Changing Boundaries

Fee-to-trust rule changes and their implications for tribal gaming

By Ryan Sawyer and Thomas Zitt

On March 1, the comment period closed on proposed revisions to two sets of regulations regarding development in Indian Country.

Under the leadership of Secretary Deb Haaland, the Department of the Interior is attempting to reform the process for acquiring lands into federal trust status for Native American tribes and individuals, commonly known as “fee-to-trust” or “FTT,” and on a parallel track, to rationalize and codify the rules that govern Class III compacts.

In this article, we focus on the proposed changes to the FTT process.

The acquisition of lands-in-trust status for Native American tribes is governed by the Indian Reorganization Act of 1934, with regulations codified at 25 Code of Federal Regulations Section 151, known colloquially as the 151 Regulations.

Proposed changes to the 151 Regulations could lead to a more predictable, impartial, efficient and timely process for tribal governments seeking to establish or expand their land base for economic development purposes, including new gaming developments.

To be eligible for gaming, newly acquired trust lands must meet certain criteria outlined in Section 20 of the Indian Gaming Regulatory Act (IGRA) of 1988. IGRA prohibits gaming on trust lands acquired after October 17, 1988 (the date IGRA was enacted), but allows for several “exceptions.” These exceptions are described fully in 25 CFR Section 2719, and generally include:

1. If the land was within or contiguous to the boundaries of the tribe’s reservation on October 17, 1988 (or the tribe’s last recognized reservation);

2. If the land is acquired into trust as part of the settlement of a land claim;

3. If the land is acquired into trust as the initial reservation for a tribe acknowledged by the secretary under the federal acknowledgment process;

4. If the lands qualify as “restored lands” for a tribe that is restored to federal recognition; or,

5. If the secretary issues a “Two-Part Determination” that gaming activities would be (1) in the best interest of the applicant tribe, and (2) not detrimental to the surrounding community; and the state’s governor concurs in the determination.

Under exceptions 1- 4, the tribe must request an Indian Lands Opinion from the Office of Indian Gaming to verify that the lands would qualify for gaming under IGRA. Many, if not most, of the pending applications for gaming-related trust acquisitions today involve exception 5 (two-part determination), meaning they will ultimately require approval by the state’s governor in addition to Interior. There are no proposed federal amendments or revisions to the federal process for determining gaming eligibility under IGRA.

The New (Draft) FTT Rules

After consultation with tribes earlier in 2022, the Office of the Assistant Secretary for Indian Affairs published the draft regulations (outlined in 25 CFR Part 151) last December. It is expected that the final regulations may be published later this year, perhaps as early as May or June, although no official release date has been announced. While the final rule may be revised pending the outcome of further tribal consultation and public comment, the draft rule contains significant substantive and process-related changes. To remove obstacles that tribes and individual Native Americans have faced in the trust acquisition process, Interior has added new definitions, clarified requirements that have been common practices, and made other minor changes throughout the rule.

A New Category of Acquisition

The proposed rule classifies four different forms of acquisitions—on-reservation, contiguous to reservation, off-reservation, and initial Indian acquisitions—with the last being a new fourth category designed to ease the process for those tribes that do not currently possess any land in trust. Requirements vary for each category, and the application process is more streamlined, as discussed below.

Requirements Eliminated

While the “purpose” of a tribal government’s acquisition must still be identified, the Bureau of Indian Affairs (BIA) would no longer be required to consider its “need.” It will now be presumed, based on decades of BIA experience in acquiring and administering trust lands, that the tribal community will benefit from the acquisition. This change would apply to all categories, saving tribes the cost and time of documenting why they “need” the acquisition (sorry, consultants).

For on-reservation acquisitions, the requirement to consult state and local governments is eliminated. However, for acquisitions of contiguous land, state and local governments will continue to have a 30-day period to submit comments regarding impacts on regulatory jurisdiction, real property taxes and special assessments. If no comments are submitted, there will be no need for the secretary to consider these issues.

Furthermore, when reviewing a tribe’s request for land that is located within or contiguous to an Indian reservation, the secretary presumes that the acquisition will be approved.

Off-reservation acquisitions would still require state and local government consultation. However, off-reservation applications would no longer require a business plan, and consideration of distance from the reservation is eliminated, with the presumption that the tribal government would factor location into its request and benefits would occur to the tribal community. However, the secretary will generally consider the location of the land in a holistic analysis of the application and in light of comments received from state and local governments.

“Purpose” Clarified and Expanded

The new rules expand the description of the allowable purpose of an acquisition beyond the current requirement to “facilitate self-determination, economic development, or Indian housing.” Under the new rules, the secretary “shall give great weight” to whether the acquisition will: “further establishment of a land base or protect tribal homelands, protect sacred sites or cultural resources and practices, establish or maintain conservation or environmental mitigation areas, consolidate land ownership, acquire land lost through allotment, reduce checkerboarding, (or) protect treaty or subsistence rights.”

Carcieri

The proposed rule lays out in regulatory text the process for determining whether a tribe was ‘‘under federal jurisdiction’’ in 1934, as required by Carcieri v. Salazar in 2009. The revised Carcieri analysis should make assessing statutory authority here simpler and faster for certain tribes. For tribes that already have received a favorable Carcieri analysis, no additional analysis is needed.

Pending Requests

Requests pending on the effective date of the final rule will continue to be processed under the current rule, unless the applicant requests in writing to proceed under the new rules. Upon receipt of such a request, the secretary shall process the pending application under the new rule, although the 120day requirement for a decision would not apply (as proposed in the draft).

Substantively, it does not appear that the new rule will require additional information beyond the current requirements, so there will likely be no need to alter or supplement any current pending applications under the new rules.

New Decision Timeline

The draft rule would require a decision by the BIA within 120 days of assembling a complete application package. This is the big enchilada prompting a lot of anticipation in Indian Country, since “complete application packages” have all-too-frequently lingered for years without decision. However, we should clarify two important caveats.

First, there are no defined mandatory timelines required for interim steps such as completion of the National Environmental Policy Act (NEPA) process, removal of unacceptable encumbrances, completion of a Carcieri analysis (where required), or completion of title and land description reviews.

Second, we would note that a two-part determination—which applies to many of the more recent applications that involve gaming—can be a very subjective process fraught with uncertainty that, at the end of the day, is subject to a governor’s veto.

Implications

In summary, while the revised rules are highly welcomed by tribal authorities, expectations related to new gaming developments should be tempered.

While the new rules could lead to an uptick in fee-to-trust for general economic development, they are unlikely to cause a dramatic increase in the viability of new gaming-related off-reservation trust acquisitions. The new FTT rules in no way alter or streamline the process for determining whether a newly acquired trust property may be eligible for gaming under IGRA (codified at 25 CFR Part 292).

That said, the new rules could have a measurable impact on timelines for complex initial-reservation or off-reservation FTT applications that currently have the potential to be delayed due to consideration of the “need” for the acquisition and/or the distance from the applicant tribe’s reservation/tribal headquarters.

A Word on Compact Rules

The parallel effort regarding Class III gaming compacts (codified at 25 CFR Part 293) involves issues that are more complicated and fraught. Since the existing 293 regulations address procedural matters only, Interior is seeking to codify substantive regulations (which currently exist in the form of decision letters and interpretation of case law) to “provide certainty and clarity on how the secretary will review certain provisions in a compact.”

While we don’t have the opportunity to detail the proposed draft 293 regulations in this article, we would note that commercial gaming interests have raised concerns during the public comment period, and there were also differing opinions among tribal leaders during the initial consultation.

A particularly thorny issue involves iGaming, which current rules do not address. The “overwhelming majority” of tribal leaders who submitted comments agreed that the regulations should “include provisions that facilitate statewide remote wagering or internet gaming,” although some were opposed for various legal and strategic reasons. The draft 293 regulations do include new language that clarifies iGaming may be an allowable provision in new or amended state compact agreements if certain criteria are met; however, the final rules may be modified pending Interior consideration of public comments.

We’ll be tracking how this extremely complex and contentious issue ultimately is resolved.