# Tribal Energy Resource Agreements Under the Indian Tribal Energy Development and Self-Determination Act

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URL: https://www.frixlaw.com/law-library/documents/fr%3AE8-4301

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 10, 2008
- **Citation:** 73 FR 12808

## Text

DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
25 CFR Part 224
RIN 1076-AE80
Tribal Energy Resource Agreements Under the Indian Tribal Energy Development and Self-Determination Act

AGENCY:

Bureau of Indian Affairs, Interior.

ACTION:

Final rule.

SUMMARY:

The Secretary of the Interior (Secretary) is promulgating final regulations providing that Indian tribes, at their discretion, may enter into business agreements and leases for energy resource development and grant rights-of-way for pipelines or electric transmission or distribution lines on tribal land without the Secretary's review and approval. Indian tribes entering into such business agreements, leases, and grants of rights-of-way must execute them under an approved tribal energy resource agreement (TERA) between the Secretary and the tribe. These final regulations provide the process under which a tribe may apply for, and the Secretary may grant, authority for an Indian tribe to review and approve leases and business agreements and grant rights-of-way for specific energy development activities on tribal lands through an approved TERA. The regulations also cover processes for implementation of TERAs, including periodic review and evaluation of a tribe's activities under a TERA, enforcement of TERA provisions, and administrative appeals. The regulations also include a process for a tribe's voluntarily rescinding a TERA.

DATES:

This rule is effective April 9, 2008.

ADDRESSES:

Further information or questions regarding this final rule should be addressed in writing to Robert Middleton, Director, Office of Indian Energy and Economic Development, Room 20—South Interior Building, 1951 Constitution Avenue, NW., Washington, DC 20245. Please include your name and return address.

FOR FURTHER INFORMATION CONTACT:

Darryl Francois, Program Analyst, Office of Indian Energy and Economic Development, Room 20—South Interior Building, 1951 Constitution Avenue, NW., Washington, DC 20245, Telephone (202) 219-0740 or Fax (202) 208-4564.

SUPPLEMENTARY INFORMATION:

I. Background

II. Discussion of Final Rule

III. Discussion of Comments on Proposed Regulations and Responses

IV. Procedural Matters

I. Background

The Secretary is issuing this part under authority of the Indian Tribal Energy Development and Self-Determination Act of 2005, Pub. L. 109-58, 119 Stat. 763, 25 U.S.C. 3501-3504, and 25 U.S.C. 2 and 9.

Title V, Section 503, of the Energy Policy Act of 2005 (Pub. L. 109-58) amended Title XXVI (Indian Energy) of the Energy Policy Act of 1992 to require the Secretary of the Interior (Secretary) to promulgate regulations that implement provisions concerning tribal energy resource development on tribal lands. Specifically, the Indian Tribal Energy Development and Self-Determination Act of 2005, Title XXVI, Section 2604 of the Energy Policy Act, as amended, authorizes tribes, at their discretion, to apply for and enter into TERAs with the Secretary. Upon Secretarial approval of TERAs, tribes may enter into energy-related business agreements and leases, and grant rights-of-way for pipelines and electric transmission and distribution lines, on tribal lands without the Secretary's review and approval. Implementation of the final regulations providing for TERAs will further the Federal Government's policy of providing enhanced self-determination and economic development opportunities for Indian tribes by promoting tribal oversight and management of energy resource development on tribal lands. The Act and the regulations provide another process, in addition to the Indian Minerals Development Act and the Indian Mineral Leasing Act, under which tribes may develop their mineral resources. Implementation of these regulations will also support the national energy policy of increasing utilization of domestic energy resources. As stated in the final regulations, the Secretary will interpret and implement these regulations and the Act in keeping with the self-determination and energy development provisions and policies of the Act. In drafting the proposed regulations and finalizing regulations, the Secretary has diligently attempted to conform to the requirements of the Act and to address concerns that arose during the tribal consultation and discussion of the proposed regulations during the public comment process.

The Secretary held a series of public meetings and tribal consultations in January 2006 to solicit stakeholder and tribal comments on the implementation of the Act. In addition, in two letters to tribal leaders, the Secretary solicited the direct involvement of tribes in drafting a framework for the development of proposed regulations. The Secretary identified three primary issues based on the written and oral comments: Whether the definition of tribal land on which tribes may conduct TERA-authorized activities should include tribal fee land; what criteria the Secretary will use to determine that a tribe has sufficient capacity to regulate its energy resource development; and what will constitute adequate environmental review of leases, business agreements, and rights-of-way a tribe may include or enter into under an approved TERA.

Definition of Tribal Lands—In the preamble to the proposed regulations, the Secretary specifically sought public comment on the alternate definition of tribal land some tribes proposed: “Those lands for which the Secretary has determined that interests in real property held in fee by a tribe and located outside of Indian Country, as defined in 18 U.S.C. 1151, are not subject to a restriction on alienation, unless otherwise specifically imposed by Congress.” In addition, the alternate definition of tribal land included the statement that “should a final, non-appealable decision of a court of competent jurisdiction invalidate the Secretary's determination that such land is not subject to a restriction on alienation and conclude such land is subject to a restriction on alienation, this definition of Tribal land will include real property held in fee by a tribe, regardless of location, except in those instances in which Congress has removed the restriction on alienation.”

In comments on the proposed regulations, some tribes suggested that this more expansive definition of tribal lands had the potential to create more economically robust energy resource development projects by allowing TERA projects on tribal fee land. The Act, at 25 U.S.C. 3501(12), defines tribal land as “any land or interests in land owned by any Indian tribe, title to which is held in trust by the United States, or is subject to a restriction against alienation under the laws of the United States.” Following publication of the proposed regulations, at § 224.30
Definitions
, in which the Secretary used the statutory definition, the Secretary considered public comments received in support of the definition in the proposed regulations and the alternate definition of tribal land offered in the preamble. The Secretary determined that public comments for the alternate definition of tribal land did not provide a convincing or compelling legal argument, nor statutory or other legal support, for changing the statutory definition of

tribal land to include tribal fee land in the regulatory definition. In response to comments, the Secretary added “or mineral interests” after “interests in land” and added “or tribes” after “any Indian tribe” to clarify that tribal mineral interests severed from the surface estate and tribal jointly held interests are included in the definition of tribal land.

Criteria for Determining Tribal Capacity—The Act requires that the implementing regulations include criteria the Secretary will use to determine that a tribe has sufficient capacity to manage. In the preamble to the proposed regulations, the Secretary specifically sought public comment concerning sufficient criteria to enable the Secretary to determine a tribe's capacity to manage the full scope of administrative, regulatory, and energy resource development a tribe proposes to assume under an approved TERA. The proposed regulations require that a tribe considering entering into a TERA participate in a pre-application process designed to provide a preliminary analysis of the type of expertise necessary to manage the particular type of energy resource development that the tribe contemplates. Under the proposed regulations, as part of the TERA application process, a tribe must describe the level of expertise it possesses to manage the energy resource development within the scope of the proposed TERA or how the tribe will acquire the needed expertise. As the Act requires, criteria the Secretary developed for the proposed regulations include the tribe's experience managing natural resources and the administrative and financial resources that will be available to it when implementing an approved TERA.

Environmental Review Processes—The Secretary specifically requested comments during the consultation process and in the preamble to the proposed regulations on additional environmental review requirements a tribe must meet beyond the minimum included in the Act. The regulations require that a TERA include provisions that establish a tribal environmental review and compliance process for any potential environmental impacts that may occur from a lease, business agreement, or right-of-way that a tribe plans to enter into.

A main component of the regulations regarding a tribe's approval authority for leases, business agreement, and rights-of-way is ensuring compliance with environmental laws. Under the regulations a tribe must include in its TERA: all required provisions for the tribe's and any third party's compliance with Federal environmental laws in regard to leases, business agreements, and rights-of-way entered into or granted under an approved TERA; provisions that the tribe include public notice and opportunity for public comment on the potential environmental effects of leases, business agreements, and rights-of-way a tribe proposes to enter into or grant under an approved TERA; provisions that the tribe notify the Secretary of any violation or breach; provisions that acknowledge that the Secretary may take various actions, including reassumption of the authority granted in a TERA, when the Secretary finds that there is imminent jeopardy to a physical trust asset; and the Secretary's remedies for an interested party who shows that an interest of the party has sustained or will sustain an adverse environmental impact as a result of a tribe's non-compliance with the terms of an approved TERA.

The Secretary will also develop with a tribe in the application process, include in an approved TERA, and conduct throughout the period an approved TERA is in effect, periodic reviews and evaluations of the tribe's performance of the energy resource development activities a tribe undertakes.

In addition, in conducting review of a tribe's TERA application, the Secretary will perform a National Environmental Policy Act (NEPA) review consistent with the scope of the tribe's proposed energy resource development in the TERA. The Secretary will also publish in the
Federal Register
a notice that the Secretary is considering a final proposed TERA and is requesting public comment.

In addition to the three issues identified in the consultation process discussed above, the Secretary identified several other main issues during the public comment period discussing: what is included as a physical trust asset and the exception of inherently Federal functions from responsibilities a tribe may assume under a TERA.

Physical Trust Asset—The regulatory definition of physical trust asset includes physical trust assets the United States owns in trust for a tribe or individual Indian or that a tribe or individual Indian owns subject to a restriction against alienation under the laws of the United States. The regulatory definition excludes improvements to the physical trust assets and monetary assets. A few commenters requested that the Secretary also exclude “water” from the definition of physical trust asset. The commenters suggested that water and water rights issues have a different legal basis under federal and tribal laws than do other natural resources and that it is not appropriate to include water as a physical trust asset. The Secretary relied on Section 3504(e)(6)(A)(i) of the Act that provides that the Secretary must “act in accordance with the trust responsibility of the United States relating to mineral and other trust resources.”

In addition, the Secretary included the definition of physical trust asset because of the imminent jeopardy to a physical trust asset regulatory provisions the Act mandates. The Secretary asserts that the inclusion of water as a physical trust asset is necessary to ensure that any water supply to or body of water that exists on tribal land is protected from imminent jeopardy because of a tribe's non-compliance with a TERA or a third party's breach or violation of a lease, business agreement, or right-of-way under a TERA or violation of applicable tribal or Federal environmental laws. Imminent jeopardy means “an immediate threat of devaluation, degradation, damage, or loss of a physical trust asset, as determined by the Secretary” (§ 224.30,
Definitions
). A tribe's energy resource development on tribal land may affect physical trust assets, including water resources on its land, adjacent Indian allotted land, or on another tribe's land. Devaluation, degradation, or damage to, or loss of, any natural resource, including water, because of a breach or violation of a term of a lease, business agreement, or right-of-way under a TERA, or violation of applicable environmental laws, are equally potentially environmentally or financially devastating. The Secretary is required under the Act to provide for taking actions necessary to protect the asset if the Secretary determines that a non-compliance with a TERA or applicable Federal or tribal environmental laws causes imminent jeopardy to a physical trust asset or if the interest of an interested party, as defined in the regulations, has sustained or will sustain an adverse environmental impact due to a tribe's non-compliance with an approved TERA. The Secretary must therefore include water, as a natural resource and a trust resource, as a trust asset in the definition of physical trust asset.

Inherently Federal Functions—In keeping with the intention of the Act and the Secretary's intention to further tribes' opportunities to manage their own energy resource development on tribal lands, the regulations provide that tribes, at their discretion, may review

and approve leases, business agreements, and rights-of-way associated with energy resource development on tribal lands to tribes under approved TERAs. In addition to the review and approval authority the Secretary would ordinarily perform, the Act and the regulations require that tribes provide for carrying out specific activities the Secretary would ordinarily perform. The regulations include required provisions for a tribe's establishing and carrying out an environmental review process, ensuring environmental compliance in tribal approval of leases, business agreements, and rights-of-way, and public participation in environmental review of the effects that tribal approval of leases, business agreements, and rights-of-way will have.

However, Congress also provided in the Act, and the regulations state, that the United States is not absolved of any responsibility to Indians or Indian tribes, including those derived from the trust relationship or from any treaties, statutes, and other laws of the United States, Executive Orders, or agreements between the United States and any Indian tribe. In addition, under the Act and the regulations, the Secretary must act in accordance with the trust responsibility of the United States relating to mineral and other trust resources and act in good faith and in the best interest of Indian tribes. In addition, the Act and the regulations provide that the Secretary must continue to fulfill the trust obligation of the United States to ensure that the rights and interests of an Indian tribe are protected “if any other party to a lease, business agreement, or right-of-way violates any applicable Federal law or the terms of any lease, business agreement, or right-of-way a tribe enters into under an approved TERA or any provision in a lease, business agreement, or right-of-way violates the TERA under which the lease, business agreement, or right-of-way was executed.” Tribes with approved TERAs must report any violation or breach of terms of a lease, business agreement, or right-of-way or a Federal or tribal environmental law to the Secretary. The Secretary must determine that a tribe has the capacity to carry out the authority and the activities it proposes to assume under a TERA before approving a TERA. Under an approved TERA, the Secretary must conduct periodic review and evaluations of a tribe's activities. In addition, the regulations, following the requirements of the Act, provide that in a TERA a tribe must authorize the Secretary to take any actions the Secretary determines are necessary to enable the Secretary to carry out the trust responsibility upon the Secretary's finding of imminent jeopardy to a physical trust asset.

The final regulations provide that tribes may assume activities beyond those specified in the Act. Wherever possible within the requirements of the Act and wherever tribal assumption of activities would not conflict with inherently Federal functions, the Secretary provided for as much flexibility as possible for participating tribes in providing for tribal procedures and assumption of activities for energy resource development under the regulations. Congress did not expressly prohibit the use of the term “Inherently Federal Functions,” and left this issue open to the Secretary when it outlined the Secretary's trust responsibility in the Act (25 U.S.C. 3504(e)(6)). Therefore, the regulations at § 224.52(c) state that a tribe may include in a TERA the “assumption by the tribe of certain activities normally carried out by the Secretary, except for inherently Federal functions.” The regulations further provide, at § 224.53(e)(3), that “the tribe's intended scope of administrative activities [in a TERA] may not include the responsibilities of the Federal government under the Endangered Species Act or any other inherently Federal functions.” Under regulations for Indian self-determination, self-governance, surface leasing and grazing, and Indian Reservation Roads, for example, the Secretary has also reserved responsibility for inherently Federal functions, which a tribe may not assume. While a few commenters requested that, the Secretary define “inherently Federal functions,” the Secretary declined to do so. Under the Indian Self-Determination and Education Assistance Act (ISDEAA), as amended, the Secretary determines inherently Federal functions on a case-by-case basis.

In the final regulations at § 224.58, the regulations provide that in an application consultation meeting with the tribe the Director will identify specific services, consistent with the Secretary's ongoing trust responsibility and available resources, that the Department will provide to the tribe upon approval of a TERA. The Director will also discuss with the tribe the activities the tribe proposes to assume under a TERA. It is the Secretary's policy to make available to a tribe under an approved TERA all administrative functions that may be lawfully contracted under the ISDEAA, as amended, and the Federal Oil and Gas Royalty Management Act. It is the Secretary's intention to interpret and implement this part as stated in § 224.20.

In the final regulations, the Secretary substituted the term “activities” for “authority” and “responsibility” where “authority” and “responsibility” were used interchangeably in the proposed regulations for activities a tribe requests to assume in a TERA. In the proposed regulations, the terms “authority” and “responsibility” were also used in a manner in which they conceptually overlapped. In order to clarify meanings and distinguish what authority a tribe obtains and what other activities a tribe may assume under an approved TERA, the Secretary determined that the term “responsibility” relates to an inherently Federal function for which the Secretary must retain final decision-making. The term “authority” is properly used in connection with a tribe's review and approval of leases, business agreements, and rights-of-way to denote the effect of an approved TERA. Under an approved TERA, the Secretary is granting authority to a tribe to review and approve these instruments without Secretarial approval. Therefore, the Secretary has maintained use of the term “authority” when it applies to the Secretary's grant to a tribe under an approved TERA. The Secretary has replaced the term “authority” or “responsibility” with “activity” or “activities” when referencing what a tribe may assume from the Secretary, in addition to review and approval authority for leases, business agreements, and rights-of-way, under an approved TERA.

In addition to the issues discussed above, in several instances the Secretary found that clarification under the requirements of the Act were necessary, as discussed below.

Miscellaneous Provisions—In order to meet the Secretary's commitment to develop implementing regulations that conform to the requirements of the Act, where the Secretary found provisions in the regulations that incompletely reflected specific provisions of the Act, the Secretary revised them to accurately reflect the requirements of the Act. In addition, the Secretary included the following items in the final regulations after review and consideration.

Recordkeeping Requirements—Based on the Act's requirements, the Secretary carefully reviewed provisions for items required for inclusion in a TERA under § 224.63. The Secretary added §§ 224.63(k) and 224.56(l) to subpart B, requiring that tribes include provisions for recordkeeping in TERAs. Under these sections, tribes must create,

maintain and preserve records concerning the activities and leases, business agreements, and rights-of-way it enters into under a TERA. The Secretary must have available at periodic reviews and evaluations sufficient documentation to allow for meaningful review and evaluation of a tribe's energy development activities under a TERA. In addition, in the event a tribe voluntarily rescinds a TERA or the Secretary reassumes a TERA, the Secretary must ensure that the tribe has appropriate records to provide to the Secretary to allow the Secretary to carry out the activities the tribe assumed; ensure compliance with the leases, business agreements, or rights-of-way the tribe has entered into with third parties; protect physical trust assets; and discharge the United States' trust responsibility. Addition of this recordkeeping provision is not a substantive change since the Act and § 224.32(e) provide that under a TERA the tribe must provide the Director with “records and documents relevant to the provisions of an agreement.” In addition, the Act and the final regulations provide that upon a tribe's notifying the Secretary of a violation or breach, the Secretary may “review relevant transactions and reports.”

Definition of Violation or Breach—Upon the review of the regulations, the Secretary determined that the definition of “violation or breach” in § 224.30 should follow the definition in the Act. Therefore, in order to complete the definition of “violation or breach” in § 224.30, the Secretary added “other” before “violation” and added “by another party” after “violation.” The Secretary also added “any provision in” before “lease” and added, “under a TERA or any activity or occurrence under a lease, business agreement or right-of-way that constitutes a violation of” before “Federal or tribal environmental law.”

Provision for Hearing on Determination of Non-Compliance With TERA—The proposed regulations did not include a provision for a hearing for a tribe upon the Director's determination that the tribe is not in compliance with the terms of its approved TERA. The Secretary added a provision for a hearing for a tribe to § 224.121 at (a), along with a provision granting a tribe a reasonable opportunity to comply with the TERA. The provision was inadvertently left out of the proposed regulations. The Secretary wanted to acknowledge that a tribe has due process rights in this section.

II. Discussion of Final Rule

The final regulations include the specific regulatory provisions the Act required for TERAs: (1) Criteria for determining that a tribe has sufficient capacity to regulate the development of its energy resources; (2) a scope of, and procedures for, Secretarial review and evaluation of tribal action under a TERA, including provisions for review of transactions, reports and site inspections, and any other review processes the Secretary deems appropriate; (3) provisions for final agency actions after exhaustion of administrative appeals of Secretarial decisions regarding interested party petitions; and (4) a process and requirements for a tribe's voluntarily rescinding a TERA and returning to the Secretary the review and approval authority for future leases, business agreements and rights-of-way for energy resource development. The regulations also provide for a tribal application process for a TERA, tribal consultation throughout the pre-application and application processes, and a process for Secretarial review and approval of TERAs. The regulations require that the Secretary provide notice of, and an opportunity for public comment on, a final proposed TERA. In addition, the regulations require that a TERA include provisions that cover tribal environmental compliance measures and a process for review of any potential environmental impacts to areas affected by activities that the tribe could approve under the TERA. Further, the final regulations provide processes for tribes and the Secretary to take any action necessary to protect physical trust assets if activities undertaken under an approved TERA cause imminent jeopardy to a physical trust asset. The regulations also require that the Secretary take any action necessary upon a third-party lessee's non-compliance with a lease or agreement or right-of-way or a violation of a Federal or tribal environmental law results in imminent jeopardy to a physical trust asset.

Because an approved TERA is the decisional and operational document governing tribal authority to approve leases and business agreements on, and to grant rights-of-way, over tribal land, the Act requires that specific provisions be included in a TERA. In addition to requiring that a tribe provide information regarding its capacity to assume certain duties, a TERA, pursuant to the Act, also sets forth detailed provisions a tribe must include in a lease, business agreement, or grant of right-of-way to ensure environmental compliance, including reporting violations and breaches of leases, business agreements, and rights-of-way and violations of Federal and tribal environmental laws to the Secretary. TERAs must also specify that the Secretary will conduct periodic reviews and evaluations of a tribe's performance under a TERA. During the application consultation, the Director and the tribe will develop a periodic review and evaluation process that addresses the tribe's specific circumstances and the tribe will include the process in its final TERA. The regulations also provide that a tribe may voluntarily rescind its authority to the Secretary. Under the regulations, the Secretary may reassume all of a tribe's activities under a TERA under very specific circumstances. Consequently, the Secretary carefully reviewed provisions requiring items to be included in a TERA. The Secretary added §§ 224.63(k) and 224.63(l) to subpart B, to provide that tribes include a provision for recordkeeping in each TERA. Under this section, tribes must create, maintain and preserve records concerning the leases, business agreements, and rights-of-way it enters into under a TERA. The Secretary must have available at periodic reviews and evaluations sufficient documentation to allow for meaningful review and evaluation of a tribe's energy development activities under a TERA. In addition, in the event a tribe voluntarily rescinds a TERA or the Secretary reassumes a TERA, the Secretary must ensure that the tribe has appropriate records to allow the Secretary to carry out the activities; protect physical trust assets; and discharge the United States' trust responsibility. The Secretary does not consider the addition of this section to be a substantive change, since § 224.32(e) already requires that the tribe provide the Director with “records and documents relevant to the provisions of an agreement.”

III. Discussion of Comments on Proposed Regulations and Responses

The Secretary received input from 20 commenters on the proposed regulations published in the
Federal Register
on August 21, 2006 (71 FR 48626). Tribes, private companies, tribal organizations, non-governmental associations, a Federal government agency, and individuals provided written comments. A number of comments indicated that commenters were not familiar with provisions of the Act from which we developed the regulations. In responses to comments, the Secretary indicated where the Act required specific provisions in the

regulations. Public comments and the Secretary's responses are arranged first by general comments and then by comments to subpart and/or section. We have included responses only to substantive comments. Where commenters suggested minor editorial revisions such as changes in grammar or minor word changes that we accepted, we have made such changes to the regulations, but have not included these comments in the responses that follow. In addition, in final review of these regulations, we identified minor editorial revisions and provisions that required edits, either to clarify a section or to provide for agreement between the regulations and the Act. We made those changes. In a few instances, we identified items that we wanted to add to sections either to clarify the section or to provide for agreement between the regulations and the Act. We also made those changes. We did not make substantive changes in any of these instances, and have provided a discussion of them in this document.

Subpart A—General Provisions

Section 224.20 How will the Secretary interpret and implement this Part and the Act?

Several commenters requested that the Department impose specific timeline requirements on tribes for energy development activities that they manage under a TERA or mandate that tribes develop processes that parallel state and federal practices. In fulfilling the requirement to write implementing regulations for Title V—Indian Energy of the Act, we have imposed specific requirements where appropriate or mandated by the Act. In other places, we have allowed as much flexibility as possible to participating tribes in accordance with the mission of the Department to advance the objectives of the Indian Self-Determination and Education Assistance Act, as amended, and in recognition of tribal sovereignty. The regulations in § 224.20 incorporate the Department's attempt to balance requirements of the Act and the flexibility tribes need to facilitate economic development.

Section 224.30 What definitions apply to this Part?

There were several comments concerning definitions. Several commenters said that the use of the term “agreement” throughout the regulations, when referring to a Tribal Energy Resource Agreement (TERA), was confusing and could lead to misinterpretation of the regulations. We agree with these commenters, and throughout the final rule, we replaced the term “agreement” with “TERA,” where appropriate, and added a definition of TERA to § 224.30. In the Preamble of the proposed rule, the Secretary published an alternate definition of the term “tribal land” and sought comment on how the term “tribal land” should be defined. The Secretary received comments on both the proposed definition and the alternate definition of tribal land. The Secretary determined that the definition of tribal land at § 224.30, which follows the definition in the Act at 25 U.S.C. 3501(12), is the appropriate definition.

Some commenters suggested that the definition of “Interested Party” unfairly limits the interests of parties that could appeal actions taken under a TERA. The Secretary recognizes the limitation of the definition, but it follows the definition in the Act. In addition, there are other avenues for appeal of TERA approved actions in Subpart I Appeals. A few commenters suggested that the Secretary constrain the definition of Violation or Breach by inserting the word “significant” to indicate that only a violation or breach of a certain degree of seriousness would require Secretarial action. The definition the Secretary uses follows the definition in the Act. In addition, under the definition the Secretary has discretion to determine the seriousness of the violation or breach within the context of the approved TERA. Some commenters suggested excluding water from the definition of a “Physical Trust Asset.” The Secretary determined that the regulations must include a definition of “Physical Trust Asset” because the Secretary has a trust responsibility for natural resources and the Act mandates provisions dealing with a breach or violation that has caused or will cause “imminent jeopardy to a physical trust asset.” The Secretary determined that the inclusion of water as a physical trust asset is necessary to ensure that any water supply or body of water that exists on tribal land has protection from imminent jeopardy because of the action or inaction of a tribe or a third party under a TERA.

Section 224.40 How does the Act or a TERA affect the Secretary's trust responsibility?

One commenter asked that the regulations reflect the Secretary's ongoing accountability for stewardship of energy and other subsurface resources. Another commenter requested that the Secretary state the specific requirements of the trust responsibility. We note that the proposed regulations in § 224.40 states that the Secretary continues to maintain trust responsibilities (as defined by statutes and regulations under
U.S.
v.
Mitchell
, 463 U.S. 206 (1983) and its progeny) and that the regulatory language is consistent with the Act at 25 U.S.C. Section 3504(e)(6)(B). One commenter objected to § 224.40(d), which relieves the Secretary of liability for any losses resulting from a business agreement, lease, or right-of-way granted under a TERA, and claims that this provision is inconsistent with the Secretary's obligation to intervene where imminent jeopardy to a physical trust asset occurs under a business agreement, lease, or grant of right-of-way. However, this provision is entirely consistent with the language of the Act which states that the Secretary “ shall not be liable to any party (including any Indian tribe) for any negotiated term of, or loss resulting from the negotiated terms for, a lease, business agreement, or right-of-way executed pursuant to and in accordance with a tribal energy resource agreement approved by the Secretary.” The Secretary believes that the regulations outlined in Subpart E are sufficient to protect physical trust assets from imminent jeopardy conditions. Another commenter asked what form a TERA would take. The language of the Act and the regulations provide that an approved TERA is the Secretary's grant of authority to a tribe to approve leases, business agreements, or rights-of-way for specific energy development activities on tribal lands. The Secretary conditions this grant of authority on the Secretary's periodic review and evaluation of the tribe's compliance with the terms of the TERA and these regulations as mandated by Title V, Section 503 of the Energy Policy Act of 2005. The final regulations contain provisions under which the Secretary may reassume the authority granted to the tribe under a TERA. One commenter expressed concern that in the case of jointly held tribal land that § 224.41 should specifically refer to “tribal minerals.” However, the definition of tribal land in § 224.30 includes “land or interests” owned by a “tribe or tribes” and therefore jointly held mineral interests are covered in the final regulations.

Subpart B—Procedures for Obtaining Tribal Energy Resource Agreements

A commenter expressed concern that the Secretary would not fully consult with tribes on the range of opportunities available to determine the scope of energy development and regulatory authority that they may want to assume under a TERA. The commenter suggested that the Secretary apprise

tribes of financial resources available to help them develop the expertise and capacity to develop their energy resources. In response, the Secretary notes that the regulations under Subparts B and C require the Secretary to conduct a thorough consultation process with a tribe applying for a TERA that will lead to a comprehensive review of the capacity of a tribe to conduct the activities that are the subject of a TERA. In addition, under Subpart F, the Secretary will conduct periodic review and evaluation of the tribe's compliance with a TERA to identify any inadequacy in the tribe's capacity to perform under the requirements of its approved TERA. If the Secretary identifies any inadequacies in the tribe's capacity to implement the provisions of the TERA, the Secretary will communicate those concerns and incorporate those findings in a decision to allow the tribe's activities to continue or to reassume the authority granted to the tribe in the TERA. Finally, in § 224.63(h), the regulations require that the TERA identify the financial assistance, if any, that the Secretary has agreed to provide to the tribe to assist in the implementation of the TERA, including the tribe's environmental review of individual energy development activities. In addition, § 224.89 of the regulations requires that the Secretary and the tribe consult regarding the extent of Secretarial assistance, if any, to enforce leases, business agreements or rights-of-way entered into under a TERA.

Some commenters noted that the regulations should retain the greatest flexibility possible to allow tribes to acquire the appropriate level of involvement with a TERA.

The Secretary recognizes the need for ongoing consultation with tribes during the process of approval and implementation of a TERA. The regulations include a pre-application consultation process at Subpart B, §§ 224.51-53. In addition, §§ 224.58-62 outline the consultation process that begins with receipt of a tribe's formal application for a TERA. Finally, at many points throughout the TERA review, approval, and monitoring process the Secretary will consult with the tribe when making decisions about the tribe's TERA. Throughout the consultation processes and implementation of TERAs, the Secretary will strive to include officials at the local level as well as officials that deal with Indian affairs in other bureaus within the Department, relevant Federal agencies outside the Department, and the Department's advisory committee in discussions with the tribe.

Section 224.52 What may a tribe include in a TERA?

In § 224.52(c), the Secretary states that a tribe may assume under a TERA “* * * certain activities normally carried out by the Secretary, except for inherently Federal functions.” Several commenters objected to the exclusion of inherently Federal functions from a TERA. These commenters either wanted the exclusion deleted or expanded into a definition. In response, the Secretary notes that Congress did not expressly prohibit the use of the term “Inherently Federal Function,” and left this issue up to the Secretary's discretion when it outlined the Secretary's trust responsibility in the Act (25 U.S.C. Section 33504(e)(6)(A) and (B)). The Secretary therefore determined that exclusion of inherently Federal functions from a TERA is consistent with the Act and other legislation, specifically the Indian Self Determination and Education Assistance Act, as amended. Furthermore, the pre- and post-application consultation process between tribes and the Department outlined in the regulations should enable the tribes and the Department to reach an agreement as to what activities a tribe can assume under a TERA.

Section 224.53 What must an application for a TERA contain?

This section describes the various elements that a TERA application must contain. One commenter said that the provision in § 224.53 went beyond the provisions of the Act. However, the Secretary determined that the regulations are fully consistent with the Act's stated purpose of assisting Indian tribes in the development of their energy resources and furthering the goal of Indian self-determination. Furthermore, the specific provisions of the Act that are codified at 25 U.S.C. 3504(e)(2)(B)(i) provide that the Secretary shall approve a TERA if the Secretary determines that the Indian tribe has demonstrated sufficient capacity to regulate the development of its energy resources. At the tribe's discretion, the tribe may include the full range of development activities in its TERA application which the Secretary must approve or disapprove.

Several commenters requested that the regulations provide an “opt out” clause for tribes so that tribes may choose to pursue agreements outside the TERA process. The Secretary notes that a tribe is not required to enter into a TERA to pursue energy development activity. In fact, the Act and the regulations provide that it is a tribe's discretion whether to enter into a TERA. When applying for a TERA, a tribe may preserve the option to use the provisions of the Indian Mineral Development Act, or other existing authorities, to pursue energy development on tribal land by complying with the requirements in § 224.53(c)(1) and (2).

Some commenters seek to insert language to clarify that after a TERA goes into effect, tribes may amend existing leases, business agreements, and rights-of-way and exercise TERA regulatory authority under a TERA with respect to the existing agreements to promote efficient administration of energy resource development projects on tribal land. The Secretary agrees with the commenters and has added clauses (c)(3) and (e)(3) to § 224.53 to allow a tribe to state its intent to amend or modify (with the agreement of relevant third parties) leases, business agreements, and rights-of-way that exist when a TERA is approved, if those activities are directly related to the activities authorized by the TERA.

Section 224.55 Is information a tribe submits throughout the TERA process under this Part subject to disclosure to third parties?

Although this section states that a tribe may identify information it determines is confidential and proprietary, one commenter requested that the regulations outline the process the Secretary will use if it receives a Freedom of Information Act (FOIA) request concerning a TERA. The Secretary does not think it is necessary to outline the procedures in these regulations, because we will follow the procedures found at 43 CFR Part 2. This commenter also requested the addition of language to the regulations that would require that the Secretary consult with the tribe before responding to a FOIA request. The Department will comply with applicable sections of both FOIA (5 U.S.C. 552) and the Departmental regulations (43 CFR Part 2) in responding to FOIA requests for tribal information submitted in pre-application and application processes.

Section 224.59 How will the Director use the results of the application consultation meeting?

One commenter noted that this section does not sufficiently describe the factors the Secretary will consider based on the information from the application consultation meeting. In response, the Secretary revised the section so that it refers to the specific

sections in which the regulations describe the evaluation process.

Section 224.62 May a final proposed TERA differ from the original proposed TERA?

A commenter requested that time limits on the review process for a TERA change only with the consent of the affected tribe when changes are made between the original proposed TERA proposal and the final proposed TERA. We agree with this request and modified the language in § 224.62(b) to indicate that tribal consent is required.

Section 224.63 What provisions must a TERA contain?

Several commenters questioned the environmental review provisions in § 224.63(c). One commenter said that the regulations did not set a “real standard” for what would constitute an “appropriate” environmental evaluation for activities proposed under a TERA. Other commenters noted that the provisions are more stringent than what is required under the National Environmental Policy Act (NEPA). In response, the Secretary agrees that the provisions in § 224.63(c) go beyond the requirements of NEPA. However, this language is consistent with the requirements of the Act at 25 U.S.C. 3504(e)(2)(C)(i)-(ii). With respect to environmental review, we agree that it is the Secretary's responsibility to ensure that the environmental review process that the tribe proposes as part of the TERA is sufficient to ensure that the tribe identifies, evaluates, and mitigates foreseeable impacts during energy resource development. The Secretary will address the process and procedures to use in this evaluation, guided by the specifics of each tribe's TERA proposal as we implement these regulations.

Another commenter requested that the Secretary require that all tribes use the same royalty accounting methodology. However, in fulfilling the requirement to write implementing regulations for Title V—Indian Energy of the Act, also called the Indian Tribal Energy and Self-Determination Act of 2005, the Secretary has imposed specific requirements where appropriate or mandated by the Act. In other sections, the Secretary has allowed as much flexibility as possible to participating tribes in accordance with the mission of the Department to advance the objectives of the Indian Self-Determination and Education Assistance Act, as amended, and in recognition of tribal sovereignty.

One commenter noted that it is important to provide that the option for a lease, business agreement, or right-of-way may have retroactive application from the date it becomes effective because parties in commercial transactions often fix the operative date of a transaction as the date upon which an agreement was reached. The Act provides that a lease, business agreement, or right-of-way becomes effective when a tribe executes it and mails it to the Secretary. Therefore, in these regulations the Secretary agrees that commercial considerations may necessitate a retroactive applicability date for a lease, business agreement or right-of-way. We modified § 224.63(c)(14) to allow for a lease, business agreement, or right-of-way to become applicable retroactively by agreement of the tribe and other parties, under certain conditions.

Another commenter noted that in the proposed regulations we used the word “reassume” in § 224.63(c)(13), but the Act uses the word “suspend.” We have made the word change to make the regulations consistent with the Act. The same commenter also suggested re-designation for clauses (c)(15) to (c)(21). We agree with the suggestions, in part, and have changed § 224.63(c)(15) to § 224.63(d) and have similarly re-designated the clauses that follow from § 224.63(c)(16) to (21) to § 224.63(e) to (j).

Section 224.67 What must the Secretary do upon the Director's receipt of a final proposed TERA?

One commenter said that it was not clear if the public notification of a TERA application would also provide access to the proposed TERA, and suggested that the public should have sufficient time to review any proposed TERA. We note that the regulations clearly state at § 224.67(a) that the
Federal Register
notice shall advise the public on how to request and receive copies of the final proposed TERA from the Secretary. Since this is a NEPA process (40 CFR 1502.25(a)), the Department will follow the longstanding procedures of the Federal government outlined in its NEPA public notice procedures to allow the public sufficient time to review the proposed TERAs.

Subpart C—Approval of Tribal Energy Resource Agreements

Section 224.70 Will the Secretary conduct a review of a final proposed TERA under the National Environmental Policy Act (NEPA)?

Several commenters asked that we insert clarifying language in § 224.70 that the Secretary's NEPA review is triggered by a tribe's submittal of a TERA for review and approval, but that such review does not extend to subsequent leases, business agreements, or grants or rights-of-way that a tribe may enter into with third parties pursuant to an approved TERA. The Secretary agrees that this is the intent of the Act and we have added language to § 224.70 of the regulations to make this clear.

One commenter stated that the relationship between these regulations, NEPA, and other Federal laws was unclear. The Secretary believes that the language in the proposed regulations at § 224.70 is consistent with the NEPA public notice and public comment requirements at 40 CFR 1503 and 1506. Furthermore, the Secretary will comply with all applicable Federal laws in the TERA review and approval process. In addition, one commenter noted that some projects might not be viable unless a tribe can opt out of the environmental review process required to be included in the TERA. We note that the proposed regulations already addressed this issue at § 224.53(c)(1), which we have retained in the final regulations. This provision of the regulations provides a tribe an opportunity to identify resources on tribal land or parts of tribal land that the tribe does not want to include in the proposed TERA.

Section 224.72 How will the Secretary determine whether a tribe has demonstrated sufficient capacity?

One commenter objects to the Secretary approving a TERA because other provisions in the Act that would build tribal capacity have not been put in place. Until these provisions have been implemented for a considerable time, according to the commenter, all tribes should be prevented from taking advantage of the TERA program. In response, the Secretary states that, in fulfilling the Act's requirement to develop implementing regulations for Title V—Indian Energy of the Act, also called the Indian Tribal Energy and Self-Determination Act of 2005, we have imposed specific requirements where appropriate or mandated by the Act. In other places, we have allowed participating tribes as much flexibility as possible in accordance with the mission of the Department to advance the objectives of the Indian Self-Determination and Education Assistance Act, as amended, and in recognition of tribal sovereignty.

In addition, given the varying experiences of tribes with managing their energy resources, the Secretary cannot ignore the intent and will of Congress in the Act, which is to provide tribes with an additional tool to enhance their financial sovereignty while

requiring a thorough evaluation of the tribe's capacity to develop its own resources. The Secretary will diligently carry out the regulations' requirement that the Secretary evaluate a tribe's technical, financial, and administrative capacity in full consultation with the tribe and in response to individual proposed TERAs. A couple of commenters indicated that the language in this section should make it clear that the Secretary's determination of tribal capacity to manage energy development under a TERA is limited to the administrative and regulatory activities the tribe seeks to assume from the Secretary, and not specific projects that a tribe may seek to develop under a TERA. In response, we have made changes consistent with these comments. Finally, one commenter objected to a provision in § 224.72(i) that allows the Secretary, in evaluating tribal capacity to assume energy development regulatory authority, to determine “any other relevant factors” for consideration. In response to this comment, the Secretary notes that the Act specifically provides this discretion to the Secretary.

Section 224.73 How will the scope of energy resource development proposed in a tribe's TERA affect the Secretary's determination of the tribe's capacity?

One commenter stated that the language in this section again suggests that a TERA will include a description of each energy resource development subject to a TERA and that tribes will have to go through multiple capacity determinations as each proposed development project arises under a TERA. We agree that this is not the intent of the Act. We have revised the language in this section to indicate that the Secretary's capacity determination will include a determination as to each type of energy resource development subject to the TERA which the tribe seeks to regulate and each type of administrative or regulatory activity the tribe proposes to assume. Furthermore, the section now makes it clear that the Secretary's review of a TERA is limited to activities specified by its provisions. Another commenter requested that we change the word “manage” in § 224.73 to “monitor,” stating that this would be consistent with language in § 224.71(b). The Secretary believes that the word “manage” is consistent with intent of the Act, and, in response, has made a change in §§ 224.71(b) and 224.72 to refer to tribe's intent to “manage” regulatory activities under a TERA.

Section 224.75 What must the Secretary do upon approval or disapproval of a final proposed TERA?

In this section, a commenter objected to the inclusion of the terms “if any” in reference to revisions in § 224.75(b)(2). The commenter stated that addition of “if any” contradicts the language and one of the purposes of the Act, which is to “provide the Indian Tribe with an opportunity to revise and resubmit the tribal energy resource agreement.” Under the Act, if the Secretary disapproves of the submitted TERA, the Secretary is required to state the “changes or other actions” a tribe is required to submit to address the Secretary's concerns. Therefore, the commenter recommends that we delete the phrase “if any.” The Secretary agrees with this comment, and we have made the suggested change. Another commenter suggested that in § 224.75(c), where there is a reference to complying with FOIA, that the regulations refer to the disclosure procedures in § 224.55. The Secretary agrees that this proposed change would clarify the regulations and has eliminated the references to FOIA in § 224.75(c).

Subpart D—Implementation of Tribal Energy Resource Agreements

Section 224.82 What activities will the Department continue to perform after approval of a TERA?

A commenter said that § 224.82(e) is ambiguous and needs clarification. The commenter specifically requested that the reference to Department “activities” should be changed to “services.” The commenter also stated that the phrase “does not affect” is unclear. We agree with the comments about the “does not affect” language and have revised this section. For the purposes of consistency with other provisions of the regulations, we are not changing “activities” to “services.” Another commenter sought the addition of a subsection that would state that the Department would provide “access to leases, agreements, rights-of-way, and other contracts entered into between the tribe and any third party.” The Secretary believes the existing language in § 224.82(a) and (e) has the same effect as proposed by this commenter. In addition, we note that when a tribe enters into a TERA, the Department's existing responsibilities to provide information or services to the tribe remains unchanged.

Section 224.84 When may a tribe grant a right-of-way?

One commenter said that this section contained too many limitations on a tribe's ability to grant a right-of-way. The Secretary notes that the limitations in the regulations regarding rights-of-way are fully consistent with the Act. Another commenter suggested that the authority for “* * * renewals of leases and rights of ways and other rights under the current TERA regulations should be included and be clear and flexible enough to allow a project to retain its lease or other rights as long as a project is being depreciated.” The Secretary agrees with this comment. In response, we added a § 224.86(d) that states that when a tribe enters into a lease or business agreement or grants a right-of-way, at its discretion, this tribe may renew the lease, business agreement, or right-of-way as long as the TERA remains in effect and as long as the tribe still has the authority to approve leases and business agreements, and grant rights-of-way under the TERA.

Section 224.85 When may a tribe enter into a lease or business agreement?

A couple of commenters said that § 224.85 is too narrow in its limitation of energy resource development activities and it could be interpreted to preclude tribes from entering into agreements for processing minerals or other activities which include non-tribal sources of production. These commenters suggested that the Secretary delete this section of the regulations or modify it to indicate that a tribe may enter into a lease or business agreement for the purpose of energy resource development on “or affecting” tribal land. In response, the Secretary notes that the Act limits energy resource development projects to those that develop resources on tribal land as defined in § 224.30 and so has not made the requested change.

Section 224.86 Are there limits on the duration of leases, business agreements, and rights-of-way?

One commenter noted that no mention was made of how to deal with renewals of leases, business agreements, and rights-of-way under a TERA. As noted before, the Secretary agrees with this comment and in response has added a § 224.86(d) that states that when a tribe enters into a lease or business agreement or grants a right-of-way, it may be renewed at the discretion of the tribe as long as the TERA remains in effect and as long as the tribe still has the authority to approve leases, business agreements, or rights-of-way under the TERA.

Another commenter requested that we change the phrase “in terms” to “on the duration” to clearly indicate that this section deals with the temporal existence of leases, business agreements,

and rights-of-way under a TERA and not the legal “terms” and conditions. The Secretary agrees with this comment and has made the requested change.

Section 224.87 What are the obligations of a tribe if it discovers a violation or breach?

A commenter suggested we clarify this section to state that Secretarial responsibilities also apply to third-party violators and that § 224.89 should be cross-referenced in these other sections to better clarify the delineation of actions by the Secretary. In response to this comment we have made specific reference to third party actions in § 224.87 and in the § 224.30 definition of imminent jeopardy.

Subpart E—Interested Party Petitions

Section 224.100 May a person or entity ask the Secretary to review a tribe's compliance with a TERA?

One commenter suggested that we delete this section because it creates a conflict of interest for the Secretary in its requirement that the Secretary act as an arbiter of a dispute between a tribe and a third party petitioner. The commenter stated that this would be a clear violation of the Secretary's trust responsibilities. Another commenter suggested that this Subpart implies that a tribe waives its sovereign immunity when it enters into a TERA. The Secretary notes that the language in Subpart E regarding the rights of a third party petitioner is identical to language in the Act codified at 25 U.S.C. 3504(e)(7)(A) and (B). The Act expressly provides that any person or entity, who is an interested party, as defined in the Act, may file a petition alleging that a tribe is not complying with a TERA. The Act also provides that an interested party must first exhaust tribal remedies if the tribe has enacted laws, regulations, or procedures providing tribal remedies. There is no waiver of sovereign immunity implied or intended in the Act or these regulations.

Section 224.101 Who is an interested party?

Several commenters objected to this regulatory provision as too broad, and permitting “anyone who claims a hypothetical or other form of inadequate `interest' to participate as an ‘interested party' ” or that “* * * such a loose standard may create a cause of action where no actual standing exists.” One commenter requested that we define “Interested Party” in § 224.101 as a person or entity “that has demonstrated that a legally cognizable interest of the person or entity in property or a resource has sustained, or will sustain, an adverse environmental impact because of a tribe's failure to comply with an agreement.” The commenter notes that this suggested definition is consistent with the Department's existing administrative appeal practice at 43 CFR 4.410(d) (requiring a legally cognizable interest). In response, the Secretary notes that Congress defined this term in the Act as codified at 25 U.S.C. 3504(e)(7)(A). In developing the regulations, the Secretary cannot limit the definition when the Act does not do so.

Section 224.106 If a tribe has enacted tribal laws, regulations, or procedures for challenging tribal action, how must the tribe respond to a petitioner's challenge?

One commenter noted that while under § 224.106(a) a tribe must respond within a “reasonable” time, the regulation should include a specified time period no longer than 30 days. In fulfilling the requirement to write implementing regulations for the Act, the Secretary has imposed specific requirements where appropriate or mandated by the Act. In other places, such as this section, the Secretary has allowed as much flexibility as possible to participating tribes in accordance with the mission of the Department to advance the objectives of the Indian Self Determination and Education Assistance Act, as amended, and in recognition of tribal sovereignty.

Section 224.107 What must a petitioner do before filing a petition with the Secretary?

One commenter stated that § 224.107(a) should explicitly require a petitioner to use “any appeals or appellate court review” allowed under the tribe's laws. The inclusion of such language would ensure that a petitioner must proceed through all available tribal remedies prior to filing a petition with the Secretary. We have added “including any tribal appeal process” to § 224.107. In addition, we note that § 224.109(c) requires a petitioner to include specific facts demonstrating that the petitioner has exhausted tribal remedies in the petition. Also, in § 224.113, a tribe may state whether the petitioner has exhausted tribal remedies in its response to a petition.

Another commenter said that this section lists as a prerequisite to filing a petition that a petitioner has participated in a tribal hearing or comment process regarding allegations of tribal non-compliance with its TERA. The commenter suggests that a petitioner should have participated in a tribal hearing or comment process regarding the tribe's proposed activity, if such a process was provided, in addition to exhaustion of tribal remedies, if any, for alleging non-compliance with a TERA. The Secretary believes that this would place an unfair burden on a petitioner to have known with foresight the full range of potential impacts and their magnitude prior to their implementation. The Secretary believes that the provision, as written, reflects the intent of Congress.

Section 224.110 When may a petitioner file a petition with the Secretary?

One commenter recommended that we shorten to 30 days the 45-day period for filing a petition that § 224.110(a) allows after receipt of the tribe's written decision on a petition, noting that Act did not specify a period for filing a petition for review and 30 days should be adequate for doing so. The Secretary agrees with the commenter and has made the change.

Section 224.115 When must the Director make a threshold determination about a petition?

A commenter objected to § 224.115(c), which allows the Director to reject the resolution mutually agreed upon by the tribe and the petitioning party. The commenter expressed the opinion that resolution of such disputes should be encouraged. The Act provides that “[t]he Secretary [shall take certain steps to ensure compliance with a TERA] only if the Indian tribe fails, refuses, is unable to cure or otherwise resolve each claim made in the petition within a reasonable period, as determined by the Secretary, after the expiration of the [consultation] period.” 25 U.S.C. 3504(e)(7)(C)(iii)(II). The commenter understands the language “as determined by the Secretary” gives the Secretary the right to determine what is a reasonable period, not to reject a settlement that the tribe and petitioning party have reached. The commenter suggests changing “may” to “will” in line 7 of § 224.114 and deleting § 224.115(c). However, the Secretary believes that the existing language in this section is consistent with the intent of the Act, and fulfills the Department's residual trust responsibility as noted in the Act (25 U.S.C. 3504(e)(6)(A)(I) and (ii)) and Section 3504(e)(6)(B)) to consider the best interests of the tribe and the protection of trust resources in the Secretary's decision-making. Therefore, the Secretary declines to make the suggested change.

Section 224.117 When must the Director dismiss a petition after making a threshold determination about a petition?

A commenter suggested that § 224.117(b) include as a basis for dismissal that a petitioner's lack of participation in a tribal hearing or comment process regarding the tribe's proposed activity, as well as failing to exhaust tribal remedies, if any, for alleging non-compliance with a TERA. The Secretary determined in response to a comment for § 224.107 that participation in a tribal hearing or comment process regarding a tribe's proposed activity under a TERA as a prerequisite for filing a petition would place an unfair burden on a petitioner and declined to make the suggested change. The Secretary also declines to make the suggested changes to § 224.117(b) because such a change would be inconsistent with the requirements in § 224.107 and would impose more requirements on a petitioner than Congress intended.

Section 224.119 How must the Director proceed if the Director does not dismiss the petition based on a threshold determination?

A commenter suggested that, if a petition is not dismissed based on threshold determinations, the Secretary's action on a petition should be limited to that necessary to cure or otherwise resolve each claim of adverse environmental impact to the petitioner's interest. The Secretary disagrees with the comment by noting that the Act expressly provides that the basis for an interested party's petition is a claim of a tribe's noncompliance with a TERA (5 U.S.C. 3504(e)(7)(B)). In addition, the Secretary's required consultation with a tribe after receipt of an interested party's petition is about “any noncompliance alleged in the petition” (25 U.S.C. 3504(e)(7)(C)(i)(II)). Also, if a tribe “denies, or fails to respond to, each claim made in the petition * * * or fails, refuses, or is unable to cure or otherwise resolve each claim made in the petition, * * * the Secretary shall determine whether the Indian tribe is not in compliance with the TERA.” (25 U.S.C. 3504(e)(7)(C)(iii)(I) and (II) and (e)(7)(D)(I)).

While we have maintained the general petition process included in Subpart E of the proposed regulations, after further review we have modified sections of Subpart E that did not accurately reflect the provisions of the Act or that required clarification, as follows:

Under the statutory scheme, Congress is providing third parties who may be interested parties, as defined in the Act, the opportunity to request that the Secretary review a claim that a tribe is not complying with a TERA. However, before a person or entity that may be an interested party may file a petition with the Secretary, the person or entity must exhaust tribal remedies. Under § 224.105(a) we clarified that tribal laws, regulations, or procedures establish “tribal remedies” rather than “a process for hearing and comments” because under § 224.105(b) tribal remedies provide a person or entity the opportunity to file a petition with the tribe. We have added a new provision at § 224.107 to clarify that during the tribal remedy process a tribe may resolve the claims in a petition with the petitioner. The new provision does not provide for how a tribe may resolve the claims or require that the Director make any determination on the tribe's resolution during the tribal remedy process. Under the final regulations at § 224.106(c) a person or entity that files a petition becomes a petitioner. In § 224.111 we added as a provision under which a petitioner may file a petition with the Secretary that the tribe failed to provide a person or entity that may be an interested party with copies of applicable tribal laws within a reasonable time of a request.

In review of the proposed regulations, the Secretary finds that proposed § 224.112 inaccurately states that after a petition consultation with the Director, a tribe “may” respond to the petition. Consequently, § 224.112 is re-numbered to § 224.113 and we have changed “may” to “must” to reflect the Act's requirement in 25 U.S.C. 3504(e)(7)(C)(ii). The Secretary also finds that § 224.113 states that a tribe “may or may not” dispute the petitioner's allegations. Consequently, § 224.113 is re-numbered to § 224.114 and we have changed this provision to state that a tribe “must respond to any claims made in the petition * * *” to reflect the Act's requirement in 25 U.S.C. 3504(e)(7)(C)(ii). We have also added subsection (b) to state that a tribe “must cure or otherwise resolve each claim of noncompliance made in the petition” as required under 25 U.S.C. 3504(e)(7)(C)(iii).

In review of comments on proposed § 224.119 on threshold determinations, the Secretary finds that proposed § 224.119 does not accurately reflect when the Director makes a threshold determination or what the threshold determination should be. The Act requires the Secretary, upon receipt of a petition, to notify the tribe of the petition within 20 days of receipt and initiate consultation with the tribe. The Act requires the tribe, within 45 days of completion of the consultation, to respond to the claims in the petition. Following consultation, the tribe has the opportunity to deny or respond to the claims in the petition and then has the opportunity to resolve or otherwise cure the claims. The Act requires the Director to make certain threshold determinations on a petition following consultation with the tribe before proceeding to review a tribe's compliance with a TERA, not upon receipt of the petition (25 U.S.C. 3504(e)(7)(C)(iii) and (e)(7)(D)(I). The Act at (e)(7) (D)(I) requires that the Director investigate a tribe's compliance with a TERA within 120 days of receipt of a petition, only upon making a threshold determination under 25 U.S.C. 3504(e)(7)(c)(iii). The threshold determinations the Director must make are whether the tribe has denied or failed to respond to each claim made in the petition or whether the tribe has failed or refused or is unable to cure or otherwise resolve each claim made in the petition (25 U.S.C. 3504(e)(7)(C)(iii)(I) and (II)). The Director may not proceed with a review of the tribe's compliance with a TERA unless the Director determines that one of the threshold determinations is met (25 U.S.C. 3504(e)(7)(C)(iii)). It is only upon the Director's determination that one of the threshold determinations is met that the Director reviews the petition and the tribe's response, if any, makes a written determination on the tribe's compliance with a TERA, and offers the tribe an opportunity for a hearing and a reasonable opportunity to attain compliance (25 U.S.C. 3504(e)(7)(E)). The Director may not take action to ensure compliance with the TERA under 25 U.S.C. 3504(e)(7)(D)(iii) before complying with 25 U.S.C. 3504(e)(7)(E)(i)-(iii). Therefore, the Secretary has modified proposed § 224.112 through § 224.122 in final § 224.113 through § 224.120 to accurately reflect the provisions of the Act.

The Secretary has added a new provision in § 224.117 that the Director provide the tribe an opportunity for a hearing, as required by 25 U.S.C. 3504(e)(7)(C)(iii)). New provision § 224.118 requires that a tribe must respond in writing to the Director's opportunity for a hearing within 20 days and, if the tribe does not respond, the Director will proceed to a determination of whether the tribe is in compliance with the TERA. Requiring the tribe to respond to the opportunity for a hearing allows for a timely hearing if the tribe requests it and allows the Director to

make a determination on compliance under the petition without undue delay.

Subpart F—Periodic Reviews

Section 224.132 How does the Director conduct a periodic review and evaluation?

One commenter raised concern that a tribe's provision of records and documents in the TERA review and evaluation process raises confidentiality issues similar to those involved in the initial application process. They recommend that the Secretary add a provision concerning record and document confidentiality. The Secretary agrees with the concern expressed in the comment. Our change is to insert in § 224.132(e) that the tribe should identify any information in these submitted records and documents that is confidential and proprietary. Specific exemptions to disclosure under the Freedom of Information Act, or other statutory protections against disclosure, may apply and preclude disclosure of this information to third parties.

Section 224.140 What must the Secretary do if the tribe fails to respond to or does not comply with the Director's order?

Two commenters raised a concern that under this section the Secretary could make a decision to reassume all activities the tribe assumed under the agreement if the tribe does not comply or respond to the Director's order to cease conduct or take a specific action to correct a condition that caused imminent jeopardy to a physical trust asset. These commenters requested that flexibility be added to this requirement so that the Secretary could reassume either all or a part of the activities the tribe assumed under the TERA. The Secretary recognizes this concern, but notes that the Act at 25 U.S.C. 3504(e)(2)(D)(ii) does not provide the desired flexibility. The Act requires total reassumption where the Secretary determines there is imminent jeopardy to a physical trust asset and the tribe does not comply or respond to the Director's order to cease conduct or take a specific action to correct a condition that caused imminent jeopardy to a physical trust asset.

Subpart G—Reassumption

Section 224.151 When may the Secretary reassume activities?

One commenter in this section suggested that when the Secretary invokes reassumption procedures because of a tribe's actions or inaction, such reassumption should be limited to the specific activity (or inactivity) giving rise to the reassumption, and not to the TERA in its entirety. The commenter further suggests that, at the very least, the regulations should give the Secretary discretion to reassume only a specific activity. In the case of reassumption in this section, the Secretary notes that the intent of the existing language of the regulations is consistent with the Act at 25 U.S.C. 3504(e)(2)(D)(ii) where there is imminent jeopardy to a physical trust asset. The language of the Act at 25 U.S.C. 3504(e)(7)(D)(iii)(II) refers to a condition of non-compliance with the conditions of the TERA that do not rise to the level of imminent jeopardy and gives the Secretary discretion to rescind all or part of a TERA. However, if the Secretary makes a decision to rescind all provisions of the TERA based on a finding of imminent jeopardy to a physical trust asset, then the Secretary must reassume all of the activities and authority under the TERA.

Another commenter requests the insertion of language in this section that states reassumption is “based on a tribal violation of an agreement or applicable Federal law.” The purpose of this change would be to clarify the underlying legal basis required for the Secretary's reassumption. However, the Secretary believes that the regulations already adequately deal with this issue and declines to make this addition.

Section 224.152 Must the Secretary always reassume the activities upon a finding of imminent jeopardy to a physical trust asset?

A commenter recommends that the text of this section should correspond to the question and should address situations involving imminent jeopardy to a physical trust asset. The Secretary believes that the section adequately responds to the question and refers to the flexibility that the Secretary has to take action when there is imminent jeopardy to a physical trust asset. The commenter also suggests that the regulations note that under the Act, (25 U.S.C. 3504(e)(2)(D)(ii), the time period for reassumption appears to expire once the violation and any condition that caused the jeopardy is corrected. The Secretary agrees with this assertion and notes that §§ 224.154 and 224.157 deal with setting conditions and a timeline for a reassumption or termination of the reassumption process.

Section 224.160 How will reassumption affect a TERA?

One commenter noted a conflict in the regulations in which § 224.160 states that reassumption of a TERA applies to all activities undertaken under a TERA and § 224.150 of Subpart G titled “What is the purpose of this subpart?” states that the subpart explains when and how the Secretary may reassume all or certain activities included within an agreement. The Secretary agrees that these sections of the regulation conflict with each other and notes that the question of reassumption as stated in the Act applies to all activities and resources transferred under a TERA. The Secretary has made changes to both sections to make them consistent and clarify their meaning. In addition, the Secretary made a change to § 224.137(d) to make clear that in case of a finding of non-compliance with a TERA or other applicable Federal law, where said non-compliance does not cause imminent jeopardy to a physical trust asset, the Secretary has the discretion to suspend or rescind a part or all activities approved under a TERA.

Subpart H—Rescission

Section 224.170 What is the purpose of this subpart?

A commenter states that the reassumption and rescission processes should allow for reassumption of specific activities and should not automatically require a tribe to relinquish all activities assumed under a TERA. The Secretary does not agree with this contention. We believe that the language in the regulations is consistent with the Act. When a rescission of a TERA takes place because of a voluntary action by the tribe, it must be done in its entirety. It is only when the rescission is a result of Secretarial action to remedy a finding of non-compliance with the TERA or other applicable Federal laws that the rescission action can be taken in part or whole.

Section 224.172 May a tribe rescind only some of the activities subject to a TERA while retaining a portion of those activities?

One commenter suggests the addition of a new sentence to the end of this section that states, “Nothing in this section shall prohibit the Secretary and a tribe from amending an agreement to change its scope.” Another commenter agrees and states that the Secretary's authority could, through an amendment to a TERA, permit a tribe to rescind a portion of a TERA voluntarily. The commenter notes that this would appear to be precluded by § 224.172 in which the Secretary appears to have limited rescission of a TERA to an all or nothing proposition. If the Secretary feels that that is the only statutorily permitted form of unilateral tribal rescission, the

commenter suggests, the Secretary should nonetheless make provision for a mutually agreed upon amendment of a TERA so that the scope of a TERA can be reduced without negating the entire TERA. The commenter argues that it is foreseeable that, in many instances, the precise scope of the optimal TERA will be developed over time and urges the Secretary to retain and apply a flexible approach to TERA amendments. The Secretary believes that the language in this section is consistent with the intent of Congress. However, the Department has added a § 224.66 to allow for a reduction in the scope of a TERA. The Secretary believes that, the addition of this section preserves the flexibility of the tribe and the Secretary while meeting the intent of Congress.

IV. Procedural Matters

Regulatory Planning and Review (Executive Order 12866)

This rule is a significant rule and the Office of Management and Budget has reviewed this rule under Executive Order 12866. We have made the assessments required by E.O. 12866 and the results are summarized below and can be obtained by writing to the address in the addressees section.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. These regulations create a process that will allow tribes to enter into an agreement with the Department whose intent is to promote tribal oversight and management of energy and mineral resource development on tribal lands. Approval of a Tribal Energy Resource Agreement (TERA) under the requirements of the regulations and will not, by itself, result in energy development related leases, business agreements, or rights-of-way.

It is important to note that there is a great amount of flexibility in the construction of a TERA with the Department. A TERA can cover energy development on all or part of the tribal land controlled by the tribe for development of energy resources (renewable and/or nonrenewable); including, but not limited to, natural gas, oil, uranium, coal, nuclear, wind, solar, geothermal, biomass, and hydrologic. Energy resource development may include the following types of arrangements between a tribe and private industry or a tribal energy resource development organization (in which the tribe is a partner):

Lease
defined as a written agreement, or modification of a written agreement, between a tribe and a tenant or lessee, whereby the tenant or lessee grants a right to possession of tribal land or energy mineral resources for purposes of energy resource development.

Business agreement
which includes (1) Any permit, contract, joint venture, option, or other agreement that furthers any activity related to locating, producing, transporting, or marketing energy resources on tribal land; (2) Any amendment, supplement, or other modification to such an agreement; or (3) Any other business agreement entered into or subject to administration under a TERA.

Right-of-Way
which means an easement, right, or other authorization over tribal lands, granted or subject to administration under a TERA, for a pipeline or electric transmission or distribution line that serves a facility located on tribal land related to energy resource development.

The ability to derive a quantitative estimate for the overall impact on the economy of these regulations is highly speculative because of the varying size of Indian Tribes, their level of infrastructure and economic development, tribal development expertise, and the type of energy resource that they possess. In addition, it is not known how many tribes will choose a TERA as a development vehicle, since the decision to enter into a TERA is voluntary. In addition the large degree of flexibility with regard to the range of regulatory activities, type of business arrangements, and type and scale of energy development that a tribe may wish to a engage in makes any quantitative analysis of the costs or benefits to a tribe highly uncertain.

The business climate for companies that seek to negotiate for leases, business agreements or rights-of-way for energy development projects on tribal land (as defined in § 224.30) would not change substantially because of these regulations. National or regional economic costs of energy development (i.e. coal vs. natural gas; wind vs. coal) and other market forces (e.g., location, access to transmission networks, cost of technology, etc.) would be the most likely principal drivers for companies that want to enter into energy development-related business arrangements than whether a tribe is negotiating under Indian Mineral Leasing Act, Indian Mineral Development Act or TERA regulations.

One benefit, to both industry and tribes that may occur, could be a reduction in the time needed to complete negotiations and enter into contracts for proposed projects. Presumably once a TERA is final a tribe's capacity to conduct negotiations, complete contractual arrangements, and conduct any needed technical analyses leading to the commencement of operations, would increase with time and could lead to an increased ability of tribes and third parties to more readily take advantage of and adjust to current market conditions without waiting for Departmental approval.

The requirement for submittal of commercial and financial information by businesses contracting with tribes should not change markedly because the regulations require tribes to adhere to administrative practices similar to what the Department already requires. Therefore, compliance costs for businesses should largely remain the same as in the pre-TERA climate.

For tribes, one factor that could increase their administrative costs would be, in some cases, an increased need for creating, maintaining and preserving records of their technical and financial arrangements with industry. These record keeping requirements now largely are the responsibility of the Department.

These recordkeeping requirements are necessary because of the Department's residual trust responsibility under the Act. In the case of a reassumption by the Department or a voluntary rescission by a tribe of authority that is granted through a TERA the Department must be able to regain effective regulatory and management control over any energy development projects on tribal trust land. However, these costs should be largely related to the initial creation of records management systems, acquisition of physical space, and training of staff for implementation.

Another factor that could increase tribal costs would be the assumption by the tribe of costs for assessing potential environmental impacts and creating an ongoing environmental review process for activities covered by a TERA. The regulations as authorized by the Act require a tribe to develop these internal capacities and programs or to identify how they will acquire these capacities externally.

Although a tribe is permitted to identify in a proposed TERA, any Departmental resources that they could use to fund administrative and technical programs that they want to assume activities there is no guarantee that an affirmative decision by the Department would provide enough financial resources to allow the tribe to not incur increased cost. However, the magnitude of these costs is highly uncertain, again because of the large variation in the

range of activities and scale of energy development that a tribe may seek to assume.

The Department believes that the benefits derived from implementation of these regulations are in keeping with Congressional and Departmental goals for advancing tribal self-governance and far outweigh the potential costs as described. Furthermore, these regulations are not unduly burdensome to Indian Tribes, private industry, or consumers and will actually serve to decrease the workload currently in place.

(2) The regulations do not preclude tribes from using other existing regulations to pursue economic development opportunities and so will not create serious inconsistency or otherwise interfere with any action taken or planned by another agency. The main benefit of this rulemaking is an enhanced self-governance opportunity for tribes. By implementing the provisions of the Act, these regulations will further the goal of Indian self-determination, that is a longstanding goal of the Federal Government and the Department.

(3) The creation of a TERA between a tribe and the Department does not affect other entitlement, grant, or loan programs with the Department or any other Federal agency. Furthermore, this rule does not establish new user fees, or restrict in any way any other existing user fees. Therefore, these regulations will not affect any such programs or the rights or obligations of their recipients.

(4) These regulations will not create serious inconsistency with existing laws or executive orders or raise novel legal or policy issues. As stated before the main benefit from these regulations is an enhanced self-governance opportunity for tribes. Implementation of the provisions of the Act is consistent with the Indian Self Determination and Education Assistance Act, as amended. These regulations further the development of Indian self-determination, which is a longstanding goal of the Federal Government and the Department.

Regulatory Flexibility Act (RFA)

The Department certifies that this rule will not have a significant economic effect on a substantial number of small entities as defined under the RFA (5 U.S.C. 601
et seq.
). Most of the costs for complying with this rule would be information collection costs. The total estimated annual burden hours for responding to the information collection requirements in this rule are 10,752. Respondents to the information collection required by these regulations would need to acquire the services of individuals in the project management and energy, environmental, financial and legal analyses fields as well as administrative service staff. The annual non-hour burden associated with the regulations is $48,200 for office and maintenance expenses associated with preparation of reports and a variety of correspondence. When added to the salary and benefits for personnel, the annual industry-wide cost for the information collection burden in this rule would be about $375,795. Therefore, complying with “Part 224—Tribal Energy Resource Agreements under The Indian Tribal Energy Development and Self-Determination Act” should not be a significant financial burden. For a rule with these relatively low projected costs, a Regulatory Flexibility Analysis is not required. Accordingly, a Small Entity Compliance Guide is not required.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

This rule is not a major rule under SBREFA (5 U.S.C. 804(2)) because:

(a) Most of the costs for complying with this rule would be information collection costs. The total estimated industry-wide cost for the information collection burden in this rule would be about $375,000. Therefore, the rule will not have an annual effect on the economy of $100 million or more.

(b) The approval of a Tribal Energy Resource Agreement will not, by itself, result in energy development related leases, business agreements, or rights-of-way. Therefore, the regulations will not cause a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic areas.

(c) Because the regulations do not directly result in energy resource development projects, they will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act (UMRA)

Participation in the development of Tribal Energy Resource Agreements as outlined in these regulations is voluntary. In addition, there are regulatory alternatives for tribes that want to develop energy resources on tribal lands, but they may not want to develop a TERA. Furthermore, the regulations will not result in the expenditure by the state, local or tribal governments or private sector of $100 million or more in any one year. Therefore, these regulations do not impose an unfunded mandate on state, local, or tribal governments, or the private sector, of more than $100 million per year, and the regulations do not have a significant or unique effect on state, local, or tribal governments, or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531
et seq.
) is not required.

Federalism (Executive Order 13132)

According to Executive Order 13132, these regulations do not have Federalism implications. While these regulations are of interest to tribes, 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, the regulations do not substantially and directly affect the relationship between the Federal and State governments, and would not impose costs on states or localities and so do not require a federalism assessment.

Civil Justice Reform (Executive Order 12988)

With respect to Executive Order 12988, the Office of the Solicitor has determined that this rule would not unduly burden the judicial system, and meets the requirements of sections 3(a) and 3(b)(2) of the Executive Order.

Paperwork Reduction Act (PRA)

Under the proposed rule (71 FR 48626, August 21, 2006), we asked for comments regarding any information collection burdens that would arise under these regulations at 25 CFR part 224 that govern the review of Tribal Energy Resource Agreements and activities undertaken pursuant to a TERA.

We specifically solicited comments on the following questions:

(a) Is the proposed collection of information necessary for the Department to properly perform its functions, and will it be useful?

(b) Are the estimates of the burden hours of the proposed collection reasonable?

(c) Do you have any suggestions that would enhance the quality, clarify, or usefulness of the information to be collected?

(d) Is there a way to minimize the information collection burden on those who are to respond, including the use of appropriate automated electronic, mechanical, or other forms of information technology?

The Department issued a
Federal Register
notice for the information

collection authorization for the proposed rule. After the comment period, the Office of Management and Budget (OMB) subsequently approved the information collection associated with this rule on March 12, 2007 under OMB control number 1076-0167 (OMB approval expires March 31, 2010). The total hour burden currently approved under 1076-0167 is 9,290 hours.

Respondents to the information collections in these regulations derive economic benefit from an enhanced ability to manage energy resources that exist on tribal lands. Therefore, the frequency of response will vary and depends on the respondents' needs. The information collection (IC) does not include questions of a sensitive nature. The Department will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 522) and its implementing regulations (43 CFR part 2) or other applicable laws. You may obtain a copy of the supporting statement for the new collection of information by contacting the Bureau of Indian Affairs' Information Collection Clearance Officer at (703) 735-4414.

National Environmental Policy Act (NEPA)

This final rule is categorically excluded from the preparation of an environmental assessment or an environmental impact statement under the National Environmental Policy Act of 1969, 42 U.S.C. 4321,
et seq.
, because its environmental effects are too broad, speculative, or conjectural to lend themselves to meaningful analysis and the federal actions under the final rule (i.e., approval or disapproval of TERAs) will be subject at the time of the action itself to the NEPA process, either collectively or case-by-case. (Because they are not Federal actions, approval or disapproval by a tribe of leases, business agreements, and rights-of-way under a TERA will not be subject to NEPA review.) Further, no extraordinary circumstances exist to require preparation of an environmental assessment or environmental impact statement.

Data Quality Act

In developing these regulations, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).

Energy Supply, Distribution, or Use (Executive Order 13211)

This rule is not a significant rule and is not subject to review by the Office of Management and Budget under Executive Order 13211. The regulations are administrative in nature and will not directly lead to energy development projects. Therefore, they will not have a significant effect on energy supply, or distribution. Thus, a Statement of Energy Effects is not required.

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

Pursuant to Executive Order 13175 of November 6, 2000, Consultation and Coordination with Indian Tribal Governments, the Department determined that because the rulemaking will uniquely affect tribal governments it would follow Department and Administrative protocols in consulting with tribal governments on the rulemaking. Consequently, the Department notified tribal governments through a
Federal Register
notice of the proposed rulemaking and through the BIA regional offices. The notices enabled tribal officials and the affected tribal constituency throughout Indian country to have meaningful and timely input in the development of the proposed rule. We believe that these actions reinforce good intergovernmental relations with tribal governments and better inform, educate, and advise such tribal governments on compliance requirements of the rulemaking.

The Department sent letters to tribal leaders on October 31, 2005 with information about the TERA provisions of Title V, Section 503 and solicited participation in a process to develop a framework for the implementing regulations. On December 9, 2005, the Department published a
Federal Register
notice (70 FR 73257) announcing public meetings and tribal consultations in 10 cities between January 9 and 20, 2006. The
Federal Register
notice also solicited written comments and the BIA regional offices distributed the notice to all tribes. We held the meetings in the following cities: Tulsa, OK; Denver, CO; Houston, TX; Albuquerque, NM; Las Vegas, NV; Sacramento, CA; Minneapolis, MN; Billings, MT; Portland, OR; and Washington, DC. The comments received from these public meetings and consultations and the written comments submitted were taken into consideration in the formulation of the proposed regulations. In response to the proposed rule, the Department received comments from several tribes and organizations that represent tribal interests. We have committed to consulting with tribal representatives in developing processes and procedures for the implementation of these Tribal Energy Resource Agreement regulations following publication of the final rule. In addition, the Department has incorporated a Pre- and Post-Application consultation process designed to enable tribes that pursue a TERA with the Department to have the widest available knowledge base with which to operate during the application review and evaluation phase.

List of Subjects in 25 CFR Part 224

Agreement, Appeals, Application, Business Agreements, Energy Development, Interested Party, Lease, Record keeping requirements, Reporting requirements, Right-of-Way, Tribal Energy Resource Agreements, Tribal capacity, Tribal lands, Trust, Trust asset.

Dated: October 1, 2007.
Carl J. Artman,
Assistant Secretary—Indian Affairs.

For the reasons stated in the preamble, the Department amends Chapter I of Title 25 of the Code of Federal Regulations to add a new part 224, to read as follows:

PART 224—TRIBAL ENERGY RESOURCE AGREEMENTS UNDER THE INDIAN TRIBAL ENERGY DEVELOPMENT AND SELF DETERMINATION ACT

Subpart A—General Provisions

Sec.
224.10
What is the purpose of this part?
224.20
How will the Secretary interpret and implement this Part and the Act?
224.30
What definitions apply to this Part?
224.40
How does the Act or a TERA affect the Secretary's trust responsibility?
224.41
When does the Secretary require agreement of more than one tribe to approve a TERA?
224.42
How does the Paperwork Reduction Act affect these regulations?

Subpart B—Procedures for Obtaining Tribal Energy Resource Agreements

224.50
What is the purpose of this subpart?

Pre-application Consultation and the Form of Application

224.51
What is a pre-application consultation between a tribe and the Director?
224.52
What may a tribe include in a TERA?
224.53
What must an application for a TERA contain?
Processing Applications

224.54
How must a tribe submit an application?
224.55
Is information a tribe submits throughout the TERA process under this Part subject to disclosure to third parties?
224.56
What is the effect of the Director's receipt of a tribe's complete application?
224.57
What must the Director do upon receipt of an application?
Application Consultation Meeting

224.58
What is an application consultation meeting?
224.59
How will the Director use the results of the application consultation meeting?
224.60
What will the Director provide to the tribe after the application consultation meeting?
224.61
What will the tribe provide to the Director after receipt of the Director's report on the application consultation meeting?
224.62
May a final proposed TERA differ from the original proposed TERA?
TERA Requirements

224.63
What provisions must a TERA contain?
224.64
How may a tribe assume management of development of different types of energy resources?
224.65
How may a tribe assume additional activities under a TERA?
224.66
How may a tribe reduce the scope of a TERA?
Public Notification and Comment

224.67
What must the Secretary do upon the Director's receipt of a final proposed TERA?
224.68
How will the Secretary use public comments?

Subpart C—Approval of Tribal Energy Resource Agreements

224.70
Will the Secretary review a proposed TERA under the National Environmental Policy Act?
224.71
What standards will the Secretary use to decide to approve a final proposed TERA?
224.72
How will the Secretary determine whether a tribe has demonstrated sufficient capacity?
224.73
How will the scope of energy resource development affect the Secretary's determination of the tribe's capacity?
224.74
When must the Secretary approve or disapprove a final proposed TERA?
224.75
What must the Secretary do upon approval or disapproval of a final proposed TERA?
224.76
Upon notification of disapproval, may a tribe re-submit a revised final proposed TERA?
224.77
Who may appeal the Secretary's decision on a final proposed TERA or a revised final proposed TERA?

Subpart D—Implementation of Tribal Energy Resource Agreements

Applicable Authorities and Responsibilities

224.80
Under what authority will a tribe perform activities for energy resource development?
224.81
What laws are applicable to activities?
224.82
What activities will the Department continue to perform after approval of a TERA?
Leases, Business Agreements, and Rights-of-Way under a TERA

224.83
What must a tribe do after executing a lease or business agreement, or granting a right-of-way?
224.84
When may a tribe grant a right-of-way?
224.85
When may a tribe enter into a lease or business agreement?
224.86
Are there limits on the duration of leases, business agreements, and rights-of-way?
Violation or Breach

224.87
What are the obligations of a tribe if it discovers a violation or breach?
224.88
What must the Director do after receiving notice of a violation or breach from the tribe?
224.89
What procedures will the Secretary use to enforce leases, business agreements, or rights-of-way?

Subpart E—Interested Party Petitions

224.100
May a person or entity ask the Secretary to review a tribe's compliance with a TERA?
224.101
Who is an interested party?
224.102
Must a tribe establish a comment or hearing process for addressing environmental concerns?
224.103
Must a tribe establish other public participation processes?
224.104
Must a tribe enact tribal laws, regulations, or procedures permitting persons or entities to allege a tribe is not complying with a TERA?
224.105
How may a person or entity obtain copies of tribal laws, regulations, or procedures that permit an allegation of noncompliance with a TERA?
224.106
If a tribe has enacted tribal laws, regulations, or procedures for challenging tribal action, how must the tribe respond to a petition?
224.107
What must a petitioner do before filing a petition with the Secretary?
224.108
May tribes offer a resolution of a petitioner's claim?
224.109
What must a petitioner claim or request in a petition filed with the Secretary?
224.110
What must a petition to the Secretary contain?
224.111
When may a petitioner file a petition with the Secretary?
224.112
What must the Director do upon receipt of a petition?
224.113
What must the tribe do after it completes petition consultation with the Director?
224.114
How may the tribe address a petition in its written response?
224.115
When in the petition process must the Director investigate a tribe's compliance with a TERA?
224.116
What is the time period in which the Director must investigate a tribe's compliance with a TERA?
224.117
Must the Director make a determination of the tribe's compliance with a TERA?
224.118
How must the tribe respond to the Director's notice of the opportunity for a hearing?
224.119
What must the Director do when making a decision on a petition?
224.120
What action may the Director take to ensure compliance with a TERA?
224.121
How may a tribe or a petitioner appeal the Director's decision about the tribe's compliance with the TERA?

Subpart F—Periodic Reviews

224.130
What is the purpose of this subpart?
224.131
What is a periodic review and evaluation?
224.132
How does the Director conduct a periodic review and evaluation?
224.133
What must the Director do after a periodic review and evaluation?
224.134
How often must the Director conduct a periodic review and evaluation?
224.135
Under what circumstances may the Director conduct additional reviews and evaluations?

Noncompliance

224.136
How will the Director's report address a tribe's noncompliance?
224.137
What must the Director do if a tribe's noncompliance has resulted in harm or the potential for harm to a physical trust asset?
224.138
What must the Director do if a tribe's noncompliance has caused imminent jeopardy to a physical trust asset?
224.139
What must a tribe do after receiving a notice of imminent jeopardy to a physical trust asset?
224.140
What must the Secretary do if the tribe fails to respond to or does not comply with the Director's order?
224.141
What must the Secretary do if the tribe responds to the Director's order?

Subpart G—Reassumption

224.150
What is the purpose of this subpart?
224.151
When may the Secretary reassume activities?
224.152
Must the Secretary always reassume the activities upon a finding of imminent jeopardy to a physical trust asset?

Notice of Intent to Reassume

224.153
Must the Secretary notify the tribe of an intent to reassume the authority granted under a TERA?
224.154
What must a notice of intent to reassume include?
224.155
When must a tribe respond to a notice of intent to reassume?
224.156
What information must the tribe's response to the notice of intent to reassume include?
224.157
How must the Secretary proceed after receiving the tribe's response?
224.158
What must the Secretary include in a written notice of reassumption?
224.159
How will reassumption affect valid existing rights or lawful actions taken before the effective date of the reassumption?
224.160
How will reassumption affect a TERA?
224.161
How may reassumption affect the tribe's ability to enter into a new TERA or to modify another TERA to administer additional activities or assume administration of activities that the Secretary previously reassumed?

Subpart H—Rescission

224.170
What is the purpose of this subpart?
224.171

Who may rescind a TERA?

224.172
May a tribe rescind only some of the activities subject to a TERA while retaining a portion of those activities?
224.173
How does a tribe rescind a TERA?
224.174
When does a voluntary rescission become effective?
224.175
How will rescission affect valid existing rights or lawful actions taken before the rescission?

Subpart I—General Appeal Procedures

224.180
What is the purpose of this subpart?
224.181
Who may appeal Departmental decisions or inaction under this part?
224.182
What is the Initial Appeal Process?
224.183
What other administrative appeals processes also apply?
224.184
How do other administrative appeals processes apply?
224.185
When are decisions under this part effective?

Authority:

25 U.S.C. 2 and 9; 25 U.S.C. 3501-3504; Pub. L. 109-58

Subpart A—General Provisions

§ 224.10
What is the purpose of this part?
This part:

(a) Establishes procedures by which a tribe, at its discretion, may enter into and manage leases, business agreements, and rights-of-way for purposes of energy resource development on tribal land; and

(b) Describes the process for obtaining, implementing, and enforcing a tribal energy resource agreement (TERA) that will allow a tribe to enter into individual leases, business agreements, and rights-of-way without obtaining Secretarial approval.

§ 224.20
How will the Secretary interpret and implement this part and the Act?
(a) The Secretary will interpret and implement this part and the Indian Tribal Energy Development and Self-Determination Act (the Act) in accordance with the self-determination and energy development provisions and policies in the Act.

(b) The Secretary will liberally construe this part and the Act for the benefit of tribes to implement the Federal policy of self-determination. The Secretary will construe any ambiguities in this part or the Act in favor of the tribe to implement a TERA as authorized by this part and the Act.

§ 224.30
What definitions apply to this part?

Act
means the Indian Tribal Energy Development and Self-Determination Act of 2005, as promulgated in Title V of the Energy Policy Act of 2005, Public Law 109-58, 25 U.S.C. 3501-3504.

Application
means the application submitted for a TERA under subpart B.

Business agreement
means:

(1) Any permit, contract, joint venture, option, or other agreement that furthers any activity related to locating, producing, transporting, or marketing energy resources on tribal land;

(2) Any amendment, supplement, or other modification to such an agreement; or

(3) Any other business agreement entered into or subject to administration under a TERA.

Days
mean calendar days in computing any period prescribed or allowed by the Act and this part:

(1) Do not include the day of the event from which the period begins to run;

(2) Include the last day of the period, unless it is a Saturday, Sunday, or Federal holiday, in which event the period runs until the end of the next day which is not a Saturday, Sunday, or Federal holiday; and

(3) When the period prescribed or allowed is less than 11 days, exclude intermediate Saturdays, Sundays, and Federal holidays from the computation.

Decision Deadline
means the 120-day period within which the Director will make a decision about a petition submitted by an interested party under subpart E. The Director may extend this period for up to 120 days.

Department
means the Department of the Interior.

Designated Tribal Official
means the official designated in a tribe's pre-application consultation request, application, or agreement to assist in scheduling consultations or to receive communications from the Secretary or the Director to the tribe regarding the status of a TERA or activities under a TERA.

Director
means the Director of the Office of Indian Energy and Economic Development or the Secretary's designee, authorized to act on behalf of the Secretary.

Energy Resources
means both renewable and nonrenewable energy sources, including, but not limited to, natural gas, oil, uranium, coal, nuclear, wind, solar, geothermal, biomass, and hydrologic resources.

Imminent jeopardy to a physical trust asset
means an immediate threat of devaluation, degradation, damage, or loss of a physical trust asset, as determined by the Secretary, caused by the noncompliance of a tribe or third party with a TERA or applicable Federal laws.

Interested party
means a person or entity who has filed a petition with the Secretary under subpart E seeking review of a tribe's compliance with a TERA and who meets the criteria in § 224.101.

Lease
means a written agreement, or modification of a written agreement, between a tribe and a tenant or lessee, whereby the tenant or lessee is granted a right to possession of tribal land or energy mineral resources for purposes of energy resource development.

Petitioner
means a person or entity who has filed a petition under subpart E with a tribe or the Secretary seeking review of a tribe's compliance under a TERA. A petitioner is not considered to be an interested party unless the petitioner meets the criteria in § 224.101.

Physical trust asset
means a physical asset held in trust by the United States for a tribe or individual Indian or by a tribe or individual Indian subject to a restriction against alienation under the laws of the United States. “Physical trust asset” does not include:

(1) Any improvements (for example, wells or structures) to the assets held in trust or restricted status; or

(2) Monetary assets.

Public
means one or more natural or legal persons, and their associations, organizations, or groups; or Federal, State, tribal and local government agencies; or private industry and their associations, organizations, or groups.

Right-of-way
means an easement, right, or other authorization over tribal lands, granted or subject to administration under a TERA, for a pipeline or electric transmission or distribution line that serves a facility located on tribal land that is related to energy resource development.

Secretary
means the Secretary of the Interior or the Secretary's designee.

TERA
means tribal energy resource agreement.

Tribal governing body
means a tribe's governing entity, such as tribal council or tribal business committee, as established under tribal or Federal law and recognized by the Secretary.

Tribal land
means any land or interests in land owned by a tribe or tribes, title to which is held in trust by the United States, or is subject to a restriction against alienation under the laws of the United States. For the purposes of this part, tribal land includes land taken into trust or subject to restrictions on alienation under the laws of the United States after the effective date of the agreement.

Tribe
means any Indian tribe, band, nation, or other organized group or community that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians, except a Native Corporation as defined in the Alaska Native Claims Settlement Act, 43 U.S.C. 1602.

Violation or breach
means any breach or other violation by another party of any provision in a lease, business agreement, or right-of-way under a TERA or any activity or occurrence under a lease business agreement or right-of-way that constitutes a violation of Federal or tribal environmental law.

§ 224.40
How does the Act or a TERA affect the Secretary's trust responsibility?
(a) The Act (25 U.S.C. 3504(e)(6)) preserves the Secretary's trust responsibilities relating to mineral and other trust resources and requires the Secretary to act in good faith and in the best interest of Indian tribes.

(b) Neither the Act nor this part absolves the Secretary of responsibilities to Indian tribes under the trust relationship, treaties, statutes, regulations, Executive Orders, agreements or other Federal law.

(c) The Act and this part preserve the Secretary's trust responsibility to ensure that the rights and interests of an Indian tribe are protected if:

(1) Another party to a lease, business agreement, or right-of-way executed under an approved TERA violates any term of the lease, business agreement, or right-of-way, or any applicable Federal law; or

(2) Any provision of a lease, business agreement, or right-of-way violates the TERA under which it was executed.

(d) The United States is not liable for losses to any party (including any tribe) for any negotiated term of, or any loss resulting from, the negotiated terms of a lease, business agreement, or right-of-way the tribe executes under a TERA.

§ 224.41
When does the Secretary require agreement of more than one tribe to approve a TERA?
When tribal land held for the benefit of more than one tribe is contemplated for inclusion in a TERA, each appropriate tribal governing body must request a pre-application consultation meeting, and submit a resolution or formal act of the tribal governing body approving the submission of any application. Each appropriate tribal governing body must also sign the TERA, if it is approved.

§ 224.42
How does the Paperwork Reduction Act affect these regulations?
The information collected from the public is cleared and covered by OMB Control Number 1076-0167. The sections of this rule which have information collections are §§ 224.53, 224.57(d), 224.61, 224.63, 224.64, 224.65, 224.68(d), 224.76, 224.83, 224.87, 224.109, 224.112, 224.120(a), 224.139(b), 224.156, and 224.173. Please note that a Federal Agency may not conduct or sponsor, and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number.

Subpart B—Procedures for Obtaining Tribal Energy Resource Agreements

§ 224.50
What is the purpose of this subpart?
This subpart establishes procedures for:

(a) Pre-application and application consultations and process;

(b) Requirements for the content of applications;

(c) Submittal of completed applications; and

(d) Secretarial review and processing of applications.

Pre-application Consultation and the Form of Application

§ 224.51
What is a pre-application consultation between a tribe and the Director?
(a) A tribe interested in entering into a TERA should request a pre-application consultation by writing to the Director, Office of Indian Energy and Economic Development. The request should include the name and contact information for the Designated Tribal Official who will coordinate scheduling with the Director.

(b) Upon receiving a pre-application consultation request, the Director will contact the Designated Tribal Official to schedule

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3AE8-4301. Public record. Not legal advice.