On June 10 2016, Congress passed the Native American Trust Asset Reform Act and on June 22, 2016, President Obama  signed  it  into  law.1 According to  the Senate Committee on Indian Affairs, the purpose of the Act “is to reaffirm the Federal government's fiduciary trust responsibilities to Indian Tribes.”2 Of particular note is Congress’ findings that treaties and agreements with Indian Tribes “provided legal consideration for permanent, ongoing performance of Federal trust duties” and the historic Federal-tribal “relations and understandings…have established enduring and enforceable Federal obligations.”

The Act is intended to facilitate tribal management of tribal trust assets and does so by establishing a voluntary demonstration project. Under the Act, a Tribe must apply to  take  part  in  the  demonstration  project,  and,  if approved, must submit a proposed Indian trust asset management plan to the Secretary for approval. Among other things, the plan must identify the trust assets that will be subject to the plan, which can be assets “located within the reservation, or otherwise subject to the jurisdiction of, the Indian Tribe,” establish objectives and priorities, allocate funding, establish procedures for nonbinding mediation or resolution of disputes between the Tribe and the United States relating to the plan, and identify federal regulations that will be superseded by the plan. The Secretary has 120 days to approve or disapprove a proposed plan, and if the Secretary does not act within 120 days, then the plan is deemed approved. The Act’s structure is similar to that enacted in 2005 providing for Tribes to enter into tribal energy resource agreements (“TERA”), to directly administer energy and resource agreements. See 25 U.S.C. § 3504. Few, if any, TERA agreements are in effect as yet.

Significantly, if approved, an Indian trust management plan can authorize an Indian Tribe to enter into “surface leasing transactions” or “forest land management activities” without Secretarial approval  if, among other things, the Tribe has adopted regulations, approved by the Secretary, that provide for environmental review and public notice and opportunity to comment on significant environmental impacts of the proposed project. The Act defines “Surface Leasing Transaction” as “a residential, business, agricultural, or wind or solar resource lease of land the title to which is held--in trust by the United States for the benefit of an Indian Tribe; or in fee by an Indian Tribe, subject to restrictions against alienation under Federal law.” This definition would exclude oil and gas or mining leases.

The Act authorizes the Secretary, “upon reasonable notice from the applicable Indian Tribe,” to cancel any lease executed by a Tribe. Surprisingly, the Act does  not require  notice  be  given  to  the  lessee  or  provide  any process for lessee involvement in lease cancellation. The Act provides that “[a]n interested party” may petition the Secretary for review of an Indian Tribe’s compliance with tribal regulations, but only after exhaustion of tribal remedies. The Act’s definition of “interested party,” includes “an Indian or non-Indian individual, entity, or government the interests  of which could be adversely affected by a tribal land leasing decision….” If the Secretary concludes that there has been a violation of tribal regulations, then the Secretary may rescind the approval of the tribal regulations and reassume responsibility for the approval of leases of tribal trust land. Before doing so, the Secretary must provide the Tribe with a hearing on the record and an opportunity to cure.

The Act also authorizes the use of appraisals and valuations without Secretarial approval, so long as the appraisal or valuation is prepared by an individual who meets certain minimum qualifications and if the Tribe or Indian landowner acknowledges an intent to have that appraisal or valuation considered for the transaction. Under those circumstances, no additional review is required and the appraisal or valuation “shall be considered final for purposes of effectuating the transaction for which the appraisal or valuation is required.” The Act authorizes the Secretary of the Interior to transition the functions of the Office of Special Trustee to other agencies, offices, or bureaus in the Department of the Interior.

Take-Away: One benefit of the Act is the potential to streamline the approval process for surface leasing transactions, once a tribal trust asset management plan is approved. Authorizing Tribes to approve such transactions not only encourages tribal self-determination and governance of tribal assets, it also removes sometimes inefficient federal approvals and associated regulatory review that can slow down project development. The Act, however,   does   have   some   potentially   problematic components, including requiring exhaustion of tribal remedies, authorizing the Secretary to cancel a lease apparently without notice to the lessee, and promoting reliance on appraisals prepared for Tribes or individual Indian landowners that are not reviewed by the Secretary or other office within the Department of the Interior. Although requiring that the appraiser meet certain minimum requirements somewhat ameliorates that  concern, the Act’s provisions do not suggest consideration of lessees’ evidence of valuation.