On November 3, 2015, Kevin Washburn, Assistant Secretary-Indian Affairs signed a final rule revising the Bureau of Indian Affair's (BIA) regulations1 governing grants of right-of-way (ROW) on Indian lands compiled at 25 C.F.R. Part 169 (Final Rule).  The Final Rule was published in the Federal Register on Thursday, November 19, 2015, 80 Fed. Reg. 72492 (Nov. 19, 2015). According to the Preamble to the Final Rule, the Final Rule "comprehensively updates and streamlines the process for obtaining Bureau of Indian Affairs (BIA) grants of rights-of-way on Indian land, while supporting self-determination and self-governance."  See also Final 25 C.F.R. § 169.001 (describing purpose of the Part 169 regulations).  The Final Rule effects significant changes in the rights and responsibilities of applicants and grantees of ROWs on tribal and allotted lands, many of which should be of concern to applicants or grantees of ROWs.  The Final Rule was originally scheduled to become effective December 21, 2015; however, BIA recently extended the effective date of the Final Rule March 21, 2016.     

Here, we examine four significant changes to the BIA regulations. 

Improper Retroactive Application of Final Rule to Existing Grants:  The BIA, in response to comments raising concern about the Final Rule's applicability to existing grants, states that the Final Rule's "procedural" provisions apply to an existing ROW grant when the grant is silent with respect to a "procedural" provision addressed by the Final Rule.  See Final 25 C.F.R. § 169.007; see also 80 Fed. Reg. at 72502.  The BIA provided as examples of the Final Rule's so called "procedural" provisions, what ROW grantees would consider highly substantive provisions governing assignments, mortgages, and renewals.  Under the Final Rule, a grantee can assign a ROW only with the consent of the tribal landowner or the often numerous allotted landowners—or if the grant expressly allows for assignment without further consent and approval.  The Final Rule similarly requires express landowner consent and BIA approval of a mortgage.  The current regulations, however, do not address, and therefore do not require, landowner consent to, or BIA approval of, assignments and mortgages. As commenters on the proposed regulations pointed out, applying what have now become the Final Rule's consent and approval requirements to an existing grant defeats the parties' expectations formed under prior law and practice, which would be consistent with general law off-reservation, that an instrument silent as to assignment or mortgage may be freely assigned or mortgaged. To the extent the Final Rule impairs a current grantee's existing property rights by imposing new burdens on an existing grant, the current grantee may have a claim that the Final Rule's requirement may not be imposed on its previously granted ROW or the company should be compensated for such impairment.

Expansion of Tribal Jurisdiction: The Final Rule's attempts to expand tribal jurisdiction, and constrain a state's jurisdiction, appear to conflict with case law of the United States Supreme Court.  See Final 25 C.F.R. §§ 169.009, 169.010, 169.011.  For example, the Final Rule provides that state law and state taxation generally do not apply to lands subject to a ROW and activities within a ROW.  While companies may benefit from a provision that creates hurdles for state taxation, to the degree the regulations would subject ROW grantees to tribal law, difficulties may be presented by sometimes unwritten or unpredictable tribal law.  The Final Rule provides that ROWs are subject to applicable federal law and subject to tribal law that is not inconsistent with federal law. The Final Rule provides that a tribe's jurisdiction extends to the land subject to the ROW and any person or activity within the ROW.  The Final Rule also provides unqualifiedly that tribes have jurisdiction to tax improvements, activities, and ROW interests. These provisions propose broader tribal authority, and narrower state authority, than is recognized by current Supreme Court precedent. 

Impediments to Efficiently Obtaining a ROW:  The Final Rule includes provisions that may impede an applicant's ability to effectively negotiate for and obtain a ROW.  For example, despite contrary industry comments critical of the proposed rule on this point, the BIA retained unconventional, alternative measures of compensation, such as "throughput fees, . . . franchise fees, avoidance value, bonuses, or other factors." Final 25 C.F.R. § 169.112.  Suggesting such measures of compensation may lead to increased difficulty in reaching consensus regarding appropriate compensation, particularly for a ROW crossing individually owned Indian lands, which may be acquired through condemnation proceedings in which such measures generally are unavailable. The BIA also imposed a requirement that consent of the Indian landowners be obtained prior to conducting a survey, which is necessary for an application.  The Final Rule likely will make it more difficult to obtain the consent of a majority of interest holders when a ROW crosses a tract of certain individually owned Indian lands because BIA inserted a provision that requires the consent of the majority of "remainder interests" identifiable at the time of the application, as well as the consent of the life tenant who granted remainder interests that vest upon his/her death. Consent for ROWs across allotted lands is further complicated by the Final Rule's requiring tribal consent when a tract has fractionalized interests and the tribe holds a fractional interest, raising the specter of a tribal veto of a ROW desired by individual holders or the tribe's leveraging its likely immunity from condemnation to exact higher compensation for allotted landowners.

Limited Recommended Duration of ROW Grants for Necessary Infrastructure: Final 25 C.F.R. § 169.201 limits the recommended maximum duration of a ROW grant for oil and gas pipelines to 20 years, and the BIA deleted the recommendation in the proposed rule that certain types of rights-of-ways, such as railroads, public roads and highways, be granted in perpetuity.