[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Pages 42111-42112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18849]



Bureau of Indian Affairs


HEARTH Act Approval of Stillaguamish Tribe of Indians' Leasing 

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Notice.


SUMMARY: On July 17, 2017, the Bureau of Indian Affairs (BIA) approved 
the Stillaguamish Tribe of Indians' leasing regulations under the 
Helping Expedite and Advance Responsible Tribal Homeownership (HEARTH) 
Act. With this approval, the Tribe is authorized to enter into the 
following types of leases without BIA approval: Agricultural, 
residential, business, wind and solar, wind energy evaluation, and 
other authorized purposes.

FOR FURTHER INFORMATION CONTACT: Ms. Sharlene Round Face, Bureau of 
Indian Affairs, Division of Real Estate Services, MS-4642-MIB, 1849 C 
Street NW., Washington, DC 20240, at (202) 208-3615.


I. Summary of the HEARTH Act

    The HEARTH Act of 2012 (the Act) makes a voluntary, alternative 
land leasing process available to Tribes, by amending the Indian Long-
Term Leasing Act of 1955, 25 U.S.C. 415. The Act authorizes Tribes to 
negotiate and enter into agricultural and business leases of Tribal 
trust lands with a primary term of 25 years, and up to two renewal 
terms of 25 years each, without the approval of the Secretary of the 
Interior (the Secretary). The Act also authorizes Tribes to enter into 
leases for residential, recreational, religious or educational purposes 
for a primary term of up to 75 years without the approval of the 
Secretary. Participating Tribes develop Tribal leasing regulations, 
including an environmental review process, and then must obtain the 
Secretary's approval of those regulations prior to entering into 
leases. The Act requires the Secretary to approve Tribal regulations if 
the Tribal regulations are consistent with the Department's leasing 
regulations at 25 CFR part 162 and provide for an environmental review 
process that meets requirements set forth in the Act. This notice 
announces that the Secretary, through the Assistant Secretary--Indian 
Affairs, has approved the Tribal regulations for the Stillaguamish 
Tribe of Indians.

[[Page 42112]]

II. Federal Preemption of State and Local Taxes

    The Department's regulations governing the surface leasing of trust 
and restricted Indian lands specify that, subject to applicable Federal 
law, permanent improvements on leased land, leasehold or possessory 
interests, and activities under the lease are not subject to State and 
local taxation and may be subject to taxation by the Indian Tribe with 
jurisdiction. See 25 CFR 162.017. As explained further in the preamble 
to the final regulations, the Federal government has a strong interest 
in promoting economic development, self-determination, and Tribal 
sovereignty. 77 FR 72,440, 72,447-48 (December 5, 2012). The principles 
supporting the Federal preemption of State law in the field of Indian 
leasing and the taxation of lease-related interests and activities 
applies with equal force to leases entered into under Tribal leasing 
regulations approved by the Federal government pursuant to the HEARTH 
    Section 5 of the Indian Reorganization Act, 25 U.S.C. 5108, 
preempts State and local taxation of permanent improvements on trust 
land. See Confederated Tribes of the Chehalis Reservation v. Thurston 
County, 724 F.3d 1153, 1157 (9th Cir. 2013) (citing Mescalero Apache 
Tribe v. Jones, 411 U.S. 145 (1973)). Similarly, section 465 preempts 
State taxation of rent payments by a lessee for leased trust lands, 
because ``tax on the payment of rent is indistinguishable from an 
impermissible tax on the land.'' See Seminole Tribe of Florida v. 
Stranburg, No. 14-14524, *13-*17, n.8 (11th Cir. 2015). In addition, as 
explained in the preamble to the revised leasing regulations at 25 CFR 
part 162, Federal courts have applied a balancing test to determine 
whether State and local taxation of non-Indians on the reservation is 
preempted. See White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 
143 (1980). The Bracker balancing test, which is conducted against a 
backdrop of ``traditional notions of Indian self-government,'' requires 
a particularized examination of the relevant State, Federal, and Tribal 
interests. We hereby adopt the Bracker analysis from the preamble to 
the surface leasing regulations, 77 FR at 72,447-48, as supplemented by 
the analysis below.
    The strong Federal and Tribal interests against State and local 
taxation of improvements, leaseholds, and activities on land leased 
under the Department's leasing regulations apply equally to 
improvements, leaseholds, and activities on land leased pursuant to 
Tribal leasing regulations approved under the HEARTH Act. Congress's 
overarching intent was to ``allow Tribes to exercise greater control 
over their own land, support self-determination, and eliminate 
bureaucratic delays that stand in the way of homeownership and economic 
development in Tribal communities.'' 158 Cong. Rec. H. 2682 (May 15, 
2012). The HEARTH Act was intended to afford Tribes ``flexibility to 
adapt lease terms to suit [their] business and cultural needs'' and to 
``enable [Tribes] to approve leases quickly and efficiently.'' Id. at 
    Assessment of State and local taxes would obstruct these express 
Federal policies supporting Tribal economic development and self-
determination, and also threaten substantial Tribal interests in 
effective Tribal government, economic self-sufficiency, and territorial 
autonomy. See Michigan v. Bay Mills Indian Community, 134 S. Ct. 2024, 
2043 (2014) (Sotomayor, J., concurring) (determining that ``[a] key 
goal of the Federal Government is to render Tribes more self-
sufficient, and better positioned to fund their own sovereign 
functions, rather than relying on Federal funding''). The additional 
costs of State and local taxation have a chilling effect on potential 
lessees, as well as on a Tribe that, as a result, might refrain from 
exercising its own sovereign right to impose a Tribal tax to support 
its infrastructure needs. See id. at 2043-44 (finding that State and 
local taxes greatly discourage Tribes from raising tax revenue from the 
same sources because the imposition of double taxation would impede 
Tribal economic growth).
    Just like BIA's surface leasing regulations, Tribal regulations 
under the HEARTH Act pervasively cover all aspects of leasing. See 
Guidance for the Approval of Tribal Leasing Regulations under the 
HEARTH Act, NPM-TRUS-29 (effective Jan. 16, 2013) (providing guidance 
on Federal review process to ensure consistency of proposed Tribal 
regulations with Part 162 regulations and listing required Tribal 
regulatory provisions). Furthermore, the Federal government remains 
involved in the Tribal land leasing process by approving the Tribal 
leasing regulations in the first instance and providing technical 
assistance, upon request by a Tribe, for the development of an 
environmental review process. The Secretary also retains authority to 
take any necessary actions to remedy violations of a lease or of the 
Tribal regulations, including terminating the lease or rescinding 
approval of the Tribal regulations and reassuming lease approval 
responsibilities. Moreover, the Secretary continues to review, approve, 
and monitor individual Indian land leases and other types of leases not 
covered under the Tribal regulations according to the Part 162 
    Accordingly, the Federal and Tribal interests weigh heavily in 
favor of preemption of State and local taxes on lease-related 
activities and interests, regardless of whether the lease is governed 
by Tribal leasing regulations or Part 162. Improvements, activities, 
and leasehold or possessory interests may be subject to taxation by the 
Snohomish County and the State of Washington.

    Dated: July 17, 2017.
Michael S. Black,
Acting Assistant Secretary--Indian Affairs.
[FR Doc. 2017-18849 Filed 9-5-17; 8:45 am]