Trust Management Reform: Leasing/Permitting, Grazing, Probate and Funds Held in Trust

Federal RegisterJan 22, 2001

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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Parts 15, 114, 115, 162 and 166

RIN 1076-AE00

Trust Management Reform: Leasing/Permitting, Grazing, Probate and Funds Held in Trust

AGENCY:

Bureau of Indian Affairs.

ACTION:

Final Rule.

SUMMARY:

The Department of the Interior, Bureau of Indian Affairs (BIA), revises its regulations in the areas of probate, funds held in trust for Indian tribes and individual Indians, leasing/permitting, and grazing. These revisions are meant to further fulfill the Secretary's fiduciary responsibility to federally-recognized tribes and individual Indians. Particularly, revisions to the probate regulations institute necessary procedures to expedite the probate process for Indian decedents' estates. Revisions to regulations dealing with funds held in trust standardize the process for collecting, distributing, and accounting for individual Indian monies and monies held in trust for tribal governments. Revisions to leasing/permitting regulations implement the Indian Agricultural Resource Management Act and address appropriate procedures for entering into leases and permits on Indian lands and, more importantly, aid in properly determining and accounting for the value of such leases to individual land owners and tribal entities. Revisions in the grazing permit regulations address similar concerns and further standardize the process and forms utilized in granting permits on Indian lands. In the interests of economy of administration, and because all the revisions clarify and standardize Departmental policy, they are illustrated in one rulemaking vehicle.

EFFECTIVE DATE:

March 23, 2001.

FOR FURTHER INFORMATION CONTACT:

Duncan L. Brown, Department of the Interior, Office of the Secretary, 1849 C Street, NW., MS 7412 MIB, Washington, DC 20240, telephone 202/208-4582.

SUPPLEMENTARY INFORMATION:

I. Background

II. Response to Comments

III. Part-by-Part Analysis

IV. Procedural Requirements

A. Review Under Executive Order 12866

B. Review Under Executive Order 12988

C. Review Under the Regulatory Flexibility Act

D. Review Under Small Businesses Regulatory Enforcement Fairness Act of 1996

E. Review Under the Paperwork Reduction act

F. Review Under Executive Order 13132—Federalism

G. Review Under the National Environmental Policy Act

H. Review Under the Unfunded Mandates Reform Act of 1995

I. Background

Pursuant to the Department's “Trust Management Improvement Project—High Level Implementation Plan,” certain parts within 25 CFR were identified for immediate revision. These parts were identified through an internal review by the Bureau of Indian Affairs (BIA) in consultation with the Office of the Special Trustee for American Indians (OST), and from tribal responses to consultations held in the field over a period of years. Additionally, non-governmental Indian organizations were consulted on areas of BIA trust management needing clarification and more uniform application of policy and administration throughout Indian Country. This rulemaking was initiated as an appropriate response to the Administration's stated goal of improving the administration and management of individual Indian and tribal trust resources. The Final Rule was developed with attention to Secretarial Order 3215, “Principles for the Discharge of the Secretary's Trust Responsibility,” of April 28, 2000, which was converted to and made permanent in the Departmental Manual on October 31, 2000.

See

303 DM 2.

The proposed regulation was published in the

Federal Register

on July 14, 2000, (65 FR 43874) with a 90-day public comment period. During the comment period, the BIA held eight formal tribal consultation sessions to discuss the proposed regulations and receive oral comments on the record. Additionally, the BIA met informally with the interested organizations, such as the policies and procedures working group formed with the National Congress of American Indians (NCAI) and the Inter-Tribal Agricultural Council, and encouraged them to provide written comments.

Comments were forwarded to a clearinghouse for compilation, and responses by the BIA to substantive comments are noted below. The comments and compilation documents were carefully reviewed by the regulation drafting teams, made up of BIA employees from central, regional and agency offices, and trust program attorneys from the Solicitor's Office. As noted in the part-by-part analysis below, in direct response to comments the regulations have been clarified and reorganized. Additionally, some sections have been deleted, while new provisions have been added to provide for increased clarity and precision. The regulations generally have been revised to afford greater recognition of tribal sovereignty and self-determination, as well as greater recognition of the inherent rights of the Indian landowners. Time frames for BIA or Departmental action have been added, as have provisions identifying the entity within the Department responsible for taking official action. Further, we have strengthened the provisions for the BIA's enforcement of leases and permits on trust and restricted lands, including collection of trust income. Further, we have revised and standardized the provisions in each part that address the creation and maintenance of trust records.

As we explain below in the part-by-part analysis, the passage of the Indian Land Consolidation Act Amendments of 2000, Public Law 106-462 (ILCA Amendments), extensively alters the legal framework governing activities on fractionated trust and restricted lands. As a result, at this time the Department will not issue new final regulations affecting business and residential leases. Such regulations will be re-proposed after the full impact of the ILCA Amendments is fully ascertained and more consultation with tribes is held.

Lastly, as explained more fully below, in order to accommodate many of the comments pertaining to Individual Indian Money (IIM) accounts, including supervised accounts and the use of IIM accounts to secure loans, the BIA will not issue final regulations in part 115 that would directly address these subjects. These provisions will be re-proposed for further comment and consultations.

To facilitate comparison between the Proposed Rule and the Final Rule, we have provided the following tables. Sections deleted from the Proposed Rule are denoted with asterisks (**) in the final regulation columns, and new sections added to the final regulations are denoted by their section numbers and a plus (+) sign in the column for final regulations.

25 CFR Part 15.—Probate of Indian Estates Except for Members of the Five Civilized Tribes

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

.104

.106

.202

.303

.310

+.405

.105

.104

.203

.304

.311

.405

.403

.106

.105

.204

.206

.305

.312

.501

.107

.205

.306

.401

.502

.101

.108

.206

.205

.307

.402

.503

.102

.109

.301

.308

.403

+.503

.103

.201

.302

.309

.404

+.504

25 CFR Part 115.—Trust Funds for Tribes and Individual Indians

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

.001

.208

.812

.311

.337

.502

.363

.389

.506

.607

.002

.209

.312

.338

.503

.364

.418

.390

.507

.608

.100

.700

.210

.806

.313

.339

.504

.365

.413

.400

.900

.508

.609

.101

.701

.211

.814

.314

.409

.340

.403

.366

.428

+.400

.509

.610

.102

.103

.212

.818

.315

.416

.341

.367

.429

.401

.901

.510

.611

.102

.702

.213

.819

.316

.342

.368

.430

+.401

.511

.612

.103

.805

.214

.820

.317

.343

.369

.402

.902

.512

.613

.104

.215

.808

.318

.344

.422

.370

.431

.340

+.402

.513

.614

.105

.216

.809

.319

.345

.423

.371

.403

.903

.514

.615

.106

.703

.216

.813

.320

.346

.424

.372

.404

.904

+.606

.107

.705

.217

.810

.321

.347

.425

.373

+.406

+.616

.108

.706

.218

.811

.322

.348

.102

.374

.314

+.407

.515

.617

.109

.707

.219

.815

.323

.349

.375

+.408

.516

.618

.110

.708

.220

.816

.324

.350

.376

+.412

.517

.619

.111

.710

.221

.817

.325

.351

.377

+.414

.518

.620

.112

.711

.300

.326

.352

.378

+.419

.600

.107

.113

.712

.301

.327

.353

.379

.358

+.421

.700

.1000

.114

.713

.302

.328

.102

.354

.380

+.500

.701

.200

.800

.303

.329

.410

.355

.381

+.501

.702

.1001

.201

.801

.304

.404

.330

.411

.356

.382

+.600

+.704

.202

.802

.305

.709

.331

.357

.421

.383

.500

.601

.801

.105

.203

.803

.306

.405

.332

.415

.358

.420

.384

.501

.802

.106

.204

.709

.307

.333

.359

.417

.385

.104

.502

.602

.803

.100

.205

.308

.334

.360

.427

.386

.503

.603

.804

.206

.309

.335

.361

.387

.504

.604

+.807

.207

.310

.336

.362

.388

.505

.605

Part 162.—Leases and Permits

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

.100

.23

.244

.42

.226

.83

.126

.252

.173

.103

.24

.230

.43

.227

.84

.126

.619

.174

.101

.25

.230

.44

.223

.85

.127

.240

.175

.103

.26

.219

.45

.234

.86

.127

.612

.176

+.105

.26

.220

.46

.234

.87

+.254

.177

+.106

.26

.221

.47

.235

.88

.128

.255

.178

+.107

.26

.223

.48

.236

.89

+.256

.179

.200

.26

.231

.49

.236

.90

.129

.180

.111

.108

.26

.238

.50

.236

.91

.130

.620

.180

.112

+.109

.27

.229

.51

.237

.100

.226

.140

.102

+.300

.202

.28

.52

.237

.101

.226

.141

+.400

.203

+.231

+.239

.102

.110

.142

.190

.500

.205

.29

.232

.60

.110

.228

.143

.191

.501

.204

.30

.233

.61

.110

.241

.144

.192

.502

.202

.31

.233

.62

.206

.111

.228

.145

.193

.10

.32

.224

.63

.111

.241

.146

.194

.503

.11

.201

.33

.64

.207

.112

.228

.147

.102

.195

.12

.214

.34

.224

.65

.112

.241

.150

.211

.601

.12

.215

.34

.613

.66

.207

.113

.228

.151

.211

.602

.13

.213

.35

.224

.66

.212

.113

.241

.152

.222

.603

.14

.217

.35

.247

.67

.104

.114

.228

.160

.604

.15

.217

.36

.248

.68

.104

.114

.241

.161

.605

.16

.217

.36

.615

.70

.102

.120

.162

.606

.17

.110

.37

.225

.70

.207

.121

.250

.163

.607

.18

.218

.37

.249

.71

.208

.121

.617

.164

.608

.19

.37

.614

.71

.209

.122

.251

.165

.609

.20

.221

.37

.616

.72

.207

.122

.618

.166

.610

.21

.230

.38

.248

.73

.210

.123

.251

.167

.611

.21

.242

.38

.615

.74

.207

.123

.618

.168

+.621

.22

.230

.39

.224

.75

.216

.124

.251

.169

+.622

+.243

.40

.224

.80

.124

.253

.170

+.623

+.245

.81

.125

.252

.171

.22

.246

.41

.226

.82

.125

.619

.172

25 CFR Part 166.—Grazing Permits on Indian Lands

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

Proposed

Final

.122

.221

+.308

.412

.418

.606

.607

.811

+.2

.123

.222

.206

.309

.413

.411

.607

.608

.812

.124

.223

.207

.310

.414

.412

.700

.813

.100

.200

.125

.224

.208

.316

.415

.419

.701

.814

.101

.201

.126

.225

.209

.317

.416

.420

+.702

.815

.102

.203

.127

.226

.210

.311

.417

.414

.702

.703

.816

.103

.204

.128

.211

.312

+.415

.703

.704

.817

+.205

.129

212

.313

.418

.413

.704

.706

.818

.104

.202

.130

+.314

.419

.705

.606

.819

.105

.206

.131

+.315

.420

.419

.706

.705

.900

.106

.207

.132

.300

.100

.421

.416

.707

.1000

.107

.208

.133

.301

.101

.422

.417

+.707

.1000

.1001

.108

.209

.134

.302

.102

.421

.708

.1100

.900

.109

.209

.135

.303

.103

.423

.422

.709

.1101

.901

.110

.209

.136

.227

.304

.104

.424

.423

+.709

.1102

.902

.111

.212

.137

.228

.400

.425

.424

.800

.1103

.903

.112

.213

.138

.229

.401

.500

.801

.1104

.904

.113

.214

+.230

.402

.501

.802

.1105

.905

.114

.210

+.231

.403

.502

.803

.1106

.906

+.211

.200

.300

.404

.503

.804

.1107

.907

.115

.215

.201

.301

.405

.504

.805

.1108

.908

.116

.216

.202

.302

.406

.600

+.805

.1109

.909

.117

.217

.203

.303

.407

.601

.806

.1110

.910

.118

.218

+.304

.408

.309

.602

.807

.119

.219

.204

.305

.409

.408

.603

.808

.120

.220

+.306

.410

.409

.604

.809

.121

.205

.307

.411

.410

.605

.810

II. Response to Comments

The Department solicited comments from all interested parties through its publication of the Proposed Rule on July 14, 2000, and further solicited informal comments through eight regional consultation sessions: Aberdeen, SD (August 7-8, 2000); Anchorage, AK (August 10, 2000); Oklahoma City, OK (August 10, 2000); Bloomington, MN (August 17, 2000); Albuquerque, NM (August 21 and 22, 2000) [two separate consultation meetings]; Billings, MT (August 24, 2000); and Reno, NV (August 28-29, 2000). Transcripts were made of these sessions in order to ensure that both oral and written comments were considered. Following the consultation meetings, several BIA regional and agency offices established informal local working groups with tribes to encourage discussion of the proposed regulations and submission of written comments. Throughout the comment period we met on an informal basis to discuss the regulations with interested organizations, including the NCAI working group and the Inter-Tribal Agricultural Council.

The Department received a total of 317 written comments on all parts of the proposed rulemaking, representing 349 individual signatures. Written responses were received from respondents in 25 states, although many responses were received in a format that did not reveal their geographic origin. The Department received 159 written responses from tribal governments (representing 168 signatures and including four tribal government resolutions), and 31 responses from non-governmental Indian organizations (representing 34 signatures). Six respondents identified themselves as tribal members. Additionally, one response was received from a state governmental entity, and five from business entities. The remaining respondents included unaffiliated individuals (57 responses) and federal agencies (58 responses, representing 78 individual signatures). All substantive comments were reviewed by the Department and, depending upon their merit, the Department accepted, accepted with revision, or rejected for reason particular comments made on each part of the rule. Substantive comments are summarized below.

A. General Comments—Overall Rulemaking

Many tribes, tribal organizations and individuals expressed strong opinions that the Department should not finalize these regulations as planned. Primarily, respondents expressed concern that the process by which the regulations were

developed did not include sufficient time to analyze the scope of the regulations and identify and resolve issues, nor did it incorporate sufficient consultation with tribes and affected individuals. The regulations were proposed only after full communication of the Department's intentions after requesting information and opinions from the tribes and individual Indians affected by the regulations.

The Department has committed to this schedule in response to the tremendous need to improve the execution of the Secretary's trust responsibility in accordance with the American Indian Trust Fund Management Reform Act, 25 U.S.C. § 4001

et seq.

We have committed to this schedule through the Department's High Level Implementation Plan, developed in cooperation with and under the oversight of the OST, and in response to ongoing litigation.

Well before the proposed regulations were published in the

Federal Register

, the Department recognized the need to complete these revisions prior to the end of the current Administration in order to prevent delays caused by the upcoming presidential transition. Based on priorities identified by BIA trust program staff, we identified the regulatory reforms that could be accomplished within this time frame and developed a schedule that would ensure consultation with tribes and consideration of their opinions to the greatest extent possible. We invited the NCAI to convene a work group of tribal representatives and other interested persons to assist in developing the regulations. To assist the NCAI, the BIA provided funding and agreed to meet as many times as necessary to complete the job. Also, we conducted early consultations with tribal leaders, advising them of the specific trust regulations to be addressed first. These meetings provided an early opportunity for meaningful input into the rule making process.

In a significant departure from past practice, the BIA distributed the preliminary drafts of the proposed regulations to the NCAI and to tribes through BIA regional directors, with a request for comments and recommendations. Several subsequent meetings were held with the NCAI working group to discuss the evolving draft regulations prior to publishing the proposed regulations on July 14, 2000. These meetings included the Assistant Secretary—Indian Affairs, the Deputy Commissioner of Indian Affairs, staff of the Trust Policies and Procedures (TPP) project, trust program managers, and trust program attorneys from the Solicitor's Office. Notably, tribal representatives from each BIA region and BIA managers participated in a three-day meeting in Mesa, AZ, in April 2000, to discuss the draft regulations.

Following the publication of the proposed rules, as noted above TPP staff conducted eight regional consultation meetings with tribal leaders, individual Indians, and other interested parties. In sum, despite the accelerated schedule for developing and issuing these regulations, tribes and individual Indians have had an extraordinary opportunity to provide meaningful input on the proposed regulations through informal consultations on the early drafts, formal consultations, and the public comment period.

Many respondents asserted that Executive Order 13084 required a negotiated rule-making process in developing and implementing the proposed regulations. Contrary to these assertions, Executive Order 13084 does not require a negotiated rule-making process.

We disagree with the concern expressed by several respondents that the proposed rules would create new processes and requirements in all areas of trust management, resulting in negative impacts to both tribes and individual Indians. Rather, these regulations strengthen the Department's exercise of its trust responsibility by codifying current practices and will provide an important measure of consistency and uniformity in these practices on a nationwide basis.

Many commenters believe that the proposed regulations did not sufficiently address the issues of tribal sovereignty and principles of tribal self-determination. We agree that the proposed regulations did not go far enough to recognize tribal sovereignty and self-determination, and have now made significant revisions within the bounds of existing law. However, many of the antiquated trust statutes that govern the actions of the Department predate the tribal self-determination legislation. When amendatory legislation is enacted, we will revise the regulations accordingly.

The management of trust records is integral to the performance of the trust responsibility, and must be carried out by all entities and individuals who undertake such activities, including tribes performing federal trust functions. It is essential that everyone managing trust assets, both tribes and the Department, be subject to the same requirements for the creation, maintenance, and retention of records that evidence the organization, functions, policies, decisions, procedures, operations, or other activities undertaken in the management of trust assets. Without a consistent nationwide system for creating and maintaining trust records, the United States will be unable to fulfill its trust responsibilities to tribes or individual Indians. Accordingly, the records language in the proposed regulations have been modified to be consistent across the board.

Of particular importance are the provisions in each part that specify who owns trust records: Records are the property of the United States if they are made or received by a tribe or tribal organization in the conduct of a federal trust function under this part pursuant to Public Law 93-638 as amended, including the operation of a trust program, and evidence the organization, functions, policies, decisions, procedures, operations, or other activities undertaken in the performance of a federal trust function under the regulations. If records are not covered by the preceding definition, but are made or received by a tribe or tribal organization in the conduct of business with the Department of the Interior, they are the property of the tribe. If a tribe or tribal organization does not preserve records associated with its conduct of business with the Department of the Interior under these regulations, the tribe may be prevented from being able to adequately document essential transactions or furnish information necessary to protect its legal and financial rights or those of persons directly affected by its activities.

The language is consistent in each part of the final regulations, and builds on the provisions that were proposed under part 115. The Department will provide more detailed direction on the management of trust records in 2001.

Finally, we received comments requesting that the Department include in the regulations provisions for the establishment and maintenance of an accounts receivable system. The Department is building such a system in its Trust Asset and Accounting Management System. However, we believe the regulations are not an appropriate place to address an accounts receivable system; to define such a system by regulation would remove operational flexibility that is necessary to address the many complex factors involved in managing trust assets.

III. Part-by-Part Analysis

A. 25 CFR Part 15—Probate of Indian Estates

The purpose of this regulation is to describe the authorities, policies and procedures the BIA uses to probate an Indian decedent's estate. This is a revision to the existing part and amends and replaces the part in its entirety.

The regulation implements administrative procedures by which the BIA will process and determine certain probate cases where a hearing is not required nor requested. These procedures, embodying a return to the BIA of the responsibility to determine particular probate cases, are the result of the recommendations of the Department's Indian Probate Reinvention Lab (IPRL). Formed in 1999, the IPRL examined the Department's Indian probate process from a multi-agency perspective, including the BIA, the Office of Hearings and Appeals (OHA), which handles Indian probate cases requiring hearings, and the OST. The IPRL recommended, among other things, that the BIA establish attorney decision-makers at regional offices to handle certain probate cases under criteria to be established by regulation. This recommendation was based on an analysis that included reviewing reports from previous studies of Indian probate matters, site visits and interviews of customers and employees. The final revisions of part 15 will implement in the BIA the procedural aspects of the IPRL's recommendations. At the appropriate time, the OHA will amend its regulations to accommodate the BIA's responsibility for these probate cases and to ensure that the same standards and criteria for determining heirs and paying claims are consistently applied between the BIA and OHA.

In addition to establishing the process by which the attorney decision makers in the BIA will decide certain probate cases, the regulations in part 15 also address the summary processing of Indian estates. Formerly handled only by agency superintendents, summary distribution of estates will also be decided by the attorney decision makers. See 65 FR 25449-25450 (May 2, 2000).

The various subparts of part 15 address the purpose and scope of the Indian probate procedures; the definition of terms; the mechanics of initiating the probate process, including the appropriate notifications of the selection of the deciding official; the preparation of the probate package itself, including the identification of necessary documents to facilitate a timely process; the disposition of claims against an estate; the ultimate distribution of the decedent's assets to the determined heirs or devisees; and the procedures for appeals should a dispute arise during any stage of the probate process. Cross references have been made to the OHA's hearings and appellate procedures and disposition of funds held in trust for decedents.

General Observations Regarding Changes From Proposed Rule

Overall, respondents commended the Department for its efforts to address a longstanding problem with the probate backlog primarily caused by a lack of staffing and resources over the years. Commenters focused on the need for devising specific time frames for each step of the probate process to ensure timely processing of the estates including the preparation and submission of the probate package, issuance of decisions, and the closing of estates. A primary concern for many commenters in adding a new BIA deciding official to expedite the probate process was that probable heirs or beneficiaries should be advised of the right to a hearing before an ALJ. These concerns were given great consideration and incorporated into the final regulations.

Finally, to be consistent with the regulations published under parts 115, 162 and 166, we have added two sections addressing the maintenance of records relating to probate cases.

Subpart A—Introduction

Summary of Subpart

This subpart addresses the purpose and scope of the Indian probate procedures, the definition of terms used in part 15, and process for probating estates. This subpart sets forth the limitation on the scope of the application of part 15 to the Five Civilized Tribes in Oklahoma and the Osage Nation. The overall process from notification of death to the appeal of decisions is described by reference to other subparts.

Comments

The Secretary's jurisdiction to decide probate cases is limited to trust or restricted assets except as otherwise provided by federal laws for the Five Civilized Tribes and the Osage Nation. The Final Rule clarifies that trust lands of the Five Civilized Tribes and Osage Nation may be included in part 15. Several respondents requested more clarification of terms used in the regulations. In response to these requests, the definitions “OTFM,” “probate clerk,” “trust land” and “restricted land” have been added to § 15.2.

The Final Rule does not significantly depart from the Proposed Rule with respect to the basic steps in the probate process and the preparation of the probate package. In response to several comments, the steps in the probate process prior to the submission to a deciding official have been standardized and streamlined by requiring that all agencies and tribes prepare the probate package in the same manner as recommended by the IPRL. The final regulations reflect the addition of the attorney decision maker as a BIA deciding official to expedite the probate of estates in certain circumstances.

Subpart B—Starting the Probate Process

Summary of Subpart

This subpart includes the procedures for starting the probate process by notifying the BIA of the death of an Indian with trust or restricted assets; the preparation of the probate package itself, including the identification, collection, and submission of the necessary documents to the BIA to facilitate the timely processing of a probate package; the circumstances in which the family of a decedent may apply for emergency assistance for funeral arrangements; the assignment of the responsibility to the BIA agency to process the package; and the procedures for the potential heirs' disclaimer of interest in the estate.

Comments

We received several comments on the types of documents that should be acceptable as evidentiary documents to support the family heirship data. Of significant importance to these respondents is the reliability of documentation relied on for proof of death. In the Final Rule at § 15.101, we have clarified the documents necessary to prove death by requiring that a certified copy of a death certificate must be provided to the BIA. Only in circumstances where a death certificate is non-existent will the BIA accept other documents. This section also allows for a tribe to verify a member's death. Where evidence other than a death certificate is submitted to verify a death, an affidavit of death must be submitted that is prepared by the tribe with whom the decedent associated or someone with direct personal knowledge about the decedent's death.

Many comments addressed the provision that allows immediate assistance for funeral services from the

decedent's IIM account. To distinguish between emergency financial assistance to pay for funeral arrangements prior to the burial of the decedent and claims for funeral expenses against the decedent's estate, we added the word “emergency” to the question. Some commenters objected to obtaining receipts for traditional burial services such as payment of cooks and grave-diggers and the direct payment to the service providers. We weighed these objections against the Secretary's trust responsibility for proper accounting of the decedent's IIM account. Thus, we renumbered the section to § 15.106 and divided it into four subparts to clarify the cost estimates for funeral arrangements and to achieve a compromise position between tribal traditions and the Secretary's trust responsibility to preserve the decedent's IIM account for the probable heirs and beneficiaries. In order to preserve the trust estate for probable heirs or beneficiaries, the BIA continues its long-standing practice of limiting the amount of money that may be distributed for funeral expenses prior to completion of the probate. Therefore, the Final Rule does not change the limit on the amount of money that can be disbursed for funeral expenses prior to the probate.

One of the problems causing significant delays in the processing of probate files is the time-intensive gathering of evidence required as supporting documents for the probate package. In certain situations where the decedent's family resides in a remote area without transportation or telephonic communications, the collection of documents proceeds very slowly. Some respondents stated that the BIA should assume an affirmative role in assisting the family in collecting documents, rather than place the burden of obtaining all of the supporting documents entirely on the decedent's family. We accepted these comments, and have changed the wording in the Final Rule at § 15.104 from “must” to “should.”

Section 15.104 lists the documents that must be included in a probate package. This section has been rearranged to provide for documents that must be obtained from a court of competent jurisdiction, which may be a tribal or state court. Name changes and orders requiring the payment of child support were added at the suggestion of the commenters. The Final Rule at § 15.104 also provides that the probate package will contain all information provided by an interested party whether the BIA has requested it or not.

We received several suggestions on the manner in which an agency or tribe is assigned the responsibility for preparing probate packages for non-enrolled decedents and decedents enrolled in more than one tribe. The proposed standard was the agency that has jurisdiction over the trust property of the decedent or the greater amount of trust property. Respondents suggested that we assign responsibility to the agency with the strongest contacts with the decedent and/or the agency where the IIM account is located. The existing BIA policy which assigns the probate to the agency with the strongest association with the decedent has been incorporated in the Final Rule at § 15.108. The most expedient manner for processing the probate package is to maintain contact with a family member of the decedent who has lived nearby the decedent and is familiar with the family relationships of the decedent. This standard was continued because a decedent may reside within the jurisdiction or have more contacts with an agency that does not necessarily have jurisdiction over the greatest amount of the decedent's trust property. The likelihood of an agency or tribe obtaining the most information about the decedent comes from an agency with the strongest associations with the decedent.

While § 15.202(g) allows the submission of a disclaimer of interest to be filed with the probate order, the Final Rule at § 15.109 provides that the probable heir or beneficiary may renounce their interest anytime up to the time a deciding official issues an order. The final regulation also incorporates the existing requirement in 43 CFR Part 4, Subpart D, that a disclaimer of any Indian interest requires a formal hearing before an ALJ.

Subpart C—Preparing the Probate Package

Summary of Subpart

This subpart addresses the requisite documents that must be contained in a complete probate package; the selection of the deciding official and notice of this decision to the interested parties; the contents of the notice; the identification of the processing times; the right of the interested parties to request a formal hearing with an ALJ; the circumstances under which the BIA will refer a probate package to an ALJ; and the procedures for the summary distribution of an estate containing only trust cash assets of less than $5,000.

Comments

We have revised this section to address similar comments on the selection of the BIA or OHA deciding official, and the notice of this selection. Incorporating many of the comments received, we provide in the Final Rule a more comprehensive notice scheme that identifies the probable intestate heirs; states whether a will has been submitted and provides a copy; and states whether any claims have been filed against the estate. In response to several comments, a new section at § 15.204 has been added to clarify that the probable heirs or beneficiaries may request a hearing before an ALJ at any time before a decision has been made by an attorney decision maker.

Many commenters were concerned over the clarity of the criteria used by the probate specialist to weigh in determining where to send the probate package. In response, we have added several new items in § 15.205(c) to clarify the circumstances under which the probate package should be sent to an ALJ and to provide consistency with other sections. These items include questions involving paternity, disclaimers of interest by an Indian heir or beneficiary, and any challenges to the jurisdiction of a court that has issued an order which has been used as a supporting document in the probate. A new subsection (d) has been added to clarify that approval of settlement agreements among heirs must be by the OHA. To address the concern that a probate specialist may not foresee all of the kinds of problems identified in § 15.205, the attorney decision maker must review the probate package and determine whether there are any issues of fact or law that would require a formal hearing. If so, then the attorney decision maker will immediately forward the case to the appropriate ALJ.

In response to several requests for more clarity, the process for summary distribution has been reorganized and placed at the end of this subpart. The summary process provides that the BIA deciding officials (the superintendent, field representative, regional director in cases of self-governance tribes, or attorney decision maker) may decide cases that contain only trust cash assets of less than $5,000. Relocating this section clarifies that the criteria for selecting the deciding official applies to the expedited intestate and testate summary distribution process. Section 15.206 provides for 30 days for the probable heirs and beneficiaries to request a formal hearing before an ALJ; 60 days after notice has been sent for the BIA deciding official to assemble the probable heirs or beneficiaries and conduct an informal hearing; and 30 days for the BIA deciding official to issue a decision after the informal hearing. Under § 15.206(c), the BIA

deciding official must apply §§ 15.302-311 to determine the distribution of the Indian estate. As recommended, the incorporation of these sections in the summary distribution process ensures that the same standards will be applied on a national scale by every BIA deciding official. Lastly, many respondents stated that they were confused by the differing appeal procedures of the decision of the superintendent and the attorney decision maker, and that the same appellate process should be in place for all BIA deciding officials. The Final Rule incorporates in § 15.206(d) a single appellate process for all BIA deciding officials.

Subpart D—Probate Processing, Claims and Distributions

Summary of Subpart

This subpart states when the BIA must forward the probate package to an ALJ for a formal hearing or to an attorney decision maker for an informal hearing. The choice of law to be applied to the facts of the Indian estate is defined to standardize the deciding official's application of law. This subpart also includes the process for submitting claims against the estate; allowance and payment of claims; priority of claims; reduction of claims; use of future income to pay claims; the payment of interest; the contents of the BIA deciding official's written decision/order; and the handling of the estate while an appeal is pending.

Comments

Numerous respondents requested that we clarify time frames and deadlines that the public and BIA must follow. Accordingly, § 15.301 imposes deadlines on the attorney decision maker for the regular processing of probate packages. The comments strongly recommend that if the attorney decision maker keeps the probate package, the attorney decision maker should hold informal hearings or conferences with the interested parties to identify any potential problems, will contests, or contested claims, which may prompt a formal hearing with an ALJ. Additionally, several commenters expressed a concern that the attorney decision maker should hold an informal hearing because many traditional Indian people may not feel comfortable or wish to make a written objection or request a formal hearing. We have accepted these comments. The Final Rule at § 15.301 incorporates the informal hearing procedure for all probate proceedings in the same manner as the existing regulations at 43 CFR 4.271.

Additional deadlines for the attorney decision maker have been incorporated in § 15.301 and § 15.310 to conduct an informal hearing and issue a decision. As many comments recommended, we will allow up to 180 days for an attorney decision maker to issue a decision.

The comments provide considerable discussion of what law is to be applied to determine heirs, approve wills, and determine whether or how to pay claims. Some tribes suggested that the Uniform Probate Code, a code adopted in portion by many states, be used on a national basis. Other tribes suggested that tribal law and tribal courts administer the Secretary's trust responsibility for the probate of Indian estates. Questions were raised about how conflicting intestate processes and land fractionation would be reconciled under tribal and state laws. Some commenters objected to the application of the inheritance laws of all fifty states. Others suggested that the law to be applied should be the law of the state where the IIM account is located. Some commenters stressed that there are also federal statutes that direct inheritance procedures in certain circumstances (e.g., Indian Land Consolidation Act) or for specific tribes (e.g., Standing Rock Sioux Tribe), and that the application of state probate law has been preempted in these circumstances. In addition to the statutory inheritance laws, many noted that the Secretary has approved tribal inheritance codes for several tribes.

These comments were considered in great depth. The Final Rule in § 15.302 continues the existing practice by acknowledging that, unless provided otherwise by federal law or by tribal inheritance codes approved by the Secretary, the state law of the decedent's domicile will determine the distribution of the estate.

There were nearly equal numbers of comments for and against the payment of any claims against an Indian decedent's estate. In particular, many were concerned that credit may not be extended if claims were precluded from Indian estates. The respondents opposing the allowance of any claims against the estate stated that in intestate situations an Indian decedent has not authorized any claims to be paid and that the assets of the estate rightfully belong to the heirs. Some tribes commented that the BIA should defer to any tribal law that addresses the filing and collection of creditors' claims. To the extent such requirements are included in a tribal inheritance code approved by the Secretary, the tribal laws will apply. Several commenters felt that trust assets should be used to pay debts only when there are no non-trust assets available. The Final Rule in § 15.303 allows the payment of claims out of trust cash assets only after evidence of exhaustion or non-existence of non-trust assets have been provided by the claimant.

Many respondents were concerned about the standards to be applied by the deciding officials in paying claims, as well as the priority of claims to be paid. Many stated that tribal claims should be a priority claim because tribes are generally the major creditor on Indian reservations. Many were concerned that failure to pay tribal loans by the estate would dramatically reduce the availability of credit to Indians. Several comments also stated that claims reduced to judgment in a court of competent jurisdiction should also be a priority. The Final Rule at § 15.305 incorporates both of these claims as priorities.

Comments from tribes and tribal advocates stated that the inclusion of the United States' claims as priority claim confers an economic benefit on the trustee that is inconsistent with its fiduciary duty. We agree. The trustee is obligated to preserve the estate for the benefit of the heirs and beneficiaries, and permitting the federal trustee to reach into the Indian trust corpus and seize property for his own benefit raises a serious conflict of interest and is inconsistent with fundamental principles of trust law. After serious consideration of the United States' role as trustee in light of potentially conflicting statutory provisions for collection of debts owed to the United States, we have deleted claims of the United States as a priority claimant against trust estates in § 15.305.

In response to many concerns that there was no provision for prorating general claims, the Final Rule at § 15.306 adds separate authority for the BIA deciding official to reduce or disallow both priority and general claims.

The BIA proposed to allow estates to remain open up to five years to pay creditors of the estate. In comparison, the current regulations at 43 CFR 4.251(d) allow an estate to remain open up to seven years. The majority of the commenters, however, objected to holding estates open for the payment of any claims, regardless of priority or general claims. Commenters stated that the United States, as trustee, has placed the creditors of Indian individuals in a better position than creditors of other non-Indian citizens by holding the estates open to pay creditor claims. After serious consideration and the weighing of comments, the Final Rule

deletes the proposed section that holds estates open to pay claims.

We received comments both in favor of and against the suspension of interest that may accumulate on a claim against the estate before it is paid. Comments favoring the payment of interest stated that non-payment would create another road block to an Indian's ability to obtain credit. Comments opposed to paying interest stated that the estate should be preserved for the heirs. The Final Rule at § 15.309 leaves in place the Proposed Rule declining to pay interest or penalties on any type of claim that may accrue after the decedent's death.

The Proposed Rule in § 15.310 addressed the responsibility of the administrator of the estate to file tax returns. Many commenters noted an administrator is not generally appointed for Indian estates. Many also noted that the Secretary, as trustee, is the functional equivalent of the administrator of the estate and therefore the heirs should consult applicable tax laws to determine if there is any tax liability related to the estate. In response to these comments, this section was deleted in its entirety.

Finally, many respondents stated that the official roles of the BIA and the OTFM should be specifically defined in executing probate cases decisions, including the distribution of income. In response, the Final Rule at § 15.312 provides that in executing probate decisions, the BIA changes land title records as appropriate and the OTFM processes payments from IIM accounts and the distributes income in accordance with the probate decision.

Subpart E—Appeals

Summary of Subpart

This subpart addresses the procedures for appeal of the decision of the BIA deciding official. The time for appeal, the status of the estate during appeal, and the standard of review of the decision are set forth in this subpart.

Comments

Many respondents stated that it was too confusing to have two separate appellate processes for the superintendents and attorney decision makers. Two separate procedures might result in the interested parties filing an appeal with the wrong entity, which would adversely affect the exercise of their right to appeal. The Final Rule incorporates this recommendation and establishes only one route of appeal for probate decisions issued by BIA deciding officials.

One commenter questioned the definition of “known evidence” in appeal proceedings. Further, the commenter was concerned that the right to appeal the decision of an attorney decision maker during the 60-day appeal period would not allow for the submission of new evidence, nor would it allow an appeal on the basis that known evidence was not included in the probate package. After careful consideration, the Final Rule at § 15.403(b)(1) and (2) includes clarified provisions for requesting after-deadline appeals based on new or unknown evidence.

Commenters suggested that the regulations specify that review of decisions of the attorney decision makers should be

de novo.

Due to the expedited procedure, informal hearing process, and absence of a full record to review, we accept this comment. The Final Rule at § 15.405 adds a new section for the

de novo

standard of review before the ALJ.

Subpart F—Information and Records

Summary of Subpart

This subpart includes general questions regarding

ex parte

communications with a BIA deciding official and the contact persons for inquiries about the status of a probate case, and new provisions addressing applicable records ownership and retention requirements.

Comments

We received several comments on the proposal that members of the public could not directly contact the attorney decision makers. The commenters generally recognized that there is clearly a need to avoid even the appearance of impropriety, but that trained adjudicative personnel understand and know the constraints of their offices. One commenter stated that no similar restriction is imposed upon agency superintendents who decide summary distributions. Other responses emphasized the need for the BIA to ensure that attorney decision makers are independent and impartial. After weighing these competing interests, we provide in the Final Rule at § 15.501 a single standard for all BIA deciding officials that precludes off-the-record communications with the attorney decision maker that might be construed as attempting to influence the substance of the final probate decision.

The comments suggested that references to the nationwide tracking system be deleted as the system was not in place and there is no date certain when the system would be in place. We agree. In the Final Rule we have deleted the references to the nationwide tracking system.

B. 25 CFR Part 114—Special Deposits

The purpose of this part was to set forth the conditions governing the deposit, investment, and distribution of principal and interest on trust funds held by the Department in special deposit accounts. In addition, this part provided procedures required for determination of ownership and distribution of funds which are on deposit in account 14X6703, “Indian Moneys Proceeds of Labor Escrow Account—Pending Determination of Ownership.” This special deposit account (IMPL Escrow Account) has been obsolete since September 30, 1987, as any unobligated balances were then deposited into miscellaneous receipts of the U.S. Treasury. Since this part dealt largely with this IMPL Escrow Account, the text of this part has been deleted in its entirety. Those provisions concerning other “special deposit accounts” are now referenced and explained in the newly revised part 115. It was the decision of the Department to move those provisions to part 115 because that part deals specifically with tribal and individual Indian trust funds. Part 114, therefore, has been “reserved.”

Comments

No comments were received on the deletion of part 114 and its subsequent reservation within 25 CFR.

C. 25 CFR 115—Trust Funds for Tribes and Individual Indians

The purpose of this regulation is to describe how the Secretary, primarily through the BIA and the Office of Trust Funds Management (OTFM) within the Office of the Special Trustee (OST), carries out the trust duties owed to tribes and individual Indians in managing and administering trust assets for the exclusive benefit of tribes and individual Indian beneficiaries. The regulation also implements provisions of the American Indian Trust Fund Management Reform Act of 1994, Pub. L. 103-412, 108 Stat. 4239, 25 U.S.C. 4001 (Trust Reform Act). The Final Rule removes and reserves the existing part 114 (special deposit account provisions are incorporated into part 115) and amends and replaces part 115 in its entirety.

As the section-by-section chart above illustrates, there have been changes to the Final Rule from the Proposed Rule of July 14, 2000. These changes are, however, reasonably limited by the decision by the BIA to remove those proposed provisions that relate to Individual Indian Money (IIM) accounts

for adults and to continue in large part with the language in the current 25 CFR 115 that addresses adult IIM accounts. This action was taken in response to the many comments received from tribes and individual Indians who were concerned with the rule's proposed supervised and encumbered IIM account provisions. In order to incorporate many of the recommendations, we believe that the Administrative Procedures Act requires that we re-propose those sections of the regulation for further public comment. Therefore, most of those sections included in subpart D of the proposed rule have been removed from the Final Rule, and will be re-proposed at a later time. The IIM account sections proposed for minors and estate accounts have been retained in the Final Rule. These sections have been amended or clarified to reflect many of the comments received. We have responded to the comment that suggested the Final Rule identify the responsibilities of OTFM and the BIA in managing and accounting for Indian trust funds, by specifying, where possible, whether OTFM or the BIA has the responsibility for an action. For more specific delegations of Secretarial authority regarding trust responsibility, we encourage interested parties to look on our web page at www.doi.gov. With respect to the numerous comments requesting language concerning how we will collect trust revenue, we refer you to parts 162 and 166.

Subpart A—Purpose, Definitions and Public Information

Summary of Subpart

Subpart A addresses the purpose of the regulation in providing guidance for the administration and management of tribal and IIM trust accounts. Additionally, definitions and common terms used throughout the subpart are explained in some detail.

Comments

Comments were received that encouraged the BIA to look to private sector trust management systems as a model for the Department's trust management system. Respondents also requested that the BIA designate a position of ultimate responsibility for the administration of trust property. The Secretary has the ultimate responsibility for the administration of trust property and a system of trust management is already in place with oversight provided by the Special Trustee as designated in the Trust Fund Reform Act. Comments received regarding the addition of more terms or clarification of definitions were accepted with more detail where appropriate, e.g., trust resources and legal disability. There were numerous calls seeking clarification of the definition of an “adult in need of assistance” while others strongly objected to the requirement of a court order as the only method to allow supervision of an account. Those comments were accepted in part and the definition of “adult in need of assistance” was amended to allow a determination either (a) through a BIA administrative process that is based on a finding by a licensed medical professional or licensed mental health professional, or (b) by an order or judgment of a court of competent jurisdiction. The determination must include language that the individual is “incapable of managing or administering his or her property, including his or her financial affairs.”

Subpart B—IIM Accounts

Summary of Subpart

As discussed above, the proposed rule had sections regarding adult IIM accounts that will require re-proposal of these provisions before we can issue a Final Rule. In the development of the provisions to be re-proposed, we will take into consideration comments received during the July 14-October 12, 2000 comment period. Subpart B of the Final Rule is largely the verbatim illustration of part 115 as it currently reads in 25 CFR. This subpart deals with specific provisions for particular tribes (Five Civilized Tribes and the Agua Caliente Band of Missions Indians); adults under legal disability; payment by other Federal agencies; restrictions; and appeals. However, provisions dealing with minors' accounts, estate accounts and the hearing process for restricting an IIM account (which were regulated in the current part 115) have been revised in accordance with the proposed rule and moved to the new subparts C, D, and E of part 115 of the Final Rule. In addition, provisions dealing with voluntary deposits and purchase orders (which were regulated in the current part 115) have been removed in accordance with the proposed rule and those sections are reserved for future use.

Comments

Comments on the Proposed Rule generally concerned the supervised account and encumbered account sections of the proposal. In particular, the respondents focused on the requirement of an order from a court of competent jurisdiction in order for the BIA to (1) supervise an IIM account or (2) encumber an IIM account to pay a debt to a third party. We plan to re-propose these sections. In the interim, to maintain some standard for dealing with adult IIM accounts (which is an ongoing BIA function), the BIA decided to retain the sections concerning adult IIM accounts in the current part 115 in this subpart B. The one change that was made in the Final Rule that affects the provisions retained from the current part 115 is the addition of a definition for an “adult in need of assistance” which has been revised from the proposed rule as discussed in the comment section of the Subpart A discussion above.

Subpart C—IIM Accounts: Minors

Summary of Subpart

This subpart deals in some detail with the procedures related to the management and supervision of a minor's account. A withdrawal from a minor's supervised account will be permitted only under a BIA approved distribution plan that provides for expenditures directly related to the minor's health, education, or welfare. A custodial parent, a legal guardian or a person who the BIA recognizes as having the control and custody of the minor, who withdraws funds from a minor's supervised account on behalf of the minor must account to the BIA with receipts for the use of those funds. The minor will not have access to information concerning his/her account. Procedurally, the provisions state that information about a minor's account will be provided to the custodial parent(s) or legal guardian(s) in a quarterly statement of performance; supervised accounts will be reviewed annually; and emancipated minors will have supervised accounts but will have access to account information and may receive funds on their own behalf.

Comments

One comment noted that the BIA should not require minors (or adults) with supervised accounts to have a “legal guardian.” We respond by reminding the public that all minor's accounts will be automatically supervised and that legally, a minor should always have a “custodial parent” or a “legal guardian”, unless emancipated by a court of competent jurisdiction. There were comments that information about an account should not be provided to foster parents. We accepted those comments with revision. The BIA will only provide account information to parents, legal guardians and emancipated minors. We rejected those comments received that stated

that minors, specifically those who have reached the age of ten or thirteen, should have access to their account information. By law, minors are not legally capable of handling and managing their financial affairs. However, account information will be provided to emancipated minors although we do not accept the comment to allow emancipated minors unrestricted access to their account. All minors, including emancipated minors, will have supervised accounts. The BIA must be kept informed of the current address information for a minor, particularly if the minor's address is different from that of their parent or legal guardian.

A concern was raised about the necessity of obtaining receipts for all purchases made from those funds disbursed from a minor's supervised account. In addition there were comments suggesting that we differentiate between parents and legal guardians when requiring receipts for expenditures from a minor's supervised account. In response, we note that under a minor's distribution plan a parent or legal guardian will be treated equally and that receipts will be required for all expenditures unless a specific provision in the plan permits a minimal disbursement for a minor's miscellaneous expenditures to be made without requiring receipts for purchases. However, we stress that it is important for the integrity of the minor's supervised account that all withdrawals be appropriately documented. Comments were received that encouraged involvement of a parent(s) or legal guardian(s) in the development of the minor's distribution plan. We note that under normal circumstances, the parent(s) or legal guardian(s) will be involved in the development of both the evaluation plan and the distribution plan, and should sign the distribution plan acknowledging that they have read/reviewed the plan. In addition, parents and guardians are responsible for meeting the obligations detailed in those signed plans. Respondents were concerned about the potential necessity to distribute emergency funds from a minor's supervised account where that amount was not included in the distribution plan. We note that distribution plans may be amended at any time for emergencies or a change in circumstances, depending upon the needs of the minor. We accept in part the comments received to place a limit on the amount of funds to be distributed from a minor's supervised account and on the purposes for which a distribution may be made. Funds will not be automatically disbursed from a minor's supervised account to create a flow through account to anyone including a parent or legal guardian. Rather, the BIA will consider all available resources to meet the minor's needs when evaluating a request for funds from a minor's supervised account and in the development of the distribution plan. As a matter of policy, we strongly discourage the use of a minor's trust funds to meet the basic needs of a minor. All distributions must be made pursuant to the terms of an approved distribution plan and receipts for expenditures must be provided to the BIA. Finally, there were numerous comments that the BIA needs to recognize that there are informal custody arrangements and foster care placements for minors with IIM accounts and that there may be a need for disbursements from a minor's supervised account to a caregiver (referenced in comments as a “minor's payee”) to help meet the minor's needs. We recognize that minor account holders may be cared for in informal living arrangements or in foster care situations, and that the Secretary may, in certain circumstances, need to recognize the caregiver and authorize limited disbursements that are in the best interests of the minor from the minor's supervised account. Other concerns raised included access by the caregiver to account information for a minor's supervised account. Account information will not be provided to the caregiver due to legal limitations such as the Privacy Act.

Subpart D—IIM Accounts: Estate Accounts

Summary of Subpart

This subpart reflects the notion in the current part 115 of providing for certain obligations and other expenditures that are attendant to an Indian decedent's estate. This is a new subpart in this Final Rule; however, its provisions were included in the Proposed Rule. The provisions in this subpart mirror the provisions contained within the Final Rule for 25 CFR part 15. Particularly, this subpart identifies when an estate account is established; how long an estate account remains open; refers to heirs to a decedent's account; establishes protocols for withdrawing monies prior to final probate; and dispositions to those having life estate interest in income-producing trust or restricted property.

Comments

Comments on Indian decedents' estates were captured in our discussions of part 15, Probate of Indian Estates above.

Subpart E—IIM Accounts: Hearing Process for Restricting an IIM Account

Summary of Subpart

This subpart outlines the notice requirement and hearing process (so-called “Kennerly” process) associated with placing a restriction on an IIM account under current §§ 115.102 and 115.104. This subpart outlines the circumstances under which the BIA will place a restriction on an IIM account; information that must be included in a notice to restrict an account; time lines for requesting a hearing to challenge BIA's decision to restrict an IIM account; pendency of a restriction during an appeal; and remedies available when an administrative error has been caused by BIA or OTFM.

Comments

We received several comments on this subpart, including that the BIA should only require the “Kennerly” process, described in the final rule in this subpart, for restricting an IIM account if there is no valid non-BIA proceeding. We note in response that the notice requirement has been in place in the current regulation for the past 40 years and, further, we must provide due process to all account holders before we take action against their account. We believe that due process is served (and our trust responsibility properly exercised) through the use of the notice and hearing process. Accordingly, we did not accept this comment for revision in the Final Rule. Other comments recommended that we not place a restriction on an account until after the hearing process is completed; that we add five (5) additional days to the time periods proposed for placing the restriction on an account; and that we extend the time period in which to request a hearing from 40 days to 90 days. We did not accept these comments because due process is provided within the time periods proposed. The funds at issue when an account is restricted will be protected and will not be disbursed until after the hearing process and appeal period, if any, have ended. One comment stated that we should explain that social services staff should not have the responsibility for collecting debts from an IIM account. In response, we note that social service providers are only involved in the development of a distribution plan where the BIA's decision is to supervise an IIM account, not when the account is to be encumbered. Finally, there were comments involving BIA's recognition

of child support awards. Concerns included honoring excessive awards; limiting amounts awarded by a court of competent jurisdiction; and other comments stating that there should be no discretion to reduce the amount of a child support award to be paid from an IIM account. Consistent with federal policy, we believe that parents are responsible for providing support for their children and that child support awards are to be determined by courts of competent jurisdiction. If there is a dispute regarding a child support award and we are provided with notice of an appeal of a child support award, upon request we will postpone the hearing.

Subpart F—Trust Fund Accounts: General Information

Summary of Subpart

This subpart discusses the sources of trust funds that may be deposited into the Secretary's trust funds management system. Particularly, this subpart explains which trust funds may be accepted for deposit into a tribal or an IIM account; the process for depositing money into an account; the requirement that the Secretary must conduct an annual audit on trust funds; and an explanation of how trust funds deposited in a trust account earn income.

Comments

Several respondents suggested that this subpart should clearly state what money would be accepted into IIM accounts while others requested that we accept specific types of non-trust monies. In response, we have described in § 115.702 what sources of trust funds may be accepted for deposit into a trust account. We note that the BIA must have specific authority to accept non-trust monies into a trust account. Therefore, we will not accept pension funds, retirement funds, conveyance fees and child support awards into trust as requested. Some respondents were concerned that an annual audit on trust accounts was not required and others wanted the inclusion of language specifying the accounting standards to be used in the audit.

The Trust Reform Act requires that an annual audit be conducted on trust funds. Prescribed auditing standards will be used in conducting those audits. In addition, a number of comments concerned the timeliness of deposits of trust funds received by the Secretary into a trust account. Deposits received by the Secretary on behalf of a tribe or an individual will be deposited into a trust account within twenty-four hours, or no later than the close of business on the next business day following the receipt of funds at a location with a designated federal depository. Another respondent stated that to require a compacting tribe to make deposits payable to the Secretary on behalf of tribes or individual Indians within a twenty-four hour time period would create problems because many tribes are isolated, live hours away from banks and “it is not always practical to do banking but once a week.” We respond that where a tribe has compacted or contracted with the federal government to operate a federal program and the tribe, operating the federal program on behalf of the Secretary, receives trust funds payable to the Secretary on behalf of the owner of the trust asset pursuant to a contract that specifies that payments are to be made to the Secretary, the tribe must follow the same standards as the Secretary under § 115.708 for the deposit of the trust funds into a trust account. We also received an inquiry as to whether interest earned on trust funds are automatically reinvested. Interest earned on trust funds is automatically reinvested. Although we called for comments regarding income derived from tribal operations, we do not address this issue in the Final Rule. We have provided a list of all sources of trust funds that will be accepted by the Secretary for deposit within the trust fund management system in § 115.702. Further, a tribe or individual Indian will not be allowed to deposit trust funds received through direct pay into a trust account, except when provided by law under 25 U.S.C. 3109. However, we have amended the regulation to allow the Secretary to accept for deposit trust funds made payable to the owner of the trust asset (direct pay) when submitted by the payor (e.g., lessee, permittee) when the payor presents evidence (i.e., an envelope marked by the United States Post Office “undeliverable”) that shows attempted delivery to the tribe or individual owner of the trust asset. We are unable to respond in the regulation to the request for a listing of OTFM offices, however, a current list of OTFM offices may be obtained from Department's web page at www.doi.gov. There were several comments requesting that we identify the tax status of, and certain agency exemptions for, trust funds. We are unable to incorporate these recommendations as this rule regulates the Department of the Interior and not other federal agencies that have a trust responsibility to tribes and individual Indians. Comments also indicated that there was general confusion about when we would accept funds from another federal agency on behalf of an individual Indian. By law, we are only able to take funds from another federal agency when the federal agency has appointed the BIA as the representative payee to receive benefits on behalf of an individual Indian because there is no legal guardian to be appointed as representative payee.

Subpart G—Tribal Accounts

Summary of Subpart

This subpart discusses the trust funds that are deposited into tribal accounts and their management by the BIA. Particularly, the subpart outlines when, and how, OTFM opens a tribal account; information regarding a statement of performance and when it is sent to a tribe; which trust funds may be deposited; tribal investments and how they are managed; procedures for withdrawing tribal trust funds; and what happens to unclaimed per capita funds.

Comments

Respondents suggested that income under a 25 U.S.C. 450f

et seq.

contract or compact should be able to be deposited into tribal trust accounts so that they may be invested and the interest earned reinvested daily. Any funds appropriated to administer a 25 U.S.C. 450f

et seq.

contract or compact are not trust funds, and cannot be deposited into tribal IIM accounts. If trust funds are to be deposited into a trust account, the contract for the sale or use of trust lands or resources (e.g., lease, permit) must specify that payments be made payable to the Secretary on behalf of the trust owner regardless of whether the Secretary manages the program or a tribe has compacted or contracted with the Secretary to operate the federal program. If a tribe that is compacting or contracting the federal program which administers/manages the tribe's contract involving trust assets receives trust funds derived from those trust assets made payable to the Secretary, then the contracting or compacting tribe must deposit those funds into a Treasury General Account. Any payments made payable to a tribe (direct pay) will not be accepted for deposit into a tribal trust account.

Another comment suggested that time lines should be prescribed for processing tribal account withdrawals. We have provided time lines in response to this comment. We are unable to accept the comments requesting that we give tribes authority over trust fund investments. By law, the Secretary is responsible for making all

trust fund investment decisions. However, we do accept with revision those comments requesting consultation with tribes on an annual basis because some tribes may not wish to meet with OTFM on an annual basis. Upon request by the tribe, OTFM will consult with a tribe annually regarding investments of tribal trust funds. Many respondents were concerned about a tribe requesting the return of unclaimed per capita funds. Unclaimed per capita funds will not automatically be returned to a tribe after six years. By law, a tribe may request, but is not required to request, the return of unclaimed per capita funds after six years. A decision to make a request for return of per capita funds is an internal tribal decision. Funds not returned to a tribe will remain in an “unclaimed per capita account.” We have decided to remove several of the provisions regarding tribal budgets and budget approvals in response to comments that these sections were confusing and seemed to add requirements that were not required by law. Tribes must continue to present budgets for the use of trust funds to the Secretary when required by law. Tribes are also encouraged to meet with OTFM to discuss cash flow needs so that OTFM may make informed investment decisions regarding tribal trust funds.

Subpart H—Special Deposit Accounts

Summary of Subpart

This subpart, which replaces part 114, limits the types of monies that may be deposited into special deposit accounts. Particularly, this subpart includes an explanation of who receives the interest earned on trust funds in a special deposit account; when trust funds in a special deposit account are distributed to the owner of the funds; whether administrative or land conveyance fees paid as federal reimbursements can be deposited into special deposit accounts; and what other types of monies may be deposited into special deposit accounts.

Comments

We received one comment on this section which requested that conveyance fees be allowed for deposit into special deposit accounts. In response, we restate that the Secretary only has authority to accept trust funds into a trust account. Conveyance fees are not trust funds.

Subpart I—Records

Comments

As previously noted, the provisions addressing the ownership and maintenance of trust records associated with the performance of this part, contained in subpart H of the Proposed Rule, have been modified in response to comments. These provisions are found in subpart I of the Final Rule.

D. 25 CFR Part 162—Leases and Permits on Indian Lands

The purpose of this regulation is to describe the authorities, policies and procedures the BIA uses to grant, approve and administer surface leases and permits on certain Indian land and Government land. It revises, amends and replaces the existing part 162 in its entirety, and implements the American Indian Agriculture Resource Management Act (AIARMA), 25 U.S.C. 3703,

et seq.

with regard to leases on Indian agricultural land. With respect to those regulations governing the administration of leases on specific reservation lands, the Final Rule will not effect any substantive changes, but renumbers those sections. The section pertaining to the Colorado River Reservation has been removed at the request of the tribe.

This regulation balances the responsibilities the Secretary has as trustee of Indian land with the need for tribes and individual Indian landowners to exercise maximum control over their Indian agricultural lands. These regulations will apply to all leases in effect on the date the regulations take effect.

General Observations Regarding Changes From Proposed Rule

The recent enactment of the ILCA Amendments affects the management of Indian lands held by multiple Indian landowners, including both tribes and individual Indians. The policies introduced by this legislation require extensive revisions to the Department's regulations affecting the leasing of individually owned allotted lands. Specifically, section 219 of the ILCA Amendments addresses all leases or other agreements affecting individually owned allotted lands or any other trust or restricted lands. Because section 219 of the new statute expressly provides that it does not amend or modify the AIARMA, the Department is now issuing final regulations in part 162 that address agricultural leasing under the authority of the AIARMA. The Department will extensively revise the regulations governing non-agricultural leases at a later date. Because the ILCA Amendments also affect tribes that own fractional shares of trust or restricted lands, the Department will not finalize new regulations affecting non-agricultural leasing on tribal lands until the full extent of the ILCA Amendments is determined and new regulations are re-proposed and additional tribal consultations are conducted.

Nevertheless, leasing must be able to continue even on lands that are subject to the new provisions of the ILCA Amendments. For these lands, most of the provisions of the superseded version of part 162 are republished in subpart F, modified such that provisions that conflict with the new definitions or agricultural leases (now covered in subpart B) have been deleted. Subpart F will be replaced with future rules, as described above. Additionally, in response to many comments calling for the BIA to strengthen its enforcement of leases, sections are included in subpart F that address the BIA's duties to collect delinquent lease payments and enforce lease violations on trust and restricted lands. These sections are modeled directly on the related sections in subpart B. Both the general provisions applicable to all leases and the new subpart F note that, if any of the provisions of these regulations conflict with the ILCA Amendments, the statute will govern.

A few respondents objected to the implementation of the AIARMA in the context of the part 162 regulations, requesting that separate regulations be issued. We reject this comment. Because agricultural leases are a specialized form of the BIA's overall leasing program and are administered under the authority of the AIARMA in combination with the Indian Long-Term Leasing Act, 25 U.S.C. 415, there is no need for stand-alone AIARMA regulations.

Agricultural leases are administered in a manner that is significantly different from other types of leases on trust and restricted Indian lands, such as business and residential leases. The Department has responded to the majority of comments addressing both the proposed leasing and grazing regulations by significantly restructuring and clarifying the leasing regulations in order to address agricultural leases independently. Separate subparts C and D, for residential and business leases, respectively, are identified and reserved for future rulemaking after the impact of the ILCA Amendments is assessed.

The process of separating provisions pertaining to agricultural leases from those that govern residential and business leases, and the consideration of public comments as described below, has resulted in extensive refinement, clarification and restructuring of the agricultural lease provisions. In its final form, the provisions pertaining to agricultural leases do not closely resemble the final grazing regulations at part 166 as much as they did in the

proposed regulations. Every effort has been made to ensure that both the agricultural lease provisions of part 162 and the grazing regulations at part 166 are substantively the same, to the greatest extent possible and practicable, insofar as they implement the provisions of the AIARMA. Additionally, specific provisions addressing trespass under the AIARMA that were contained in subpart L of the Proposed Rule have been deleted in favor of cross-referencing to the AIARMA trespass provisions in part 166.

In response to the majority of comments, the final agricultural leasing provisions reflect significant deference to tribal and individual Indian landowners, such as deferral to tribal laws and requirements for consultation between the BIA and the Indian landowner on all facets of management and enforcement activities, including enforcing lease and permit violations and trespass. The final regulations also provide more flexibility to the Indian landowner to negotiate, with the assistance of the BIA, desirable and favorable provisions in their leases. The BIA will provide subsequent guidance, including model lease language, to assist Indian landowners in negotiating their own leases.

The final leasing regulations provide for more pervasive deference to tribal law and tribal self-determination, not only as required under the AIARMA for grazing and agricultural leasing (subpart B), but also in the provisions that will apply to general leasing activities (subpart A). Several tribes and the NCAI pressed for more complete deference to tribal leasing decisions than the Department believes can be accommodated under current law, notwithstanding the Indian Self-Determination and Education Assistance Act, 25 U.S.C. 450

et seq.

For example, the NCAI requested that the Department adopt regulations that would provide for routine approvals of tribal short-term leases. However, existing statutory authorities require meaningful review by the Secretary in carrying out the trust responsibility. Moreover, a rule providing for such routine approvals of tribal short-term leases would fail to take into account those tribes that do not yet have sufficient policies and procedures in place to ensure that the trust assets are properly managed.

Nevertheless, the Department is committed to speeding up its review, approval, administration and enforcement of leases. Throughout these regulations, reasonable time frames for action by the BIA have been inserted to strengthen the management of leases. For the reasons stated in the preceding paragraph, under existing law we must reject those comments seeking automatic lease approvals if the time frames are not met.

A few commenters, particularly the NCAI, requested that the BIA identify with specificity the individual official responsible for taking action or making a decision in any given instance. We reject these comments, as we believe such matters are properly addressed in Bureau and Departmental delegations of authority, which may be changed as work load and other factors demand. To commit to such delegations in regulations would inflexibly bind the BIA and Department from addressing pressing workforce needs in an efficient and effective manner. The NCAI further requested that the BIA adopt a “trust officer” model for managing trust land, similar to that used in the private sector. We believe such a model already exists at the individual BIA agency and field office level; the agency superintendent and field representative effectively serve as the responsible “trust officer” responsible for the administration of trust land within their jurisdiction.

Consistent with the majority of comments, the final regulations continue to provide for direct payment to Indian landowners for leases on their trust lands, as long as direct payment is a specific term in the lease or permit. In order to ensure that the Secretary can properly enforce lease and permit payment terms, leases and permits authorizing direct payments must require that tenants maintain documentary proof of payment. Several respondents suggested that the Secretary should require that proof of payment be submitted to the agency with every direct payment. However, such a requirement would be inconsistent with historic practice and would result in an unsustainable drain on agency resources. Absent a system for tracking such notices, the requirement would not produce the desired goal of ensuring prompt enforcement of payment of trust income. Further, it would be far less effective than relying on the Indian landowner to advise the BIA immediately upon discovering that a payment has not been made and requesting enforcement assistance. Therefore, the final regulations provide that the Indian landowner notify the Secretary that a required payment has not been made. The Secretary then will take prompt and effective action based on that specific information. The Department continues to recognize the advantages to Indian landowners of direct payments. However, this advantage necessarily brings with it increased responsibility of Indian landowners to assist in the enforcement of non-payment of their leases and permits. With this regulatory change, Indian landowners who opt for and negotiate direct payments are clearly notified of their responsibilities to notify the BIA of late payments. Similarly, tenants are notified both by these regulations and in the lease itself that documentary proof of payment will be necessary to demonstrate that a payment was timely made in the correct amount due, should there be any question about a payment.

The Department is not taking on any obligation to manage or account for funds paid directly to Indian landowners that are not actually held in trust by the United States. This is consistent with section 102(a) of the American Indian Trust Management Reform Act of 1994, 25 U.S.C. 4011. Although we invited the public to comment on the question of accounting for direct payments, no specific recommendations were received beyond a general recommendation to collect proof of payment.

In both general lease and permit enforcement, as well as in trespass enforcement, the final leasing regulations reflect the suggestions of a large number of commenters to establish reasonable time frames in which the BIA will take appropriate enforcement action, and to reduce the amount of procedural steps necessary for effective enforcement. Significantly, the final rule includes new provisions identifying the BIA's responsibility for collecting delinquent rent payments.

Subpart A—General Provisions

Summary of Subpart

Subpart A addresses the purpose and scope of part 162 and describes the general authorities, objectives and policies the BIA uses to approve, grant, administer and enforce surface leases of Indian land. This subpart also defines key terms used throughout part 162 and identifies the land, interests in land, and types of leases covered by part 162. This subpart describes how tribal laws will apply to leases, and how records are maintained that document the leasing of trust and restricted lands.

Comments

Subpart A of this Final Rule now includes new provisions addressing the scope of part 162, policy statements, and other general provisions not found in the Proposed Rule. As noted above, many commenters suggested that the Final Rule include separate standards

for different types of leases, including agricultural, business and residential leases. In response, this Final Rule provides for separate subparts for agricultural leases (subpart B), residential leases (subpart C), and business leases (subpart D). Subparts C and D are reserved for publication at a later date. Accordingly, we will not address any of the provisions in subpart E or elsewhere in the Proposed Rule concerning residential or business leases, or the comments relating to those provisions.

Section 162.101 of the Final Rule contains definitions of key terms used throughout part 162. In response to many comments, we have clarified and streamlined most of the definitions in concert with those used in the final rules at parts 151 and 166. We have added definitions for day, emancipated minor, fee interest, immediate family, interest, minor, mortgage, remainder, surety, and tenant. Several confusing terms have been deleted or revised. For example, we have deleted specific definitions of appeal bond and surety in favor of a single definition of bond. In response to many comments, we generally have discontinued using the term lessee in favor of tenant.

Several respondents raised questions about the scope of the Proposed Rule. In response, § 162.102 clarifies that only land and land interests held in trust or restricted status are covered, and § 162.103 defines the types of agreements covered. Section 162.102(b) sets forth the general rule with respect to the leasing of life estates and remainder interests, with a cross-reference to 25 CFR Part 179. The information in subpart J of the Proposed Rule concerning fee interests or “non-trust” interests has been relocated to § 162.102(c) of this Final Rule. In addition, the provision in § 162.70 of the Proposed Rule which recognized that tribes could lease tribal land without BIA approval under federal charters has been moved to § 162.102(d) of this Final Rule. Finally, § 162.102(e) of this Final Rule notes that to the extent part 162 conflicts with the recently-enacted ILCA Amendments, the provisions of the ILCA Amendments will govern. In § 162.103, the Final Rule expands the cross-references in § 162.1(a) of the Proposed Rule, to distinguish the surface leases and permits covered by part 162 from other transactions involving trust or restricted land.

Many questioned whether the individual Indian landowners of undivided interests in fractionated tracts would need leases from their co-owners (i.e., “owner's use”), before taking possession. In response, § 162.104(b) clarifies that an Indian landowner of an undivided interest may not take possession without a lease unless the Indian co-owners give their permission. We have not accepted the requests to eliminate the owner's use provision in its entirety. This provision is necessary to ensure protection for, and to foster cooperation and negotiation among, all Indian co-owners.

Several commenters also expressed confusion as to how the trespass rules in subpart L of the Proposed Rule would apply to leases. As previously noted, some suggested that failure to pay rent be treated immediately as trespass. In response, the special provisions on trespass have been removed, but those provisions (as still incorporated in part 166) have been cross-referenced in §§ 162.106(b) and 162.256 of this Final Rule. We have rejected the comments requesting that we treat non payment as trespass, based on the availability of contract remedies prior to the cancellation of the lease. We have noted, however, that we will treat any possession of Indian land without a lease as a trespass, whether or not it occurs it occurs on Indian agricultural land.

Several respondents indicated that the Proposed Rule did not sufficiently define the BIA's responsibilities in the leasing of trust and restricted land; promote tribal self-determination through the negotiation of tribal leases and the administration of reservation lands under self-determination contracts or self-governance compacts; or support tribal sovereignty through the formal recognition of tribal laws and leasing policies. We have accepted these comments. Accordingly, §§ 162.107-162.108 define our objectives in granting or approving leases involving trust or restricted land and our responsibilities in the administration and enforcement of such leases, as noted above. The policies expressed in §§ 162.107-162.108 are intended to reflect our strong support for the rights of Indian landowners, tribal governing authority, and tribal administration of BIA programs. In § 162.109(b) we expressly recognize that tribal laws will broadly apply to all land under tribal jurisdiction, and generally allow tribal laws to supersede or modify the regulations in part 162 with respect to leases of tribal land.

In the Proposed Rule, we invited comments with respect to the distribution of rents derived from unitized leases comprised of multiple tracts with different Indian landowners. In response to the small number of comments received, we have combined §§ 162.17 and 162.102 of the Proposed Rule in § 162.105 of this Final Rule. We continue to provide that rents will be distributed based on the size of the Indian landowner's interest in proportion to the acreage in the entire lease tract, unless the lease provides otherwise. We also clarify that minimum Indian landowner consent requirements will apply to each tract separately rather than to the unitized lease tract as a whole.

Finally, to be consistent with the regulations published under parts 15, 115, and 166, we have added two sections addressing the maintenance of records relating to probate cases. These provisions, §§ 162.111 and 162.112, replace subpart M of the Proposed Rule.

Subpart B—Agricultural Leases

Summary of Subpart

Subpart B, consisting of six groupings of sections, governs agricultural leases on Indian lands. Under “General Provisions” are sections addressing the applicability of tribal laws and policies to agricultural leases. The sections under “How to Obtain a Lease” set forth procedural requirements including who can grant agricultural leases, how the BIA approves such leases, the documentation and recording requirements for such leases, and the effective dates of leases and BIA decisions. “Lease Requirements” includes sections that describe mandatory lease provisions, the amount of rent to be paid and the manner of payment (including late payments and penalties), improvements, bonds, and insurance. Under “Lease Administration” are provisions governing administrative fees and amendments, assignments, subleases and mortgages. “Lease Enforcement” includes sections identifying the BIA's responsibilities and time frames for collection of delinquent rent payments and other violations of agricultural leases, lease cancellation procedures, emergency action and inspections by the BIA.

Comments

General Provisions

A large number of commenters questioned provisions in the Proposed Rule that implemented the AIARMA. As we noted above and provide with respect to part 166, we have rejected the comments suggesting that special AIARMA regulations be promulgated independent of the BIA's leasing and grazing programs. As noted, the AIARMA-based trespass provisions in subpart L of the Proposed Rule have

been removed, leaving appropriate cross-references to 25 CFR Part 166. Many of the respondents were also concerned about the applicability of tribal laws and leasing policies. As indicated above, we have replaced § 162.4 of the Proposed Rule with the more specific § 162.109 in this Final Rule, to clarify that tribal laws will broadly apply to all types of leases, but will supersede or modify our regulations only in limited circumstances.

We have moved the AIARMA-based provisions found in §§ 162.5-162.9 and § 162.11 of the Proposed Rule to this heading in subpart B of the Final Rule. Consistent with the AIARMA, section 162.200 provides that subpart B will apply not only to agricultural leases, but also to business leases that support the Indian agricultural community. Section 162.201 provides that lands be managed in accordance with any agricultural resource management plan that have been adopted. As required by AIARMA, § 162.201(c) broadly authorizes waivers of regulations that are inconsistent with any agricultural resource management plan.

The provisions in §§ 162.5 and 162.9 of the Proposed Rule, relating to the implementation and enforcement of tribal laws affecting agricultural land, have been combined in § 162.202 of this Final Rule. In response to comments, § 162.202(b)(3) includes provisions that clarify that BIA appearances in tribal forums may be limited by Departmental regulations at 43 CFR Part 2, and by provisions in the AIARMA to preserve the sovereign immunity of the United States and limit tribal court review of BIA actions. Section 162.202(c) broadly authorizes waivers of regulations that are inconsistent with tribal laws.

Section 162.6 of the Proposed Rule, addressing when our standard regulations can be superseded or modified by certain types of tribal leasing policies, has been slightly modified and redesignated as § 162.203. It should also be noted that the broad AIARMA provision authorizing our approval of an agricultural lease of tribal land at any rate determined by tribal governing body has been incorporated in this Final Rule through standard regulations, at § 162.222(b), as well as through tribal policies made applicable under § 162.203 of the Final Rule. Although a number of commenters requested guidance as to how a superseding leasing policy might be adopted by a tribe, the Final Rule leaves the matter to the discretion of each tribe. The notice provisions in § 162.8 of the Proposed Rule have been clarified and extended to Indian landowners in § 162.204. Although some commenters objected to any notice requirement being placed on tribes, we continue to require that tribes provide us with notice of any tribal law or leasing policy that supersedes or modifies any of the regulations in part 162, so that we may provide the notices required by AIARMA. Finally, § 162.205 clarifies the provisions in § 162.7 of the Proposed Rule, authorizing individual Indian landowners to exempt their land from a leasing policy which supersedes or modifies one of our standard regulations prohibiting tenant preferences, requiring a bond, or guaranteeing three months notice before we grant a lease. Consistent with the AIARMA, we continue to require that at least 50% of the Indian landowners request the exemption and add a new provision that the exemption be requested each time a lease is granted or approved. Although numerous commenters objected to the exemption provision, these exemption rights are expressly provided for in AIARMA and have thus been retained in this Final Rule.

How To Obtain a Lease

In response to many comments, we have clarified the circumstances under which leases can be obtained through negotiation or advertisement or granted or approved without an appraisal or other documented valuation. In doing so, we have reduced and consolidated the provisions in subpart C of the Proposed Rule into §§ 162.206 and 162.212, respectively, in this Final Rule. Further, we have consolidated the provisions subpart D of the Proposed Rule into §§ 162.207-162.210 of the Final Rule, with several corrective amendments. The provisions relating to fair annual rental determinations, proposed in §§ 162.150-162.151 of the Proposed Rule, have been consolidated in § 162.211 of the Final Rule, with a clarification that fair annual rental determinations are not needed in cases where a lease may be approved at less than a fair annual rental, unless the Indian landowners request such a determination. We have also clarified that the BIA will determine fair annual rental value for leases on Indian lands by appraisal, advertisement, competitive bidding, or any other appropriate method that complies with the USPAP. The BIA does not intend to specify in part 162 the particular method for appraising Indian land; rather, ensuring flexibility in choosing an appraisal method allows the Secretary to most effectively discharge his responsibility as trustee.

Many respondents questioned the proposed provisions that addressed the granting of leases on fractionated tracts, including “owner's use” leases. In response, the provisions in the Proposed Rule that indicated that land being used by an Indian owner of a fractional interests could be leased to another party have been modified. Section 162.209(b) provides that we will not exercise our authority under 25 U.S.C. § 380 to grant a lease on behalf of all of the Indian owners of a fractionated tract where the Indian co-owners have given one of the Indian landowners permission to possess the tract without a lease.

A number of commenters objected to the provisions in § 162.12 of the Proposed Rule that identified the factors to be used in applying the “best interest” standard of review for lease approvals. Some noted that the BIA incorrectly applied 25 U.S.C. § 415(a). Others requested that the BIA consider additional factors beyond those provided in the statute. In response, § 162.214(a)(3) provides that we must assure ourselves that adequate consideration has been given to the five factors identified in 25 U.S.C. § 415, consistent with the statutory language. A sixth, non-statutory factor was suggested by the NCAI and identified in the Proposed Rule. This factor would require that we consider any tribal assessment of potential impacts on tribal culture and sovereignty. We received contradictory objections to this provision as being at once too paternalistic and yet too deferential to tribes. Because the sixth factor pertains primarily to long-term, business and residential leases, we have deleted it from the Final Rule for agricultural leases.

Many commenters requested that we include a time frame in which we must make a decision whether to grant or approve a lease. In response, § 162.214(b) requires action within 30 days, so long as the lease is in a form which has been previously accepted or approved, and all of the requisite supporting documents have been received. Those supporting documents are generally described in § 162.213, including a cross-reference to the bond requirement not found in proposed § 162.13, the corresponding provision of the Proposed Rule.

Many questions were raised about the effective dates of our decisions to grant or approve leases. With respect to the effective date of an agricultural lease, and the relation between the effective date of our decision to grant or approve the lease and the commencement date of the lease, the provisions in §§ 162.12(c) and 162.28 of the Proposed Rule have been consolidated and clarified in

§ 162.215 of the Final Rule. This section confirms that our decision can be made retroactively effective.

In response to numerous comments, we have significantly revised the applicability of the appeals process for decisions to grant or approve leases. Contrary to § 162.75 and subpart I of the Proposed Rule, § 162.216 makes a grant or approval decision effective immediately, notwithstanding any appeal that may be filed under 25 CFR Part 2.

Finally, we received many inquiries as to why we proposed only to record leases greater than one year in duration. We agree with those concerns and will record all leases. The Proposed Rule omitted mention of recording permits; the final rule provides that all permits will be recorded, as well. The provisions in §§ 162.14-162.16 of the Proposed Rule have been consolidated and clarified in § 162.217, expressly exempting permits from the recording requirement.

Lease Requirements

We received many comments requesting that the BIA be less prescriptive in mandatory lease requirements and allow for greater flexibility in negotiating leases that are favorable to the Indian landowner. We have balanced these concerns against the need for mandatory provisions that provide sufficient protection of Indian landowners. Accordingly, under the heading “Lease Requirements” are minimal mandatory provisions for agricultural leases, as well as provisions addressing matters that we strongly encourage be negotiated.

The mandatory provisions listed in § 162.26 of the Proposed Rule have been clarified and streamlined in §§ 162.219 and 162.220 of this Final Rule. Many respondents criticized the provisions relating to the description of the leased premises, as found in §§ 162.20 and 162.26(i) of the Proposed Rule, as being too restrictive for business purposes. We agree with these comments. In consolidating these sections in § 162.221 of the Final Rule, we state a clear preference for public or private surveys, but will accept any legal description that adequately identifies the property.

As previously noted in the general discussion of the changes to part 162, we have responded to the numerous comments received regarding direct rent payments. We are retaining the authority for direct payments and requiring tenants to retain documentation evidencing proof of payment. The provisions in §§ 162.41-162.42 and §§ 162.100-162.101 have been consolidated in § 162.226 of this Final Rule.

Section § 162.225 addresses late payments, combining §§ 162.34 and 162.36-162.37 from the Proposed Rule. In response to the majority of comments, this section provides that interest will begin to accrue immediately after a payment is missed, and that negotiated late payment penalties also may be imposed. Section 162.227 allows payments made directly to the Indian landowners to be made by any method specified in the lease. This section also allows payment by personal or business checks, in accordance with virtually every comment received on this issue. To minimize the risk to Indian landowners where such checks are dishonored, we have added a provision in § 162.248(d) stating that a lease is violated by the dishonoring of a check, and future payments must be made by one of the alternative methods identified in § 162.227.

Several commenters requested that the BIA allow greater flexibility in requirements for adjusting rental payments over the course of a lease. In response, § 162.223 provides for a minimum of one adjustment during the term of an agricultural lease, but Indian landowners may negotiate additional adjustments. We received few comments addressing the adjustment method and have clarified that the parties may negotiate the method of adjustment, with assistance from the BIA.

A number of comments also addressed the maximum lease term for agricultural leases. We have clarified this information in § 162.229, consistent with the AIARMA, to state that the maximum term for an agricultural lease is ten years, unless otherwise provided by law, and unless substantial investment in improvement of the land justifies extending the term up to 25 years.

Most commenters who addressed lease amendments, assignments, subleases, and leasehold mortgages requested that the BIA approve every such transaction. We agree that, with respect to agricultural leases, such approval continues to be necessary to protect Indian landowners. Section 162.230 has been amended accordingly, combining provisions in found in the Proposed Rule at §§ 162.21-162.25 and 162.87-162.90.

Many respondents requested additional clarity in the treatment of improvements to agricultural lands, both during and after the term of a lease. We have responded to these comments in §§ 162.232 and 162.233, by providing for negotiation of ownership of improvements in the lease, with suggestions for favorable terms, and provisions for BIA enforcement.

Finally, in response to many comments seeking strengthened remedies protecting Indian landowners in the event of lease violations, § 162.240 of the Final Rule amplifies the rights of Indian landowners to negotiate remedies that may be applied in addition to those taken by the BIA, including the possibility that the Indian landowner may cancel the lease. We also encourage Indian landowners to address the matter of tribal court jurisdiction for the resolution of lease disputes involving such negotiated remedies. However, this section provides that the BIA may not be bound by such decisions, but we generally will defer to tribal court proceedings as appropriate.

Lease Administration

Some commenters found the organization of the Proposed Rule confusing because it failed to distinguish clearly between the review and processing of a lease, and subsequent lease amendments, assignments, subleases, and leasehold mortgages. In response, we have created this grouping of sections entitled “Lease Administration,” which combines the provisions relating to the review and processing of amendments, assignments, subleases, and leasehold mortgages, as contained in subpart B of the Proposed Rule, with the provisions relating to administrative fees, proposed in subpart G.

With respect to administrative fees specifically, several commenters felt that the provisions in subpart G of the Proposed Rule were unclear as to the authority of tribes to charge and collect such fees, whether or not the tribe is administering the leasing program under a self-determination contract or self-governance compact. In response, § 162.241 establishes a standard 3% fee, subject to modification by a tribe or a discretionary waiver by us, and clarifies who pays the fee, why it is paid, and when it is subject to tribal modification. This provision has a consistent counterpart in part 166. As indicated above, the provisions in § 162.114 of the Proposed Rule, relating to the payment of other types of fees and charges, have been relocated to § 162.228 of this Final Rule.

Many respondents noted that subpart E of the Proposed Rule, which was intended to apply only to business leases, contained general provisions applicable to other types of leases. We believe the reorganized structure of part 162 will address these concerns. As

noted above in the general discussion of these Final Rules, numerous commenters suggested that the Final Regulations include time frames binding the BIA, with automatic approval of leases should BIA time frames be missed. With respect to agricultural leases, we added time frames to improve BIA review and approval procedures, but have rejected the comments suggesting automatic approval if the BIA fails to meet the specified time frames.

We have retained the basic structure and content of the Proposed Rule's standard of review provisions for assignments, subleases and mortgages, respectively. Additionally, in response to several comments, we have added a standard of review provision for lease amendments at § 162.242. We also eliminated the provision in the Proposed Rule that would have required that a tenant remain liable even after an assignment is approved, leaving such matters to negotiation between the parties. In § 162.45, we have added a provision stating that amendments, assignments, subleases, and leasehold mortgages are immediately effective upon approval, notwithstanding any appeal which may be filed under 25 CFR Part 2.

The recording requirement for leasehold mortgages, as found in § 162.22 of the Proposed Rule, has been extended to all subsequently approved lease documents by § 162.246 of this Final Rule.

Lease Enforcement

Many respondents criticized the enforcement provisions in subpart H of the Proposed Rule, recommending that we employ stricter definitions of our enforcement responsibilities, including time frames for BIA action. In particular, commenters urged us to develop very specific enforcement provisions governing enforcement of a tenant's failure to pay rent. We have accepted these comments, and have combined some of the collection provisions in subpart B of the Proposed Rule with the enforcement provisions in subpart H of the Proposed Rule. In response to several commenters, § 162.248 contains new provisions specifying the actions the BIA will take to enforce a tenant's failure to pay rent. These actions include a written notice of violation, immediate action to recover undisputed overdue rent prior to lease cancellation, and the acceptance of partial payments. Additionally, in § 162.249 we have added a new provision addressing the BIA's authority to assess against delinquent tenants special fees to cover the cost of collection. The inspection provision in § 162.121 of the Proposed Rule has been strengthened in § 162.250 of the Final Rule, providing that appropriate investigation will be initiated within five days of the date on which the BIA receives notice that a specific violation has occurred.

Many respondents requested that we strengthen the provisions by which we cancel leases for violations. Specifically, commenters requested that we speed up the cancellation process to better protect Indian landowners against financial losses during the pendency of any appeal of a cancellation decision. We have accepted these comments in the Final Rule. First, the provisions relating to notices of violations, found in §§ 162.122-162.124 of the Proposed Rule, have been consolidated and clarified in § 162.251 of the Final Rule, by eliminating the right of a tenant to appeal a notice of violation other than by responding to the notice itself. The provisions in §§ 162.123(c) and 162.125-162.127 of the Proposed Rule outlining the actions a tenant could take to cure a violation have been combined in § 162.252 of the Final Rule, with the election of remedies to be based in part on consultation with the Indian landowners. Second, special streamlined appeal provisions will be applied to lease cancellations. For example, in § 162.253, bonding requirements for decisions to cancel leases will differ from those in 25 CFR Part 2. Additionally, § 162.254 provides that cancellation decisions will be stayed only for thirty days pending the filing of an appeal. Third, the provisions relating to emergency actions from §§ 162.128-162.129 of the Proposed Rule have been consolidated and strengthened in § 162.255 of the Final Rule. Finally, § 162.256 provides that holdover tenants will be treated as trespassers.

Subpart C (Residential Leases) Is Reserved

Subpart D (Business Leases) Is Reserved

Subpart E—Special Requirements for Certain Reservations

Summary of Subpart

Subpart E identifies special provisions applicable only to leases made under special acts of Congress that apply only to certain Indian reservations. These provisions were in subpart N of the proposed regulations. Except for the removal, at the request of the tribe, of the section pertaining to the Colorado River Reservation, there have been no changes from the superseded or proposed regulations.

Subpart F—Non-Agricultural Leases

Summary of Subpart

As noted above, because of the enactment of the ILCA Amendments and the separation of agricultural leases into a distinct subpart, the BIA will promulgate new regulations for business and residential leases in the future. Until then, such leases must continue under existing authority. Therefore, new subpart F contains the general leasing authorities from the superseded regulations at 25 CFR 162.2-162.10, and §§ 162.12-162.13. In response to the many comments requesting stronger provisions for collection of lease rent and enforcement of lease provisions, subpart F contains new collection and enforcement provisions for non-agricultural leases, modeled on those in subpart B. Subpart F will be withdrawn when the new business and residential lease subparts are issued.

E. 25 CFR Part 166—Grazing Permits on Indian Lands

The purpose of this part is to describe the authorities, policies and procedures the Secretary uses to grant, approve and administer grazing permits on agricultural lands that are restricted against alienation or are held by the United States in trust for federally recognized Indian tribes and individual Indians, as well as certain lands owned by the federal government. It revises and entirely replaces the existing part 166, and implements the AIARMA with regard to grazing permits on Indian agricultural land and education in agriculture management. We have taken care to ensure consistency of related provisions in both parts 166 and 162 that implement the AIARMA.

Part 166 balances the Secretary's responsibilities as trustee of Indian land and resources with the need for Indian tribes and individual Indian landowners to exercise control over their agricultural trust lands and business affairs. Part 166 is organized to include ten subparts for the convenience of the reader. The expanded sections clarify existing policies and procedures governing the administration of grazing permits on Indian agricultural lands and is intended to bring consistency to the administration of grazing permits by the BIA. Part 166 does not address leasing of any type, nor does it address permitting for purposes other than grazing. Leasing of Indian lands is covered in part 162 of 25 CFR.

General Observations Regarding Changes From Proposed Rule

The Final Rule follows the format used in the Proposed Rule. Specific

changes and responses to significant comments are outlined below.

Subpart A—Purpose, Scope, and Definitions

Summary of Subpart

Subpart A addresses the purpose and scope of part 166 and describes the authorities, policies, and procedures the Secretary uses to approve, grant, and administer grazing permits of Indian agricultural land. This subpart also defines key terms used throughout part 166. These terms are consistent with those found in the AIARMA.

Comments

As we noted in our general discussion of the final regulation and our discussion of part 162, several commenters recommended that the BIA develop a stand-alone rule to implement the AIARMA exclusively. This recommendation was not accepted. Part 166 fully implements the AIARMA as it pertains to grazing permits on Indian land.

One tribe recommended that the Final Rule not impact tribal grazing lands currently governed by other parts of Title 25 of the Code of Federal Regulations. This recommendation was accepted. Section 166.1(c) was added to clarify that tribal grazing programs authorized under separate statutory authority are not subject to part 166.

Several respondents requested clarification of definitions including “conservation practices,” “fair annual rental,” “majority interest,” “on-and-off grazing permit,” “owner's use,” and “parcel.” These comment were accepted and the revisions have been incorporated into the definitions found in subpart A. Also in response to several comments, all the definitions were reviewed and revised to maintain consistency with the AIARMA and part 162.

Subpart B—Tribal Policies and Laws Pertaining to Permits

Summary of Subpart

Under subpart B, tribal laws and ordinances, including laws regulating the environment, cultural or historic preservation, land use, and other activities under tribal jurisdiction, apply to grazing permits on Indian agricultural lands unless such tribal laws and ordinances are prohibited by federal law. Tribes are responsible for enforcing tribal laws and ordinances pertaining to Indian agricultural lands with the assistance of the Secretary.

Consistent with the AIARMA, this subpart makes clear that when authorized by an appropriate tribal resolution, the Secretary will comply with certain general tribal policies pertaining to permitting on Indian agricultural lands. Also consistent with the AIARMA, subpart B provides that individual Indian landowners who have at least a 50% interest in a fractionated tract of Indian land can exempt their Indian land from the Secretary's implementation of these certain general tribal policies by submitting a written request to the BIA.

Comments

Similar to part 162, many comments questioned provisions of part 166 that allow individual Indian land owners to exempt their lands from certain general tribal policies pertaining to permitting on Indian agricultural lands. Comments also recommended that tribes should not be authorized to define “highly fractionated undivided heirship lands.” These comments were not accepted. Section 3715(b) of the AIARMA authorizes tribes to establish certain general tribal policies pertaining to permitting on Indian agricultural lands through an appropriate tribal resolution which also includes the authorization of tribes to define “highly fractionated undivided heirship lands” for notification purposes. Section 3715(c)(3) of the AIARMA authorizes individual Indian landowners who have at least a 50% interest in a fractionated tract of Indian land to exempt their Indian land from the Secretary's implementation of these certain general tribal policies pertaining to permitting on Indian agricultural lands by submitting a written request to the BIA. Part 166 fully complies with these provisions of the AIARMA.

Many comments recommended that tribes not be required to notify the BIA when new tribal laws or policies are enacted. These comments were not accepted. Section 3712(b) of the AIARMA requires the Secretary to provide notice of tribal laws or policies to persons or entities undertaking activities on Indian agricultural lands. It is reasonable to require tribes to notify the BIA of new applicable tribal laws or policies so that the Secretary may comply with the AIARMA. This notice requirement does not invalidate tribal laws or policies if tribes do not provide the BIA with notice of such new laws or policies. Finally, in response to comments, a provision was added in § 166.104 that states the BIA will notify affected Indian landowners, in addition to permittees, of new applicable tribal laws or policies.

Subpart C—Permit Requirements

Summary of Subpart

This subpart describes general requirements for obtaining a grazing permit, obtaining a grazing permit (leasehold) mortgage, modifying and assigning a grazing permit, and subpermitting of an existing grazing permit. This subpart also recognizes the authority of tribes to determine the duration of permits on tribal lands. Pursuant to the AIARMA, 25 USC 3715(a), subpart C provides that grazing permits would be generally granted for a period of ten years unless a longer term of up to 25 years is appropriate.

Subpart C recognizes that the Secretary has authority to grant or approve only permits of trust interests in Indian lands. Subpart C also makes clear that to ensure the preservation and proper use of trust lands, the Secretary requires permittees to conduct grazing operations in accordance with tribal goals and priorities for multiple use, sustained yield, agricultural resource management planning, and sound conservation practices. This subpart further requires permittees to fulfill all financial obligations to the Indian landowners and to conduct only those activities authorized by the grazing permit. Failure by a permittee to meet these expectations may result in an imposition of fines or penalties under subpart H, “Permit Violations,” or subpart I, “Trespass,” in order to protect the interests of the Indian landowners.

Comments

Several comments recommended a clarification of whether the BIA must approve tribal permits. The recommendation was accepted. Clarifications were made in § 166.1 of subpart A which describe specific circumstances for which Secretarial approval is not required for tribal permits.

Many respondents recommended that the regulations provide protection to Indian landowners so that their land may not be subpermitted at higher rates without a commensurate benefit to the Indian landowners. These recommendations were accepted. Section 166.229 provides protection to the Indian landowner by requiring BIA approval and the written consent of all parties to the permit (including Indian landowners) prior to an amendment, modification, assignment, transfer, or subpermit.

The proposal to eliminate the “on-and-off” grazing permit system that allowed for the administration of range units that involve both trust and non-trust lands was the subject of many

concerns. These respondents raised concerns about prudent range management practices where grazing trust land is permitted adjacent to non-trust land where grazing also occurs. These comments were accepted. A new provision, § 166.308, was added to allow the modification of the number of animals on permitted Indian land in order to accommodate adjacent non-trust lands so long as the conservation plan and the permit for the permitted Indian land accounts for this practice. However, the Secretary has no management authority over non-trust lands and will not approve grazing on non-trust lands.

The non-trust interest provisions previously located in subpart C of the Proposed Rule was eliminated. A discussion of the Secretary's responsibility regarding non-trust interest is now found in § 166.1.

A small number of comments recommended that leasehold mortgages not be allowed on grazing permits. Because such mortgages can be an important mechanism for economic development, these comments were not accepted. Section 166.223 preserves the option of mortgages on the permitted interest for those wishing to do so. Such mortgages apply only to the permit interest, not the interest in Indian land, and are a valid source of secured lending. The BIA recognizes that leasehold mortgages should be available where the parties to the permit agree. Mortgaging a permit interest is not required, and the parties to the permit remain free to negotiate a provision to allow or disallow such mortgages.

Several comments recommended that part 166 contain a 30-day time frame for notifying permittees of the removal of tribal land from a range unit. These comments were not accepted. Permittees require a reasonable time to make other arrangements for their livestock when tribal lands are removed from a range unit. Thus, § 166.228 continues the current 180-day notice requirement.

Several comments recommended that tribes be responsible for conducting their own appraisals and valuations. While the comments have merit, the Secretary has a trust responsibility to ensure that appropriate valuation is obtained for each permit. Tribes may conduct their own valuations in addition to valuations required by part 166.

Several comments recommended that the BIA should not limit valuation methods to appraisals. These comments were accepted. Section 166.401 was re-written to clarify that additional valuation methods may be employed as appropriate if consistent with the Uniform Standards of Professional Appraisal Practices (USPAP).

Many comments recommended that emancipated minors be recognized as adults and be authorized to grant permits on their own behalf. These comments were accepted. Section 166.202 was re-written to enable emancipated minors to grant grazing permits on their own behalf.

A number of respondents recommended that part 166 clarify the Indian landowner's responsibility in negotiating and advertising permits. These comments were accepted. Sections 166.220 and 166.221 were clarified to reflect that Indian landowners may negotiate permits and advertise for bids. The BIA will continue to assist Indian landowners with negotiations and advertisement or negotiate or advertise on behalf of Indian landowners when requested.

Subpart D—Land and Operations Management

Summary of Subpart

Subpart D, “Land Operations and Management,” describes how the BIA will establish range units and grazing capacity in consultation with Indian landowners.

All grazing permits issued under subpart D must be consistent with an agricultural resource management plan prepared in accordance with § 3711(b) of the AIARMA by a tribe or by the BIA in close consultation with a tribe. To ensure that a permittee's intended objectives regarding animal husbandry and other grazing issues represent sound practice, § 166.312 requires that a conservation management plan be developed with the permittee for each permit. The conservation management plan must be consistent with the tribe's approved agricultural resource management plan.

Comments

Several comments recommended that the Final Rule include an “on-and-off” grazing permit that allows the number of animals and/or season of use to be modified on the permitted land if adjacent trust or non-trust rangelands are used. These comments were accepted. Section 166.308 of this subpart describes how the number of animals and/or adjacent trust or non-trust rangelands may be included in an “on-and-off” grazing permit.

Several comments recommended that the final rule accommodate tribes that wish to decide livestock ownership requirements on tribal land, including those pertaining to non-Indian cattle owners and Indian cattle enterprises. These recommendations were accepted. A new provision, § 166.309, was added to support the tribe's authority to determine tribal livestock ownership requirements on tribal lands.

Several respondents recommended that conservation plans not be developed by permittees, and that tribes should be included when preparing and evaluating conservation plans. Many also recommended that part 166 provide greater specificity on how tribes should develop their agriculture resource management plans. Section 166.312 provides that conservation plans will be developed with the permittee for each permit and must be approved by the BIA prior to issuance of the permit. The conservation plan must also be consistent with the tribe's agriculture resource management plans in accordance with the AIARMA. As written, § 166.312 does not mandate options by which tribes may fund or contract plan development in order to maintain flexibility.

Several commenters recommended that part 166 identify who would be liable for completing or maintaining a conservation practice through a USDA cost share program or other similar program if the permittee no longer holds the permit. These comments were accepted. A new provision, § 166.315, was added that requires the parties to the permit to negotiate and identify which party will be responsible for completing and/or maintaining a conservation practice should the permit expire or be canceled.

Subpart E—Grazing Rental Rates, Payments, and Late Payment Collections

Summary of Subpart

Subpart E, “Grazing Rental Rates, Payments, and Late Payment Collections” preserves the ability of tribes to establish grazing rental rates on tribal lands. The BIA continues to set the grazing rental rates for individually owned Indian land. This subpart clarifies the procedures by which tribes may set grazing rental rates higher or lower than the BIA's established fair annual rental rate.

As trustee, the Secretary must determine the fair annual rental value of Indian trust lands in order to assist Indian landowners in negotiating permits with potential permittees and to determine if a permit is in the best interest of the Indian landowner. Subpart E clarifies that the BIA will determine fair annual rental value for grazing permits on Indian agricultural lands by appraisal, advertisement,

competitive bidding, or any other appropriate method that complies with the USPAP. The BIA does not intend to specify in part 166 the particular method for appraising agricultural land; rather, ensuring flexibility in choosing an appraisal method allows the Secretary to most effectively discharge his responsibility as trustee.

Subpart E continues the practice of direct payments to Indian landowners, and requires adequate proof of payment.

In § 166.424, the BIA will prorate grazing rental payments made to each Indian landowner according to the forage production that each parcel of Indian land contributes to the permit, annual rental rate of each parcel, and the Indian landowner's interest in each parcel.

Comments

Many comments recommended that the BIA clarify and expand payment methods to allow greater flexibility for landowners such as by allowing rental payments by electronic funds transfer, personal, and business checks. These comments were accepted. In addition, § 166.419(c) allows for partial rental payments only under special circumstances with the written consent of the parties to the permit and the BIA approval when necessary to obtain the maximum payment possible for the Indian landowner.

Many comments were received about the BIA's obligation to collect late rental payments owed to Indian landowners. These comments were accepted. Part 166 includes new provisions that describe the BIA's responsibility in collecting late rental payments. For example, § 166.419 describes the collection actions the BIA will take (including canceling the permit, assessing payment penalties, interest, and administrative fees, and referring unpaid debts to the United States Department of Treasury for collection) against a permittee to collect on a late payment. The NCAI recommended that the BIA adopt a collection process from another federal agency that would initiate trespass action immediately for non-payment of rental payments. This recommendation was not accepted because permits must be canceled before a permittee can be determined to be in trespass.

Subpart F—Administrative and Tribal Fees

Summary of Subpart

Subpart F, “Administrative and Tribal Fees,” provides a schedule of administrative fees based on the dollar value of the permit. This subpart provides a minimum and maximum administrative fee amount. The BIA continues to be able to waive such administrative fees. This subpart also acknowledges that tribes may establish and collect their own administrative fees in addition to administrative fees assessed by the BIA.

Comments

Several comments recommended that the BIA use a flat administrative fee rate to charge permittees for the administration of permits. These comments were accepted. The BIA will charge a flat three percent administrative fee based on the annual grazing rental to cover costs associated with the performance of administrative duties. The existing minimum and maximum administrative fees described in the proposed regulation were retained in § 166.501(b).

Subpart G—Bonding and Insurance Requirements

Summary of Subpart

Subpart G, “Bonding and Insurance Requirements,” clarifies current BIA practices by requiring that a bond be provided for each permit issued to ensure performance and compliance with permit terms. Upon request of an Indian landowner, the BIA may waive the bond requirement. For grazing permits on tribal lands, this subpart recognizes tribal authority to negotiate the form of the bond.

Comments

Many comments recommended that part 166 include bonding requirements that address overgrazing on Indian lands. These comments were accepted. Section 166.601(a)(4) as described in the proposed regulation was retained and allows a bond to be applied to the costs of restoration and reclamation of Indian land damaged by a permittee. Also, § 166.602(b) states that Indian landowners may negotiate a permit term that specifies the use of any bond forms described in § 166.602(a).

Several comments recommended that the BIA pay interest on cash bonds. These comments were not accepted. Cash bonds are not trust funds and are not administered as trust funds, and therefore are ineligible for interest payments without additional statutory authority.

Subpart H—Permit Violations

Summary of Subpart

Subpart H, “Permit Violations,” provides for Secretarial action should the BIA learn that a violation of the terms of a grazing permit may have occurred.

Comments

Several comments recommended that grazing unit inspections by the BIA for permit compliance be required more often than one time per year. These comments were not accepted. Due to the varying circumstances of each range unit, flexibility in grazing unit inspections must be maintained. While the BIA intends to increase its ability to monitor range units for permit compliance, the BIA must continue to rely on information provided by Indian landowners. Thus, § 166.703(a) was added to clarify that Indian landowners may contact the BIA to request that appropriate enforcement action be taken by the BIA should an Indian landowner believe that a violation has occurred.

Several comments recommended that the final rule support the tribe's authority to adopt its own appeal process for range unit violations. These comments were accepted. Section 166.702 was modified so that the parties to a grazing permit may negotiate a provision in the permit that would defer to tribal remedies for permit violations.

Subpart I—Trespass

Summary of Subpart

Subpart I, “Trespass,” defines trespass under a grazing permit to include any unauthorized occupancy, use of or action on Indian agricultural or government lands assigned to the control of a tribe. This subpart describes the process for trespass notification, enforcement, actions, penalties, damages, and costs.

Comments

Many comments recommended that part 166 should include a trespass inspection schedule. These comments were not accepted. As with grazing unit inspections under subpart H, flexibility in inspections must be maintained to take into account varying range unit circumstances and the need to rely on Indian landowners. Part 166 provides that the BIA will continue to act on specific information about trespass on Indian agricultural lands. Section 166.801 clarifies our obligation to investigate and respond to allegations of trespass.

Several comments recommended that penalties received from a grazing trespass be paid directly to the permittee. These comments were partially accepted. Section 3713(c) of the AIARMA authorizes the payment of proceeds from trespass for the loss of forage or other damage. However, the

AIARMA is unclear as to whether permittees are to receive all or some of such proceeds. The BIA recognizes that the loss of forage or other damage is often sustained by the permittee. In order to provide for trespass payments to permittees (as an affected party under section 166.818) for the loss of forage or damage due to trespass, the parties to the permit may include a trespass reimbursement provision in the permit that allows for such reimbursement.

One comment recommended the final rule should not suggest that tribes are required to adopt the trespass provisions of part 166 in order to secure tribal trespass jurisdiction. This comment was accepted. Section 166.802(b) was added to specifically recognize the authority of tribes to take any trespass action tribal law may allow.

Subpart J—Agriculture Education, Education Assistance, Recruitment, and Training

Summary of Subpart

Subpart J, Agriculture Education, Education Assistance, Recruitment, and Training, outlines the provisions for implementing subchapter II of the AIARMA, Education in Agriculture Management.

Comments

Many comments recommended that students receive one year of funding for one year worked in the agricultural education program in accordance with the AIARMA. This comment was accepted. Section 166.901(f)(3) was changed to support the requirement that students enter into an obligated service agreement to serve as a professional resource manager or agriculture-related professional with an approved organization for one year in exchange for each year in the program.

Subpart K—Records

As noted previously, new provisions have been added addressing the ownership and maintenance of trust records associated with the performance of this part. These provisions replace those in subpart K of the Proposed Rule.

IV. Procedural Requirements

A. Review Under Executive Order 12866

Under Executive Order 12866 (58 FR 51735, October 4, 1993), OMB must determine whether the regulatory action is “significant” and therefore subject to 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.

Accordingly, OMB has determined that this rule is not a significant regulatory action and is largely administrative and technical in nature. The rule describes how the federal government will administer its trust responsibility in managing the trust fund accounts. Thus, the impact of the rule is confined to the federal government and the Indian trust beneficiaries and does not impose a compliance burden on the economy generally. The Department did submit the entire Proposed Rule for review by the Office of Information and Regulatory Affairs of the Office of Management and Budget (OMB) as a significant policy matter impacting all federally-recognized Indian tribes and individual Indians. This decision was made because of the magnitude of the monies involved in Indian trust matters and the notion that any revisions to existing regulations that impact trust account management could have significant impacts on tribal governments, communities and individual Indians. In particular, the Department conducted an economic analysis of the revisions to part 115 and found that there were significant benefits in management, security and reporting of trust accounts and only small increases on tribal governments or individual Indians. The increased benefits are better identification of funds, ability to gain performance reports on tribal or individual accounts, clarifications in what funds could be deposited into such accounts, better distribution procedures, and clarifications on when and how such accounts could be restricted or otherwise encumbered. The revisions to part 115 were found to have potential for administrative savings.

B. Review Under 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 affected 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 ensure that the regulation: (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 affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, 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 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. The Department of the Interior has determined that, to the extent permitted by law, the proposed regulation meets the relevant standards of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

This rule was reviewed under the Regulatory Flexibility Act, 5 U.S.C. 601

et seq.,

which requires preparation of a regulatory flexibility analysis for any rule which is likely to have significant economic impact on a substantial number of small entities. This rule streamlines the Department's policies, procedures, provisions and clauses that apply to certain Indian trust resources. Indian tribes are not small entities under the Regulatory Flexibility Act. Any impacts on identified small entities affected by this rulemaking are minimal as they would concern a small number of farmers, ranchers, and individuals doing business on Indian lands. Accordingly, the Department of the Interior has determined that this regulation will not have a significant economic impact on a substantial number of small entities, and, therefore, no regulatory flexibility analysis has been prepared.

D. Review Under the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more. The revised parts represent programs that are ongoing within the BIA and no new monies are being introduced into the stream of commerce. This rule will not result in a major increase in costs or prices. The effect of this rulemaking will be to streamline ongoing policies, procedures and management operations of the BIA in their handling of tribal and individual Indian trust resources. No increases in costs for administration will, therefore, be realized and no prices would be impacted through these administrative and technical clarifications of existing field practice. This rulemaking will not result in any significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of the United States-based companies to compete with foreign-based companies in domestic and export markets. The impact of the rulemaking will be realized by tribal governments and individual Indians having a protected trust resource. These administrative and technical clarifications of Departmental policy and procedure will not otherwise have a significant impact on any other small businesses or enterprises.

E. Review Under the Paperwork Reduction Act

This rulemaking requires an information collection from 10 or more parties and a submission under the Paperwork Reduction Act of 1995, Public Law 104-13, is required. Accordingly, the Department prepared an OMB form 83-I for review and approval by OMB. Having reviewed the submissions of the Department with respect to the burden hours of each part of this rulemaking, along with any comments that were submitted by the reviewing public, OMB has approved the information collection requirements contained in this rulemaking and has assigned OMB control number 1076-0154.

F. Review Under Executive Order 13132—Federalism

This rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. While this 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 has no sufficient federalism implications to warrant the preparation of a Federalism Assessment.

G. Review Under the National Environmental Policy Act of 1969

This rule does not constitute a major federal action significantly affecting the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is necessary for this rule.

H. Review Under the Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995, Public Law 104-4, establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. Under section 202 of the Act, the Department generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “federal mandates” that may result in expenditures to state, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. The Department, however, determined that the rulemaking would uniquely affect tribal governments and, accordingly, followed Departmental and Administration protocols in consulting with tribal governments on this rulemaking. See discussion on consultations found in the Background section of this preamble. These consultations were in keeping with the President's Executive Order 13084, “Consultation and Coordination with Indian Tribal Governments.”

List of Subjects

25 CFR Part 15

Estates, Indians—law.

25 CFR Part 114

Accounting, Indians—business and finance.

25 CFR Part 115

Administrative practice and procedure, Indians—business and finance.

25 CFR Part 162

Indians—lands.

25 CFR Part 166

Grazing lands, Indians—lands, Livestock.

For the reasons stated in the preamble, the Department of the Interior, Bureau of Indian Affairs, amends 25 CFR as follows:

PART 15—PROBATE OF INDIAN ESTATES, EXCEPT FOR MEMBERS OF THE FIVE CIVILIZED TRIBES

1. Part 15 is revised to read as follows:

Subpart A—Introduction

Sec.

15.1

What is the purpose of this part?

15.2

What terms do I need to know?

15.3

Will the Secretary probate all the property in Indian estates?

15.4

How does the probate process work?

Subpart B—Starting the Probate Process

15.101

How do I begin the BIA probate process?

15.102

May I notify the BIA of a death if I am not related to the decedent?

15.103

When should the BIA be notified of a death?

15.104

What other documents does the BIA need to process a probate package?

15.105

Will the BIA wait to begin the probate process until it is notified of the decedent's death?

15.106

Can I get emergency assistance for funeral services from the decedent's IIM account?

15.107

Who prepares an Indian probate package?

15.108

What agency prepares the probate package if the decedent was not an enrolled member of a tribe or is a member of more than one tribe?

15.109

Can a probable heir or beneficiary give up his/her interest in trust or restricted lands or trust funds?

Subpart C—Preparing the Probate Package

15.201

What will the BIA do with the documents that I provide?

15.202

What must the complete probate package contain?

15.203

What happens after the BIA prepares the probate package?

15.204

After the probate package has been sent to a BIA deciding official, may I still request a formal hearing with an ALJ?

15.205

When will the BIA refer a probate to the OHA?

15.206

Is there a summary process for distributing an estate with only trust cash assets?

Subpart D—Probate Processing, Claims and Distributions

15.301

What does the attorney decision maker do with the probate package?

15.302

What law is used by the deciding official to determine the distribution of the trust estate?

15.303

If the decedent owed me money, how do I file a claim against the estate?

15.304

How does the BIA deciding official determine if a claim will be allowed and paid?

15.305

What claims will be paid first?

15.306

Can the BIA deciding official reduce the amount of claims?

15.307

What if there is not enough money in the decedent's IIM account to pay all claims?

15.308

Will the BIA use future income to pay claims?

15.309

Will the BIA deciding official authorize payment of interest or penalties accruing after the date of death?

15.310

When will the BIA deciding official issue a decision on the probate?

15.311

What is in the written decision/order of the BIA deciding official?

15.312

What happens after the decision is made?

Subpart E—Appeals

15.401

May I appeal the decision of the BIA deciding official?

15.402

How do I file an appeal of the decision/order?

15.403

How long do I have to file an appeal?

15.404

What will happen to the estate if an appeal is filed?

15.405

How does the ALJ review a decision issued by a BIA deciding official?

Subpart F—Information and Records

15.501

If I have a question about a probate that has been assigned to a BIA deciding official, may I contact the deciding official directly?

15.502

How can I find out the status of a probate?

15.503

Who owns the records associated with this part?

15.504

How must records associated with this part be preserved?

Authority:

Secs. 1, 2, 36 Stat. 855, as amended, 856, as amended, sec. 1, 38 Stat. 588, 42 Stat. 1185, as amended, secs. 1, 2, 56 Stat. 1021, 1022, 25 U.S.C. 372, 373, 374, 373a, 373b; Federal Records Act, as amended, 44 U.S.C. § 3101,

et seq.

(1950).

Cross reference:

For special rules applying to proceedings in Indian Probate (Determination of Heirs and Approval of Wills, Except for Members of the Five Civilized Tribes and Osage Indians), including hearings and appeals within the jurisdiction of the Office of Hearings and Appeals, see Title 43, Code of Federal Regulations, Part 4, Subpart D; Funds of deceased Indians other than the Five Civilized Tribes, see Title 25 Code of Federal Regulations, Part 115.

Subpart A—Introduction

§ 15.1

What is the purpose of this part?

This part contains the procedures that the Secretary follows to initiate the probate of the trust estate of a deceased individual Indian who owned trust or restricted property. This part tells you how to file the necessary documents to probate the trust estate. This part also describes how probates will be processed by the BIA, and how probates may be sent to the OHA for disposition.

§ 15.2

What terms do I need to know?

ALJ

means an administrative law judge or other employee of the Department of the Interior's Office of Hearings and Appeals (OHA) upon whom authority has been conferred by the Secretary to conduct hearings in accordance with 43 CFR Part 4 Subpart D.

BIA

means the Bureau of Indian Affairs within the Department of the Interior.

IIM account

means Individual Indian Money Account.

LTRO

means the Land Titles and Records Office within the BIA.

OHA

means the Hearings Division, Office of Hearings and Appeals, Department of the Interior.

OTFM

means the Office of Trust Funds Management, within the Office of the Special Trustee for American Indians, Department of the Interior, or its authorized representative.

Agency

means the agency office or any other designated office in the BIA having jurisdiction over trust or restricted property and money. This term also means any office of a tribe which has contracted or compacted the BIA probate function under 25 U.S.C. § 450f or 25 U.S.C. § 458cc.

Attorney decision maker

means an attorney with the BIA, who reviews a probate package, determines heirs, approves wills and beneficiaries of the will, determines creditors claims, and issues a written decision.

Beneficiary

means any individual who receives trust or restricted property or money in a decedent's will.

Day

means a calendar day, unless otherwise stated.

Decedent

means a person who is deceased.

Deciding official

means the official with the delegated authority to make a decision on a probate matter, and may include a BIA regional director, agency superintendent, field representative, or attorney decision maker (BIA deciding official); or an OHA ALJ or other OHA designated official (OHA deciding official).

Decision/order

means a written document issued by the deciding official determining heirs, approving wills and beneficiaries of the will, approving creditors claims, and ordering distribution of property and money.

Domicile

means the legal residence of the person.

Estate

means the trust cash assets, restricted or trust lands owned by the decedent at the time of his death.

Form OHA-7

means a form issued by the OHA which lists data for heirship and family history, and provides information on any wills, trust and restricted property, adoptions, names and addresses of all interested parties.

Heir

means any individual who receives trust or restricted property or money from a decedent in an intestate proceeding.

IIM account

means funds held in an individual Indian monies account by the OTFM or a tribe performing this function under a contract or compact.

Interested parties

means any probable or actual heir, any beneficiary under a will, any party asserting a claim against a deceased Indian's estate, and any tribe having a statutory option to purchase the trust or restricted property interest of a decedent.

Intestate

means the decedent died without a will.

Minor

means an individual that has not reached age of majority as defined by the applicable tribal or state law.

Probate

means the legal process by which applicable tribal law, state law, or federal law that affects the distribution of the decedent's estate is applied to: (1) determine the heirs; (2) approve wills and beneficiaries; and (3) transfer any funds held in trust by the Secretary for a decedent to the heirs, beneficiaries, or other persons or entities entitled by law.

Probate clerk

means a BIA or tribal employee who is responsible for processing a probate package.

Probate specialist

means t

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