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Indian Nations Law Update - December 2012

December 10, 2012

Interior Department Issues Long-Awaited Leasing Regulations
Federal laws require that leases of tribal trust and restricted lands be approved by the Secretary of the Interior or Bureau of Indian Affairs (BIA) officials to whom the Secretary has delegated authority. The approval process has caused delay, added costs and made it more difficult tor tribes to issue leases for economic development or housing for members.

On December 5, the Interior Department published new Part 162 leasing regulations intended to streamline lease issuance. Decades-old existing regulations included a subpart for agricultural leases and a generic "non-agricultural leases" subpart for all other types of leases. The new regulations, effective January 4, 2013, retain the agricultural lease provisions but add new subparts for:

  • Residential Leases;
  • Business Leases;
  • Wind Energy Evaluation Leases (WEELs); and
  • Wind and Solar Resource (WSR) Leases.

Consistent with the self-determination doctrine and tribal sovereignty, the new rules provide for increased deference to tribal governments with respect to leases of tribal trust and restricted lands, including:

  • Mandatory approval of leases, amendments, subleases, assignments and leasehold mortgages unless the BIA identifies a "compelling reason" that justifies non-approval;
  • Establishment of deadlines for BIA approval and remedies for non-compliance, including automatic approval if a lease amendment or sublease is not approved within 30 days;
  • Elimination of the requirement that permits be approved by BIA;
  • Elimination of insurance and bonding requirements;
  • Deference to tribes' decision to lease land at less than fair rental value; and
  • Deference to a tribe's negotiated valuation rather than requiring a costly appraisal.

The new regulations clarify that subleases for office space, in BIA's view, require approval, although this can be avoided by providing for subleases in the principal lease. Mortgages of subleases do not require BIA approval unless the lease otherwise provides.

One of the most striking features of the new rules is its defense of tribal immunities from state taxation. Increasingly, state and municipal governments have sought to reach into Indian country to impose taxes on improvements, services and other value claimed to be generated by non-Indian lessees. The Preamble to the rules, citing to the relevant Supreme Court authorities, vigorously rejects these efforts. Subject only to "applicable federal law," the rules flatly prohibit state and municipal taxation of:

  • Permanent improvements on the leased land, without regard to ownership of those improvements;
  • Activities under a lease conducted on the leased premises, including any charge or tax on "business use, privilege, public utility, excise, gross revenue taxes;" or
  • The leasehold or possessory interest.

The regulations also strongly support the right of tribes to require tribal employment preference for activities undertaken pursuant to leases, an issue subject to litigation in recent years. The Preamble cites the political (versus racial or ethnic) basis for these preferences. The rules include an express affirmation of the validity of these provisions.

The new regulations should be viewed as complementary to the HEARTH Act enacted in law in July. The HEARTH Act permits tribes to avoid the approval requirements of Part 162 entirely by enacting ordinances, with certain HEARTH-prescribed features, that have been approved by the BIA.

Godfrey & Kahn has worked extensively with tribes in the area of leasing, including preparation of realty ordinances that comply with HEARTH, preparation of housing ordinances that support one-stop tribal housing agencies to meet all of the community's housing needs, including both rental and home ownership, serving both low income and non-low income families. Brian Pierson is the author of National American Indian Housing Council's Indian Housing Development Handbook.

For more information or assistance in taking advantage of the new leasing regulations and the HEARTH Act, contact Brian Pierson at 414-287-9456 or bpierson@gklaw.com.

HUD Amends NAHASDA Regulations
The Department of Housing and Urban Development (HUD) on December 3 published amendments to the rules that govern the Indian Housing Block Grant and guaranty programs under the Native American Housing Assistance and Self-Determination Act (NAHASDA). The amendments bring the regulations into conformity with changes made in the 2008 act reauthorizing NAHASDA through 2013. The new rules, effective January 2, 2013, make changes to:

  • Subpart A relating to guiding principles of NAHASDA, definitions, labor standards, environmental review procedures, procurement, tribal and Indian preference, and program income;
  • Subpart B relating to eligible families, useful life of properties, and criminal conviction records; and
  • Subpart C relating to the tribal program year, Indian Housing Plan (IHP) requirements, administrative and planning expenses, reserve accounts, local cooperation agreements, and exemption from taxation; and
  • Subpart D relating to certain formula information that must be included in the IHP and Annual
  • Performance Report (APR), as well as the date by which HUD must provide data used for the formula and projected allocation to a tribe or Tribally Designated Housing Entity;
  • Subpart E relating to financing guarantees; and
  • Subpart F relating to HUD monitoring, APRs, APR review, HUD performance measures, recipient comments on HUD reports, remedial actions in the event of substantial noncompliance, audits, submission of audit reports, and records retention.

Because the more significant changes became effective with the enactment of the 2008 reauthorization act, the amendments are not expected to have a major impact on the operations of tribal housing programs.

Godfrey & Kahn's Pierson and Clancy to Present on Use of the IHBG for Renewable Energy at NAIHC Legal Symposium December 12 in Las Vegas
Brian Pierson, leader of Godfrey & Kahn's Indian Nations Law Team, and John Clancy, leader of Godfrey & Kahn's Environmental/Energy Law Team, will present "Financing Wind, Solar, and Bio-Power for Indian Housing" as part of the National American Indian Housing Council's annual Legal Symposium at the Mirage Resort in Las Vegas, December 10-13, 2012. Mr. Pierson will also provide a litigation update at 10:30 a.m. during the plenary session December 11.

The renewable energy breakout session, to be held September 12 from 1:30 to 3:00 p.m. in Room Trinidad A, will:

  • Explain how tribes and tribally-designated housing entities can combine their Indian Housing Block Grants with other state and federal financing to develop homes powered by renewable energy sources such as wind, solar, and biomass;
  • Describe various funding sources that are available for retrofits for existing housing, and for development of generation facilities that can power tribal facilities, including housing; and
  • Review the permissible uses of the financing sources for renewable energy projects and discuss specific Indian country examples.

For more information on this topic, contact Brian Pierson at 414-287-9456 or bpierson@gklaw.com.

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