The Silver Lining: Efficiencies in BIA’s Newly Effective Right-of-Way Regulations
As we have previously reported, the Bureau of Indian Affair’s (BIA) recently revised the regulations governing grants of right-of-way (ROW) on Indian lands compiled at 25 C.F.R. Part 169 (Final Rule).1 The Final Rule became effective on April 22, 2016.2 While many of the Final Rule’s provisions are concerning because of the impediments they pose to obtaining and maintaining ROWs across tribal and allotted lands, the Final Rule includes provisions that create efficiencies by carving out exceptions to landowner consent and BIA approval and by adding more detail to certain regulations regarding consent. Given the complexity of the new regulations, a full review is necessary to inform any action or decision. However, we discuss here landowner consent/BIA approval exceptions for renewals, assignments, and mortgages in turn. We also identify provisions that may be advised to be included in future ROW grants to take advantage of the Final Rule’s efficiencies for future grants.
Efficiencies for Existing Grants:
Renewals: Under 25 C.F.R. § 169.202, the BIA will renew an existing ROW grant without landowner(s) consent only if the original grant expressly allowed for automatic renewal or option to renew and specifies compensation or how compensation will be calculated. Of course, these provisions may inform how new agreements should be crafted. To determine whether the grant at issue can be renewed without landowner consent at the time of renewal, consider reviewing your existing grants (and any tribal agreement/resolution if tribal lands are involved) for the following language:
- Landowner consent to automatic renewal;
- Language providing for option to renew;
- Language identifying how much compensation will be paid to landowner upon renewal or agreement as to a method to determine compensation.
The regulations indicate a grant may authorize automatic renewal or an option to renew if it provides no further landowner consent is required, identifies compensation or method for determining compensation at the time of renewal, and the grantee or assignee provides BIA with copy of the assignment documents. 25 C.F.R. § 169.202(a)(2). In addition to the landowner consent requirements, BIA will renew a grant only if there are no changes to the location or use authorized by the original grant, and the initial term and renewal term together do not exceed the maximum reasonable term as set forth in 25 C.F.R. § 169.201.
If the proposed renewal involves a change to the original grant or the original grant was silent regarding renewals, then BIA requires the grantee to reapply for a new ROW and BIA will treat the application as an original application for a ROW. 25 .C.F.R. § 169.202(c).
Assignments: Under 25 C.F.R. § 169.207, the Final Rule states that a grantee may assign a ROW grant without landowner(s) consent and without BIA approval only if the original grant expressly allowed for assignment without landowner(s) consent and BIA approval. To determine whether the grant at issue can be assigned without landowner consent and without BIA approval, consider the following:
- Was the assignment the result of corporate merger, acquisition, or transfer by operation of law? If so, then no landowner consent and BIA approval required. 25 C.F.R. § 169.207(c). The assignee, however, must comply with requirements to provide documentation to the BIA.
- If the assignment is not a result of a corporate merger, does the grant state that it is binding on “successors and assigns”? If so, BIA has indicated in its “Preamble” commentary on the new regulations that no landowner consent or BIA approval should be required.3any current grants include language granting to the grantee and the grantee’s assignees,” which the comments state the BIA interprets as “contain[ing] explicit language allowing the grant to be freely assigned without landowner consent or BIA approval, and that explicit grant language would govern.”).] The assignee must comply with requirements to provide documentation to the BIA.
- If the assignment is not the result of a corporate merger or the grant does not state that it is binding on “successors and assigns,” does the grant contain a landowner consent to future assignments without further landowner consent and without BIA approval; then BIA indicates no further negotiations with the landowner should be required and no BIA approval necessary. 25 C.F.R. § 169.20.
- Note however, that even if landowner consent and BIA approval are not required, the assignee and grantee must provide a copy of the assignment and supporting documentation to the BIA within 30 days of the assignment.
In addition, the Final Rule requires all assignees to file all prior assignments with the BIA by, as extended, August 16, 2016, or request an extension of that date. See 25 C.F.R. § 169.7. If BIA does not have a record showing legal right to occupy the ROW, then, according to BIA’s FAQs, the assignee “risk[s] BIA pursuing an enforcement action against you for trespass.”
Mortgages: Under 25 C.F.R. § 169.210, a grantee may only mortgage a ROW if the grant “expressly allows mortgaging.” This appears to mean that a ROW grantee is precluded from mortgaging existing ROW grants after the Final Rule’s effective date unless the existing grant expressly authorizes the grantee to mortgage its interest. The BIA has not indicated it considers “successors and assigns” language also authorizes mortgages, though there are good reasons it should have similar effect. In addition, the Final Rule requires landowner(s) consent, unless the existing grant expressly allowed for mortgage without landowner(s) consent. It appears that BIA approval is required even if landowner consent is not required.
“So Numerous” Exception to Landowner Consent: If the grant does not contain the language authorizing renewal, assignment, mortgage or amendment, the Part 169 regulations allow for BIA approval without landowner consent when the landowners are so numerous that it would be impracticable to obtain consent. The “so numerous” exception, which also applies to original grants of ROWs, existed in the prior regulations, but BIA has added clarity about what constitutes “so numerous” in the Final Rule. 25 C.F.R. § 169.107(b)(1)(2). If there are 50 or more co-owners of undivided trust or restricted interests in an allotment, then an applicant may want to consider requesting BIA approval under the “so numerous that it would impracticable to obtain consents” regulation. The Final Rule sets forth the process to follow if an applicant wants to proceed under the “so numerous” exception, which includes providing notice and request for consent to the landowners, along with a statement that BIA can proceed under Section 169.107(b)(1) if consent is not obtained. BIA has identified the following information as relevant to its decision whether to approve under the “so numerous” exception and this information may be useful to include in an application:
- Statement that the grant will cause no substantial injury to the land or any landowner. BIA considers the following in the substantial injury review: Term, amount of acreage, type of disturbance, type of activity, potential for environmental or safety impacts, and objections by the landowners.
- Statement that the landowners will be adequately compensated for consideration and damages. If the grant specified the amount of compensation or a method for determining compensation, that information may be evidence of adequate compensation.
- BIA must provide notice to all owners at least 60 days in advance of approval. See 25 U.S.C. § 324; Final 25 C.F.R. § 169.107(b)(1).
Language to Include in New Grants.
If you cannot simply renew your grant, or if you are acquiring a new grant, then the following language may be helpful to include to enhance certainty with respect to future renewals, assignments, or mortgages.
Renewals: Consider including the following concepts regarding your right to renew your grant (25 C.F.R. § 169.202):
- Landowner consent to automatic renewal or an option to renew, and without further BIA approval;
- An agreement with the landowner for how much compensation will be paid to landowner upon renewal or agreement as to a method to determine compensation (CPI adjustment, etc.);
- A definition of the initial term and renewal term and, if the initial term and renewal term agreed to is different than the duration specified in 25 C.F.R. § 169.201(c), a statement that the landowner agrees that the initial term and renewal term will benefit the Indian landowner and, if true, the initial term and renewal term is consistent with the duration of the ROW crossing tribal lands.
Assignments: Consider including the following concepts regarding your right to assign the grant (25 C.F.R. § 169.207):
- Landowner consent to future assignments without further landowner consent;
- Statement that grant is binding on “successors and assigns”;
- Landowner agreement that no BIA approval is required.
Mortgages: Consider including the following concepts regarding your right to mortgage the grant (25 C.F.R. § 169.210):
- Ensure that the grant expressly authorizes mortgaging;
- Landowner consent to future mortgages;
- Landowner agreement that BIA approval is not required, although it is unclear whether BIA will agree that its approval is not required.
- 1. The BIA’s website has additional information on the Final Rule and its implementation, including templates for ROW applications, grants, consents for renewals, amendments, mortgages, and assignments, available here.
- 2. An industry group, Western Energy Alliance, challenged the Final Rule in the United States District Court for the District of North Dakota, but then dismissed its challenge. Modrall Sperling represented the New Mexico Oil and Gas Association in that challenge.
- 3. See 80 Fed. Reg. 72491, 72502 (Nov. 19, 2015) (“[M
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