BIA Seeks Comments on Proposed Rule Making Major Changes to the Department of the Interior's Regulations Governing Rights-of-Way across Tribal and Individually Owned Indian Lands.

On June 17, 2014, the Department of the Interior ("DOI") issued proposed regulations which would "comprehensively update and streamline the process for obtaining BIA grants of rights-of-way on Indian land," compiled at 25 C.F.R. Part 169. 79 Fed. Reg. 34455, 34455.  The proposed rights-of-way regulations are designed to "mirror" the thoroughgoing revisions recently made to the 25 C.F.R. Part 162 regulations, which govern business site leases on Indian land.  The proposed regulations, among other things, establish timelines for BIA review of rights-of-way applications, clarify the process for BIA review, allow BIA disapproval only when there is a compelling stated reason, provide greater authority to tribes, and eliminate outdated requirements.  The proposed regulations also address applicable law, jurisdiction, and taxation, as well as, compensation, consent, and BIA enforcement actions, and assignment and encumbrancing.  Comments are currently due on or before August 18, 2014, although a request has been made to extend the deadline for submitting comments.  No information is available at this time regarding whether the DOI has agreed to extend the deadline for submitting comments.

The DOI seeks comments on all changes, but specifically requested comments on the bonding provisions and the durations for different types of rights-of-way set forth in Proposed Section 169.201.  This alert provides an overview of some of the primary changes, beginning with the bond provisions and the provision addressing right-of-way terms, but is not intended to be comprehensive given the amount of the changes proposed.  The changes are significant and warrant attention by tribes and entities requiring tribal or "allotted" rights-of-way for personal or business purposes. 

Bond Provisions: The proposed regulations require an applicant to post a bond in an amount that covers, among other things, the highest annual rental, unless compensation is a one-time payment, the estimated damages resulting from construction of permanent improvements, and restoration and reclamation of the premises to their pre-use condition or some other specified condition.  Proposed § 169.103(a).  The regulations provide that the right-of-way grant can include conditions authorizing BIA to adjust the security bond, Proposed § 169.103(c) requires notice from the surety if it intends to cancel the bond, and states that failure to provide a substitute bond constitutes a violation of the right-of-way.

Right-of-Way Duration:  Proposed Section 169.201 suggests the following "guidelines for what terms are reasonable given the purpose of the right-of-way":
 
• In perpetuity: Railroads, public roads and highways, public and community water lines, utility gas lines, public sanitary and storm sewer lines, water control and use projects;
• 50 years: Transmission and distribution lines;
• 30 years: Telecommunication lines, broadband or fiber optic lines;
• 20 years: Oil and gas pipelines, avigation hazard easements.

Tribal versus Federal/State Law/Taxation:  The proposed regulations provide that state law does not apply, except with respect to certain exceptions, and only "in the absence of Federal or tribal law." Proposed § 169.008(a). The regulations state that the parties may subject the right-of-way to state or local law if the Indian landowners expressly agree, unless prohibited by federal law.  Proposed § 169.008(b).  Similarly, with respect to taxation, Proposed § 169.009 provides that "subject only to applicable federal law," the permanent improvements, activities, or the possessory interest in the right-of-way itself are not subject to state or local taxes, but may be subject to taxation by a tribe with jurisdiction. The proposal does not address whether the drafters consider White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980), Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163 (1989), or Atkinson Trading Co. v. Shirley, 532 U.S. 645 (2001), to be such "applicable federal law."

Tribal versus Federal/State Jurisdiction:  Proposed §§ 169.008(d) and (e) state that a grant of a right-of-way does not diminish tribal jurisdiction over the lands subject to the right-of-way, and that the tribe retains the right to exercise civil jurisdiction over the lands subject to the right-of-way, including taxation and licensing.  This provision may conflict with United States Supreme Court decisions, including Strate v. A-1 Contractors, 520 U.S. 438, 451-52 (1997), and Atkinson Trading Co. v. Shirley, 532 U.S. 645, 659 (2001). 

Applicability to "Government land":  Proposed § 169.003 states that the regulations apply to "Government land,", which is in turn defined as "any tract, or interest herein, in which the surface estate is owned and administered by the United States, not including Indian land."  Proposed § 169.002.  In what may be hoped is an oversight, the proposed regulations do not include the qualifier contained in existing 25 C.F.R. § 169.1(e), "which was acquired or set aside for the use and benefit of Indians," thus appearing to extend the regulations all federal lands.

Compensation Standards: The proposed regulations expressly provide for negotiated compensation determined by a tribe, Proposed § 169.109, at the tribe's election, without BIA review. For individual Indian landowners, Proposed § 169.110 states compensation may not be less than "market value," and may include alternative forms of compensation, including, among others,: a "percentage of the projected income," or "throughput fees, severance damages, franchise fees, avoidance value, bonuses, or other factors," Proposed § 169.110(a), and may also include "in-kind consideration." Proposed § 169.115(a).  The regulations thus expand the types of compensation that can be negotiated to include elements that the existing regulations included in market value, such as severance damages, and to include elements that have not been considered applicable to rights-of-way under the condemnations available to acquire allotted lands rights-of way under 25 U.S.C. § 357.  

Consent of Life Tenant/Remainder Interests: The regulations include new provisions governing consents from life estate holders and remainder interest holders.  Proposed § 169.003.  The existing regulations did not qualify the ability of an allottee who had granted a remainder interest that vested upon her death to grant a right-of-way. The proposed regulations would create a new regime that limits the effective consent of a life estate holder to the duration of the life estate, unless the will creating the life estate provides otherwise.  Proposed § 169.003(b)(1). Proposed § 169.003(b)(2). The proposed regulations authorize BIA to grant a right-of-way for longer than the duration of the life estate only with the consent of a majority of the remainder interest holders.  Proposed § 169.003(b)(3).

Assignment/Mortgage: The proposed regulations provide that a grantee may assign or mortgage a right-of-way only after meeting the consent requirements and obtaining BIA approval, unless the original right-of-way grant allowed assignment/mortgage without BIA approval, in which case it appears that landowner consent is still required.  Proposed § 169.207(a); §§ 169.210-212.  The proposed regulation as drafted does not appear to authorize the parties to stipulate landowner consent to future assignments/mortgages in agreement for consent to the right-of-way grant. 

Appeals of Official's Untimely Action or Failure to Act:  The proposed regulations provide certain time limitations on BIA's decisions whether to approve or deny a right-of-way, renewal, amendment, or mortgage.  Proposed § 169.119.  However, unlike some Bureau of Land Management regulations, BIA's proposed regulations do not state that the requested approval is deemed approved if the official does not act within the specified period.  Instead, Proposed § 169.304 provides the applicant or grantee must seek the same decision from BIA superior official(s), up to the Director of the BIA, and if no decision is then entered, the applicant or grantee must pursue an appeal to the Interior Board of Indian Appeals.  The regulations specifically clarify that the provisions of 25 C.F.R. § 2.8 (appeal from agency inaction) do not apply to the inaction of BIA officials with respect to granting, denying, renewing, amending, assignments or mortgages.  Proposed § 169.304(g).

Violations/Cancellation Procedure: The proposed regulations state that a right-of-way grantee and the tribe or Indian landowners can negotiate remedies, such as the power to terminate the right-of-way grant.  Proposed § 169.403.  The proposed regulations provide additional detail regarding BIA's enforcement of violations and authority to cancel a grant of right-of-way. If the BIA determines that a violation has occurred, the BIA will send a notice of violation and must give the grantee 10 business days within receipt of the notice to cure, dispute the violation, or request additional time to cure.  Proposed § 169.404(b). If the BIA determines that cancellation or other remedies is warranted, the BIA will send a letter specifying its determination, which will notify the grantee of, among other things, the right to appeal and, if cancellation is ordered, order the grantee to vacate the property within 31 days if an appeal is not filed. Proposed § 169.405(c).  A right-of-way may also be cancelled for non-use or abandonment upon notice to the grantee or if the grantee fails to correct the basis for cancellation within 30 days after BIA's mailing of the notice.  Proposed § 169.408. 

Trespass/Holdover: A new provision provides that, if a grantee remains in possession after the expiration, termination, or cancellation of a right-of-way, the BIA may treat the unauthorized possession as a trespass. Proposed § 169.410.  Additionally, the provision states that the BIA may take action to recover possession of the right-of-way, unless a tribe or the majority of the individual landowners have notified the BIA in writing that they are engaged in good faith negotiations with the grantee.   

Applicability of New Regulations:  If the right-of-way was granted or approved before the effective date of the regulations, then the new regulations will apply unless they conflict with the provisions of the right-of-way grant.  Proposed § 169.006.  If the right-of-way was submitted, but not approved before the effective date of the regulations, then the BIA will review the application under the regulations in place at the time the application was submitted, but once the application is granted, the new regulations apply unless inconsistent with the provisions of the right-of-way grant.  

If you would like any additional information, please contact Lynn Slade at lynn.slade@modrall.com or Deana M. Bennett at deana.bennett@modrall.com.