RAPID/Roadmap/3-FD-b

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Regulatory and Permitting Information Desktop Toolkit

Federal Tribal Land Leasing (3-FD-b)

The United States has a unique legal and political relationship with Indian tribes and Alaska Native entities as provided by the Constitution of the United States, treaties, court decisions and Federal statutes. Within the government-to-government relationship, the Bureau of Indian Affairs provides services directly or through contracts, grants, or compacts to 566 Federally recognized tribes with a service population of about 1.9 million American Indian and Alaska Natives. While the role of Indian Affairs has changed significantly in the last three decades in response to a greater emphasis on Indian self-governance and self-determination, Tribes still look to Indian Affairs for a broad spectrum of services.

The Indian Affairs offers an extensive scope of programs that covers the entire range of Federal, State and local government services. Programs administered through the Bureau of Indian Affairs (BIA) include social services, natural resources management on trust lands representing 55 million surface acres and 57 million acres of subsurface minerals estates, economic development programs in some of the most isolated and economically depressed areas of the United States, law enforcement and detention services, administration of tribal courts, implementation of land and water claim settlements, housing improvement, disaster relief, replacement and repair of schools, repair and maintenance of roads and bridges, and the repair of structural deficiencies on high hazard dams, the BIA operates a series irrigation systems and provides electricity to a rural parts of Arizona.

The Division of Energy and Mineral Development assists Tribes with the exploration, development and management of their energy and mineral resources to create sustainable economies for reservations, generate new jobs and expand entrepreneurship and self-sufficiency.

The Division of Indian Energy Policy Development oversees the development and implementation of energy and mineral development regulations in Indian country and initiates programs to enhance the capacity of tribes to take charge of developing their energy and mineral resources.

Resources for doing business on Indian Lands: Working on Indian Lands webpage includes examples of leases, NEPA compliance, and Federal agency information. The Tribal Energy and Environmental Information Clearinghouse page, and the US DOE Maps of geothermal resources for most tribal lands in the West are all useful resources.

Tribal Energy Resource Agreements


Tribal Land Leasing Process

3-FD-b.1 - Formal Letter to Tribe Expressing Interest to Lease

Geothermal developers send a letter of expression to enter into an agreement (lease, IMDA) to the Tribal Council or appropriate office.

3-FD-b.2 - Evaluate and Negotiate Proposal

The Indian Mineral Development Act of 1982 (IMDA) was enacted to provide Indian tribes with flexibility in the development and sale of mineral resources. Foremost among the beneficial effects of IMDA was the opportunity for Indian tribes to enter into joint venture agreements with mineral developers. The contractual relationships permitted by IMDA were designed to meet two objectives: First, to further the policy of self-determination and second, to maximize the financial return tribes can expect for their valuable mineral resources.

Tribes may negotiate directly with companies under the authority of the Indian Mineral Development Act of 1982 (Regulations: 25 CFR 225). This Act empowers tribal governments to enter into any joint venture, operating, production sharing, service, managerial, lease or other agreement, or any amendment, supplement or other modification of such agreement providing for the exploration, extraction, processing, or other development of oil, gas, uranium, coal, geothermal resources, or other energy or non-energy mineral resources in which tribes own a beneficial or restricted interest, or providing for the sale or other disposition of production or products from their mineral resources.

Agreements negotiated under the authority of the Indian Mineral Development Act of 1982 do not have a prescribed form. All terms are negotiable (i.e., rents, royalty, shut-in royalties, exploration rights, length of term, etc.). The negotiable length of term is one of the more important provisions of the Act. Under the 1938 Act, only ten year primary terms are allowed. After the tenth year, leases must continue to produce in paying quantities or expire by their own terms. As permitting requirements have grown more complex, ten years may not be a realistic time frame, ten years may be insufficient to bring a geothermal project into production. The only provisions in an IMDA agreement that are not negotiable are the applicable operating regulations of the Bureau of Land Management and the applicable royalty management reporting requirements of the Minerals Management Service.

3-FD-b.3 - Agreement Reached

If the developer and Tribe are able to reach an agreement on leasing and development, the Tribe notifies BIA.

3-FD-b.4 - Notify Bureau of Indian Affairs (BIA)

The Bureau of Indian Affairs (BIA) is the lead agency on lease agreements up to the point of signing an agreement.

3-FD-b.5 - Notify Developer of Agreement

Bureau of Indian Affairs will notify the developer of approval to proceed with drafting an IMDA lease.

3-FD-b.6 - Draft Indian Mineral Development Act (IMDA) Lease

Pursuant to § § 225.21 of the Indian Mineral Development Act of 1982 (IMDA), no particular form of minerals agreement is prescribed. In preparing the minerals agreement the Indian mineral owner shall, if applicable, address provisions including, but not limited to, the following:

  1. A general statement identifying the parties to the minerals agreement, the legal description of the lands, including, if applicable, rock intervals or thicknesses subject to the minerals agreement, and the purposes of the minerals agreement;
  2. A statement setting forth the duration of the minerals agreement;
  3. A statement providing indemnification to the Indian mineral owner(s) and the United States from all claims, liabilities and causes of action that may be made by persons not a party to the minerals agreement;
  4. Provisions setting forth the obligations of the contracting parties;
  5. Provisions describing the methods of disposition of production;
  6. Provisions outlining the method of payment and amount of compensation to be paid;
  7. Provisions establishing accounting and mineral valuation procedures;
  8. Provisions establishing operating and management procedures;
  9. Provisions establishing any limitations on assignment of interests, including any right of first refusal by the Indian mineral owner in the event of a proposed assignment;
  10. Bond requirements;
  11. Insurance requirements;
  12. Provisions establishing audit procedures;
  13. Provisions for resolving disputes;
  14. A force majeure provision;
  15. Provisions describing the rights of the parties to terminate or suspend the minerals agreement, and the procedures to be followed in the event of termination or suspension;
  16. Provisions describing the nature and schedule of the activities to be conducted by the parties;
  17. Provisions describing the proposed manner and time of performance of future abandonment, reclamation and restoration activities;
  18. Provisions for reporting production and sales;
  19. Provisions for unitizing or communitizing of lands included in a minerals agreement for the purpose of promoting conservation and efficient utilization of natural resources;
  20. Provisions for protection of the minerals agreement lands from drainage and/or unauthorized taking of mineral resources; and
  21. Provisions for record keeping.

In order to avoid delays in obtaining approval, the Indian mineral owner is encouraged to confer with the Secretary prior to formally executing the minerals agreement, and seek advice as to whether the minerals agreement appears to satisfy the requirements of §225.22, or whether additions or corrections may be required in order to obtain Secretarial approval.

The executed minerals agreement, together with a copy of a tribal resolution authorizing tribal officers to enter into the minerals agreement, shall be forwarded by the tribal representative to the appropriate Superintendent, or in the absence of a Superintendent to the Area Director, for approval.

3-FD-b.7 - Consult with Agencies

The Tribe consults with BIA to initiate NEPA process and consultations with Office of Natural Resources Royalty and the BLM to evaluate whether the terms of the IMDAs is in the best interest of the Tribe.

3-FD-b.8 - Conduct Royalty Evaluation

The Office of Natural Resources Revenue (ONRR), formerly Minerals Management Service, reviews royalty rate provisions to ensure clarity of calculations and distributes royalty payments.

Pursuant to 30 C.F.R. Part 1201.100, the Associate Director is responsible for the collection of certain rents, royalties, and other payments; for the receipt of sales and production reports; for determining royalty liability; for maintaining accounting records; for any audits of the royalty payments and obligations; and for any and all other functions relating to royalty management on Indian oil and gas leases.

3-FD-b.9 - Evaluate Comparable Sales

The BLM conducts an appraisal to determine the Fair Market Value of the lands to be included within the IMDS using comparable sales approach and standard appraisal methods.

3-FD-b.10 - Evaluate Lease Economics

Under §225.23 of the Indian Mineral Development Act of 1982, the DOI prepares an economic assessment that, among other things, addresses:

  1. Whether there are assurances in the minerals agreement that operations shall be conducted with appropriate diligence;
  2. Whether the production royalties or other form of return on mineral resources is adequate; and
  3. Whether the minerals agreement is likely to provide the Indian mineral owner with a return on the production comparable to what the owner might otherwise obtain through competitive bidding, when such a comparison can reasonably be made.

The Bureau of Indian Affairs is the agency authorized for Tribal leasing and conducting the NEPA analysis if the lands proposed for leasing have not previously been evaluated for geothermal leasing and development.

Bureau of Land Management- NEPA Process:
9-FD-a

3-FD-b.12 - Make Recommendations to Approve or Deny Lease Issuance

Under § 225.22 of the Indian Mineral Development Act of 1982, a minerals agreement submitted for approval pursuant to § 225.21(d) must be approved or disapproved within either 180 days after submission or 60 days after compliance, if required, with section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)) or any other requirement of Federal law, whichever is later.

At least 30 days prior to approval or disapproval of any minerals agreement, the affected Indian mineral owners shall be provided with written findings forming the basis of the Secretary's intent to approve or disapprove the minerals agreement. The written findings shall include an environmental study which meets the requirements of § 225.24 and an economic assessment, as described in § 225.23. The Secretary will also include in the written findings any recommendations for changes to the minerals agreement needed to qualify it for approval.

Such findings and all projections, studies, data or other information (other than the environmental study required by § 225.24) possessed by the Department of the Interior regarding the terms and conditions of the minerals agreement; the financial return to the Indian parties thereto; the extent, nature, value or disposition of the mineral resources; or the production, products or proceeds thereof, shall be held by the Department of the Interior as privileged and proprietary information of the affected Indian mineral owners. A minerals agreement will be approved if it is determined that the following conditions are met:

  1. The minerals agreement is in the best interest of the Indian mineral owner;
  2. The minerals agreement does not have adverse cultural, social, or environmental impacts sufficient to outweigh its expected benefits to the Indian mineral owners; and,
  3. The minerals agreement complies with the requirements of this part and all other applicable regulations and the provisions of applicable Federal law.

3-FD-b.13 - Review Recommendation to Approve or Deny Lease Issuance

If a Superintendent or Area Director believes that a minerals agreement should not be approved, a written statement of the reasons why the minerals agreement should not be approved shall be prepared and forwarded, together with the minerals agreement, the written findings required by the IMDA and all other pertinent documents, to the Secretary for a decision with a copy to the affected Indian mineral owner. The Secretary will review any minerals agreement referred with a recommendation that it be disapproved, and the Secretary's decision to disapprove a minerals agreement is a final Federal agency action.

3-FD-b.14 - Letter Notifying Developer of Lease Approval or Denial

BIA Regional director will send letter to developer notifying them of decision.




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