CHAPTER 6 MODERNIZED LEASING AND RIGHT-OF-WAY REGULATIONS FOR INDIAN LANDS
| Jurisdiction | United States |
MODERNIZED LEASING AND RIGHT-OF-WAY REGULATIONS FOR INDIAN LANDS
Steptoe & Johnson LLP
former Deputy Solicitor for Indian Affairs
U.S. Department of the Interior
Washington, DC
Kevin Washburn
Regents' Professor of Law
University of New Mexico School of Law
former Assistant Secretary for Indian Affairs
U.S. Department of the Interior
Albuquerque, NM 1
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JODY A. CUMMINGS is a partner in the Washington, D.C. office of Steptoe & Johnson LLP where he represents clients on matters relating to federal Indian law and natural resources development. Prior to resuming his practice at Steptoe, Jody served in the Obama Administration at the Department of the Interior as Senior Counselor to the Solicitor and then as Deputy Solicitor for Indian Affairs. As Senior Counselor, he served as the Solicitor's senior advisor with primary responsibilities covering Indian affairs and public lands matters. As Deputy Solicitor for Indian Affairs, Jody led the work of Interior's Indian Affairs legal team on a range of significant and historic initiatives in Indian law and policy implemented during the Obama Administration. His responsibilities included managing Interior's Indian Affairs legal work relating to rulemakings, agency decisions, litigation, and policy development in the areas of fee-to-trust acquisitions, land use and resource development, Indian gaming, protection of sacred sites, 638 contracting, and trust asset management, among other issues. Before joining Interior, Jody spent more than a decade in practice at Steptoe representing tribal governments and corporate clients on a variety of federal Indian law, natural resources development, and environmental law issues. He received his undergraduate degree from Duke University ( A.B. 1997) and his law degree from Columbia Law School (J.D. 2000). Jody is an enrolled member of the Lumbee Tribe of North Carolina.
KEVIN WASHBURN is a law professor and the former dean of the UNM School of Law. He served as the Senate-confirmed Assistant Secretary for Indian Affairs at the U.S. Department of the Interior in the second term of the Obama Administration in Washington, D.C. from October of 2012 until January 1, 2016. In that role, he was the highest ranking federal Indian policy official for the federal government; he oversaw nearly 8000 employees of the Bureaus of Indian Affairs and Indian Education, and executed a budget that reached $2.8 billion during his leadership. He testified approximately thirty times before Congressional Committees and worked on a daily basis with the White House. He also appeared several times before the United Nations in Geneva to defend our nation's adherence to international treaties. Washburn graduated from Yale Law School, clerked for Judge Wm C. Canby, Jr., of the U.S. Court of Appeals for the Ninth Circuit, and served as an Honors Program trial attorney in the Lands Division of the Department of Justice in Washington, D.C. He later served as a federal prosecutor in New Mexico and as the general counsel of the National Indian Gaming Commission, a federal regulatory agency in Washington, D.C. As an academic, he has taught law at the Universities of Arizona, Minnesota, and New Mexico, and as a visiting professor at Harvard Law School. He also has several books to his name, including casebooks on gaming/gambling law and federal Indian law. He is also a co-author/co-editor of the Cohen Handbook of Federal Indian Law. He and his wife and kids are citizens of the Chickasaw Nation of Oklahoma.
Introduction
One hallmark of the early 21st Century has been the expanding role of tribal governments in managing Indian land.2 Driven by robust tribal economic development that began in the 1970s and increasing disappointment with federal efforts to manage federal Indian lands,3 tribes have prioritized self-governance of Indian lands. In part because of this important tribal priority, federal decision-makers have shown increased deference to tribal sovereign authority to make decisions about tribal lands. Federal policy, however, has not always kept pace with the progress of tribal governments in Indian country.
In 2012 and 2015, respectively, the U.S. Department of the Interior ("Interior") adopted new regulations dealing with leasing and rights-of-ways on Indian lands. Section I of this essay will provide a high-level overview of the purposes of the reforms. Section II will detail the specific changes created by the new rules. Section III will discuss areas of discord and litigation that is expected or has already occurred.
I. Overview
The stated purposes behind the new leasing and right-of-way regulations were modernization, flexibility, improved responsiveness, clarity of taxation, and general improvements in the regulatory process for federal approvals.
Modernization and Flexibility
One of the principal goals of the regulatory changes was to make each regime more consistent with modern norms of federal Indian policy. Neither regulatory structure had been amended
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significantly in decades. The original schemes had been developed at a time when the Bureau of Indian Affairs ("BIA") at Interior exercised the central authority on Indian reservations and tribal governments generally deferred to BIA decisions, a time when people jokingly said that "BIA" stood for "Bossing Indians Around."
In a number of ways over the past several decades, tribal governments have reassumed the status of principal governing authority on Indian reservations and the BIA has transitioned to an important supporting role. It is no longer controversial to suggest that tribal nations should be self-governing. Controversy sometimes arises, however, as this principle is implemented.
As tribal governmental leadership has focused increasingly on jobs and economic development, the ancient BIA processes had come to represent obstacles to effective economic development. The regulatory approval process for leases and rights-of-way had become a gauntlet of regulatory hurdles that slowed economic development and frustrated economic progress. Prior to the recent reforms, much of the focus of the regulatory gauntlet involved limiting federal liability for BIA decisions. For example, an appraisal was required for every lease or right-of-way decision even if the tribe or individual Indian owner was competent to make decisions and clearly desired approval. Tribal preference was irrelevant to that question.
In efforts to modernize these regimes and increase their transparency and efficiency, the regulations now build in greater flexibility for compensation and land valuations. Both sets of regulations give considerable deference to compensation terms negotiated by tribes in the place of requiring appraisals, and allow for alternative forms of payment, including in-kind consideration. The regulations also permit direct pay from lessees and grantees to landowners in certain circumstances, and give landowners significant leeway in determining how long a lease or right-of-way may last.
Interior also took steps, such as specifying separate, simplified processes for obtaining BIA approval of leases for residential, business, and wind and solar ("WSR") purposes on Indian land. The regulations also eliminate the requirement for BIA approval of permits for short term activities on Indian lands (in the case of leases) and create a distinct, less cumbersome process for utility service line agreements.
Improved Responsiveness
A widespread complaint about the BIA approval regime was that it was slow and cumbersome. Even a very simple lease, such as for a single home site, might languish for years in the approval process. Often, participants in the approval process would walk away in frustration before the culmination of the approval. In cases involving capital financing, rather than endure years of delay, investors in projects on Indian lands frequently were unwilling to wait on the regulatory process and chose instead to put their capital to work outside of Indian country.
To address this problem and provide swifter responses to applications for approval, Interior made several changes. The leasing regulations now impose strict deadlines requiring that the BIA issue decisions on completed residential lease applications within 30 days, and completed business and WSR applications within 60 days. For rights-of-way, the BIA now has 60 days to make a
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decision on a completed application (30 days for an amendment, assignment or mortgage of a right-of-way). To enforce these deadlines, the new regulations authorize appeals to higher-level BIA supervisors when a deciding official fails to make a timely decision.
Taxation
Taxation on Indian land subject to leases and rights-of-way has regularly been an area of significant confusion and dispute. State and local governments have often sought to impose taxes on permanent improvements and activities located on Indian land that is leased or subject to a right-of-way. These efforts have either hindered tribes from imposing their own taxes or subjected nonmember improvements and activities on leased land and within rights-of-way to threats of dual taxation, thereby potentially limiting economic development opportunities in tribal communities.
The leasing and right-of-way regulations now clarify that "subject only to applicable federal law," permanent improvements on leased land or within a right-of-way, activities conducted under a lease or right-of-way grant, and any leasehold or possessory interest or right-of-way interest is not subject to state or local taxes. Those improvements, activities, and interest, however, are subject to taxation by the Indian tribe with jurisdiction.
Other Enhancements for Tribes and Tribal Members
The revision of the leasing and right-of-way regulations provided Interior an opportunity...
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