee may assign a residential 

lease by meeting the consent 

requirements in § 162.350 and obtaining 

our approval of the assignment under 

§§ 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 

§ 162.014. 

§ 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 § 162.013, must 

consent to an assignment of a residential 

lease in the same percentages and 

manner as a new residential lease under 

§ 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; 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

§ 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 § 162.363. 

§ 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 

§ 162.353 May a lessee sublease a 

residential lease? 

(a) A lessee may sublease a residential 

lease by meeting the consent 

requirements in § 162.354 and obtaining 

our approval of the sublease under 

§§ 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. 

§ 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 

§ 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. 

§ 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. 

§ 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 

§ 162.357 May a lessee mortgage a 

residential lease? 

(a) A lessee may mortgage a 

residential lease by meeting the consent 

requirements in § 162.358 and obtaining 

BIA approval of the leasehold mortgage 

under in §§ 162.359 and 162.360. 

(b) Refer to § 162.349(b) for 

information on what happens if a sale 

or foreclosure under an approved 

mortgage of the leasehold interest 

occurs. 

§ 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 § 162.013, must 

consent to a leasehold mortgage of a 

residential lease in the same percentages 

and manner as a new residential lease 

under § 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; 


tkelley on DSK3SPTVN1PROD with 
72482 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

(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. 

§ 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 § 162.363. 

§ 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 

§ 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 § 162.347(b) or 

§ 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 § 162.349(b) 

or a sublease that does not require our 

approval under § 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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; 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 

§ 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 § 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 nonpayment 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. 

§ 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. 

§ 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: 


tkelley on DSK3SPTVN1PROD with 
72484 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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. 

§ 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. 

§ 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 § 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. 

§ 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. 

§ 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. 

§ 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 nonuse after which the lease premises will 

be considered abandoned. 

Subpart D—Business Leases 

Business Leasing General Provisions 

§ 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. 

§ 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 

§ 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. 

§ 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. 

§ 162.413 Are there mandatory provisions 

that a business lease must contain? 

(a) All business leases must identify: 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 § 162.415; 

(6) Payment requirements and late 

payment charges, including interest; 

(7) Due diligence requirements under 

§ 162.417 (unless the lease is for 

religious, educational, recreational, 

cultural, or other public purposes); 

(8) Insurance requirements under 

§ 162.437; and 

(9) Bonding requirements under 

§ 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 § 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 § 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 § 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with 
72486 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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 

§ 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 § 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 § 162.422. 

§ 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 

§ 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 predevelopment 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 § 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 § 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. 

§ 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. 

§ 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 162.012, unless the lease provides 

otherwise. 

§ 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 

§ 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 

§ 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 


tkelley on DSK3SPTVN1PROD with 
72488 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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. 

§ 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. 

§ 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 

§ 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 

§§ 162.420(a), 162.426(b), and 

162.428(a), or a separate signed 

certification meeting the requirements 

of §§ 162.426(b) and 162.428(a)); 

(c) A valuation, if required under 

§ 162.420 or § 162.421; 

(d) Proof of insurance, if required 

under § 162.437; 

(e) A performance bond or other 

security, if required under § 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 

§ 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 § 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72489 

the jurisdiction where the land is 

located. 

§ 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. 

§ 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 § 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 § 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 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 § 162.446; 

and 

(c) BIA approval of the amendment 

under §§ 162.447 and 162.448. 

§ 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 § 162.013, must 

consent to an amendment of a business 

lease in the same percentages and 

manner as a new business lease under 

§ 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; 


tkelley on DSK3SPTVN1PROD with 
72490 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

(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. 

§ 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. 

§ 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 

§ 162.449 May a lessee assign a business 

lease? 

(a) A lessee may assign a business 

lease by meeting the consent 

requirements in § 162.450 and obtaining 

our approval of the assignment under 

§§ 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 

§ 162.014. 

§ 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 § 162.013, must 

consent to an amendment of a business 

lease in the same percentages and 

manner as a new business lease under 

§ 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. 

§ 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 § 162.463. 

§ 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; 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 

§ 162.453 May a lessee sublease a 

business lease? 

(a) A lessee may sublease a business 

lease by meeting the consent 

requirements in § 162.454 and obtaining 

our approval of the sublease under 

§§ 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. 

§ 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 § 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. 

§ 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. 

§ 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 

§ 162.457 May a lessee mortgage a 

business lease? 

(a) A lessee may mortgage a business 

lease by meeting the consent 

requirements in § 162.458 and obtaining 

our approval of the leasehold mortgage 

under §§ 162.459 and 162.460. 

(b) Refer to § 162.449(c) for 

information on what happens if a sale 

or foreclosure under an approved 

mortgage of the leasehold interest 

occurs. 

§ 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 § 162.013, must 

consent to a leasehold mortgage of a 

business lease in the same percentages 

and manner as a new business lease 

under § 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 


tkelley on DSK3SPTVN1PROD with 
72492 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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 § 162.463. 

§ 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 

§ 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 § 162.447(c) or 

§ 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 § 162.449(b) 

or § 162.449(c) or a sublease that does 

not require our approval under 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 

§ 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. 

§ 162.466 What will BIA do about a 

violation of a business lease? 

(a) In the absence of actions or 

proceedings described in § 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 nonpayment 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. 

§ 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. 

§ 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: 


tkelley on DSK3SPTVN1PROD with 
72494 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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. 

§ 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. 

§ 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 § 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. 

§ 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. 

§ 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. 

§ 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 nonuse after which the lease premises will 

be considered abandoned. 

Subpart F—[Removed] 

■ 14a. Remove subpart F, consisting of 

§§ 162.600 through 162.623. 

Subpart E [Redesignated as Subpart F] 

■ 14b. Redesignate subpart E, consisting 

of §§ 162.500 through 162.503, as new 

subpart F under the following heading: 

Subpart F—Special Requirements for 

Certain Reservations 

■ 15. Add a new subpart E to read as 

follows: 

Subpart E—Wind and Solar Resource 

Leases 

General Provisions Applicable to 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? 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 nonmonetary 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 

§ 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 nonprofit 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. 

§ 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 § 162.005(b); 

(2) By a permit from the Indian 

landowners under § 162.007; or 

(3) By a tribe on its land under 25 

U.S.C. 81. 

(b) Except as provided in 

§§ 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. 

§ 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, 


tkelley on DSK3SPTVN1PROD with 
72496 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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 

§ 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. 

§ 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. 

§ 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 § 162.515; 

(6) Payment requirements and late 

payment charges, including interest; 

and 

(7) Due diligence requirements, under 

§ 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 § 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 § 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. 

§ 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 

§ 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. 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72497 

§ 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 

§ 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 § 162.520. 

§ 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. 

§ 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. 

§ 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 § 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. 

§ 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 § 162.014 and any 

other legal requirements may be 

incorporated by reference, as 

appropriate, into the analyses of a 

proposed WSR lease. 

§ 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 

§ 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 §§ 162.552 through 

162.558 also apply to WEELs. 

§ 162.524 Will BIA require a valuation for a 

WEEL? 

We will not require a valuation for a 

WEEL. 

WEEL Bonding and Insurance 

§ 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. 

§ 162.526 [Reserved] 

§ 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 

§ 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 

§ 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 

§ 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 


tkelley on DSK3SPTVN1PROD with 
72498 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

the funding for a project similar to the 

proposed project, if appropriate; 

(i) A legal description of the land 

under § 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. 

§ 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. 

§ 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 § 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 § 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. 

§ 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. 

§ 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. 

§ 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 

§ 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 

§ 162.535 What effectiveness, compliance, 

and enforcement provisions apply to 

WEELs? 

(a) The provisions at § 162.586 apply 

to WEEL lease documents. 

(b) The provisions at §§ 162.587 

through 162.589 and 162.591 through 

162.599 apply to WEELs, except that 

any references to § 162.590 will apply 

instead to § 162.536. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72499 

§ 162.537 [Reserved] 

WSR Leases 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 § 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 

§ 162.546; 

(9) Insurance requirements, under 

§ 162.562; and 

(10) Bonding requirements under 

§ 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 § 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 § 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. 

§ 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 § 162.019. These facilities and 

associated infrastructure are considered 

permanent improvements. A resource 

development plan must be submitted for 

approval with the lease under 

§ 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: 


tkelley on DSK3SPTVN1PROD with 
72500 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

(1) Location of permanent 

improvements; 

(2) Type of permanent improvements; 

or 

(3) Delay of 90 days or more in any 

phase of development. 

§ 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. 

§ 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. 

§ 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 § 162.592. 

§ 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. 

§ 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 

§ 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 § 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 § 162.551. 

§ 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 

§ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 § 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 § 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 


tkelley on DSK3SPTVN1PROD with 
72502 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

§ 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 

§ 162.012, unless the lease provides 

otherwise. 

§ 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 

§ 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 

§ 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. 

§ 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

§ 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 

§ 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 

§§ 162.549(a), 162.555(b), and 

162.557(a), or a separate signed 

certification meeting the requirements 

of §§ 162.555(b) and 162.557(a)); 

(c) A valuation, if required under 

§ 162.549 or § 162.550; 

(d) Proof of insurance, if required 

under § 162.562; 

(e) A performance bond or other 

security, if required under § 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 

§ 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 § 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. 

§ 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. 

§ 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 § 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 § 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 


tkelley on DSK3SPTVN1PROD with 
72504 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

individually owned Indian land to the 

lessee, and make copies available to the 

Indian landowners upon written 

request. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 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 § 162.571; 

and 

(c) BIA approval of the amendment 

under §§ 162.572 and 162.573. 

§ 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 § 162.013, must 

consent to an amendment of a WSR 

lease in the same percentages and 

manner as a new WSR lease under 

§ 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. 

§ 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 72505 

landowners’ determination that the 

amendment is in their best interest. 

(c) We may not unreasonably 

withhold approval of an amendment. 

WSR Lease Assignments 

§ 162.574 May a lessee assign a WSR 

lease? 

(a) A lessee may assign a WSR lease 

by meeting the consent requirements in 

§ 162.575 and obtaining our approval of 

the assignment under §§ 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 

§ 162.014. 

§ 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 § 162.013, must 

consent to an assignment in the same 

percentages and manner as a new WSR 

lease under § 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. 

§ 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 § 162.588. 

§ 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 

§ 162.578 May a lessee sublease a WSR 

lease? 

(a) A lessee may sublease a WSR lease 

by meeting the consent requirements in 

§ 162.579 and obtaining our approval of 

the sublease under §§ 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. 

§ 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 § 162.013, must 

consent to a sublease in the same 

percentages and manner as a new WSR 

lease under § 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. 

§ 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, 


tkelley on DSK3SPTVN1PROD with 
72506 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

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. 

§ 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 

§ 162.582 May a lessee mortgage a WSR 

lease? 

(a) A lessee may mortgage a WSR 

lease by meeting the consent 

requirements in § 162.583 and obtaining 

our approval of the leasehold mortgage 

under §§ 162.584 and 162.585. 

(b) Refer to § 162.574(c) for 

information on what happens if a sale 

or foreclosure under an approved 

mortgage of the leasehold interest 

occurs. 

§ 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 § 162.013, must 

consent to a leasehold mortgage in the 

same percentages and manner as a new 

WSR lease under § 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. 

§ 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 § 162.588. 

§ 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 

§ 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 § 162.572(b) or 

§ 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 § 162.574(b) 

or a sublease that does not require our 

approval under § 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. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 

§ 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. 

§ 162.591 What will BIA do about a 

violation of a WSR lease? 

(a) In the absence of actions or 

proceedings described in § 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 nonpayment 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 


tkelley on DSK3SPTVN1PROD with 
72508 Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 

obligations in the lease until the lease 

expires or is terminated or cancelled. 

§ 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. 

§ 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. 

§ 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. 

§ 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. 

§ 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 § 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. 

§ 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. 

§ 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. 

§ 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 nonuse after which the lease premises will 

be considered abandoned. 

■ 16. Add subpart G to read as follows: 

Subpart G—Records 

Sec. 


tkelley on DSK3SPTVN1PROD with 
Federal Register / Vol. 77, No. 234 / Wednesday, December 5, 2012 / Rules and Regulations 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 

§ 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. 

§ 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 § 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 § 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. 

§ 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 


tkelley on DSK3SPTVN1PROD with