[Federal Register Volume 69, Number 27 (Tuesday, February 10, 2004)]
[Proposed Rules]
[Pages 6500-6524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2392]



[[Page 6499]]

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Part IV





Department of the Interior





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Bureau of Indian Affairs



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25 CFR Part 162



Trust Management Reform: Residential Leases and Business Leases; 
Proposed Rule

  Federal Register / Vol. 69, No. 27 / Tuesday, February 10, 2004 / 
Proposed Rules  

[[Page 6500]]


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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 162

RIN 1076-AE36


Trust Management Reform: Residential Leases and Business Leases

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Bureau of Indian Affairs (BIA) proposes to revise its 
regulations in the area of residential leases and business leases on 
trust and restricted land. The revisions would further fulfill the 
Secretary's fiduciary responsibility to federally recognized tribes and 
individual Indians. These regulations currently have reserved subparts 
for Residential Lease and Business Lease. These subparts, along with a 
subpart for General Provisions, will eventually provide regulations for 
residential and business leases on trust and restricted land. When we 
publish these changes as a final rule, we will remove the current 
subpart for Non-Agricultural Leases.

DATES: Written comments must be submitted no later than May 10, 2004.

ADDRESSES: Comments on this proposed rule should be addressed to: Ben 
Burshia, Chief, Division of Real Estate Services, Office of Trust 
Responsibilities, Bureau of Indian Affairs, 1849 C Street NW., MS 4513-
MIB, Washington, DC 20240. Submissions by facsimile should be sent to 
(202) 219-1255. Electronic comment submission is not available at this 
time.
    DOI invites comments on the information collection requirements in 
the proposed regulation. You may submit comments by telefacsimile at 
(202) 395-5806 or by e-mail at [email protected]. Please also 
send a copy of your comments to BIA at the location specified above. 
Note that requests for comments on the rule and the information 
collection are separate.

FOR FURTHER INFORMATION CONTACT: Ben Burshia, 202-219-1195.

SUPPLEMENTARY INFORMATION:

I. Background
II. Subpart-by-Subpart Analysis
III. Public Comments
IV. Procedural Requirements
    A. Regulatory Planning and Review (Executive Order 12866)
    B. Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
    C. Small Business Regulatory Enforcement Fairness Act (SBREFA) 
of 1996
    D. Unfunded Mandates Reform Act of 1955
    E. Taking Implication Assessment (Executive Order 12630)
    F. Energy Effects (Executive Order 13211)
    G. Federalism (Executive Order 13132)
    H. Civil Justice Reform (Executive Order 12988)
    I. National Environmental Policy Act (NEPA)
    J. Consultation and Coordination with Indian Tribal Governments 
(Executive Order 13175)
    K. Paperwork Reduction Act (44 U.S.C. 3501)

I. Background

    As part of trust reform initiatives, in January of 2001, the Bureau 
of Indian Affairs issued final Leasing and Permitting Regulations, 25 
CFR part 162 (66 FR 7109, January 22, 2001). This final rule replaced 
the existing part 162 in its entirety. At that time, we reserved 
Subpart C, Residential Leases, and Subpart D, Business Leases, for 
future rulemaking to include the Indian Land Consolidation Act 
Amendments of 2000 and all other issues related to residential and 
business leases.
    This proposed rule provides guidance for processing individual 
Indian and tribal residential and business leases on trust and 
restricted land. Subpart F, Non-agricultural Leases, currently provides 
general leasing regulations for all non-agricultural leases, which 
includes residential and business leases. The current Subpart F is 
general and does not differentiate between business and residential 
leases. Therefore, with text added to reserved Subparts C and D, 
Subpart F will be removed.
    This proposed rule addresses the specific needs of residential and 
business leases and thus, will facilitate streamlining the processing 
of residential and business leases. This proposed rule will strengthen 
the services that we provide to federally recognized tribes and 
individual Indians. The rule is consistent with our fiduciary 
responsibility to individual Indians and tribes and reflects the 
provisions of the Departmental Manual, Part 303, Chapter 2, Principles 
for Managing Indian Trust Assets.

II. Subpart-by-Subpart Analysis

    25 CFR part 162, Subpart C, Residential Leases, and Subpart D, 
Business Leases, will replace Subpart F, Non-Agricultural Leases. The 
consent requirements in the proposed regulations are consistent with 
the Indian Land Consolidation Act Amendments (ILCA) of 2000. Because 
the ILCA Amendments of 2000 do not apply to tribes in Alaska, the 
consent requirements for Alaska will remain the same as the previous 
regulations governing leasing. The proposed regulations provide for 
recognition and accommodation of tribal laws regulating activities for 
residential and business leases, unless prohibited by federal law. The 
proposed regulations provide procedures for lease amendments, 
assignments, subleases and leasehold mortgages.
    Under Subpart C, Residential Leases, of the proposed regulation, 
the definition for Residential Leases covers both ground leases and 
leases for residential development on tribal and allotted land. The 
definition of Residential Lease is defined as single-family homes and 
housing for public purposes. This definition was developed in order to 
provide regulations that streamline the processing of residential 
leases for Indian housing; leases not meeting this definition will be 
processed under Subpart D, Business Leases. The proposed regulations 
provide for a 30-day time-frame under which the Secretary or her 
designee must issue a decision on a complete residential lease 
application. Residential leases for nominal rent will be approved on 
tribal land if the rent is established by the tribe or on individual 
Indian land when the tenant is a member of the landowner's immediate 
family or a co-owner in the tract. Rental adjustments are not required 
for a residential lease unless negotiated in the lease. Also, bonds may 
not be required, if specified in the lease and upon a determination 
that it is in the best interest of the landowner(s). Subpart C also 
includes provisions for enforcement of lease violations.
    Subpart D, Business Leases, of the proposed regulations covers both 
ground leases (undeveloped land) and leases of developed land (together 
with improvements thereon) on tribal or allotted land, authorizing the 
development or use of the leased premises. Leases covered by this 
subpart may authorize the construction of single-purpose or mixed use 
projects designed for use by any number of tenants or occupants. The 
leases may include: (1) Leases for residential purposes that are not 
covered in Subpart C; (2) Leases for public, religious, educational, 
and recreational purposes; and (3) Commercial or industrial leases for 
retail, office, manufacturing, storage, and/or other business purposes. 
The potential lessee may negotiate a lease with an Indian landowner. 
The lease is subject to the review and approval of the Secretary. 
Generally, business leases will not be advertised for competitive bid. 
A potential lessee may request, in writing, the names and addresses of 
the Indian landowners or their representatives for the purposes of 
negotiating a lease. The proposed

[[Page 6501]]

business lease regulations provide for the following when considering 
approval, disapproval or when requesting additional document 
information: When we receive a business lease and all of the supporting 
documents that conform to this part, we will approve, disapprove, or 
return for additional documents/corrections/modifications to the lease 
within 60 days of the date of our receipt of the documents. If we do 
not act within 60 days, the Indian landowner may take appropriate 
action under part 2 of this chapter. If we approve or disapprove a 
lease, we will notify the parties immediately and advise them of their 
right to appeal the decision under part 2 of this chapter. Copies of 
business leases that have been granted or approved will be provided to 
the tenant, and made available to the Indian landowners upon request.

III. Public Comments

    The Bureau of Indian Affairs, with tribal participation, formulated 
a team to draft regulations for residential and business leases. On 
June 5, 2002, the initial draft Residential Lease and Business Lease 
regulations were distributed to the Regional Offices, the National 
Congress of American Indians, and the Inter-Tribal Monitoring 
Association, requesting comments. The comments received through that 
distribution were considered in the development of the final draft 
regulations as were the comments received from Tribal Consultations 
(meetings) in Portland, Oregon; Phoenix, Arizona; and Nashville, 
Tennessee, in September of 2002. In addition, the comments received 
from further consultation sessions in November of 2002 were taken into 
consideration in the formulation of the following proposed Residential 
and Business Leasing regulations. The consideration of comments has 
resulted in refinement, clarification and restructuring of the 
residential and business lease provisions.
    In response to comments received, in Subpart C, Residential Leases, 
the definition of ``immediate family'' has been expanded to include 
``or when some other special relationship exists between the lessor and 
the lessee or special circumstances exists that in the opinion of the 
Secretary warrant the approval of the residential lease,'' based on 25 
CFR 152.25(d). The definition of ``single-family home'' has been 
amended to include ``a building with one to four dwelling units on a 
tract of land under a single lease'' and a definition for ``tribal land 
assignment'' is provided.
    The consent requirements were amended to clarify that the 
applicable percent for consent pertains to the amount of undivided 
interest owned and not the amount of owners. Language was provided to 
clarify who can represent the Indian landowners in negotiating or 
granting a residential lease. The environmental requirements were 
amended to include an explicit commitment to adopt tribal environmental 
reviews, to the extent such adoption is allowed under our procedures 
implementing the National Environmental Policy Act of 1969 (NEPA).
    Comments were received requesting clarification on whether or not a 
30-year lease can be paid in full at one time. Consistent with 25 
U.S.C. 415b, the proposed regulations allow for payment in full only if 
it is provided for in the lease, otherwise rental payments may not be 
made or accepted more than one year in advance of the due date. 
Comments were received requesting more than one option to renew a 
residential lease. The proposed regulations have been amended to allow 
for more than one option to renew a residential lease provided the 
lease authority is the Native American Housing Assistance and Self-
Determination Act of 1996, 25 U.S.C. 4211. Comments were received from 
the Department of Housing and Urban Development (HUD) requesting that 
we provide language for the approval of leasehold mortgages on a 
residential lease for the purposes of refinancing a loan. The proposed 
regulations have been amended to expand the scope for approval of 
leasehold mortgages on residential leases, which would include 
refinancing. The Secretary will approve a leasehold mortgage under a 
residential lease when the required consents have been obtained from 
the Indian landowners and the Secretary finds that it is in the best 
interest of the landowner. HUD requested that along with the 
landowner's approval for cancellation of a lease, that we require the 
approval of the leasehold mortgagee. The proposed regulations were 
amended to include a requirement for approval from the mortgagee before 
cancellation of the residential lease. Comments were received 
requesting clarification of what would happen in the instance that a 
tenant does not diligently develop or abandons the leased premises. The 
proposed regulations were amended providing language to clarify this 
section of the regulation.
    In the consideration of comments received, Subpart D, Business 
Leases, we are adding to the proposed regulations the key terms under 
Sec. 162.101 ``Approval which means written authorization by the 
Secretary or his/her delegated official and must be a part of the 
instrument being approved.'' Also, under this same section we are 
proposing to add for clarification, the term ``Fair annual rental or 
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.'' The term Fair Annual Rental will be removed. Fair 
market rental relates to a period of time which may be more or less 
than one year, whereas, fair annual rental is for a one year period. We 
received comments on approvals and the proposed regulations were 
changed to add to Sec. 162.107 paragraph ``(c) All approvals must be in 
writing for permits, leases, subleases, assignments, modifications, 
amendments, etc., unless otherwise provided in the master lease.'' 
During consultations, there was a comment about Who can represent the 
Indian landowners in negotiating or granting a lease? The proposed 
regulations include paragraph ``(d) Any person who is authorized to 
practice before the Department of the Interior under 43 CFR part 1 and 
has been given written authorization for representation.'' A comment 
was received about the requirement of appraisals on tribal land being 
unduly burdensome to tribal business and economic development. The 
proposed regulations include under Sec. 162.407 paragraph ``(d) Upon a 
duly adopted Tribal Resolution, we will use some other type of 
valuation for a business lease on tribal land, subject to our 
approval.'' A comment was received on NEPA compliance. We address this 
concern in requiring that the tenant should provide any environmental, 
archaeological reports and other documents, as determined by us to be 
necessary to facilitate our compliance with federal and tribal and/or 
local land use requirements, if applicable. We will adopt any tribal 
environmental review as our NEPA review, to the extent such adoption 
meets our standards in implementing NEPA. We received a comment 
inquiring on, May a lease be mortgaged without the consent of the 
Indian landowners? The proposed regulations include under Sec. 162.430, 
``* * * provided, if the approved lease includes the following: (a) The 
lease may be mortgaged without the further consent of the Indian 
landowners for the purpose of borrowing capital for commercially 
reasonable purposes defined in the lease if the lease contains a 
general authorization for such a

[[Page 6502]]

mortgage; (b) The mortgage cannot secure any unrelated debts owed by 
the lessee to the mortgagee; (c) The mortgage may be refinanced; and 
(d) The encumbrance instrument must be approved by us.'' A comment was 
received on What happens if the lessee abandons the lease? The proposed 
regulations include under Sec. 162.457, ``(a) If the lessee abandons 
the leased premises, the lessee and its sureties will not be relieved 
of the obligations contained in the lease; and (b) We may cancel the 
lease, effective immediately, and attempt to find a new lessee for the 
property.'' There were other comments on the typographical, grammatical 
and punctuation of the draft regulation, they were duly noted and 
changed appropriately. Other comments were acknowledged, considered and 
duly noted when we felt those items were either already addressed or 
were statutorily resolved.

IV. Procedural Requirements

A. Regulatory Planning and Review (Executive Order 12866)

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the BIA 
must determine whether the regulatory action is ``significant'' and 
therefore subject to OMB review and the requirements of the Executive 
Order. The Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    This proposed rule describes how the BIA will administer 
residential and business leases on trust and restricted land. Thus, the 
impact of the rule is confined to the Federal Government and individual 
Indian and tribal landowners and does not impose a compliance burden on 
the economy generally. Accordingly, it has been determined that this 
rule is not a ``significant regulatory action'' from an economic 
standpoint, or otherwise creates any inconsistencies or budgetary 
impacts to any other agency or federal program.

B. Regulatory Flexibility Act (5 U.S.C. 601 et seq.)

    Under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., as 
amended, whenever an agency is required to publish a notice of 
rulemaking for any proposed or final rule, it must prepare and make 
available for public comment a regulatory flexibility analysis that 
describes the effects of the rule on small entities (e.g., small 
businesses, small organizations, and small government jurisdictions). 
Indian tribes are not considered to be small entities for purposes of 
the Act and, consequently, no regulatory flexibility analysis has been 
done.
    This proposed implementation guidance does not have significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or the ability of U.S. based enterprises to compete with 
foreign-based enterprises. Accordingly, this proposed regulation will 
not have an economic impact on a substantial number of small entities, 
and, therefore, no regulatory flexibility analysis has been prepared.

C. Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996

    Under 5 U.S.C. 804(2), SBREFA, a rule is major if OMB finds that it 
results in (1) An annual effect on the economy of $100 million or more; 
(2) A major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or (3) Significant adverse effects on competition, employment, 
investment, productivity, innovation, or the ability of U.S.-based 
enterprises to compete with foreign-based enterprises.
    This proposed rule is not a major rule as defined by section 804 of 
the SBREFA. This rule is uniquely confined to the Federal Government, 
individual Indians and tribal landowners, thus, it will not result in 
the expenditure by State, local and tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. This proposed rule provides regulatory guidance for residential 
and business leases on trust and restricted lands owned by individual 
Indians and tribes.

D. Unfunded Mandates Reform Act

    The proposed implementation guidance would not impose unfunded 
mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. 
L. 104-4, March 22, 1995, 109 Stat. 48). This proposed rule will not 
result in the expenditure by State, local and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year (2 U.S.C. 1532). The impact of this proposed rule is confined 
to residential and business lease on land held in trust for individual 
Indians and tribes. Accordingly, this proposed rule will not result in 
the expenditure of $100 million or more in any one year.

E. Takings Implication Assessment (Executive Order 12630)

    This proposed implementation guidance does not have significant 
``takings'' implications. Policies that have taking implications do not 
include actions affecting properties that are held in trust by the 
United States. The residential and business leasing regulations provide 
specific regulatory guidance on trust lands.

F. Energy Effects (Executive Order 13211)

    On May 18, 2001, the President issued Executive Order 13211 which 
speaks to regulations that significantly affect energy supply, 
distribution, and use. The Executive Order requires agencies to prepare 
Statements of Energy Effects when undertaking certain actions. This 
proposed rule is restricted to 25 CFR part 162, subpart C, Residential 
Leases, and subpart D, Business Leases, on lands held in trust for 
individual Indians and tribes. Mineral development on lands held in 
trust for individual Indians and tribes is regulated under the Indian 
Mineral Development Act. Regulations for mineral development are 
provided under a separate part in 25 CFR parts 211, 212 and 225. This 
proposed implementation guidance is not expected to significantly 
affect energy supplies, distribution, or use. Therefore, no Statement 
of Energy Effects has been prepared.

G. Federalism (Executive Order 13132)

    This proposed implementation guidance does not have significant 
Federalism effects because it pertains solely to Federal-tribal 
relations and will not interfere with the roles, rights, and 
responsibilities of States. While this proposed rule will impact tribal 
governments, there is no federalism impact on the trust relationship or 
balance of power between the United States government and the various 
tribal governments affected by this rulemaking. Therefore, in 
accordance with Executive Order 13132, it is determined that this rule 
will not have sufficient federalism implications to

[[Page 6503]]

warrant the preparation of a federalism assessment.

H. Civil Justice Reform (Executive Order 12988)

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
Civil Justice Reform, 61 FR 4729, February 7, 1996, imposes on 
executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for effective conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3 (a), section (b) of Executive Order 12988 
specifically requires that executive agencies make every reasonable 
effort to insure that the regulations: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
federal law or regulation; (3) provides a clear legal standard for 
affecting conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive affect if any; (5) adequately defines key 
terms; and (6) addresses other important issues affecting clarity and 
general draftsmanship under any guidelines issued by the Attorney 
General. Section 3( c) of Executive Order 12988 requires executive 
agencies to review regulations in light of the applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. This proposed 
implementation guidance does not unduly burden the judicial system and 
meets the applicable standards provided in sections 3(a) and 3(b)(2) of 
the Executive Order 12988.

I. National Environmental Policy Act (NEPA)

    This proposed rule is categorically excluded from the preparation 
of an environmental assessment or an environmental impact statement 
under the National Environmental Policy Act of 1969, 42 U.S.C. 4321, et 
seq., because its environmental effects are too broad, speculative, or 
conjectural to lend themselves to meaningful analysis and the Federal 
actions under the proposed rule (i.e., approval or disapproval of 
leases of Indian lands) will be subject at the time of the action 
itself to the National Environmental Policy Act process, either 
collectively or case-by-case. Further, no extraordinary circumstances 
exist to require preparation of an environmental assessment or 
environmental impact statement.

J. Consultation and Coordination With Indian Tribal Governments 
(Executive Order 13175)

    Pursuant to Executive Order 13175 of November 6, 2000, Consultation 
and Coordination with Indian Tribal Governments, the Department has 
determined that because the proposed rulemaking will uniquely affect 
tribal governments it will follow Department and Administrative 
protocols in consulting with tribal governments on the rulemaking. 
Consequently, tribal governments will be notified through this Federal 
Register notice and through the BIA field offices, of the ramifications 
of this rulemaking. This will enable tribal officials and the affected 
tribal constituency throughout Indian country to have meaningful and 
timely input in the development of the final rule. This will reinforce 
good intergovernmental relations with tribal governments and better 
inform, educate and advise such tribal governments on compliance 
requirements of the rule making. We consulted with tribal 
representatives during the formulation of this proposed regulation. On 
June 5, 2002, the initial draft Residential Lease and Business Lease 
regulations were distributed to the Bureau of Indian Affairs' Regional 
Offices, the National Congress of American Indians, and the Inter-
Tribal Monitoring Association, requesting comments. The comments 
received through that distribution were considered in the development 
of the final draft regulations. We held Tribal Consultations (meetings) 
in Portland, Oregon, Phoenix, Arizona and Nashville, Tennessee, in 
September 2002. The comments received from these consultations were 
taken into consideration in the formulation of the following proposed 
Residential and Business Leasing regulations. We have committed to 
consulting with tribal representatives in the formulation of a final 
rule for the Residential and Business Lease regulations.

K. Paperwork Reduction Act (44 U.S.C. 3501)

    This regulation requires an information collection from 10 or more 
parties, and therefore is subject to review under the Paperwork 
Reduction Act of 1995 (Pub. L. 104-13). Because the sections where the 
information collections occur has changed from the proposed rule of 
July 14, 2000 (65 FR 43918) and the final rule of January 22, 2001, we 
are including a table showing the section changes.

                                 Table Showing Changes in Information Collection
----------------------------------------------------------------------------------------------------------------
                              New CFR
        Old CFR cite            cite        Section title         Change in  collection    Explanation of change
----------------------------------------------------------------------------------------------------------------
162.7......................    162.301  May individual Indian  No Change.................  There is no change in
162.205 *..................    162.401   landowners exempt                                  collection of
                                         their land from                                    information. The
                                         tribal policies for                                regulatory
                                         leasing on Indian                                  requirements have
                                         Agricultural lands?                                been separated and
                                                                                            clarified by
                                                                                            providing separate
                                                                                            regulations for
                                                                                            Residential and
                                                                                            Business Leases.
162.8......................    162.301  What notifications     No Change.................  There is no change in
162.109 *..................    162.401   are required that                                  collection of
162.204 *..................              tribal law applies                                 information. The
                                         to a lease on Indian                               regulatory
                                         Agricultural lands?                                requirements have
                                                                                            been separated and
                                                                                            clarified by
                                                                                            providing separate
                                                                                            regulations for
                                                                                            Residential and
                                                                                            Business Leases.
162.12.....................    162.309  How will the           No Change.................  There is no change in
162.241 *..................    162.409   Secretary decide                                   collection of
                                         whether to grant and/                              information. The
                                         or approve a lease?                                regulatory
                                                                                            requirements have
                                                                                            been separated and
                                                                                            clarified by
                                                                                            separate
                                                                                            regulations.
162.14.....................    162.312  Must a lease be        No Change.................  There is no change in
162.246 *..................    162.412   recorded?.                                         collection of
                                                                                            information. The
                                                                                            regulatory
                                                                                            requirements have
                                                                                            been separated and
                                                                                            clarified by
                                                                                            providing separate
                                                                                            regulations for
                                                                                            Residential and
                                                                                            Business Leases.
162.18.....................    162.313  Is there a standard    No Change.................  Same as above.
162.218 *..................    162.413   lease form?.
162.20.....................    162.316  How is leased land     No Change.................  Same as above.
                               162.416   described?.

[[Page 6504]]

 
162.22.....................    162.325  May a lease be used    No Change.................  Same as above.
162.610(c) *...............    162.425   as collateral for a
                                         leasehold?
162.30.....................    162.334  What happens to        No Change.................  Same as above.
162.608 *..................    162.437   improvements
                                         constructed on
                                         Indian lands when
                                         the lease has been
                                         terminated?
162.32.....................    162.319  When must a lease      No Change.................  Same as above.
162.613 *..................    162.419   payment be made?
162.37.....................    162.320  Is there a penalty     No Change.................  Same as above.
162.614-616 *..............    162.420   for late payment on
                                         a lease?
162.47.....................    162.339  What forms of bonds    No Change.................  There is no change in
162.604 *..................    162.442   will the BIA accept?                               collection of
                                                                                            information. The
                                                                                            regulatory
                                                                                            requirements have
                                                                                            been separated and
                                                                                            clarified by
                                                                                            providing separate
                                                                                            regulations for
                                                                                            Residential and
                                                                                            Business Leases.
162.52.....................    162.341  What types of          No Change.................  Same as above.
162.604 *..................    162.444   insurance may be
                                         required?
162.61.....................    162.302  How do I acquire a     No Change.................  Same as above.
162.605-606 *..............    162.402   lease on Indian
                                         land?
162.68.....................    162.305  Must the parents or    No Change.................  Same as above.
162.603 *..................    162.405   guardians of minors
                                         who own Indian land
                                         obtain a lease
                                         before using the
                                         land?
162.82.....................    162.314  What supporting        No Change.................  Same as above.
162.604 *..................    162.414   documents must I
162.213 *..................              provide?
162.83.....................    162.317  How much rent must a   No Change.................  Same as above.
162.604 *..................    162.417   lessee pay?.
162.113....................    162.348  May the Secretary      No Change.................  Same as above.
162.611 *..................    162.451   waive administrative
                                         fees?
162.126....................    162.348  What happens if you    No Change.................  Same as above.
162.619 *..................    162.451   do not cure a lease
                                         violation?
162.164....................    162.352  What can I do if I     No Change.................  Same as above.
162.251 *..................    162.455   receive a trespass
                                         notice?
----------------------------------------------------------------------------------------------------------------
Note: Section numbers followed by an * are from final rule.

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

                                                                         Table of Burden for 25 CFR Part 162 (1076-0155)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Number of                                                                                             Total  Federal
              CFR section                   Number of        annual          Hourly  burden per       Total  annual     Salary \1\        Federal  burden per          annual       Salary \2\
                                           respondents      responses             response           hourly  burden                            response            burden  hours
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
162.301................................             500             500  30 min....................             250          $4,630   30 min....................             250          $4,630
162.401................................
162.309................................          14,500          14,500  2 hrs.....................          29,000         537,080   2 hrs.....................          29,000         537,080
162.409................................
162.312................................          14,500          14,500  1 hr......................          14,500         268,540   1 hr......................          14,500         268,540
162.412................................
162.313................................               0               0  0.........................               0               0   0.........................               0               0
162.413................................
162.316................................          14,500          14,500  30 min....................           7,250         134,270   30 min....................           7,250         134,270
162.416................................
162.325................................               0               0  0.........................               0               0   0.........................               0               0
162.425................................
162.334................................               0               0  0.........................               0               0   0.........................               0               0
162.437................................
162.319................................          14,500          14,500  15 min....................           3,625          66,156   15 min....................           3,625          66,156
162.419................................
162.320................................           3,625           3,625  15 min....................             906          16,779   15 min....................             906          16,779
162.420................................
162.339................................          14,500          14,500  30 min....................           7,250         134,270   30 min....................           7,250         134,270
162.442................................
162.341................................          14,500          14,500  15 min....................           3,625          66,156   15 min....................           3,625          66,156
162.444................................
162.302................................          14,500          14,500  1 hrs.....................          14,500         268,540   1 hrs.....................          14,500         268,540
162.402................................

[[Page 6505]]

 
162.305................................               0               0  0.........................               0               0   0.........................               0               0
162.405................................
162.314................................           7,250           7,250  3 hrs.....................          21,750         402,810   3 hrs.....................          21,750         402,810
162.414................................
162.317................................             725             725  30 min....................           1,450          26,854   30 min....................           1,450          26,854
162.417................................
162.342................................           7,250           7,250  15 min....................           1,813          33,576   15 min....................           1,813          33,576
162.445................................
162.348................................             145             145  30 min....................              73           1,352   30 min....................              73           1,352
162.451................................
162.352................................             145             145  30 min....................              73           1,352   30 min....................              73           1,352
162.455................................
                                        --------------------------------                            ---------------------------------                            -------------------------------
    Totals.............................          14,500         121,140                                     106,065       1,962,365                                      106,065      1,962,365
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ $18.52 x total hourly burden = total hourly burden cost.
\2\ $18.52 x total hourly burden = total Federal burden cost.

    In addition, BIA collects fees for processing submitted documents, 
as set forth in sections 162.342 and 162.445, which can be considered 
as part of the information collection burden.
    DOI invites comments on the information collection requirements in 
the proposed regulation. You may submit comments by telefacsimile at 
(202) 395-5806 or by e-mail at [email protected]. Please also 
send a copy of your comments to BIA at the location specified under the 
heading ADDRESSES. Note that requests for comments on the rule and the 
information collection are separate.
    You can receive a copy of BIA's submission to OMB by contacting the 
person listed in the FOR FURTHER INFORMATION CONTACT section, or by 
requesting the information from the BIA Information Collection 
Clearance Officer, 1951 Constitution Avenue, NW., Mail Stop 52 SIB, 
Washington, DC 20240.
    Comments should address: (1) Whether the proposed collection of 
information is necessary for the proper performance of the Program, 
including the practical utility of the information to BIA; (2) the 
accuracy of BIA's burden estimates; (3) ways to enhance the quality, 
utility, and clarity of the information collected; and (4) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.
    Please note that an agency may not sponsor or request, and an 
individual need not respond to, a collection of information unless it 
has a valid OMB Control Number. The valid OMB Control Number for this 
information collection is 1076-0155. However, OMB will assign a 
different temporary control number until the final rule is approved. At 
that time, the OMB Control Number will revert to 1076-0155.
    OMB must make a decision concerning the collection of information 
requirements in this proposed rule no sooner than 30 days, and no later 
than 60 days, after it is published in the Federal Register. Therefore, 
a comment is best assured of having its maximum effect if OMB receives 
it within 30 days of publication. Comments on information collection 
requirements do not relate, however, to the deadline for general public 
comments on the proposed rule, indicated in the DATES section.
    Organizations and individuals who submit comments on the 
information collection requirements should be aware that BIA keeps such 
comments available for public inspection during regular business hours. 
If you wish to have your name and address withheld from public 
inspection, you must state this prominently at the beginning of any 
comments you make. BIA will honor your request to the extent allowable 
by law.

List of Subjects in 25 CFR Part 162

    Indians--lands.

    Dated: January 6, 2004.
Aurene M. Martin,
Deputy Assistant Secretary--Indian Affairs.

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

PART 162--LEASES AND PERMITS

    1. The authority citation for part 162 is revised 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, 477, 635, 2218, 3701, 3702, 3703, 3712, 
3713, 3714, 3715, 3731, 3733, 4211; 44 U.S.C. 3101 et seq.

    2. Revise paragraphs (b) and (c) and add paragraph (d) to Sec. 
162.100 to read as follows:


Sec. 162.100  What are the purposes of this part?

* * * * *
    (b) This part includes five subparts, including separate, self-
contained subparts relating to Agricultural Leases (Subpart B), 
Residential Leases (Subpart C), Business Leases (Subpart D), and 
Special Requirements for Certain Reservations (Subpart E). Subpart E 
identifies special provisions applicable only to leases made under 
special acts of Congress that apply only to certain Indian 
reservations. Leases covered by subpart E are also subject to subparts 
A through D, except to the extent that subpart A through D are 
inconsistent with:

[[Page 6506]]

    (1) The provisions in subpart E; or
    (2) Any act of Congress under which the leases are made.
    (c) These regulations apply to all leases in effect when the 
regulations are promulgated.
    (d) Unless otherwise agreed by the parties, this part will not 
affect the validity or terms of any existing lease or any restatement 
of an existing lease.
    3. Amend Sec. 162.101 by:
    A. Revising the terms of ``Immediate family;'' ``Lease;'' ``Life 
Estate;'' ``Mortgage;'' ``Permit;''and ``Tribal land;'' and
    B. Removing the term ``Fair annual rental;'' and
    C. Adding in alphabetical order the terms ``Approval;'' ``Fair 
annual rental or fair market rental;'' ``Consent or consenting;'' 
``Grant or granting;'' ``Housing for public purposes;'' ``Single-family 
home;'' and ``Tribal land assignment,'' to read as follows:


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

* * * * *
    Approval means written authorization by the Secretary or a 
delegated official that is a part of the instrument being approved.
* * * * *
    Consent or consenting means the execution of a lease by the Indian 
landowner or by the Secretary on behalf of an individual Indian 
landowner.
    Fair annual rental or fair market rental means the amount of rental 
income that a leased tract of Indian land would most probably command 
in a comparable open and competitive market.
* * * * *
    Grant or granting means the process of consenting to a lease.
    Housing for public purposes means multi-family developments and 
single family residential developments administered by a Tribal Housing 
Authority (or other Tribally-Designated Housing Entity) or financed by 
a tribal/federal/state housing program.
    Immediate family means a spouse, brother, sister, aunt, uncle, 
niece, nephew, first cousin, lineal ancestor, lineal descendant, or 
when some other special relationship exists between the lessor and 
lessee or special circumstances exist that in the opinion of the 
Secretary warrant the approval of the residential lease.
* * * * *
    Lease means a written contract between Indian landowner(s) and a 
tenant or lessee, whereby the tenant or lessee is granted a right to 
possession of Indian land, for a specified purpose and duration. Unless 
otherwise provided, the use of this term will also include permits, as 
appropriate.
* * * * *
    Life estate means an interest in Indian land that expires upon the 
death of the interest holder(s) or some other person. A life estate is 
also referred to as ``life use.''
* * * * *
    Mortgage means a mortgage, deed of trust or other instrument that 
pledges a tenant's leasehold interest as security for a debt or other 
obligation owed by the tenant to a lender or other mortgagee. A 
mortgage of a leasehold of Indian land cannot pledge the beneficial or 
restricted title to the land.
* * * * *
    Permit means a written, non-assignable, contract between Indian 
landowners and the applicant for the permit, also referred to as a 
permittee, whereby the permittee is granted a revocable privilege to 
use Indian land or government land, for a specified purpose.
* * * * *
    Single-family home means a building with one to four dwelling units 
on a tract of land under a single lease (also referred to as a homesite 
lease).
* * * * *
    Tribal land means the surface estate of land, or any interest 
therein, held by the United States in trust for, or for the use and 
benefit of, a tribe, band, community, group or pueblo of Indians, or an 
Indian corporation chartered under 25 U.S.C. 477. The term also 
includes the surface estate of land or any interest therein held by a 
tribe, band, community, group or pueblo of Indians that is subject to 
federal restrictions against alienation or encumbrance.
    Tribal land assignment means a contract or agreement that conveys 
to tribal members any rights for temporary use of tribal lands, 
assigned by the Indian tribes in accordance with tribal laws or 
customs.
* * * * *
    4. Revise Sec. 162.102 to read as follows:


Sec. 162.102  What land, or interests in land, are subject to this 
part?

    (a) This part applies to Indian land and government land, including 
any tract in which an individual Indian or tribe owns an interest in 
trust or restricted status.
    (b) Where a life estate and remainder interest are both owned in 
trust or restricted status, the life estate and remainder interest must 
both be leased under this part, unless the lease is for less than one 
year in duration. Unless otherwise provided by the document creating 
the life estate or by agreement, rent payable under the lease must be 
paid to the life tenant under part 179 of this chapter.
    (c) In approving a lease under this part, we will not lease any fee 
interest in Indian land, nor will we collect rent on behalf of any fee 
owners. The leasing of the trust and restricted interests of the Indian 
landowners will not be conditioned on a lease having been obtained from 
the owners of any fee interests. Where all of the trust or restricted 
interests in a tract are subject to a life estate held in fee status, 
we will approve a lease of the remainder interests only if such action 
is necessary to preserve the value of the land or protect the interests 
of the Indian landowners.
    (d) This section applies to tribal land leased under a corporate 
charter that we issue under 25 U.S.C. 477, or under a special act of 
Congress authorizing leases without our approval. This part does not 
apply to these leases except to the extent that the authorizing 
statutes require us to enforce the leases on behalf of the Indian 
landowners.
    5. Revise Sec. 162.105 to read as follows:


Sec. 162.105  Can BIA combine for leasing purposes tracts that have 
different Indian landowners?

    (a) A lease negotiated by Indian landowners may cover more than one 
tract of Indian land, but the minimum consent requirements for leases 
granted by Indian landowners will apply to each tract separately. We 
may combine multiple tracts into a unit for leases negotiated by us, if 
we determine that unitization is in the Indian landowners' best 
interests and consistent with the efficient administration of the land.
    (b) Unless otherwise provided in the lease, the rent or other 
consideration derived from a unitized lease will be distributed based 
on the size of each owner's interest in proportion to the acreage 
within the entire unit. Unless otherwise agreed upon by the Indian 
landowners, market rent will be based on the value of the entire leased 
unit, without any consideration being given to the relative or 
contributive values of the individual tracts within the unit.
    6. Revise Sec.Sec. 162.108, 162.109, and 162.110 to read as 
follows:


Sec. 162.108  What are BIA's responsibilities in administering and 
enforcing leases?

    (a) We will make reasonable efforts to see that lessees meet their 
payment obligations to Indian landowners through the collection of rent 
on behalf of the landowners and the prompt initiation of appropriate 
collection and

[[Page 6507]]

enforcement actions. Upon actual notice of a violation, we will also 
assist landowners in the enforcement of direct payment obligations, and 
in the exercise of any negotiated remedies that apply in addition to 
specific remedies made available to us under these or other 
regulations.
    (b) We will make reasonable efforts to see that lessees comply with 
the requirements in their leases through appropriate inspections and 
enforcement actions as needed to protect the interests of the Indian 
landowners and respond to concerns expressed by them. We will take 
emergency action as needed to preserve the value of the land.
    (c) In those cases where tribal law or ordinances are in place we 
may defer enforcement responsibilities to the tribe.


Sec. 162.109  What laws apply to leases granted or approved under this 
part?

    (a) Leases granted or approved under this part are subject to 
Federal laws of general applicability and any specific federal 
statutory requirements that are not incorporated in this part.
    (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 substantially and materially inconsistent with this part or 
other applicable Federal law. This part may be superseded or modified 
by tribal laws, so long as:
    (1) The tribal laws are consistent with the enacting tribe's 
governing documents;
    (2) The tribe has notified us of the superseding or modifying 
effect of the tribal laws;
    (3) 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
    (4) The superseding or modifying of the regulation applies only to 
tribal land.
    (c) Tribal laws may include laws assigning the responsibility for 
leasing to a Division, Department, or local governmental unit of a 
tribe, and any lease with that Division, Department, or local 
governmental unit is considered to be a lease with that tribe.
    (d) State laws may apply to a lease of Indian land if the laws are 
expressly agreed to by the parties to the lease, and by the tribe, if 
the lease is for individually-owned land. Unless expressly provided in 
the lease of tribal land, or the tribe's consent for a lease of 
individually owned land, the agreement does not waive the tribe's 
sovereign immunity or provide its consent to state civil regulatory 
jurisdiction.


Sec. 162.110  Can tribes administer this part on behalf of the 
Secretary or BIA?

    Any tribe or tribal organization that is administering programs or 
services under 25 CFR part 900:
    (a) Can administer the provisions in this part that authorize or 
require us to take certain actions; and
    (b) Cannot administer the provisions of this part relating to the 
granting, approval, or enforcement of leases and permits.
    7. Add Sec. 162.114 to read as follows:


Sec. 162.114  Who should I contact with questions concerning the 
leasing process?

    The Indian landowner or prospective tenant should contact the local 
BIA Realty Office or any tribal realty office for answers to questions 
about the leasing process.
    8. Add Sec. 162.115 to read as follows:


Sec. 162.115  Does the information submission require approval by the 
Office of Management and Budget?

    Yes, information as requested in Subparts B, C, D and E requires 
approval by the Office of Management and Budget. OMB has assigned OMB 
Control Number 1076-0155. Please note that, as a federal agency, we 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.
    9. Add subparts C and D to read as follows:
Subpart C--Residential Leases

General Provisions

162.300 What types of leases does this subpart cover?
162.301 How will the BIA accommodate tribal laws on land under a 
residential lease?

How To Obtain a Lease

162.302 Can a tenant negotiate a residential lease with the Indian 
landowners?
162.303 When can the Indian landowners grant a residential lease?
162.304 What are the consent requirements for a residential lease on 
a fractionated tract?
162.305 Who can represent the Indian landowners in negotiating or 
granting a residential lease?
162.306 When can BIA grant a permit for residential use?
162.307 Must the land be appraised before BIA's grant or approval of 
a residential lease?
162.308 What documents must BIA review before granting or approving 
a residential lease?
162.309 How and when will BIA decide whether to grant or approve a 
residential lease?
162.310 When will a residential lease be effective?
162.311 When is a decision to grant or approve a residential lease 
effective?
162.312 Must a residential lease or permit be recorded?

Lease Requirements

162.313 Is there a standard residential lease form?
162.314 Are there any provisions that must be included in a 
residential lease?
162.315 What requirements must be satisfied in executing a 
residential lease?
162.316 How should a residential lease describe the land?
162.317 How much rent must be paid under a residential lease?
162.318 Must the rent be adjusted under a residential lease?
162.319 When are rental payments due under a residential lease?
162.320 Will untimely rental payments incur interest charges or 
penalties?
162.321 To whom can rental payments be made under a residential 
lease?
162.322 What form of rental payment can be accepted under a 
residential lease?
162.323 What other types of payments are required under a 
residential lease?
162.324 How long can the term of a residential lease run?
162.325 Can a residential lease be amended, assigned, sublet, or 
mortgaged?
162.326 How will BIA decide whether to approve an amendment to a 
residential lease?
162.327 Can a residential lease be assigned without the consent of 
the Indian landowners?
162.328 May a residential lease be sublet without the consent of the 
Indian landowners?
162.329 May a residential lease be mortgaged without the consent of 
the Indian landowners?
162.330 May Indian landowners withhold their consent to an 
assignment, sublease, or mortgage?
162.331 When will a decision to approve an amendment, assignment, 
sublease, or mortgage under a residential lease be effective?
162.332 How can the leased premises be used under a residential 
lease?
162.333 Can improvements be made under a residential lease?
162.334 Who will own the improvements made under a residential 
lease?
162.335 What indemnities are required under a residential lease?
162.336 How will payment rights and obligations relating to 
residential land be allocated between the Indian landowners and the 
tenant?
162.337 Can a residential lease provide for negotiated remedies in 
the event of a violation?
162.338 Must a tenant provide a bond under a residential lease?
162.339 What forms of bonds can be accepted under a residential 
lease?
162.340 How will a bond be administered?
162.341 Is insurance required under a residential lease?

Lease Administration

162.342 Are there administrative fees for actions relating to 
residential leases?

[[Page 6508]]

162.343 Will BIA notify a tenant when a rental payment is due under 
a residential lease?

Lease Enforcement

162.344 What will BIA do if rental payments are not made as required 
by a residential lease?
162.345 What fees are assessed on delinquent rental payments due 
under a residential lease?
162.346 How will BIA determine whether the activities of a tenant 
under a residential lease comply with the terms of the lease?
162.347 What will BIA do about a violation under a residential 
lease?
162.348 What will BIA do if a violation of a residential lease is 
not cured on time?
162.349 Will BIA's appeal bond rules apply to cancellation 
decisions?
162.350 When is a cancellation of a residential lease effective?
162.351 Can BIA take emergency action if leased premises are 
threatened?
162.352 What will BIA do if a tenant remains in possession after a 
lease expires or is canceled?
162.353 May a lease be terminated before its expiration date?
162.354 What happens if the tenant abandons or does not diligently 
develop the leased premises?
Subpart D--Business Leases

General Provisions

162.400 What types of leases are covered by this subpart?
162.401 How will BIA accommodate tribal laws on land under a 
business lease?

How To Obtain a Lease

162.402 How and when can a business lease be obtained?
162.403 When can the Indian landowners grant a business lease?
162.404 What are the consent requirements for a business lease on a 
fractionated tract?
162.405 Who can represent the Indian landowners in negotiating or 
granting a business lease?
162.406 When can BIA grant a permit for business use?
162.407 How will BIA estimate the fair market rental of Indian land?
162.408 What documents must BIA review before granting or approving 
a business lease?
162.409 How and when will BIA decide whether to approve a business 
lease?
162.410 When will a business lease be effective?
162.411 For purposes of appeal, when will a BIA decision to grant or 
approve a business lease be effective?
162.412 Must a business lease or permit be recorded?

Lease Requirements

162.413 Is there a standard business lease form?
162.414 Are there any provisions that must be included in a business 
lease?
162.415 Are there any formal requirements that must be satisfied in 
the execution of a business lease?
162.416 How should the land be described in a business lease?
162.417 How much rent must be paid under a business lease?
162.418 Must the rent be adjusted under a business lease?
162.419 When are rental payments due under a business lease?
162.420 Will untimely rental payments made under a business lease be 
subject to interest charges or late payment penalties?
162.421 To whom can rental payments be made under a business lease?
162.422 What form of rental payment can be accepted under a business 
lease?
162.423 What other types of payments are required under a business 
lease?
162.424 How long can the term of a business lease run?
162.425 Can a business lease be amended, assigned, sublet, or 
mortgaged?
162.426 How and when can a business lease be amended?
162.427 May a lease be assigned without the consent of the Indian 
landowners?
162.428 May a lease be subleased without the consent of the Indian 
landowners and the approval of the Secretary?
162.429 How will BIA decide whether to approve an assignment or 
sublease under a business lease?
162.430 May a lease be mortgaged without the consent of the Indian 
landowners?
162.431 How will BIA decide whether to approve a leasehold mortgage 
under a business lease?
162.432 When will a BIA decision to approve an amendment, 
assignment, sublease, or mortgage under a business lease be 
effective?
162.433 Must an amendment, assignment, sublease, or mortgage 
approved under a business lease be recorded?
162.434 When will BIA take action on an amendment, assignment, 
sublease, or mortgage under a business lease?
162.435 How can the leased premises be used under a business lease?
162.436 Can improvements be made under a business lease?
162.437 Who will own the improvements made under a business lease?
162.438 What indemnities are required under a business lease?
162.439 How will payment rights and obligations relating to business 
leases be allocated between the Indian landowners and the lessee?
162.440 Can a business lease provide for negotiated remedies in the 
event of a violation?
162.441 Must a lessee or assignee provide a bond for a lease?
162.442 What forms of bond can be accepted under a business lease?
162.443 How will a bond be administered?
162.444 Will we require insurance for a business lease?

Lease Administration

162.445 Will administrative fees be charged for actions relating to 
business leases?
162.446 Will we notify a lessee when a rental payment is due under a 
business lease?

Lease Enforcement

162.447 What will we do if rental payments are not made in the time 
and manner required by a business lease?
162.448 Will any special fees be assessed on delinquent rental 
payments due under a business lease?
162.449 How will we determine whether the activities of a lessee 
under a business lease are in compliance with the terms of the 
lease?
162.450 What will we do in the event of a violation under a business 
lease?
162.451 What will we do if a violation of a business lease is not 
cured to our satisfaction within the requisite time period?
162.452 Will BIA's regulations concerning appeal bonds apply to 
cancellation decisions involving business leases?
162.453 When will a cancellation of a business lease be effective?
162.454 Can we take emergency action if the leased premises are 
threatened with immediate and significant harm?
162.455 What will we do if a lessee holds over after the expiration 
or cancellation of a business lease?
162.456 May a lease be terminated before its expiration date?
162.457 What happens if the lessee abandons the lease?

Subpart C--Residential Leases

General Provisions


Sec. 162.300  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 improvements thereon) on 
tribal or allotted land, for the purposes of Indian housing. The 
regulations in this subpart also apply to permits made for Indian 
housing purposes, if appropriate. Leases covered by this subpart would 
authorize the construction or use of:
    (1) A single-family home; and
    (2) Housing for public purposes.
    (b) Leases for other residential development (for example, multi-
family developments and single family residential developments for 
profit) are covered under subpart D of this part.


Sec. 162.301  How will BIA accommodate tribal laws on land under a 
residential lease?

    (a) Unless prohibited by Federal law, we will recognize and 
accommodate tribal laws regulating activities on land under a 
residential lease, including tribal laws relating to land use, 
environmental protection, and historic or cultural preservation.
    (b) This paragraph applies when this subpart is inconsistent with a 
tribal law and Sec. 162.109 prohibits tribal law to supersede or modify 
this subpart. We may waive provisions of this subpart

[[Page 6509]]

under 25 CFR part 1, if the waiver does not:
    (1) Violate a Federal statute or judicial decision; or
    (2) Conflict with our general trust responsibility under Federal 
law.

How To Obtain a Lease


Sec. 162.302  Can a tenant negotiate a residential lease with the 
Indian landowners?

    Yes, a tenant can obtain a residential lease through direct 
negotiation. We will assist prospective tenants in contacting the 
Indian landowners or their representatives to negotiate a lease, 
including providing the names and addresses of the Indian landowners 
upon written request. We will assist the Indian landowners in those 
negotiations upon request.


Sec. 162.303  When can the Indian landowners grant a residential lease?

    (a) Tribes may grant residential leases of tribally-owned land, 
including any tribally-owned undivided interest(s) in a fractionated 
tract, as evidenced by an appropriate tribal authorization and subject 
to our approval. Where tribal land is subject to a land assignment made 
to a tribal member or some other individual under tribal law or custom, 
the individual and the tribe must both grant the lease, subject to our 
approval.
    (b) Adult Indian landowners, or emancipated minors, may grant 
residential leases of their land, including undivided interests in 
fractionated tracts, subject to our approval.
    (c) In order to grant a residential lease of a fractionated tract, 
the Indian landowners must:
    (1) Obtain approval of the required percentage of the owners of the 
undivided interest in the tract as required by Sec. 162.304; and
    (2) Obtain our approval.
    (d) The proceeds from a residential lease that we approve under 
paragraph (c) of this section must be distributed to all owners of 
undivided interests in the tract covered by the lease.
    (1) The amount of the proceeds distributed to each owner must be 
determined in accordance with the portion of the undivided interest in 
the tract covered under the lease owned by that owner.
    (2) This paragraph applies where the owners of the applicable 
percentage of interests under Sec. 162.304 grant a residential lease on 
behalf of all of the Indian owners of a fractionated tract. The non-
consenting Indian landowners (including those on whose behalf we have 
granted consent under Sec. 162.304(c)) must receive a fair market 
rental, even if the land is being leased at less than a fair market 
rental under Sec. 162.317.
    (e) Upon request of the Indian landowner, we will assist the tenant 
in obtaining the grant of the applicable percentage of interests under 
Sec. 162.304 of this subpart.


Sec. 162.304  What are the consent requirements for a residential lease 
on a fractionated tract?

    (a) Except for Alaska, the Indian landowners must determine the 
percentage referred to in the Indian Land Consolidation Act Amendments 
of 2000, 25 U.S.C. section 2218, as follows:

------------------------------------------------------------------------
                                               Then the percentage of
 If the number of owners of the undivided    owners who must approve of
       interest in the tract is. . .              the lease is. . .
------------------------------------------------------------------------
(1) Five or fewer.........................  100 percent.
(2) More than five but less than 11.......  80 percent.
(3) More than 10 but fewer than 20........  60 percent.
(4) Twenty or more........................  Over 50 percent.
------------------------------------------------------------------------

    (b) In Alaska, residential leases of Indian lands may be negotiated 
by the Indian landowners, or their representatives who may execute 
leases under Sec. 162.305, provided:
    (1) The owners of a majority of the interests have negotiated a 
lease satisfactory to us;
    (2) We grant the lease on behalf of those persons for whom we are 
authorized to grant leases under paragraph (c) of this section; and
    (3) The total combined consent of the owners and us provides 100 
percent consent.
    (c) We may give written consent to a lease, and that consent must 
be counted in the percentage ownership described in paragraphs (a) or 
(b) of this section, 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) Individuals whose whereabouts are unknown to us, after 
reasonable attempts are made to locate such individuals;
    (3) Individuals who are found to be non compos mentis, or 
determined to be an adult in need of assistance or under legal 
disability as defined in part 115 of this chapter;
    (4) Orphaned minors;
    (5) Individuals who have given us a written power of attorney to 
lease their land; and
    (6) The individual landowners of a fractionated tract where:
    (i) We have given the Indian landowners written notice of our 
intent to grant 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.


Sec. 162.305  Who can represent the Indian landowners in negotiating or 
granting a residential lease?

    The following individuals or entities may represent an individual 
Indian landowner:
    (a) An adult acting on behalf of his or her minor children;
    (b) A guardian, conservator, or other fiduciary appointed by a 
court of competent jurisdiction to act on behalf of an individual 
Indian landowner;
    (c) An adult or legal entity who has been given a written power of 
attorney that:
    (1) Meets all of the formal requirements of any applicable Federal, 
tribal, or state law;
    (2) Identifies the attorney-in-fact and the land to be leased; and
    (3) Describes the scope of the power granted and any limits 
thereon.
    (d) Any person who is authorized to practice before the Department 
of the Interior under 43 CFR Part 1.


Sec. 162.306  When can BIA grant a permit for residential use?

    (a) We may grant a permit for residential use in the same manner as 
we would grant a residential lease under Sec. 162.304(c), for example, 
to keep an Indian landowner's house occupied while the landowner's 
estate is going through probate. We may also grant a permit on behalf 
of individual Indian landowners, without prior notice, if it is 
impractical to provide notice to the owners and no substantial injury 
to the land will occur, or to protect the trust resource, but we must 
give the Indian landowners subsequent immediate notice and advise them 
of their right to appeal the decision under part 2 of this chapter. If 
the permit is granted to protect the trust resource, the permit will be 
effective immediately under part 2 of this chapter.
    (b) We may grant a permit for residential use on government land.
    (c) A tribe may grant a permit, subject to our approval, in the 
same manner as it would grant a lease under Sec. 162.303.
    (d) Permits may be revoked upon reasonable notice to the permittee, 
as specified in the permit.

[[Page 6510]]

Sec. 162.307  Must the land be appraised before BIA's grant or approval 
of a residential lease?

    (a) To support the Indian landowners in their negotiations, and to 
assist in our consideration of whether a residential lease is in the 
Indian landowners' best interest, we must determine the fair market 
rental of the land before our grant or approval of the lease, even if 
the land may be leased at less than a fair market rental under Sec. 
162.317, except as provided in paragraph (c) of this section.
    (b) A fair market rental may be determined by referral to published 
residential rental rates in the area, appraisal, or any other 
appropriate valuation method. Where an appraisal or other valuation is 
needed to determine the fair market rental, the appraisal or valuation 
must be prepared in accordance with the Uniform Standards of 
Professional Appraisal Practice (USPAP).
    (c) Upon receipt of an appropriate Tribal Resolution, we may not 
require an appraisal for a lease on tribal land.


Sec. 162.308  What documents must BIA review before granting or 
approving a residential lease?

    (a) The Indian landowner and the tenant must provide an executed 
lease that complies with the requirements of this part. We will assist 
the Indian landowner in this process upon request.
    (b) In addition to the executed lease, the parties must provide the 
following supporting documents:
    (1) If the tenant is a corporation, partnership or other legal 
entity, it must provide organizational and financial documents, as 
needed to show that the lease will be enforceable against the tenant 
and the tenant will be able to perform all of its lease obligations.
    (2) Where a bond is required under Sec. 162.338, the bond must be 
furnished before we consider the lease application complete under Sec. 
162.309(b).
    (3) The tenant should provide environmental and archaeological 
reports, surveys, and site assessments, as needed to facilitate BIA 
compliance with NEPA and other applicable Federal and tribal land use 
requirements. We will adopt any tribal environmental review as our NEPA 
review, to the extent such adoption is allowed under our procedure 
implementing NEPA.
    (4) The tenant may be required to provide proof that the proposed 
use is in conformance with applicable tribal ordinances.


Sec. 162.309  How and when will BIA decide whether to grant or approve 
a residential lease?

    (a) Before we grant or approve a lease, we must determine in 
writing 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 
(including approval of the appropriate review documents under NEPA);
    (3) Assure ourselves that adequate consideration has been given, as 
appropriate, to:
    (i) The relationship between the use of the leased premises and the 
use of neighboring lands;
    (ii) The height, quality, and safety of any structures or other 
facilities to be constructed on the leased premises;
    (iii) The availability of police and fire protection, utilities, 
and other essential community services;
    (iv) The availability of judicial forums for all criminal and civil 
matters arising on the leased premises; and
    (v) The effect on the environment of the proposed land use.
    (4) Require any lease modifications or mitigation measures that are 
needed to satisfy any requirements, or any other Federal or tribal land 
use requirements.
    (b) We will take action on the lease within 30 days of the date of 
our receipt of the lease and supporting documents. (This deadline 
applies only if the lease is in an approved form and we have received 
all of the documents that we need to support the findings required by 
paragraph (a) of this section.) If we do not act within 30 days, the 
Indian landowner may take appropriate action under part 2 of this 
chapter.
    (c) If we approve or disapprove a lease, we will notify the parties 
immediately and advise them of their right to appeal the decision under 
part 2 of this chapter. Upon grant or approval of a residential lease, 
we will provide a copy to the tenant and make the lease available to 
the Indian landowner(s) upon request.


Sec. 162.310  When will a residential lease be effective?

    Unless otherwise provided in the lease, a residential lease will be 
effective on the date on which the lease is granted or approved by us. 
A residential lease may be made effective on some past or future date, 
by agreement, but such a lease may not be granted or approved more than 
one year before the date on which the lease term is to commence. All 
approvals must be in writing.


Sec. 162.311  When is a decision to grant or approve a residential 
lease effective?

    Our decision to grant or approve a residential lease will be 
effective immediately, notwithstanding any appeal that may be filed 
under part 2 of this chapter.


Sec. 162.312  Must a residential lease or permit be recorded?

    (a) A residential lease or permit must be recorded in our Land 
Titles and Records Office with jurisdiction over the land. We will 
record the lease or permit immediately following our grant or approval 
under this subpart.
    (b) Residential leases of tribal land that do not require our 
approval, under Sec. 162.102 of this part, must be recorded by the 
tribe in our Land Titles and Records Office with jurisdiction over the 
land.

Lease Requirements


Sec. 162.313  Is there a standard residential lease form?

    No, there is no standard residential lease form. We will assist the 
Indian landowners in drafting lease provisions that conform to the 
requirements of this part.


Sec. 162.314  Are there any provisions that must be included in a 
residential lease?

    Yes, in addition to the other requirements of this part, all 
residential leases must include the following provisions.
    (a) The obligations of the tenant 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.
    (b) Nothing in the lease must delay or prevent termination of 
Federal trust responsibilities for the land during the lease's term.
    (c) Termination of Federal trust responsibilities for the land does 
not abrogate the lease.
    (d) The owners of the land and the tenant and its surety or 
sureties must be notified of any change in the status of the land.
    (e) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises.
    (f) The tenant must comply with all applicable laws, ordinances, 
rules, regulations, and other legal requirements, including tribal laws 
and leasing policies.

[[Page 6511]]

Sec. 162.315  What requirements must be satisfied in executing a 
residential lease?

    (a) A residential lease must identify the Indian landowners and 
their respective interests in the leased premises, and the lease must 
be granted by or on behalf of each of the Indian landowners. One who 
executes a lease in a representative capacity under Sec. 162.305 must 
identify the owner being represented and the authority under which such 
action is being taken.
    (b) A residential lease must be executed by individuals having the 
necessary capacity and authority to bind the tenant under applicable 
law.
    (c) A residential lease must include a citation of the provisions 
in this subpart that authorize our grant or approval, along with a 
citation of the formal documents by which such authority has been 
delegated to the official taking such action.


Sec. 162.316  How should a residential lease describe the land?

    A residential lease should describe the leased premises by 
reference to a public survey, if possible. The lease must include a 
legal description or other description that is sufficient to identify 
the leased premises. Where there are undivided interests owned in fee 
status, the aggregate percentage of trust and restricted interests 
should be identified in the description of the leased premises.


Sec. 162.317  How much rent must be paid under a residential lease?

    (a) A residential lease must provide for the payment of a fair 
market rental at the beginning of the lease term and at specified times 
during the term of the lease, unless a lesser amount is permitted under 
paragraphs (b) or (c) of this section. The tenant's rent payments will 
be in fixed amounts.
    (b) We will approve a residential lease of tribal land at a nominal 
rent, or at less than a fair market rental, if such a rent is 
negotiated or established by the tribe.
    (c) We will approve a residential lease of individually-owned land 
at a nominal rent or at less than a fair market rental, if the tenant 
is a member of the Indian landowner's immediate family; a co-owner in 
the lease tract; when some other special relationship exists between 
the lessor and lessee or special circumstances exist that in the 
opinion of the Secretary warrant the approval of the conveyance.


Sec. 162.318  Must the rent be adjusted under a residential lease?

    (a) A residential lease is not required to allow for rental 
adjustments, unless the parties agree to provide for periodic 
adjustments in the lease.
    (b) If rental adjustments are provided for, the lease must specify:
    (1) How adjustments are made;
    (2) Who makes the adjustments;
    (3) When the adjustments are effective; and
    (4) How disputes about the adjustments are resolved.


Sec. 162.319  When are rental payments due under a residential lease?

    A residential lease must specify the dates on which all rental 
payments are due. Unless otherwise provided in the lease, rental 
payments may not be made or accepted more than one year in advance of 
the due date. Rent payments are due at the time specified in the lease, 
regardless of whether the tenant receives an advance billing or other 
notice that a payment is due.


Sec. 162.320  Will untimely rental payments incur interest charges or 
penalties?

    A residential lease must specify the rate at which interest will 
accrue on any rental payment not made by the due date or any other date 
specified in the lease. A lease may also identify additional late 
payment penalties that will apply if a rental payment is not made by a 
specified date. Unless otherwise provided in the lease, such interest 
charges and late payment penalties will apply in the absence of any 
specific notice to the tenant from us or the Indian landowners, and the 
failure to pay such amounts will be treated as a lease violation under 
Sec. 162.347.


Sec. 162.321  To whom can rental payments be made under a residential 
lease?

    (a) A residential lease must specify whether rental payments will 
be made directly to the Indian landowners or to us on behalf of the 
Indian landowners. If the lease provides for payment to be made 
directly to the Indian landowners, the lease must also require that the 
tenant retain specific documentation evidencing proof of payment, such 
as canceled checks, cash receipt vouchers, or copies of money orders or 
cashier's checks.
    (b) Rental payments made directly to the Indian landowners must be 
made to the parties and addresses specified in the lease, unless the 
tenant receives notice of a change of ownership or address. Unless 
otherwise provided in the lease, rental payments may not be made 
payable directly to anyone other than the Indian landowners.
    (c) A lease that provides for rental payments to be made directly 
to the Indian landowners must also provide for such payments to be 
suspended and the rent thereafter paid to us, rather than directly to 
the Indian landowners, if:
    (1) An Indian landowner dies;
    (2) An Indian landowner requests that payment be made to us;
    (3) An Indian landowner is found by us to be in need of assistance 
in managing his/her financial affairs; or
    (4) We determine, in our discretion and after consultation with the 
Indian landowner(s), that direct payment should be discontinued.


Sec. 162.322  What form of rental payment can be accepted under a 
residential lease?

    (a) When rental payments are made directly to the Indian 
landowners, a residential lease must specify the type of payment that 
is acceptable to the owners.
    (b) Payments made to us may be delivered in person or by mail. We 
will not accept cash, foreign currency, or third-party checks. We will 
accept:
    (1) Personal or business checks drawn on the account of the tenant;
    (2) Money orders;
    (3) Cashier's checks;
    (4) Certified checks; or
    (5) Electronic funds transfer payments.


Sec. 162.323  What other types of payments are required under a 
residential lease?

    (a) The tenant may be required to pay additional fees, taxes, and 
assessments associated with the use of the land, as determined by the 
tribe having jurisdiction over the land. The tenant must pay these 
amounts to the appropriate tribal office.
    (b) Except as otherwise provided in part 171 of this chapter, if 
the leased premises are within an Indian irrigation project or drainage 
district, the tenant must pay all operation and maintenance charges 
that accrue during the lease term. Payment must be to the appropriate 
office in charge of the irrigation project or drainage district.


Sec. 162.324  How long can the term of a residential lease run?

    (a) A residential lease must provide for a definite lease term, 
specifying the commencement date. The commencement date of the lease 
may not be more than one year after the date on which the lease is 
granted or approved.
    (b) The lease term must be reasonable, given the purpose of the 
lease and the level of investment required. Unless otherwise provided 
by statute, the maximum term may not exceed 50 years. The lease may 
provide for a primary term of less than 50 years with a provision for 
renewal(s), so long as the maximum term, including the renewal(s), does 
not exceed 50 years. A residential lease may not be extended by 
holdover.

[[Page 6512]]

    (c) Where the Secretary grants a lease under Sec. 162.304(c)(1) on 
behalf of undetermined heirs or devisees of an individual Indian 
decedent owning 100 percent interest in the land, the maximum term of 
that lease may not exceed 2 years.
    (d) If an option to renew is provided, the lease must specify:
    (1) The time and manner in which the option must be exercised; and
    (2) Any additional consideration which will be due upon the 
exercise of the option or the commencement of the renewal period.


Sec. 162.325  Can a residential lease be amended, assigned, sublet, or 
mortgaged?

    Yes, a residential lease can be amended, assigned, sublet, or 
mortgaged in accordance with Sec.Sec. 162.326 to 162.331.


Sec. 162.326  How will BIA decide whether to approve an amendment to a 
residential lease?

    We will approve a residential lease amendment if:
    (a) The required consents have been obtained from the Indian 
landowners (under Sec. 162.304) and any mortgagee or any other 
sureties; and
    (b) We find the amendment to be in the best interest of the Indian 
landowners, under the standards set forth in Sec. 162.309.


Sec. 162.327  Can a residential lease be assigned without the consent 
of the Indian landowners?

    (a) The lease may be assigned without the consent of the Indian 
landowners if the assignee agrees in writing to assume all of the 
tenant's obligations under the lease, including bonding requirements, 
and:
    (1) The lease provides for assignments without further consent of 
the landowners;
    (2) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance; or
    (3) As specified in the lease.
    (b) If the owners' consent is required, it must be obtained in the 
same manner as a new lease, unless the lease authorizes one or more of 
the Indian landowners to consent on behalf of all such owners.
    (c) Consent must be obtained from the holders of any bonds or 
mortgages.
    (d) Except as provided in paragraph (e) of this section, the 
assignment must be approved by the Secretary. Such approval will not be 
withheld providing that our approval will protect the best interests of 
the Indian landowners. To make that determination we will consider 
whether:
    (1) The tenant is not in default, and will remain liable under the 
lease;
    (2) The assignee agrees to be bound by the terms of the lease;
    (3) The proposed use by the assignee will require an amendment of 
the lease;
    (4) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (5) The assignee has provided supporting documents which 
demonstrate that the lease will be enforceable against the assignee, 
and that the assignee will be able to perform its obligations under the 
lease.
    (e) The lease may be assigned without our approval 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 
under the lease; and
    (3) The assignee agrees in writing that any tenant to whom it 
transfers the lease will be another member of the tribe, a person who 
is eligible to be a member, a Tribal Housing Authority (or other 
Tribally-Designated Housing Entity), or the tribe. If no tribal member 
or person who is eligible to be a member or Tribal Housing Authority 
(or other Tribally-Designated Housing Entity) or the tribe wishes to 
lease the property, the lease may be transferred to another Indian, 
consistent with tribal law. If no Indian wishes to lease the property, 
the lease may be transferred to a non-Indian, consistent with tribal 
law.
    (f) The assignment must be recorded under Sec. 162.312.
    (g) If the lease was approved at less than fair market rent under 
Sec. 162.317(c), and the assignee is not a co-owner or a member of the 
Indian landowner's immediate family, the assignment must provide for 
the assignee to pay fair market rent to the Indian landowner.


Sec. 162.328  May a residential lease be sublet without the consent of 
the Indian landowners?

    (a) The lease may provide for subleasing without the consent of the 
Indian landowners when the sublease is part of a housing development 
for public purposes for which a general plan has been submitted and 
approved and we have approved a sublease form for use in the project. 
Unless otherwise specified in the lease, the Indian landowners must 
consent to a sublease of a single-family home in the same manner as the 
initial lease.
    (b) Consent to the sublease must be obtained from any sureties.
    (c) The subtenant must agree to be bound by the terms of the lease.
    (d) If the lease was approved at less than fair market rent under 
Sec. 162.317(c), and the subtenant is not a co-owner or a member of the 
Indian landowner's immediate family, the sublease must provide for the 
subtenant to pay fair market rent to the Indian landowner.
    (e) Except as provided in paragraph (e) of this section or as 
provided in the lease, we must approve the sublease. We will not 
withhold approval providing that our approval will protect the best 
interests of the Indian landowners. To make that determination we will 
consider whether:
    (1) The tenant is not in default, and will remain liable under the 
lease;
    (2) The subtenant agrees to be bound by the terms of the lease;
    (3) The Indian landowner should receive some or all of any income 
received by the tenant for the sublease;
    (4) The proposed use by the subtenant will require an amendment of 
the lease;
    (5) The value of any part of the leased premises not covered by the 
sublease would be adversely affected; and
    (6) The subtenant has provided supporting documents which 
demonstrate that the sublease will be enforceable against the 
subtenant, and that the subtenant will be able to perform its 
obligations under the sublease.
    (f) Part of the leased premises may be sublet without our approval 
when:
    (1) The sublease is for housing for public purposes; and
    (2) We have approved a sublease form and rent schedule for use in 
the project.
    (g) The sublease should be recorded under Sec. 162.312.
    (h) A sublease under paragraph (f) of this section should be 
recorded under Sec. 162.312. All other subleases must be recorded.


Sec. 162.329  May a residential lease be mortgaged without the consent 
of the Indian landowners?

    (a) The residential lease may be mortgaged without further consent 
of the Indian landowners if the lease contains a general authorization 
for such a mortgage, and it states what law would apply in case of 
foreclosure.
    (b) We must approve the leasehold mortgage. We will approve a 
leasehold mortgage under a residential lease if:
    (1) The required consents have been obtained from the Indian 
landowners and the holders of the tenant's bond; and
    (2) We find that our approval is in the best interests of the 
Indian landowners.
    (c) In making the finding required by paragraph (b)(4) of this 
section, we will consider whether:

[[Page 6513]]

    (1) The tenant's ability to comply with the lease would be 
adversely affected by any new loan obligations;
    (2) Any lease provisions would require modification to be 
consistent with the mortgage;
    (3) The remedies available to us or to the Indian landowners would 
be limited (beyond any additional notice and cure rights to be afforded 
to the mortgagee) in the event of a lease violation; and
    (4) Any rights of the Indian landowners would be subordinated or 
adversely affected in the event of a loan default by the tenant.


Sec. 162.330  May Indian landowners withhold their consent to an 
assignment, sublease, or mortgage?

    Yes, Indian landowners may withhold their consent to an assignment, 
sublease, or mortgage. However, Indian landowners are encouraged not to 
withhold their consent unreasonably.
    (a) A lease may require that:
    (1) The Indian landowners specify their reasons for withholding 
consent; and
    (2) The owners' consent will be deemed granted if a response to a 
request for consent is not given within a time period specified in the 
lease.
    (b) An attempt by the tenant to mortgage the leasehold interest or 
authorize possession by another party, without the necessary consent 
and approval, will be treated as a lease violation under Sec. 162.347.
    (c) A residential lease may authorize us, one or more of the Indian 
landowners, or a designated representative of the Indian landowners, to 
consent to an amendment, assignment, sublease, mortgage, or other type 
of agreement, on the landowners' behalf. A designated landowner or 
representative may not negotiate or consent to an amendment, 
assignment, or sublease that would:
    (1) Reduce the rentals payable to the other Indian landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or modify the term of the lease.
    (d) Where the Indian landowners have not designated a 
representative for the purpose of consenting to an amendment, 
assignment, sublease, mortgage, or other type of agreement, such 
consent may be granted by or on behalf of the landowners in the same 
manner as a new lease, under Sec. 162.304.


Sec. 162.331  When will a decision to approve an amendment, assignment, 
sublease, or mortgage under a residential lease be effective?

    Our decision to grant or approve an amendment, assignment, 
sublease, or mortgage under a residential lease will be effective 
immediately, notwithstanding any appeal that may be filed under part 2 
of this chapter. Copies of approved documents will be provided to the 
party requesting approval, and made available to the Indian landowners 
upon request.


Sec. 162.332  How can the leased premises be used under a residential 
lease?

    A residential lease must describe the authorized uses of the leased 
premises. Any use of the leased premises for an unauthorized purpose, 
will be treated as a lease violation under Sec. 162.347.


Sec. 162.333  Can improvements be made under a residential lease?

    (a) A residential lease must generally describe the type and 
location of any improvements to be constructed by the tenant. Unless 
otherwise provided in the lease, any specific plans for the 
construction of those improvements will not require the consent of the 
Indian landowners or our approval.
    (b) Construction of any improvements not described in the lease 
must be approved as an amendment to the lease under Sec. 162.326. An 
attempt by the tenant to construct improvements, without the necessary 
consent and approval, will be treated as a lease violation under Sec. 
162.347.


Sec. 162.334  Who will own the improvements made under a residential 
lease?

    (a) A residential lease may specify who will own any improvements 
constructed by the tenant, during the lease term. The lease must 
indicate whether any improvements constructed by the tenant will remain 
on the leased premises upon the expiration or termination of the lease, 
providing for the improvements to either:
    (1) Remain on the leased premises, in a condition satisfactory to 
the Indian landowners and us; or
    (2) Be removed within a time period specified in the lease, at the 
tenant's expense, with the leased premises to be restored as close as 
possible to their condition before construction of such improvements.
    (b) If the lease allows the tenant to remove the improvements, it 
must also provide the Indian landowners with an option to waive the 
removal requirement and take possession of the improvements if they are 
not removed within the specified time period. If the Indian landowners 
choose not to exercise this option, we will take appropriate 
enforcement action to ensure removal at the tenant's expense. This 
obligation survives the termination or expiration of the lease.


Sec. 162.335  What indemnities are required under a residential lease?

    (a) A residential lease must require that the tenant indemnify and 
hold the United States and the Indian landowners harmless from any 
loss, liability, or damages resulting from the tenant's use or 
occupation of the leased premises, unless the tenant would be 
prohibited by law from making such an agreement.
    (b) Unless the tenant would be prohibited by law from making such 
an agreement, a residential lease must specifically require that the 
tenant indemnify 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.


Sec. 162.336  How will payment rights and obligations relating to 
residential land be allocated between the Indian landowners and the 
tenant?

    Unless otherwise provided in a residential lease, the Indian 
landowners will be entitled to receive any settlement funds or other 
payments arising from certain actions that diminish the value of the 
land or the improvements thereon. The amount of the payments that are 
distributed to each owner must be determined in accordance with the 
portion of the undivided interests in the tract covered under the lease 
owned by the land owner. Such payments may include:
    (a) Insurance proceeds;
    (b) Trespass damages; and
    (c) Condemnation awards.


Sec. 162.337  Can a residential lease provide for negotiated remedies 
in the event of a violation?

    (a) A residential lease of tribal land may provide the tribe with 
certain negotiated remedies in the event of a lease violation, 
including the power to terminate the lease. A residential lease of 
individually owned land may provide the individual Indian landowners 
with similar remedies, so long as the lease also specifies the manner 
in which those remedies may be exercised by or on behalf of the 
landowners.
    (b) The negotiated remedies described in paragraph (a) of this 
section will apply in addition to the cancellation remedy available to 
us under Sec. 162.349. If the lease specifically authorizes us to 
exercise any negotiated remedies on behalf of the Indian landowners, 
the exercise of such remedies may substitute for cancellation.

[[Page 6514]]

    (c) A residential lease may provide for lease disputes to be 
resolved in tribal court or any other court of competent jurisdiction, 
or through arbitration or some other alternative dispute resolution 
method. We may not be bound by decisions made in such forums, but we 
will defer to ongoing proceedings, as appropriate, in deciding whether 
to exercise any of the remedies available to us under Sec. 162.349.


Sec. 162.338  Must a tenant provide a bond under a residential lease?

    (a) Except as provided in paragraph (b) of this section, the tenant 
must provide a bond to secure:
    (1) At least one rental payment under the terms of the lease;
    (2) The construction of any required improvements;
    (3) The performance of any additional lease obligations, including 
the payment of operation and maintenance charges under Sec. 162.323(b); 
and
    (4) The restoration and reclamation of the leased premises, to 
their condition at the commencement of the lease term or some other 
specified condition.
    (b) A bond may not be required, if specified in the lease and upon 
a determination under Sec. 162.309 that such a waiver is in the best 
interest of the Indian landowner(s).


Sec. 162.339  What forms of bonds can be accepted under a residential 
lease?

    (a) Except as provided in paragraph (b) of this section, a bond 
must be deposited with us and made payable only to us, and the bond may 
not be modified or withdrawn without our approval. We will only accept 
a bond in one of the following forms.
    (1) Cash.
    (2) Negotiable Treasury securities that:
    (i) Have a market value at least equal to the bond amount; and
    (ii) Are accompanied by a statement granting full authority to us 
to sell them if the terms of the lease are violated.
    (3) Certificates of deposit that:
    (i) Indicate on their face that our approval is required before 
redemption by any party;
    (ii) Have a face value at least equal to the bond amount, plus any 
penalties for early redemption; and
    (iii) Are accompanied by a statement granting full authority to us 
to sell them in case of a violation of the terms of the lease.
    (4) Irrevocable letters of credit issued by Federally-insured 
financial institutions authorized to do business in the United States. 
A letter of credit must:
    (i) Contain a clause that grants us the authority to demand 
immediate payment if the tenant violates the lease or fails to replace 
the letter of credit at least 30 days before its expiration date;
    (ii) Be payable to BIA (or tribe if the bond is held by the tribe 
under paragraph (b) of this section);
    (iii) Be irrevocable during its term and have an initial expiration 
date of not less than one year following the date BIA receives it; and
    (iv) Be automatically renewable for a period of not less than one 
year, unless the issuing financial institution provides us with written 
notice that it will not be renewed, at least 90 calendar days before 
the letter of credit's expiration date.
    (5) A surety bond issued by a company approved by the U.S. 
Department of the Treasury.
    (6) Assignment of a savings account.
    (7) Any other form of highly liquid, non-volatile security 
subsequently approved by us that is easily convertible to cash and for 
which our approval is required before redemption by any party.
    (b) A tribe may accept and hold any form of bond described in 
paragraph (a) of this section, to secure performance under a 
residential lease of tribal land.


Sec. 162.340  How will a bond be administered?

    (a) If a cash bond is submitted, we will retain the funds in an 
account established in the name of the tenant.
    (b) We will not pay interest on a cash performance bond.
    (c) If the bond is not forfeited under Sec.Sec. 162.344 or 162.348, 
we will refund the bond to the tenant upon the expiration or 
termination of the lease.


Sec. 162.341  Is insurance required under a residential lease?

    When necessary to protect the interests of the Indian landowners, a 
residential lease must require that a tenant provide insurance. Such 
insurance should include property, liability and/or casualty insurance, 
depending on the interests to be protected. If insurance is required, 
it must identify both the Indian landowners and the United States as 
additional insured parties, and be sufficient to protect all insurable 
improvements on the leased premises.

Lease Administration


Sec. 162.342  Are there administrative fees for actions relating to 
residential leases?

    (a) We will charge an administrative fee each time we approve a 
residential lease, amendment, assignment, sublease, mortgage, or 
related document. These fees will be paid by the tenant, assignee, or 
subtenant, to cover our costs in preparing or processing the documents 
and administering the lease.
    (b) Except as provided in paragraph (c) of this section, we will 
charge administrative fees based on the rent payable under the lease. 
The fee will be 3 percent of the annual rent.
    (c) The minimum administrative fee is $10.00 and the maximum 
administrative fee is $500.00, and any administrative fees that have 
been paid will be non-refundable. However, we may waive all or part of 
these administrative fees, in our discretion.
    (d) If all or part of the costs in preparing or processing the 
documents and administering the lease are paid from tribal funds, the 
tribe may establish an additional or alternate schedule of fees.


Sec. 162.343  Will BIA notify a tenant when a rental payment is due 
under a residential lease?

    We may issue bills or invoices to a tenant in advance of the dates 
on which rental payments are due under a residential lease, but the 
tenant's obligation to make such payments in a timely manner will not 
be excused if such bills or invoices are not delivered or received.

Lease Enforcement


Sec. 162.344  What will BIA do if rental payments are not made as 
required by a residential lease?

    (a) A tenant's failure to pay rent in the time and manner required 
by a residential lease is a violation of the lease, and with will issue 
a notice of violation under Sec. 162.347.
    (1) If the lease requires that rental payments be made to us, we 
will send the tenant and its sureties a notice of violation within 10 
business days of the date on which the rental payment was due.
    (2) If the lease provides for payment directly to the Indian 
landowners, we will send the tenant and its sureties a notice of 
violation within 10 business days of the date on which we receive 
actual notice of non-payment from the landowners.
    (b) If a tenant fails to provide adequate proof of payment or cure 
the violation within the period required by Sec. 162.347, and the 
amount due is not in dispute, we may take any of the actions in this 
paragraph.
    (1) We may:
    (i) Take action to recover the unpaid rent and any associated 
interest charges or late payment penalties;
    (ii) Cancel the lease under Sec. 162.348; or
    (iii) Invoke any other remedies available under the lease or 
applicable

[[Page 6515]]

law, including collection on any available bond or referral of the debt 
to the Department of the Treasury for collection.
    (2) We do not have to cancel the lease or give any further notice 
to the tenant before taking action to recover any unpaid rent.
    (3) If we cancel the lease, we can still take action to recover any 
unpaid rent.
    (c) We or the Indian landowners may accept partial payments and 
underpayments, but acceptance does not waive any amounts remaining 
unpaid or any other existing lease violations. Unless otherwise 
provided in the lease, overpayments may be credited as an advance 
against future rent payments.
    (d) If a personal or business check is dishonored, and a rental 
payment is therefore not made by the due date, the failure to make the 
payment in a timely manner will be a violation of the lease, and a 
notice of violation will be issued under Sec. 162.347. Any payment made 
to cure such a violation, and any future payments by the same tenant, 
must be made by one of the alternative payment methods listed in Sec. 
162.322.


Sec. 162.345  What fees are assessed on delinquent rental payments due 
under a residential lease?

    (a) The following special fees will be assessed if rent is not paid 
in the time and manner required, in addition to any interest or late 
payment penalties that must be paid to the Indian landowners under a 
residential lease. The following special fees will be assessed to cover 
administrative costs incurred by the United States in the collection of 
the debt:

------------------------------------------------------------------------
        The tenant will  pay . . .                    For . . .
------------------------------------------------------------------------
(1) $50.00................................  Administrative fee for
                                             dishonored checks.
(2) $15.00................................  Administrative fee for BIA
                                             processing of each notice
                                             or demand letter.
(3) 18 percent of balance due.............  Administrative fee charged
                                             by Treasury following
                                             referral for collection of
                                             delinquent debt.
------------------------------------------------------------------------

    (b) If all or part of the costs incurred in collection of the debt 
are paid from tribal funds, the tribe may establish an additional or 
alternate schedule of fees.


Sec. 162.346  How will BIA determine whether the activities of a tenant 
under a residential lease comply with the terms of the lease?

    (a) Unless a residential lease provides otherwise, we may enter the 
leased premises at any reasonable time, without prior notice, to 
protect the interests of the Indian landowners and ensure that the 
tenant is in compliance with the operating requirements of the lease.
    (b) If an Indian landowner notifies us that a specific lease 
violation has occurred, we will initiate an appropriate investigation 
within 10 business days of that notification. If we find out from 
another source that a specific lease violation has occurred, we will 
initiate an appropriate investigation and make a reasonable attempt to 
notify the Indian landowners.


Sec. 162.347  What will BIA do about a violation under a residential 
lease?

    (a) If we determine that a residential lease has been violated, we 
will send the tenant and its sureties and any mortgagee a notice of 
violation within 5 business days of that determination. The notice of 
violation must be provided by certified mail, return receipt requested.
    (b) Within 10 business days of the receipt of a notice of 
violation, the tenant must:
    (1) Cure the violation and notify us in writing that the violation 
has been cured;
    (2) Dispute our determination that a violation has occurred and/or 
explain why we should not cancel the lease; or
    (3) Request additional time to cure the violation.


Sec. 162.348  What will BIA do if a violation of a residential lease is 
not cured on time?

    (a) If the tenant does not cure a violation of a residential lease 
within the requisite time period, we will consult with the Indian 
landowners, as appropriate, and determine whether:
    (1) We should cancel the lease under paragraph (c) of this section 
and Sec.Sec. 162.350 through 162.354;
    (2) We should invoke any other remedies available to us under the 
lease, including collecting on any available bond;
    (3) The Indian landowners wish to invoke any remedies available to 
them under the lease; or
    (4) The tenant should be granted additional time in which to cure 
the violation.
    (b) If we decide to grant a tenant additional time in which to cure 
a violation, the tenant must proceed diligently to complete the 
necessary corrective actions within a reasonable or specified time 
period from the date on which the extension is granted.
    (c) If we decide to cancel the lease, we will send the tenant and 
its sureties and any mortgagee a cancellation letter within 5 business 
days of that decision. The cancellation letter must be sent to the 
tenant by certified mail, return receipt requested. We will also 
provide actual or constructive notice of a cancellation decision to the 
Indian landowners, as appropriate. The cancellation letter will:
    (1) Explain the grounds for cancellation;
    (2) Notify the tenant of the amount of any unpaid rent, interest 
charges, or late payment penalties due under the lease;
    (3) Notify the tenant of its right to appeal under part 2 of this 
chapter, as modified by Sec. 162.349, including the amount of any 
appeal bond that must be posted to perfect an appeal of the 
cancellation decision;
    (4) Order the tenant to vacate the property within 30 days of the 
date of receipt of the cancellation letter, if an appeal is not 
perfected by that time; and
    (5) If the lease so provides, cancellation will be subject to the 
approval of the holder of any outstanding leasehold mortgage.


Sec. 162.349  Will BIA's appeal bond rules apply to cancellation 
decisions?

    (a) The appeal bond provisions of part 2 of this chapter will not 
apply to appeals from lease cancellation decisions made under Sec. 
162.348. Instead, when BIA decides to cancel a residential lease, we 
may require that the tenant post an appeal bond in order to perfect an 
appeal of the cancellation decision. The requirement to post an appeal 
bond will apply in addition to all of the other requirements in part 2 
of this chapter.
    (b) An appeal bond should be set in an amount necessary to protect 
the Indian landowners against financial losses that will likely result 
from the delay caused by an appeal. Appeal bond requirements will not 
be separately appealable, but may be contested during the appeal of the 
lease cancellation decision.
    (c) If the appeal bond is not posted, BIA can dismiss the appeal. 
That dismissal will be final for the Department of the Interior.


Sec. 162.350  When is a cancellation of a residential lease effective?

    A cancellation decision involving a residential lease becomes 
stayed and not effective 30 days after either the tenant receives a 
cancellation letter from us, or 40 days from the date the letter is 
mailed, whichever is earlier. The cancellation decision will be further 
stayed if the tenant perfects an appeal under Sec.Sec. 162.348 and 
162.349 and part 2 of this chapter, unless the decision is made 
immediately effective under part 2 of this chapter. While a 
cancellation decision is stayed, the tenant must

[[Page 6516]]

continue to pay rent and comply with the other terms of the lease. If 
an appeal is not perfected in accordance with Sec. 162.350 and part 2 
of this chapter, the cancellation decision will be effective 31 days 
after either the tenant receives a cancellation letter from us, or 41 
days from the date the letter is mailed, whichever is earlier.


Sec. 162.351  Can BIA take emergency action if leased premises are 
threatened?

    We may take appropriate emergency action if there is a natural 
disaster or if a tenant or any other party causes or threatens to cause 
immediate and significant harm to the leased premises during the term 
of a residential lease. Emergency action may include judicial action 
seeking immediate cessation of the activity resulting in or threatening 
the harm. We will make reasonable efforts to notify the Indian 
landowners, either before or after the emergency action is taken.


Sec. 162.352  What will BIA do if a tenant remains in possession after 
a lease expires or is canceled?

    If a tenant remains in possession after the expiration or 
cancellation of a residential lease, we will treat the unauthorized use 
as a trespass. Unless we have been advised in writing by the applicable 
percentage of Indian landowners under Sec. 162.304 that they are 
engaged in negotiations with the tenant to obtain a new lease, we will 
take action to recover possession on behalf of the Indian landowners, 
and pursue any additional remedies available under applicable law, such 
as forcible entry and detainer action.


Sec. 162.353  May a lease be terminated before its expiration date?

    (a) The lease may provide either party with one or more options to 
terminate, for any reason. If an option to terminate is provided, the 
lease must specify the time and manner in which the option must be 
exercised.
    (b) The lease may be mutually terminated by agreement between the 
lessee and the applicable percentage of Indian landowners under Sec. 
162.304, subject to our approval and notice to any approved 
encumbrancer.
    (c) If the lease so provides, termination will be subject to the 
approval of the holder of any outstanding leasehold mortgage.


Sec. 162.354  What happens if the tenant abandons or does not 
diligently develop the leased premises?

    (a) If the tenant does not diligently develop the leased premises 
or abandons the leased premises before expiration of the lease term, 
the tenant and its sureties continue to be responsible for the 
obligations contained in the lease. The lease may specify a time after 
which the leased premises must be developed or a period of non-use 
after which the lease premises will be considered abandoned.
    (b) We will treat the non-use as a violation of the lease under 
Sec. 162.346, and may cancel the lease under Sec.Sec. 162.347-162.350.

Subpart D--Business Leases

General Provisions


Sec. 162.400  What types of leases are covered by this subpart?

    (a) This subpart covers both ground leases (undeveloped land) and 
leases of developed land (together with any improvements) on Indian 
land, authorizing the development or use of the leased premises.
    (b) Leases covered by this subpart may authorize the construction 
of single-purpose or mixed use projects designed for use by any number 
of tenants or occupants. These leases may include:
    (1) Leases for residential purposes that are not covered in subpart 
C;
    (2) Leases for public, religious, educational, and recreational 
purposes; and
    (3) Commercial or industrial leases for retail, office, 
manufacturing, storage, and/or other business purposes.


Sec. 162.401  How will BIA accommodate tribal laws on land under a 
business lease?

    (a) Unless prohibited by Federal law, we will recognize and 
accommodate tribal laws regulating activities on land under a 
residential lease, including tribal laws relating to land use, 
environmental protection, and historic or cultural preservation.
    (b) This paragraph applies when this subpart is inconsistent with a 
tribal law and Sec. 162.109 prohibits tribal law to supersede or modify 
this subpart. We may waive provisions of this subpart under 25 CFR part 
1, if the waiver does not:
    (1) Violate a Federal statute or judicial decision; or
    (2) Conflict with our general trust responsibility under Federal 
law.

How To Obtain a Lease


Sec. 162.402  How and when can a business lease be obtained?

    If you are a potential lessee, you may negotiate a lease with an 
Indian landowner. The lease is subject to review and approval by the 
Secretary. Generally, business leases will not be advertised for 
competitive bid. You may request, in writing, the names and addresses 
of the Indian landowners or their representatives for the purpose of 
negotiating a lease.


Sec. 162.403  When can the Indian landowners grant a business lease?

    (a) We can approve business leases on tribal land only with the 
written consent of the tribe, as evidenced by an appropriate tribal 
resolution. Tribal written consent is also required for a lease of any 
tribally-owned undivided interest(s) in a fractionated tract, subject 
to our approval, except when the individual owners have consented in 
the percentages indicated in Sec. 162.404. Where a tribal land 
assignment has been made to a tribal member or some other individual 
under tribal law or custom, and the assignee subsequently leases to 
another party, the assignee and the tribe must both consent to the 
lease, subject to our approval.
    (b) Adult Indian landowners, or emancipated minors, may consent to 
business leases of their land, including undivided interests in 
fractionated tracts, subject to our approval.


Sec. 162.404  What are the consent requirements for a business lease on 
a fractionated tract?

    (a) Except for Alaska, the Indian landowners must determine the 
percentage referred to in the Indian Land Consolidation Act Amendments 
of 2000, 25 U.S.C. section 2218, as follows:

------------------------------------------------------------------------
                                               Then the percentage of
 If the number of owners of the undivided    owners who must approve of
       interest in the tract is. . .              the lease is. . .
------------------------------------------------------------------------
(1) Five or fewer.........................  100 percent.
(2) More than five but less than 11.......  80 percent.
(3) More than 10 but fewer than 20........  60 percent.
(4) Twenty or more........................  Over 50 percent.
------------------------------------------------------------------------

    (b) In Alaska, Indian landowners, or their representatives who may 
execute leases under Sec. 162.405 of this part may negotiate business 
leases of Indian land only if:
    (1) The owners of a majority of the interests have negotiated a 
lease that we approve;
    (2) We grant the lease on behalf of those persons for whom we are 
authorized to grant leases under Sec. 162.404(c); and
    (3) Our consent when combined with the consent of the owners 
provides 100 percent consent.
    (c) We may give written consent to a lease, and that consent must 
be counted in the percentage ownership described in paragraphs (a) and 
(b) of this section, on behalf of:

[[Page 6517]]

    (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) Any heir or devisee if the heir or devisee has been determined 
but after reasonable attempts have been made, cannot be located;
    (3) Individuals who are found to be non compos mentis, or 
determined to be an adult in need of assistance or under legal 
disability as defined in part 115 of this chapter;
    (4) Orphaned minors who do not have guardians duly appointed by a 
court of competent jurisdiction;
    (5) Individuals who have given us a written power of attorney to 
lease their land; and
    (6) The individual landowners of a fractionated tract where we have 
provided the Indian landowners with written notice of our intent to 
grant a lease on their behalf, but the Indian landowners are unable to 
agree upon a lease during a 3-month negotiation period immediately 
following such notice, and the land is not being used by an Indian 
landowner.


Sec. 162.405  Who can represent the Indian landowners in negotiating or 
granting a business lease?

    The following individuals or entities may represent an individual 
Indian landowner, provided that there are no Federal or tribal laws 
prohibiting this activity:
    (a) An adult with custody acting on behalf of his or her minor 
children;
    (b) A guardian, conservator, or other fiduciary appointed by a 
court of competent jurisdiction to act on behalf of an individual 
Indian landowner;
    (c) An adult, legal entity who has been given a written power of 
attorney that:
    (1) Meets all of the formal requirements of any applicable Federal, 
tribal or state law;
    (2) Identifies the attorney-in-fact and the land to be leased; and
    (3) Describes the scope of the power granted and any limits 
thereon.
    (d) Any representative who is authorized to practice before the 
Department of the Interior under 43 CFR part 1.3.


Sec. 162.406  When can BIA grant a permit for business use?

    (a) We may grant a permit for business use in the same manner as we 
would grant a business lease under Sec. 162.404(c) of this part. We may 
also grant a permit on behalf of individual Indian landowners, without 
prior notice, if it is impractical to provide notice to the owners and 
no substantial injury to the land will occur, or to protect the trust 
resource, but we must give the Indian landowners subsequent immediate 
notice and advise them of their right to appeal the decision under part 
2 of this chapter. If the permit is granted to protect the trust 
resource, the permit will be effective immediately under part 2 of this 
chapter.
    (b) We may grant a permit for business use on government land.
    (c) We will not grant a permit for business use on tribal land, but 
a tribe may grant a permit, subject to our approval, in the same manner 
as it would grant a lease under Sec. 162.403.
    (d) Permits may be revoked upon reasonable notice to the permittee, 
as specified in the permit. Decisions to revoke a permit may not be 
appealed under part 2 of this chapter.
    (e) Permits may not be assigned.


Sec. 162.407  How will BIA estimate the fair market rental of Indian 
land?

    We will use an appraisal to determine the fair market rental of 
land before we grant or approve a lease, except as provided in 
paragraph (d) of this section.
    (a) The purpose of the appraisal is to support the Indian 
landowners in their negotiations, and to assist in our consideration of 
whether a business lease is in the Indian landowners' best interest.
    (b) We will either prepare the appraisal ourselves or use an 
appraisal from the Indian landowner or lessee subject to our approval.
    (c) The appraisal must be prepared in accordance with USPAP.
    (d) Upon a duly adopted Tribal Resolution, we will use some other 
type of valuation for a business lease on tribal land, subject to our 
approval.


Sec. 162.408  What documents must BIA review before granting or 
approving a business lease?

    If you are a lessee, you must submit the documents required by this 
section, unless we decide otherwise.
    (a) If you are a corporation, limited liability company, 
partnership, joint venture, or other legal entity, you must be in good 
standing, authorized to conduct business in the state where the land is 
located, or on the reservation, if applicable. You must provide 
organizational documents, certificates, filing records, and resolutions 
or other authorization documents, as needed to show that the lease will 
be enforceable against you and that you will be able to perform all of 
your lease obligations.
    (b) We may require you to pay for an independent appraisal, which 
we must review and approve, to support the negotiated rent and term 
provisions in the lease.
    (c) We may require you to provide, at a minimum, financial 
statements and credit reports or, where such records are not available, 
other appropriate documentation to show that you can meet the monetary 
obligations under the lease.
    (d) We may require you to provide proof that the proposed use is in 
conformance with applicable tribal ordinances.
    (e) If the proposed lease will authorize new construction, we may 
require you to provide:
    (1) Environmental reports, archaeological reports and other 
documents that we need to comply with environmental laws and land use 
requirements (if possible, we will adopt any tribal environmental 
review as our NEPA review);
    (2) A preliminary site plan identifying the proposed location of 
any new buildings, roads and utilities, and a construction schedule 
showing the tentative commencement and completion dates for those 
improvements; and
    (3) A certified survey plat of the leased premises that includes 
the legal description of the land encumbered by the lease, and a 
description of each tract of trust/restricted land in the lease and the 
acreage of each. Plats should show the tie-in to the nearest corner of 
a public survey, all courses and distances, exceptions, and tract 
acreages.
    (f) We may require you to provide additional documentation to 
demonstrate its ability to perform all of the lease obligations.


Sec. 162.409  How and when will BIA decide whether to approve a 
business lease?

    (a) Before we approve a business lease, we must determine in 
writing 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 
(including preparation of the appropriate review documents under NEPA);
    (3) Assure ourselves that adequate consideration has been given to:
    (i) The relationship between the use of the leased premises and the 
use of neighboring lands;
    (ii) The height, quality, and safety of any structures or other 
facilities to be constructed on the leased premises;
    (iii) The availability of police and fire protection, utilities, 
and other essential community services;

[[Page 6518]]

    (iv) The availability of judicial forums for all criminal and civil 
matters arising on the leased premises; and
    (v) The effect on the environment of the proposed land use.
    (4) Require any lease modifications or mitigation measures that are 
needed to satisfy any requirements, or any other Federal or tribal land 
use requirements; and
    (5) Receive notice from the tribe that all tribal procedures 
regarding tribal land development and land use have been satisfied.
    (b) When we receive a business lease and all of the supporting 
documents that conform to this part, we will approve, disapprove, or 
return the submission for revision within 60 days of the date of our 
receipt of the documents. If we do not act within 60 days, the Indian 
landowner may take appropriate action under part 2 of this chapter. If 
we approve or disapprove a lease, we will notify the parties 
immediately and advise them of their right to appeal the decision under 
part 2 of this chapter. Copies of business leases that have been 
granted or approved will be provided to the tenant, and made available 
to the Indian landowners upon request.


Sec. 162.410  When will a business lease be effective?

    Unless otherwise provided in the lease, a business lease will be 
effective on the date on which the lease is granted or approved by us. 
A business lease may be made effective on some past or future date, by 
agreement, but such a lease may not be granted or approved more than 
one year before the date on which the lease term is to commence. All 
approvals must be in writing.


Sec. 162.411  For purposes of appeal, when will a BIA decision to grant 
or approve a business lease be effective?

    Our decision to grant or approve a business lease will be effective 
immediately, notwithstanding any appeal that may be filed under part 2 
of this chapter.


Sec. 162.412  Must a business lease or permit be recorded?

    (a) A business lease or permit must be recorded in the Land Titles 
and Records Office with jurisdiction over the land. We will record the 
lease or permit immediately following our approval under this subpart. 
The business lease or permit may also be recorded in the local county 
recorder's office.
    (b) Business leases of tribal land that do not require our approval 
under Sec. 162.102 of this part must be recorded by the tribe in the 
Land Titles and Records Office with jurisdiction over the land.

Lease Requirements


Sec. 162.413  Is there a standard business lease form?

    No, based on the need for flexibility in negotiating and drafting 
of appropriate lease terms and conditions, there is no standard 
business lease form that must be used. We will assist the Indian 
landowners in drafting lease provisions that conform to the 
requirements of this part.


Sec. 162.414  Are there any provisions that must be included in a 
business lease?

    In addition to the other requirements of this part, all business 
leases must provide that:
    (a) 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;
    (b) Nothing contained in this lease must operate to delay or 
prevent a termination of Federal trust responsibilities with respect to 
the land by the issuance of a fee patent or otherwise during the term 
of the lease; however, such termination must not serve to abrogate the 
lease. The owners of the land and the lessee and his surety or sureties 
must be notified of any such change in the status of the land;
    (c) There must not be any unlawful conduct, creation of a nuisance, 
illegal activity, or negligent use or waste of the leased premises; and
    (d) The lessee must comply with all applicable Federal, tribal, 
state and local laws, ordinances, rules, regulations, and other legal 
requirements.


Sec. 162.415  Are there any formal requirements that must be satisfied 
in the execution of a business lease?

    (a) A business lease must identify the Indian landowners and their 
respective interests in the leased premises. The requisite percentage 
of landowners must consent in writing to the lease. One who executes a 
lease in a representative capacity under Sec. 162.405 must identify the 
owner being represented and the authority under which such action is 
being taken.
    (b) The lessee must provide evidence of appropriate authority to 
execute a business lease.
    (c) A business lease must include a citation of the provisions in 
this subpart that authorize our approval, along with a citation of the 
formal documents by which such authority has been delegated to the 
official taking such action.
    (d) All signatures of the landowner(s) and lessee(s) may be 
required to be either witnessed by two individuals or be notarized.


Sec. 162.416  How should the land be described in a business lease?

    A business lease must describe the leased premises by reference to 
a public survey. Where there are undivided interests owned in fee 
status, the aggregate portion of trust or restricted interests should 
be identified in the description of the leased premises.


Sec. 162.417  How much rent must be paid under a business lease?

    (a) The lease must require the initial payment of fair market 
rental, based on a fixed amount, a percentage of the projected income, 
or a combination of both unless paragraphs (c), (d) and (f) of this 
section permit a lesser amount.
    (b) Unless the lessee is paying nominal rental as described in 
paragraphs (c), (d) and (f) of this section, or unless the rental 
amount is based primarily on a percentage of income, the lease may be 
reviewed annually in accordance with Sec. 162.418, but must provide for 
a review and possible adjustment of the rental, at a minimum, every 
fifth year.
    (c) We will approve a negotiated lease of tribal land, or of any 
undivided tribal interest in a fractionated allotment, which provides 
for the payment of nominal rent, or less than a fair market rental, if 
the tribe provides a resolution containing an explanation why approval 
will serve the tribe's best interest over the entire period in which 
the reduced rent will be paid. Unless otherwise specified, the reduced 
rent must be applied for the entire lease term.
    (d) We may approve a lease of individually-owned Indian land which 
provides for the payment of nominal rent, or less than a fair market 
rental, if:
    (1) The lease is for religious, educational, recreational, 
cultural, or other public purposes;
    (2) The lessee is a member of the individual Indian landowner's 
immediate family or a co-owner; or
    (3) The lessee is a joint venture or other legal entity in which 
the Indian owners directly participate in the revenues or profits 
generated by the lease, and the distribution of profits or revenues to 
the owners is projected to exceed the rent that would otherwise be paid 
over the entire lease term.
    (e) We may grant on behalf of non-consenting minority undivided 
interest owners only if the lease provides for payment of fair market 
value for their interest(s).
    (f) If new construction is required, the lease may provide for the 
payment of less than a fair annual rental during the

[[Page 6519]]

pre-development and construction periods specified in the lease.


Sec. 162.418  Must the rent be adjusted under a business lease?

    If rental adjustments are required by us, the lease must specify:
    (a) When adjustments are made.
    (b) Who makes the adjustments.
    (c) What the adjustments are based on.
    (d) How disputes arising from the adjustments are resolved.


Sec. 162.419  When are rental payments due under a business lease?

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


Sec. 162.420  Will untimely rental payments made under a business lease 
be subject to interest charges or late payment penalties?

    A business lease must specify the rate at which interest will 
accrue on any rental payment not made by the due date or any other date 
specified in the lease. A lease may also identify additional late 
payment penalties that will apply if a rental payment is not made by a 
specified date. Unless otherwise provided in the lease, such interest 
charges and late payment penalties will apply in the absence of any 
specific notice to the lessee from us or the Indian landowners, and the 
failure to pay such amounts will be treated as a lease violation under 
Sec. 162.450.


Sec. 162.421  To whom can rental payments be made under a business 
lease?

    (a) A business lease must specify whether rental payments will be 
made directly to the Indian landowners or to us on behalf of the Indian 
landowners. Any changes to the direct pay provision of the lease must 
be made by amendment to the lease, but such amendment will only require 
the consent of the individual requesting direct pay and the lessee, and 
approval of the Secretary. If the lease provides for payment to be made 
directly to the Indian landowners, the lease must also require that the 
lessee either provide immediate proof of payment to us or retain 
specific documentation evidencing proof of payment, such as canceled 
checks, cash receipt vouchers, or copies of money orders or cashier's 
checks, for the duration of the lease plus 6 years and 90 days.
    (b) Rental payments made directly to the Indian landowners must be 
made to the parties specified in the lease, unless the lessee receives 
notice of a change of ownership. Unless otherwise provided in the 
lease, rental payments may not be made payable directly to anyone other 
than the Indian landowners.
    (c) A lease that provides for rental payments to be made directly 
to the Indian landowners must also provide for such payments to be 
suspended and the rent thereafter paid to us, rather than directly to 
the Indian landowners, if:
    (1) An Indian landowner dies;
    (2) An Indian landowner requests that payment be made to us;
    (3) An Indian landowner is found by us to be in need of assistance 
in managing his/her financial affairs; or
    (4) We determine after consultation with the Indian landowner(s), 
that direct payment should be discontinued.


Sec. 162.422  What form of rental payment can be accepted under a 
business lease?

    (a) When rental payments are made directly to the Indian 
landowners, the form of payment must be acceptable to the Indian 
landowners.
    (b) Payments made to us may be delivered in person or by mail. We 
will not accept cash, foreign currency, or third-party checks. We will 
accept:
    (1) Personal or business checks drawn on the account of the lessee;
    (2) Money orders;
    (3) Cashier's checks;
    (4) Certified checks; or
    (5) Electronic funds transfer payments.


Sec. 162.423  What other types of payments are required under a 
business lease?

    (a) The lessee may be required to pay additional fees, taxes, and/
or assessments associated with the use of the land, as determined by 
entities having jurisdiction over the land. The lessee must pay these 
amounts to the appropriate office.
    (b) Except as otherwise provided in part 171 of this chapter, if 
the leased premises are within an Indian irrigation project or drainage 
district, 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. Failure to make such payments will constitute a violation of 
the lease.


Sec. 162.424  How long can the term of a business lease run?

    (a) A lease will specify the term of the lease, as well as any 
option to renew, extend, or terminate.
    (b) The lease term, including any renewal period, must be 
reasonable, given the purpose of the lease and the type of financing 
and level of investment required.
    (c) Unless otherwise authorized by Federal statute, leases for 
business purposes will have a maximum primary term that does not exceed 
25 years. An extension for one additional term not to exceed 25 years 
may be included. Leases of land on the following reservations may be 
made for terms of not to exceed 99 years, including any option to 
renew: the Gila River Reservation, AZ; the Hualapai Reservation, AZ; 
the San Carlos Apache Reservation, AZ; Yavapai-Prescott Community 
Reservation, land on the Colorado River Reservation, AZ and CA., the 
Navajo Reservation, AZ, NM, and UT; the Palm Springs Reservation, CA; 
the Soboba Indian Reservation, CA; the Viejas Indian Reservation, CA; 
the Cabazon Indian Reservation, CA; the Fort Mohave Reservation, CA, 
AZ, and NV; the Southern Ute Reservation, CO; Hollywood (formerly 
Dania) Reservation, FL; the Coeur d'Alene Indian Reservation, ID; The 
Mille Lacs Indian Reservation with respect to a lease between an entity 
established by the Mille Lacs Band of Chippewa Indians and the 
Minnesota Historical Society, MN; the Pueblos of Cochiti, Pojoaque, 
Tesuque, Santa Ana (with the exception of the lands known as the 
``Santa Ana Pueblo Spanish Grant,''), and Zuni, NM; The Pyramid Lake 
Reservation, NV; the Burns Paiute Reservation, OR; the Spokane 
Reservation, WA; the Kalispel Indian Reservation, WA; the Swinomish 
Reservation, WA; the Tulalip Reservation, WA; leases of the lands 
comprising the Moses Allotment Number 10, Chelan County, WA; and lands 
held in trust for: the Twenty-nine Palms Band of Luiseno Mission 
Indians, CA; the Torres Martinez Desert Cahuilla Indians, CA; the 
Guidiville Band of Pomo Indians of the Guidiville Indian Rancheria, CA; 
the Cahuilla Band of Indians of California, CA; the Confederated Salish 
and Kootenai Tribes of the Flathead Reservation, MT; leases to the 
Devils Lake Sioux Tribe, or any organization of such tribe, of land on 
the Devils Lake Sioux Reservation, ND; the Pueblo of Santa Clara, NM; 
the Las Vegas Paiute Tribe of Indians, NV; the Reno Sparks Indian 
Colony, NV; the Cherokee Nation of Oklahoma, OK; the Confederated 
Tribes of the Umatilla Indian Reservation, OR; the Confederated Tribes 
of the Grand Ronde Community of Oregon, OR; the Confederated Tribes of 
the Colville

[[Page 6520]]

Reservation, WA; and any other reservations as authorized by Congress.
    (d) Where the Secretary grants a lease under Sec. 162.404(c)(1) on 
behalf of undetermined heirs or devisees of an individual Indian 
decedent owning 100 percent interest in the land, the maximum term of 
that lease may not exceed 2 years.
    (e) A lease can be extended only by one renewal or extension, not 
to exceed 25 years. The exercise of the option must be in writing and 
the lease must specify:
    (1) The time and manner in which the option must be exercised; and
    (2) Any additional consideration, if any, which will be due upon 
the exercise of the option or the commencement of the renewal period.
    (f) The lease may not:
    (1) Be renewed or extended by holdover; or
    (2) Provide a right of first refusal or any other type of 
preference with respect to a new lease.
    (g) The Secretary must record in the Land Titles and Records Office 
the official notice to the lessee of the grant of extension or 
termination.


Sec. 162.425  Can a business lease be amended, assigned, sublet, or 
mortgaged?

    Yes, a business lease can be amended, assigned, sublet, or 
mortgaged in accordance with Sec.Sec. 162.426 to 162.431.


Sec. 162.426  How and when can a business lease be amended?

    (a) A lease may authorize one or more of the Indian landowners, or 
a designated representative of the Indian landowners, to consent to an 
amendment on the landowners' behalf, subject to our approval. The lease 
may also designate us as the landowners' representative. A designated 
landowner or representative may not negotiate or consent to an 
amendment that would:
    (1) Reduce the payment obligations or terms to the Indian 
landowners;
    (2) Increase or decrease the lease area; or
    (3) Terminate or modify the term of the lease.
    (b) Where the Indian landowners have not designated a 
representative for the purpose of consenting to an amendment, such 
consent may be granted by or on behalf of the landowners in the same 
manner as a new lease.


Sec. 162.427  May a lease be assigned without the consent of the Indian 
landowners?

    (a) The lease may be assigned without the consent of the Indian 
landowners if:
    (1) The lease provides for assignments without further consent of 
the landowners; or
    (2) The assignee is a leasehold mortgagee or its designee, 
acquiring the lease either through foreclosure or by conveyance; and 
the assignee agrees in writing to assume all of the lessee's 
obligations under the lease, including bonding requirements.
    (b) If the Indian landowners' consent is required, it must be 
obtained in the same manner as a new lease, unless the lease authorizes 
one or more of the Indian landowners to consent on behalf of all such 
owners.
    (c) If the lease provides, consent must be obtained from any 
sureties or guarantors.
    (d) The assignment of a lease must be approved by the Secretary. 
Such approval will not be withheld providing that our approval will 
protect the best interests of the Indian landowners. To make that 
determination we will consider whether:
    (1) The proposed use by the assignee will require an amendment of 
the lease,
    (2) The value of any part of the leased premises not covered by the 
assignment would be adversely affected; and
    (3) The assignee has provided supporting documents which 
demonstrate that the lease will be enforceable against the assignee, 
and that the assignee will be able to perform its obligations under the 
lease.
    (e) The lease may provide that assignments may be made without the 
consent of the landowners, but the assignments must be approved by the 
Secretary.


Sec. 162.428  May a lease be subleased without the consent of the 
Indian landowners and the approval of the Secretary?

    (a) The lease may provide for subleasing without the consent of the 
Indian landowners when the sublease is part of a commercial development 
or residential development for which a general plan has been submitted 
and approved and we have approved a sublease form for use in the 
project. The lease may contain a provision authorizing the lessee to 
sublease the premises, in whole or in part, without further approval of 
the Secretary. A copy of the executed sublease must be provided to us.
    (b) If the owners' consent is required, it must be obtained in the 
same manner as a new lease, unless the lease authorizes one or more of 
the Indian landowners to consent on behalf of all such owners.
    (c) Consent must be obtained from any sureties or guarantors.
    (d) The sublessee must agree to be subordinated to the terms of the 
lease.
    (e) If the lease requires that the sublease be approved by the 
Secretary, such approval will not be withheld providing that our 
approval will protect the best interests of the Indian landowners. To 
make that determination we will consider whether:
    (1) The proposed use by the sublessee will require an amendment of 
the lease;
    (2) The value of any part of the leased premises not covered by the 
sublease would be adversely affected; and
    (3) The sublessee has bonded its performance and provided 
supporting documents which demonstrate that the sublease will be 
enforceable against the sublessee, and that the sublessee will be able 
to perform its obligations under the sublease.


Sec. 162.429  How will BIA decide whether to approve an assignment or 
sublease under a business lease?

    (a) We will approve an assignment or sublease under a business 
lease if:
    (1) The required consents have been obtained from the parties to 
the lease under Sec. 162.404 and the tenant's sureties and 
encumbrancers;
    (2) The tenant is not in violation of the lease;
    (3) The assignee agrees to be bound by, or the subtenant agrees to 
be subordinated to, the terms of the lease; and
    (4) We find no compelling reason to withhold our approval in order 
to protect the best interests of the Indian owners.
    (b) In making the finding required by paragraph (a)(4) of this 
section, we will consider whether:
    (1) The Indian landowners should receive any income derived by the 
tenant from the assignment or sublease, under the terms of the lease;
    (2) The proposed use by the assignee or subtenant will require an 
amendment of the lease;
    (3) The value of any part of the leased premises not covered by the 
assignment or sublease would be adversely affected; and
    (4) The assignee or subtenant has bonded its performance and 
provided supporting documents that demonstrate that the lease or 
sublease will be enforceable against the assignee or subtenant, and 
that the assignee or subtenant will be able to perform its obligations 
under the lease or sublease.


Sec. 162.430  May a lease be mortgaged without the consent of the 
Indian landowners?

    (a) The lease may be mortgaged without further consent of the 
Indian landowners for the purpose of borrowing capital for commercially 
reasonable purposes defined in the lease

[[Page 6521]]

if the lease contains a general authorization for such a mortgage.
    (b) The mortgage cannot secure any unrelated debts owed by the 
lessee to the mortgagee.
    (c) The mortgage may be refinanced.
    (d) The encumbrance instrument must be approved by us.


Sec. 162.431  How will BIA decide whether to approve a leasehold 
mortgage under a business lease?

    (a) We will approve a leasehold mortgage under a business lease if:
    (1) The required consents have been obtained from the parties to 
the lease under Sec. 162.404 and the tenant's sureties;
    (2) The mortgage covers only the tenant's interest in the leased 
premises, and no unrelated collateral; and
    (3) We find no 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 will consider whether:
    (1) The tenant's ability to comply with the lease would be 
adversely affected by any new loan obligations;
    (2) Any lease provisions would be modified by the mortgage;
    (3) The remedies available to us or to the Indian landowners would 
be limited (beyond any additional notice and cure rights to be afforded 
to the mortgagee), in the event of a lease violation; and
    (4) Any rights of the Indian landowners would be subordinated or 
adversely affected in the event of a loan default by the tenant.


Sec. 162.432  When will a BIA decision to approve an amendment, 
assignment, sublease, or mortgage under a business lease be effective?

    Our decision to approve an amendment, assignment, sublease, or 
mortgage under a business lease will be effective immediately, even 
though an appeal has been filed under part 2 of this chapter. Copies of 
approved documents will be provided to the party requesting approval, 
and made available to the Indian landowners upon request.


Sec. 162.433  Must an amendment, assignment, sublease, or mortgage 
approved under a business lease be recorded?

    An amendment, assignment, sublease, or mortgage approved under a 
business lease must be recorded in our Land Titles and Records Office 
that has jurisdiction over the leased premises. We will record the 
document immediately following our approval under this subpart.


Sec. 162.434  When will BIA take action on an amendment, assignment, 
sublease, or mortgage under a business lease?

    (a) We will take action on a business lease amendment, assignment, 
sublease, or mortgage within 60 days of the date of our receipt of the 
complete assignment and all supporting documents. If we do not act 
within 60 days, any interested party may take appropriate action under 
part 2 of this chapter. If we approve or disapprove an amendment, 
assignment, sublease, or mortgage, we will notify the parties 
immediately and advise them of their right to appeal the decision under 
part 2 of this chapter. Copies of business lease amendments, 
assignments, subleases or mortgages that have been granted or approved 
will be provided to the tenant, and made available to the Indian 
landowners upon request.
    (b) Copies of approved documents will be provided to the party 
requesting approval, and made available to the Indian landowners upon 
request.


Sec. 162.435  How can the leased premises be used under a business 
lease?

    A business lease must describe the authorized uses of the leased 
premises. Any use of the leased premises for an unauthorized purpose, 
or a failure by the lessee to maintain continuous operations throughout 
the lease term unless so provided in the lease, will be treated as a 
lease violation.


Sec. 162.436  Can improvements be made under a business lease?

    Yes, improvements can be made under a business lease. A business 
lease must:
    (a) Describe, or provide for development of, a plan that describes 
the type and location of any improvements to be constructed by the 
lessee. Development plans for the construction of those improvements 
will require the review and approval by tribal officials, if 
applicable, and must be filed with us before the commencement of 
construction, unless specifically exempted in the lease.
    (b) Provide a construction schedule.


Sec. 162.437  Who will own the improvements made under a business 
lease?

    (a) A business lease must specify who will own any improvements 
constructed by the lessee during the lease term. The lease must 
indicate whether any improvements constructed by the lessee will remain 
on the leased premises upon the expiration or termination of the lease, 
providing for the improvements to either:
    (1) Remain on the leased premises, in a condition satisfactory to 
the Indian landowners and us; or
    (2) Be removed within a time period specified in the lease, at the 
lessee's expense, with the leased premises to be restored as close as 
possible to their condition before construction of such improvements.
    (b) If the lease allows the lessee to remove the improvements, it 
must also provide the Indian landowners with an option to waive the 
removal requirement and take possession of the improvements if they are 
not removed within the specified time period. If the Indian landowners 
choose not to exercise this option, we will take appropriate 
enforcement action to ensure removal and restoration of the premises at 
the lessee's expense. This obligation survives the termination or 
expiration of the lease.
    (c) A business lease may also contain alternative provisions for 
disposal of the leasehold improvements, including provision for 
reimbursement of the residual value of the improvements at the 
termination of the lease.


Sec. 162.438  What indemnities are required under a business lease?

    (a) A business lease must require that the lessee indemnify and 
hold 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, unless the lessee would be 
prohibited by law from making such an agreement.
    (b) Unless the lessee would be prohibited by law from making such 
an agreement, a business lease must specifically require that the 
lessee indemnify 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 materials from the leased 
premises that occurs during the lease term, regardless of fault, unless 
the liability or cost arises from the gross negligence or wilful 
misconduct of the Indian landowner.


Sec. 162.439  How will payment rights and obligations relating to 
business leases be allocated between the Indian landowners and the 
lessee?

    The lease must specify the distribution of any settlement funds or 
other payments arising from certain actions that diminish the value of 
the land or the improvements thereon. Such payments may include, but 
are not limited to:
    (a) Insurance proceeds;
    (b) Trespass damages; and
    (c) Condemnation awards.

[[Page 6522]]

Sec. 162.440  Can a business lease provide for negotiated remedies in 
the event of a violation?

    (a) A business lease of tribal land may provide the tribe with 
certain negotiated remedies in the event of a lease violation, 
including the power to terminate the lease. A business lease of 
individually-owned land may provide the individual Indian landowners 
with similar remedies, so long as the lease also specifies the manner 
in which those remedies may be exercised by or on behalf of the 
landowners.
    (b) The negotiated remedies described in paragraph (a) of this 
section will apply in addition to the cancellation remedy available to 
us under Sec. 162.452. If the lease specifically authorizes us to 
exercise any negotiated remedies on behalf of the Indian landowners, 
the exercise of such remedies may substitute for cancellation.
    (c) A business lease may provide for lease disputes to be resolved 
in tribal court or any other court of competent jurisdiction, or 
through an alternative dispute resolution method. We may not be bound 
by decisions made in such forums, for example, if they conflict or 
diminish our trust responsibility to the Indian landowners or are 
contrary to Federal law, but we will defer to ongoing proceedings, as 
appropriate, in deciding whether to exercise any of the remedies 
available to us under Sec. 162.452.


Sec. 162.441  Must a lessee or assignee provide a bond for a lease?

    (a) Except as provided in paragraph (c) of this section, the lessee 
or assignee will be required to provide a bond to secure:
    (1) The payment of one year's rental;
    (2) The construction of any required improvements;
    (3) The performance of any additional lease obligations, including 
the payment of operation and maintenance charges under Sec. 162.424;
    (4) The restoration and reclamation of the leased premises, to 
their condition at the commencement of the lease term or some other 
specified condition; and
    (5) Applicable tribal laws and policies.
    (b) The lease may provide that we may adjust security or bond 
requirements at any time to reflect changing conditions.
    (c) The lease may provide that a bond is not required, however we 
must determine that this is in the best interest of the landowners.


Sec. 162.442  What forms of bond can be accepted under a business 
lease?

    We will only accept bonds in the following forms:
    (a) Negotiable Treasury securities that:
    (1) Have a market value at least equal to the bond amount; and
    (2) Are accompanied by a statement granting full authority to us to 
sell such securities in case of a violation of the terms of the lease.
    (b) Certificates of deposit that indicate on their face that our 
approval is required before redemption by any party; and
    (1) Have a face value at least equal to the bond amount, plus any 
penalties for early redemption; and
    (2) Are accompanied by a statement granting full authority to us to 
sell such securities in case of a violation of the terms of the lease.
    (c) Irrevocable letters of credit (LOC) issued by Federally-insured 
financial institutions authorized to do business in the United States. 
LOC's must:
    (1) Contain a clause that grants us authority to demand immediate 
payment if the lessee defaults or fails to replace the LOC within 30 
calendar days before its expiration date;
    (2) Be payable to the Department of the Interior, BIA;
    (3) Be irrevocable during its term and have an initial expiration 
date of not less than one year following the date BIA receives it; and
    (4) Be automatically renewable for a period of not less than one 
year, unless the issuing financial institution provides BIA with 
written notice at least 90 calendar days before the letter of credit's 
expiration date that it will not be renewed.
    (d) Surety bond issued by a company approved by the U.S. Department 
of the Treasury;
    (e) Assignment of savings account; or
    (f) Any other form of highly liquid, non-volatile security 
subsequently approved by us that is easily convertible to cash by us 
and for which Secretarial approval is required before redemption by any 
party.


Sec. 162.443  How will a bond be administered?

    (a) If a lease requires a bond or guaranty, the bond or guaranty 
must remain effective throughout the lease term and any renewal period. 
Alternatively, the lease may provide for the bond or guaranty to be 
modified or released:
    (1) After a specified period of time;
    (2) If we determine that the original bond or guaranty is no longer 
needed to secure the contractual obligations; or
    (3) If, for leases on tribal lands, the tribe requests the 
modification or release of the bond, and we approve the request.
    (b) If the lease does not initially require a bond or guaranty, or 
if it provides for modification or release at some future date, the 
lease must allow us to establish or reinstate a bond or guaranty 
requirement at any time we deem it necessary to secure the contractual 
obligations. A tribe may request that we establish or reinstate a bond 
or guaranty requirement.
    (c) We may require that the surety or guarantor provide any 
supporting documents needed to show that the bond or guaranty will be 
enforceable, and that the surety or guarantor will be able to perform 
the guaranteed obligations. The surety or guarantor must provide notice 
of cancellation before canceling the bond.
    (d) The lease must require that the lessee or assignee obtain the 
consent of the surety or guarantor, with respect to any amendment, 
assignment, sublease, or leasehold mortgage that directly impacts or 
affects the obligations and liabilities of the surety or guarantor. The 
lease must also provide for the surety or guarantor to receive a copy 
of any notice of default issued to the lessee by us or by the Indian 
landowners.


Sec. 162.444  Will we require insurance for a business lease?

    We may require any or all of the following types of insurance 
depending upon the activity conducted under the lease: property, 
business interruption, liability, and casualty (such as for fire, 
hazard, or flood). If insurance is required, it must:
    (a) Be provided in an amount sufficient to:
    (1) Protect any improvements on the leased premises;
    (2) Cover losses such as personal injury or death; and
    (3) Protect the interest of the Indian landowner.
    (b) Identify the Indian landowners and the United States as 
additional insured parties.
    (c) Be provided by a nationally accredited insurance company, with 
a minimum insurer financial strength rating of ``A'' or its equivalent, 
authorized to do business in the state where the land is located.

Lease Administration


Sec. 162.445  Will administrative fees be charged for actions relating 
to business leases?

    (a) We will charge an administrative fee each time we approve a 
business lease, amendment, assignment, sublease, mortgage, or related 
document. These fees will be paid by the lessee, assignee, or 
sublessee, to cover our costs in preparing or processing the documents 
and administering the lease.

[[Page 6523]]

    (b) We will charge administrative fees based on the rent payable 
under the lease. The fee will be 3 percent of the annual rent payable, 
including any percentage-based rent that can be reasonably estimated. 
The minimum administrative fee is $10.00 and the maximum administrative 
fee is $500.00, and any administrative fees that have been paid will be 
non-refundable. However, we may waive all or part of these 
administrative fees, in our discretion.
    (c) If all or part of the expenses of the work are paid from tribal 
funds, the tribe may establish an additional or alternate schedule of 
fees.


Sec. 162.446  Will we notify a lessee when a rental payment is due 
under a business lease?

    We may issue bills or invoices to a lessee in advance of the dates 
on which rental payments are due under a business lease, but the 
lessee's obligation to make such payments in a timely manner will not 
be excused if such bills or invoices are not delivered or received.

Lease Enforcement


Sec. 162.447  What will we do if rental payments are not made in the 
time and manner required by a business lease?

    (a) A lessee's failure to pay rent in the time and manner required 
by a business lease will be a violation of the lease, and a notice of 
violation will be issued under Sec. 162.450. If the lease requires that 
rental payments be made to us, we will send the lessee and its sureties 
a notice of violation within 10 business days after the date the rent 
was due. If the lease provides for payment directly to the Indian 
landowners, we will send the lessee and its sureties a notice of 
violation within 10 business days of the date on which we receive 
actual notice of non-payment from the landowners.
    (b) If a lessee fails to provide adequate proof of payment or cure 
the violation within the requisite time period described in Sec. 
162.450, and the amount due is not in dispute, we may immediately take 
action to recover the amount of the unpaid rent and any associated 
interest charges or late payment penalties. We may also cancel the 
lease under Sec. 162.451, or invoke any other remedies available under 
the lease or applicable law, including collection on any available bond 
or referral of the debt to the Department of the Treasury for 
collection. An action to recover any unpaid amounts will not be 
conditioned on the prior termination of the lease or any further notice 
to the lessee, nor will such an action be precluded by a prior 
termination.
    (c) Partial payments may be accepted by the Indian landowners or 
us, but acceptance will not operate as a waiver with respect to any 
amounts remaining unpaid or any other existing lease violations. Unless 
otherwise provided in the lease, overpayments may be credited as an 
advance against future rental payments, or refunded. Lessee will not be 
entitled to any interest accrued on advanced payments.
    (d) If a personal or business check is dishonored, and a rental 
payment is therefore not made by the due date, the failure to make the 
payment in a timely manner will be a violation of the lease and a 
notice of violation will be issued under Sec. 162.450. Any payment made 
to cure such a violation, and any future payments by the same lessee, 
must be made by one of the alternative payment methods listed in Sec. 
162.422.


Sec. 162.448  Will any special fees be assessed on delinquent rental 
payments due under a business lease?

    (a) The following special fees will be assessed if rent is not paid 
in the time and manner required, in addition to any interest or late 
payment penalties that must be paid to the Indian landowners under a 
business lease. The following special fees will be assessed to cover 
administrative costs incurred by us in the collection of the debt:

------------------------------------------------------------------------
        The lessee will  pay . . .                    For . . .
------------------------------------------------------------------------
(1) $50.00................................  Administrative fee for
                                             dishonored checks.
(2) $25.00................................  Administrative fee for our
                                             processing of each notice
                                             or demand letter.
(3) 18 percent of balance due.............  Administrative fee charged
                                             by Treasury following
                                             referral for collection of
                                             delinquent debt.
------------------------------------------------------------------------

    (b) If all or part of the expenses of the work are paid from tribal 
funds, the tribe may establish an additional or alternate schedule of 
fees.


Sec. 162.449  How will we determine whether the activities of a lessee 
under a business lease are in compliance with the terms of the lease?

    (a) Unless a business lease provides otherwise, we may enter the 
leased premises at any reasonable time, without prior notice, 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 initiate an appropriate investigation 
within 5 business days of that notification. If we find out from 
another source that a specific lease violation has occurred, we will 
initiate an appropriate investigation and make a reasonable attempt to 
notify the Indian landowners.


Sec. 162.450  What will we do in the event of a violation under a 
business lease?

    (a) If we determine that there has been a violation of a business 
lease we will send the lessee and its sureties a notice of violation 
within 5 business days of that determination. The notice of violation 
must be provided by certified mail, return receipt requested.
    (b) Within 10 business days of the receipt of a notice of 
violation, the lessee must:
    (1) Cure the violation and notify us in writing that the violation 
has been cured;
    (2) Dispute our determination that a violation has occurred and/or 
explain why we should not cancel the lease; or
    (3) Request additional time to cure the violation.


Sec. 162.451  What will we do if a violation of a business lease is not 
cured to our satisfaction within the requisite time period?

    (a) If the lessee does not cure a violation of a business lease 
within the requisite time period, we will consult with the Indian 
landowners, as appropriate, and determine whether:
    (1) The lease should be canceled by us under paragraph (c) of this 
section and Sec.Sec. 162.453 through 162.457;
    (2) We should invoke any other remedies available to us under the 
lease, including collecting on any available bond;
    (3) The Indian landowners wish to invoke any remedies available to 
them under the lease; or
    (4) The lessee should be granted additional time in which to cure 
the violation.
    (b) If we decide to grant a lessee additional time in which to cure 
a violation, the lessee must proceed diligently to complete the 
necessary corrective actions within a reasonable or specified time 
period from the date on which the extension is granted.
    (c) If we decide to cancel the lease, we will send the lessee, its 
encumbrancers, and its sureties a cancellation letter within 5 business 
days of that decision. The cancellation letter must be sent to the 
lessee by certified mail, return receipt requested. We will also 
provide actual or constructive notice of a cancellation decision to the 
Indian landowners. The cancellation letter will:
    (1) Explain the grounds for cancellation;

[[Page 6524]]

    (2) Notify the lessee of the amount of any unpaid rent, interest 
charges, or late payment penalties due under the lease;
    (3) Notify the lessee of its right to appeal under part 2 of this 
chapter, as modified by Sec. 162.452, including the amount of any 
appeal bond that must be posted with an appeal of the cancellation 
decision; and
    (4) Order the lessee to vacate the property within 30 days of the 
date of receipt of the cancellation letter, if an appeal is not filed 
by that time.


Sec. 162.452  Will BIA's regulations concerning appeal bonds apply to 
cancellation decisions involving business leases?

    (a) The appeal bond provisions in part 2 of this chapter will not 
apply to appeals from lease cancellation decisions made under Sec. 
162.451. Instead, when we decide to cancel a business lease, we may 
require that the lessee post an appeal bond with an appeal of the 
cancellation decision. The requirement to post an appeal bond will 
apply in addition to all of the other requirements in part 2 of this 
chapter.
    (b) An appeal bond should be set in an amount necessary to protect 
the Indian landowners against financial losses that will likely result 
from the delay caused by an appeal. Appeal bond requirements will not 
be separately appealable, but may be contested during the appeal of the 
lease cancellation decision.
    (c) If the appeal bond is not posted, BIA can dismiss the appeal. 
That dismissal will be final for the Department of the Interior.


Sec. 162.453  When will a cancellation of a business lease be 
effective?

    A cancellation decision involving a business lease will not be 
effective until 30 days after either the lessee receives a cancellation 
letter from us, or ten days from the date the letter is mailed, 
whichever is earlier. The cancellation decision will be stayed if the 
lessee files an appeal under Sec.Sec. 162.451 and 162.452 and part 2 of 
this chapter unless the decision is made immediately effective under 
part 2. While a cancellation decision is stayed, the lessee must 
continue to pay rent and comply with the other terms of the lease. If 
an appeal is not filed in accordance with Sec. 162.453 and part 2 of 
this chapter, the cancellation decision will be effective on the 31st 
day after either the lessee receives a cancellation letter from us, or 
10 days from the date the letter is mailed, whichever is earlier.


Sec. 162.454  Can we take emergency action if the leased premises are 
threatened with immediate and significant harm?

    In the event of a natural disaster, or if a lessee or any other 
party causes or threatens to cause immediate and significant harm to 
the leased premises during the term of a business lease, we may take 
appropriate emergency action. Emergency action may include judicial 
action seeking immediate cessation of the activity resulting in or 
threatening the harm. Reasonable efforts will be made to notify the 
Indian landowners, either before or after the emergency action is 
taken.


Sec. 162.455  What will we do if a lessee holds over after the 
expiration or cancellation of a business lease?

    If a lessee remains in possession after the expiration or 
cancellation of a business lease, we will treat the unauthorized use as 
a trespass. Unless we have been advised in writing by the applicable 
percentage of Indian landowners under Sec. 162.404 that they are 
engaged in good faith negotiations with the lessee to obtain a new 
lease, we will take action to recover possession on behalf of the 
Indian landowners, and pursue any additional remedies available under 
applicable law, such as forcible entry and detainer action.


Sec. 162.456  May a lease be terminated before its expiration date?

    (a) Yes, the lease may provide either party with one or more 
options to terminate, for any reason. If an option to terminate is 
provided, the lease must specify the time and manner in which the 
option must be exercised.
    (b) The lease may be mutually terminated by agreement between the 
lessee and the Indian landowners, subject to our approval and notice to 
any approved encumbrancer. The percentage of consent by the landowners 
for termination must be in the same percentages as required to obtain a 
lease (see Sec. 162.404).


Sec. 162.457  What happens if the lessee abandons the lease?

    (a) If a lessee abandons the leased premises, the lessee and its 
sureties will not be relieved of the obligations contained in the 
lease.
    (b) We may cancel the lease, effective immediately, and attempt to 
find a new lessee for the property.

Subpart E [Amended]

    9. The title for subpart E is revised to read as follows:

Subpart E--Special Requirements for Certain Reservations

Subpart F [Removed]

    10. Subpart F (Sec.Sec. 162.600-162.633) is removed in its 
entirety.

[FR Doc. 04-2392 Filed 2-9-04; 8:45 am]
BILLING CODE 4310-W7-P