[Senate Hearing 112-628]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-628

 
                  ENERGY DEVELOPMENT IN INDIAN COUNTRY

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 16, 2012

                               __________

         Printed for the use of the Committee on Indian Affairs


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                      COMMITTEE ON INDIAN AFFAIRS

                   DANIEL K. AKAKA, Hawaii, Chairman
                 JOHN BARRASSO, Wyoming, Vice Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
KENT CONRAD, North Dakota            LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            JOHN HOEVEN, North Dakota
MARIA CANTWELL, Washington           MIKE CRAPO, Idaho
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
AL FRANKEN, Minnesota
      Loretta A. Tuell, Majority Staff Director and Chief Counsel
     David A. Mullon Jr., Minority Staff Director and Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 16, 2012................................     1
Statement of Senator Akaka.......................................     1
Statement of Senator Barrasso....................................     5
Statement of Senator Franken.....................................     4
Statement of Senator Johnson.....................................     2
Statement of Senator Tester......................................     2
Statement of Senator Udall.......................................     3

                               Witnesses

Anketell, Hon. Thomas ``Stoney'', Tribal Executive Board Member, 
  Assiniboine and Sioux Tribes of the Fort Peck Reservation......    46
    Prepared statement...........................................    48
Bordeaux, Hon. Rodney, President, Rosebud Sioux Tribe............    33
    Prepared statement...........................................    36
Gillette, Jodi, Deputy Assistant Secretary--Indian Affairs, U.S. 
  Department of the Interior.....................................    16
    Prepared statement...........................................    17
Jim, Hon. Rex Lee, Vice President, Navajo Nation.................    60
    Prepared statement...........................................    61
Kauhane, Michelle, Deputy Director, Department of Hawaiian Home 
  Lands, State of Hawaii.........................................    54
    Prepared statement...........................................    55
LeBeau, Tracey A., Director, Office of Indian Energy Policy and 
  Programs, U.S. Department of Energy............................     6
    Prepared statement...........................................     8
Pesata, Hon. Levi, President, Jicarilla Apache Nation............    40
    Prepared statement...........................................    41

                                Appendix

Crow Tribe of Montana, prepared statement........................    77
Cuch, Hon. Irene C., Chairwoman, Ute Tribal Business Committee, 
  Ute Indian Tribe of the Uintah and Ouray Reservation, prepared 
  statement......................................................    85
Hall, Hon. Tex G., Chairman, Mandan, Hidatsa and Arikara Nation 
  of the Fort Berthold Reservation, prepared statement...........    93
King, Hon. Randy, Chairman, Shinnecock Indian Nation, prepared 
  statement......................................................    89
National Congress of American Indians (NCAI), prepared statement.    96
Tri-State Generation and Transmission Association, Inc., prepared 
  statement......................................................   100


                  ENERGY DEVELOPMENT IN INDIAN COUNTRY

                              ----------                              


                      THURSDAY, FEBRUARY 16, 2012


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:15 p.m. in room 
628, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Committee, presiding.

          OPENING STATEMENT OF HON. DANIEL K. AKAKA, 
                    U.S. SENATOR FROM HAWAII

    The Chairman. I call this hearing of the Committee on 
Indian Affairs to order.
    Aloha, and thank you all for being with us today and taking 
the time to be with us today. Welcome to this oversight hearing 
entitled Energy Development In Indian Country.
    Native lands hold great potential for energy development. 
We all know that. Collectively, Tribal nations, Indian Tribes, 
Alaska Native, Native Hawaiians, are the third largest owners 
of mineral resources in the United States. Native lands are 
estimated to contain 3 percent of the known oil and gas 
reserves, as much as 30 percent of the coal west of the 
Mississippi and up to a third or more the Nation's uranium.
    Native lands are also geographically situated to become 
great producers of renewable energy resources, such as wind, 
solar and biomass. In Hawaii, we have been focusing on 
developing renewable energy resources to reduce our dependence 
on imported energy resources. I anticipate that the State of 
Hawaii Department of Hawaiian Home Lands will be sharing some 
of their innovative strategies to develop these resources on 
Hawaiian trust lands. Harnessing these vast energy resources 
means great economic development prospects for all, especially 
for Native communities. And the United States has a trust 
responsibility to ensure they can participate fully.
    Many Native communities are located away from major 
population centers where other forms of economic development 
are not feasible. Energy production provides jobs for Native 
and non-Natives alike. Developing energy resources at home also 
decreases our dependence on foreign energy sources.
    Like other areas of Indian policy, Congress has attempted 
to address energy development issues with limited success. Some 
barriers include administrative delays in permitting processes, 
State taxation of energy development on Tribal lands, and poor 
access to the transmission infrastructure to bring energy 
resources to market. Helping Tribes and Native communities 
develop their energy resources means a better quality of life 
for Native peoples and others living in the surrounding areas. 
Especially for insulated communities, energy self-sufficiency 
is key.
    I look forward to hearing from our witnesses about their 
ideas, concerns and solutions to increase the ability of Native 
communities to participate in energy production to meet their 
needs. Vice Chair Barrasso, my good friend from Wyoming, is my 
partner on this Committee. I am happy that we are able to work 
together on the important work of this Committee. When he 
comes, I will call on him to give his opening remarks. I want 
you to know I am proud to co-sponsor his bill on energy.
    So let me then call on our members here for any opening 
remarks that you may have. Senator Johnson?

                STATEMENT OF HON. TIM JOHNSON, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Johnson. Thank you, Mr. Chairman, for holding this 
hearing.
    I would like to welcome several witnesses who have ties to 
my home State of South Dakota. Welcome to all of the 
Administration officials, each of which is from the Great 
Plains region.
    In addition, I would like to welcome President Rodney 
Bordeaux, from the Rosebud Sioux Tribe.
    As you know, Mr. Chairman, in South Dakota we have several 
large land-based Tribes where unemployment can be as high as 80 
percent. For the Tribes in my region, energy development is 
economic development. We must do all that we can to assist our 
Tribes to navigate the Federal Government to bring economic and 
energy development to our Indian communities.
    I look forward to the testimony today, and thank you again, 
Mr. Chairman, for holding this hearing.
    The Chairman. Thank you very much, Senator Johnson, and for 
your leadership here in the Senate.
    Senator Jon Tester?

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman. I thank you for 
holding this important hearing and I want to welcome our 
witnesses.
    A special welcome to Stoney Anketell, thank you very much 
for coming all the way from the Fort Peck Assiniboine and Sioux 
Tribes based in Poplar, Montana. It is a long trip, indeed, and 
I want to thank you for taking the time to travel out here. We 
look forward to your testimony on the second panel, and your 
experience, particularly as it applies to the Bakken formation, 
what you have seen so far and what you anticipate seeing into 
the future. I know there are other Montanans here today, and I 
appreciate those as well as everybody here to hear this 
testimony. This is a very, very important issue.
    This hearing is important because energy development in 
Indian Country has the potential to improve lives for everybody 
that lives in Indian Country and indeed, the entire United 
States. It has the power to provide badly-needed economic 
development in many reservations that need economic 
development, and it will help America wean ourselves off of our 
dependence on energy from outside our borders.
    However, as with any powerful tool, it has the potential to 
be used for both good and bad purposes. I want to make sure 
that our Tribes have the opportunity to take advantage of the 
traditional forms of energy and the emerging renewable energy 
markets. I want to make sure the Tribes are not negatively 
impacted by those activities in terms of public safety or wear 
and tear on infrastructure, housing, cultural and environmental 
degradation, and the list goes on.
    By communicating with each other and by working together, 
we are going to be able to use this powerful tool of energy 
development to empower Indian Country to be strong, self-
sufficient, while maintaining important individual cultural 
identities. Once again, I just want to thank you, Mr. Chairman, 
for holding this hearing. I look forward to the testimony of 
the people who are on the panels.
    The Chairman. Thank you very much, Senator Tester.
    Senator Tom Udall.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you. We really appreciate, Chairman 
Akaka and Vice Chairman Barrasso, your holding this very 
important oversight hearing.
    I would also like to recognize and give warm welcome to two 
individuals who will be joining us on the second panel: the 
Honorable Levi Pesata, President of the Jicarilla Apache 
Nation, and he is accompanied by several of his council 
members; and the Honorable Rex Lee Jim, Vice President of the 
Navajo Nation. Both of these men lead Tribes that have been 
very successful in a range of energy development activities. I 
urge our Administration witnesses to listen to their testimony 
and concerns closely and be as responsive as possible.
    I would also like to thank the Department of Energy for the 
Tribal energy grants announced today worth close to $1.3 
million to jump start renewable energy projects on Tribal lands 
within New Mexico. The Navajo-Hopi Land Commission is receiving 
$347,000 for feasibility studies for renewable energy on Navajo 
lands, where up to 4,000 megawatts of solar can be developed. 
Tahaduli Economic Development, Inc. is receiving $300,000 to 
conduct pre-construction activities for 30 megawatts of solar. 
Jemez and Zia Pueblos are also receiving funds for solar and 
biomass development and construction projects.
    Tribal lands have great energy potential, both renewable 
and traditional fossil fuel resources. The Department of 
Interior holds a very serious trust responsibility to Tribal 
nations in this regard. They are charged with protecting Tribal 
nations' interests in their rightfully-owned resources.
    However, those protections should not be burden to 
responsible development. This hearing is urging the Department 
to make Tribal development more efficient in order to spur 
economic development.
    Tribal nations also know the importance of protecting the 
environment. New Mexico Tribes have felt a legacy of 
contamination from uranium mining and sacred sites are still at 
risk. I believe that Tribal nations can become leaders in 
responsible energy development. But the Federal Government must 
fulfill its trust responsibilities to allow this to happen.
    Thank you, Mr. Chairman. I notice this poster here that 
talks about did you know. Those four or five facts on there are 
so important to what the Tribes have to offer to the Nation and 
to themselves as to the potential for energy development.
    Thank you, Chairman Akaka.
    The Chairman. Thank you very much.
    Let me save Vice Chair Barrasso and call on Senator Al 
Franken for your opening remarks.
    Senator Franken. Save the Vice Chair for last, good choice.

                 STATEMENT OF HON. AL FRANKEN, 
                  U.S. SENATOR FROM MINNESOTA

    Thank you, Mr. Chairman, for this important hearing. Energy 
development in Indian Country is a top priority for me. Our 
Country is in the midst of a major transition in the way we 
produce and the way we use energy. There is no doubt that clean 
energy development is a powerful tool to create jobs and foster 
economic development in communities all across the Country. And 
nowhere is that more urgent than in Indian Country, where 
unemployment rates can be 40, 50 percent or higher, and where 
vast energy resources are going untapped.
    Tribes in Minnesota fully understand this potential. The 
White Earth Band of Ojibwe in northern Minnesota erected a 750 
kilowatt wind turbine. And they did actually get a feasibility 
grant today from the Energy Department on a combined heat and 
power facility that would run completely on biomass. So I want 
to thank the DOE for that.
    In northeastern Minnesota, the Fond du Lac Band of Ojibwe 
has built a biomass pilot project that uses waste woody mass 
from surrounding forests. It is a very wooded area of 
Minnesota.
    And just this January, I toured the Shakopee Sioux 
community and they have built a 12.5 megawatt, again, combined 
heat and power plant that runs on waste agricultural biomass 
from the local area. Electricity from the plant is sold on the 
open market and the excess heat is captured and used in a 
nearby malt manufacturing plant.
    There are more examples like this from Tribes in Minnesota. 
They are a testament to the fact that Tribes are engaged in 
energy development and looking for ways to scale up these 
projects. But most Indian energy development successes have 
been on a very small scale. Broader energy development on 
Tribal lands is still a missed opportunity, as that chart so 
well shows.
    As I have talked to Minnesota Tribes about energy 
development, I keep hearing the same issue over and over again: 
lack of access to financing, regulatory hurdles and 
administrative delays. I look forward to discussing these 
issues in more detail today and hearing from all the witnesses 
who I want to thank for your presence. I want to thank again 
the Chairman and the Vice Chairman for holding this important 
hearing. Thank you.
    The Chairman. Thank you very much, Senator Franken.
    And now I would like to call on my good friend from 
Wyoming, Vice Chair Barrasso, who is my partner. We have worked 
well together and I want you to know that he has taken a lead 
position on Indian energy development. I am proud to co-sponsor 
his bill and look forward to doing that.
    Senator Barrasso, will you please.

               STATEMENT OF HON. JOHN BARRASSO, 
                   U.S. SENATOR FROM WYOMING

    Senator Barrasso. Thank you very much, Mr. Chairman. Thank 
you for holding this important hearing on one of our 
Committee's highest priorities.
    I want to thank you personally for the cooperation we have 
had and for your co-sponsorship of the bill that I have been 
working on. I know we have additional hearings scheduled for 
next month on the specifics of that bill.
    When I meet with the Tribal leaders in Wyoming, I am 
reminded of how important energy development is to our Indian 
communities. As Senator Franken just said, there continues to 
be hurdles, challenges, and delays. There have been successes, 
but they have been too small. We need to do more.
    Both on and off the reservation, energy development means 
jobs. Energy means royalty income for individual Tribal members 
and for Tribal governments. That is true not just in Wyoming 
but all over the Country.
    Energy development, of one sort or another, translates to 
jobs and income on many of our Country's Indian reservations. 
This Committee can address key issues relating to energy that 
will improve Tribes' abilities to develop their own energy 
resources.
    What we need to do is remove unnecessary regulatory 
barriers to energy development. That would actually help in a 
couple of important areas: it will bring jobs and economic 
prosperity to our Country's Indian reservations and it will 
help our Country achieve energy independence.
    Not surprisingly, the Federal Government is often at cross 
purposes with itself, and we see this, certainly in this 
community and in this Committee. By over-regulating energy 
development in Indian Country, the Government inhibits the 
creation of desperately needed jobs, and it puts an unnecessary 
barrier in the pathway to energy security. NEPA can do that, as 
can some of the EPA's rules and regulations.
    It is my hope, Mr. Chairman, that we can address these and 
other impediments to development on Indian lands. With that 
said, I want to thank our witnesses for being here today and 
thank you, Mr. Chairman, for your continued leadership.
    The Chairman. Thank you very much, Senator Barrasso.
    As Chairman, it is my goal to ensure that we hear from all 
who want to contribute to the discussion. So the hearing record 
is open for two weeks from today and I encourage anyone 
interested to submit their comments through written testimony.
    I want to remind the witnesses to please limit your oral 
testimony to five minutes today.
    Serving on our first panel is Ms. Tracey LeBeau, Director 
of the Office of Indian Energy Policy and Programs at the 
Department of Energy; and Ms. Jody Gillette, Deputy Assistant 
Secretary, Indian Affairs for Policy and Economic Development 
at the Department of Interior. Ms. Gillette is accompanied by 
Mr. Mike Black, Director of the Bureau of Indian Affairs at the 
Department of Interior.
    I want to welcome our panel here and look forward to your 
testimony. Ms. LeBeau, will you please proceed with your 
testimony?

      STATEMENT OF TRACEY A. LeBEAU, DIRECTOR, OFFICE OF 
            INDIAN ENERGY POLICY AND PROGRAMS, U.S. 
                      DEPARTMENT OF ENERGY

    Ms. LeBeau. Thank you very much.
    Good afternoon, Chairman Akaka, Vice Chairman Barrasso, 
members of the Committee. I thank you very much for the 
opportunity to appear before you today to discuss the 
Department of Energy's energy programs and initiatives to 
support Indian energy development.
    My written submission, of course, goes into much more 
detail about the array of programs that DOE is leading to 
support Indian energy development. In the time I have today, I 
am going to update you on the status of this new office as well 
as focus more narrowly on the new and ongoing initiatives led 
by this new office.
    Since my appointment and taking office approximately one 
year ago, the Office of Indian Energy has been stood up and is 
now a formal program office within the Department, which now 
sits alongside our other sister offices, the Office of Energy 
Efficiency and Renewable Energy, the Office of Fossil Energy, 
Office of Nuclear Energy and the Office of Electricity Delivery 
and Energy Reliability, all of whom report to DOE's 
Undersecretary.
    The U.S. Department of Energy's Office of Indian Energy is 
statutorily charged to direct, foster, coordinate and implement 
energy planning, education, management, conservation and 
delivery of programs, to assist Tribes with energy development, 
capacity building, energy infrastructure, energy costs and 
electrification in Indian Country.
    Since joining DOE a little more than a year ago, I have 
been committed to undertaking the following strategic 
programmatic and administrative activities. First, reaching out 
into Indian Country to understand really what the high priority 
needs are for energy development and how this office can help 
address those needs, based on feedback from Indian Country 
directly and develop programs and policies to fill gaps in 
current departmental programs.
    Second, to work within the Department to leverage many of 
our resources, financial as well as technical, to promote 
Indian energy development throughout the Department and to 
institutionalize Indian energy development within the 
Department.
    Third is to develop programs to provide Tribal leader 
education, strategic targeted technical assistance for Tribes 
on energy project development, information on transmission and 
electrification, innovative project development and best 
practices for Tribes.
    And finally, to coordinate resources across the agencies to 
promote Indian energy development generally.
    In doing so, one of the things we wanted to point out and 
jut remind is that the Administration is committed to safely 
and responsibly harnessing America's domestic energy resources 
to power our national economy. Our office's charge is very 
broad in terms of the scope of energy development we are 
directed to facilitate for Tribes, ranging from conventional 
energy to cutting edge energy development. So our approach is 
an all-out, all of the above strategy, which does include clean 
energy resources such as wind and solar, but also traditional 
energy resources such as coal and natural gas, as well as 
improving infrastructure needed to deliver this energy.
    It is a fact that Tribes have shown a very high motivation 
to pursue expanded clean energy development. So our office 
initiatives that are taking root in Indian Country are a direct 
reflection of the innovation and the promise of the next 
generation of Tribal energy development.
    Our priority is in designing and implementing new programs 
in very close collaboration with Tribal leaders and Tribal 
experts that will accelerate energy development in Indian 
Country by providing reliable and accurate information, quality 
training and technical assistance. We are seeking to further 
empower Tribal leaders to make informed energy decisions and 
promote community economic development and job creation and 
advance Tribal clean energy ventures.
    Shortly after I was appointed, I asked the National 
Renewable Energy Lab to update all of our renewable energy 
estimates for Indian Country. Based on the 2011 data provided 
by DOE's lab, NREL, using updated analysis and modeling tools, 
the estimated maximum renewable energy resource potential in 
Indian lands is in the millions of megawatts of nameplate 
capacity.
    Solar and wind are the primary energy resources that 
contribute to this potential. Although it would not be 
realistic to blanket Indian Country with solar panels or wind 
turbines, those numbers certainly illustrate the vast amount of 
resources potentially available. When combined, it is clear 
that further development of these resources in Indian Country 
provide an incredible opportunity not only to increase Tribal 
energy reliability and self-sufficiency but also provide an 
opportunity for Tribes to contribute to the Nation's energy 
security goals.
    There are many critical factors to building sustainable 
economies around energy. Key amongst those factors are policy 
support, strong collaborative partnerships and understanding of 
issues affecting the hoped-for outcomes and of course, 
designing appropriate response.
    Some of the areas that we have been focusing most of our 
programmatic activities on is in technical assistance. We have 
initiated a strategic technical assistance program for Tribes, 
which we are in the process of making final selections for 
applications that have been received in the last two months.
    Interestingly enough, that was one of the primary areas, 
when we went out to Indian Country and spoke directly to Tribal 
leaders across the Country, the most requested thing from the 
Department of Energy was our technical assistance. And that is 
where we are focusing most of our activities and our funding on 
right now.
    I just want to finish up by also mentioning, and you all 
also acknowledged it today, that we have traditionally, our 
Office of Energy Efficiency and Renewable Energy's Tribal 
Energy Program, since 2005, has been implementing the Office of 
Indian Energy's Title V grant authority and has been providing 
funding related to renewable energy and energy efficiency. This 
program has been a really valuable investment in Indian Country 
and since 1994, DOE has funded a total of 210 Tribal energy 
projects and invested over $45 million in Indian Country. 
Today, we are proud to announce, as prat of the Obama 
Administration's commitment to strengthening partnerships with 
Tribal nations and supporting Tribal energy development, 
Secretary Chu announced today that 19 clean energy projects 
will receive more than $6.5 million. These competitively-
selected projects will allow Native American Tribes to advance 
clean energy within their communities by assessing local energy 
resources, developing renewable energy projects to their next 
level, and for installing clean energy technologies on Indian 
lands.
    These projects selected reflect a very innovative and 
exciting way to approach clean energy development and 
deployment and will help Tribal communities across the Country 
save money and create new jobs and business opportunities.
    I am going to conclude my remarks there and thank you again 
for asking me to be here today. I am available for questions.
    [The prepared statement of Ms. LeBeau follows:]

  Prepared Statement of Tracey A. LeBeau, Director, Office of Indian 
         Energy Policy and Programs, U.S. Department of Energy
Introduction
    Good afternoon, my name is Tracey A. LeBeau, Director of the Office 
of Indian Energy Policy and Programs at the U.S. Department of Energy 
(DOE) and a member of the Cheyenne River Sioux Tribe. Thank you Mr. 
Chairman for extending the invitation to testify before the Committee 
on energy development in Indian Country. I am honored to be here to 
testify before the Committee on behalf of Secretary Steven Chu.
Background and Executive Summary of Accomplishments to Date
    The U.S. Department of Energy Office of Indian Energy is charged by 
Congress to direct, foster, coordinate, and implement energy planning, 
education, management, conservation, and delivery programs that assist 
Tribes with energy development, capacity building, energy 
infrastructure, energy costs, and electrification of Indian lands and 
homes. This Office has four statutory goals:

   Promote Indian tribal energy development, efficiency, and 
        use;

   Reduce or stabilize energy costs;

   Enhance and strengthen Indian tribal energy and economic 
        infrastructure relating to natural resource development and 
        electrification; and

   Bring electrical power and service to Indian land and the 
        homes of tribal members.

    To accomplish these goals, Title V of the Energy Policy Act of 2005 
(EPAct) conferred my Office the authority to provide grants, including 
formula grants or grants on a competitive basis to eligible tribal 
entities. Grants may be used for establishing programs to assist 
consenting Indian Tribes in meeting energy education, research and 
development, planning, and management needs, including:

   Energy generation, energy efficiency, and energy 
        conservation programs;

   Studies and other activities supporting tribal acquisitions 
        of energy supplies, services, and facilities, including the 
        creation of tribal utilities to assist in promoting 
        electrification of homes and businesses on Indian land;

   Planning, construction, development, operation, maintenance, 
        and improvement of tribal electrical generation, transmission, 
        and distribution facilities located on Indian land;

   Development, construction, and interconnection of electric 
        power transmission facilities located on Indian land with other 
        electric transmission facilities;

   Developing a program to support and implement research 
        projects that provide Indian Tribes with opportunities to 
        participate in carbon sequestration practices on Indian land; 
        and

   Encouraging cooperative arrangements between Indian Tribes 
        and utilities that provide service to Tribes.

    Since joining DOE a little more than a year ago, I have been 
committed to accomplishing four strategic programmatic and 
administrative goals:

        1.  Fully implement Congressional stated goals for energy 
        development in Indian Country, as found in Title V of the 
        Energy Policy Act of 2005;

        2.  Reach out to Indian Country to understand what the high 
        priority needs are for energy development and how this Office 
        can help address those needs, and based on feedback from Indian 
        Country, develop policies and programs to fill gaps in current 
        Department programs;

        3.  Work within the Department to leverage the many resources--
        financial and technical--to promote Indian energy development 
        throughout the Department and to institutionalize Indian energy 
        development; and

        4.  Coordinate resources across agencies to promote Indian 
        energy development.

    In that same time period, the DOE Office of Indian Energy has:

   Conducted a major outreach initiative to Indian Country 
        through eight roundtable discussions with tribal leaders around 
        the country to discuss current needs and priorities related to 
        Indian energy policy and programs;

   Established the Indian Country Energy and Infrastructure 
        Working Group, an informal group of tribal leaders that 
        provides input and recommendations to the DOE Office of Indian 
        Energy on issues related to energy development and 
        opportunities in Indian Country;

   Developed programs that provide tribal leader energy 
        education, strategic and targeted technical assistance for 
        Tribes on renewable energy project deployment, information on 
        transmission and electrification, innovative project 
        development, and best practices forums for tribal leaders; and

   Supported interagency coordination efforts to promote energy 
        development in Indian Country.

    More details about these efforts, as well as future plans are 
provided below.
    My testimony today will touch on some of our efforts to fulfill 
congressional and Administration goals. My written testimony goes into 
considerably more detail regarding these activities.
Pursuing Sustainable Energy Development in Indian Country
    The Administration is committed to safely, responsibly harnessing 
America's domestic energy resources to power our economy--from oil and 
gas to clean coal to nuclear energy to renewable energy and energy 
efficiency. Our Office's charge is also broad in terms of the scope of 
energy development we are directed to facilitate in Indian Country--
including renewable energy sources such as wind and solar and 
traditional energy sources such as coal and natural gas, as well as 
improving the infrastructure needed to deliver this energy. However, 
Tribes have shown a high motivation to pursue expanded clean energy 
development. It is our strong belief that the new DOE Office of Indian 
Energy initiatives that are taking root in Indian Country are a direct 
reflection of the innovation and the promise of the next generation of 
tribal energy development. Our priority is in designing and 
implementing new programs in close collaboration with tribal leaders 
and tribal experts that will accelerate energy development in Indian 
Country. By providing reliable and accurate information, quality 
training, and technical assistance, we seek to further empower tribal 
leaders to make informed energy decisions that promote community 
economic development and job creation, foster energy self-sufficiency 
and self-determination, and advance tribal clean energy visions.
    Shortly after being appointed, I asked the National Renewable 
Energy Lab to update all the renewable resource estimates in Indian 
Country. Based on 2011 data provided by DOE's National Renewable Energy 
Laboratory using updated analysis and modeling tools, the estimated 
maximum renewable energy resource potential on Indian lands is millions 
of megawatts (MW) of nameplate capacity. Solar and wind are the primary 
energy resources that contribute to this potential. These estimates do 
not, however, take into account cost, transmission access, or other 
critical constraints on renewable energy deployment, and they assume 
that all land that is not protected, impervious to (or too small for) 
system installation, or clearly ill-suited for the technology is used 
for generation. Most of these resources will not be economical to 
access and there are competing land-use constraints. Although it would 
not be realistic to blanket Indian Country with solar panels or wind 
turbines, these numbers certainly illustrate the vast amount of 
resources potentially available. These resources are generally regional 
and geographic in nature: solar in the southwest, wind in the plains, 
biomass in the northwest and east, and geothermal in the West.
    When combined, it's clear that further development of these energy 
resources in Indian Country provide an incredible opportunity to not 
only increase tribal energy reliability and selfsufficiency, but also 
provide an opportunity for Tribes to contribute to the nation's energy 
security goals.
Energy Economies in Indian Country that are Built to Last
    There are many critical factors to building sustainable economies 
around energy. Key among those factors are policy support, strong 
collaborative partnerships and understanding of issues affecting the 
hoped for outcomes, and of course designing appropriate responses to 
meeting the challenges identified.
Policy Support
    President Obama and Secretary Chu have been extremely supportive of 
improving the economy of Tribal communities through enhanced energy 
development.
    At the 2011 White House Tribal Nations Conference, the President 
stated:

         ''While our work together is far from over, today we can see 
        what change looks like. It's the Native American-owned small 
        business that's opening its doors, or a worker helping a school 
        renovate. It's new roads and houses. It's wind turbines going 
        up on tribal lands, and crime going down in tribal communities. 
        That's what change looks like.''

    At DOE's Tribal Summit, held May 2011, the Secretary reaffirmed his 
commitment to Indian energy development. The summit provided a historic 
opportunity for the Department and tribal leaders to discuss a broad 
range of critical energy and environmental issues in Indian Country. 
Secretary Chu said, ``By working together, we can promote economic 
development and help many more tribes and villages seize the clean 
energy opportunity.''
    In support of this commitment, Secretary Chu announced three key 
initiatives to support DOE's goals of promoting Indian energy: (1) the 
creation of the previously mentioned Indian Country Energy and 
Infrastructure Working Group (ICEIWG); and (2) intent to issue policy 
guidance to the Department to implement the Title V provision on giving 
preference to tribal majority-owned businesses for DOE acquisition of 
electricity, energy products, and by-products. DOE also supports a 
number of programs that provide technical assistance to Indian tribes, 
including the Strategic Technical Assistance Response Team (START) 
initiative to help advance clean energy development in tribal 
communities, as described later in this testimony.
    The Indian Country Energy and Infrastructure Working Group was 
established in August 2011. The working group provides advice and 
recommendations to the Director of the DOE Office of Indian Energy 
Policy and Programs and to the Secretary of Energy on the strategic 
planning and implementation of the Department's energy resource, energy 
technology, and energy infrastructure development programs. To provide 
the most relevant and up-to-date perspectives, the ICEIWG is comprised 
of five (5) elected tribal leaders from Tribes that are actively 
developing or have established energy projects, or can demonstrate 
business interest in energy development. This composition of tribal 
leaders enables ICEIWG to provide technical and experienced analysis 
and feedback to the Office of Indian Energy and DOE on complex energy 
development issues.
    We also have been working since May 2011 with several DOE offices, 
including the Office of Procurement, Federal Energy Management Program, 
Office of Policy, Office of Economic Impact and Diversity, Western Area 
Power Administration (WAPA), and the Bonneville Power Administration 
(BPA) to implement Secretary Chu's directive to develop policy guidance 
to implement the Indian energy procurement preference provision. 
Section 503 in Title V of the Energy Policy Act of 2005 (codified at 25 
U.S.C. 3502(d)) grants DOE new authority to give preference to tribal 
majority-owned business organizations when purchasing electricity, 
energy products, and energy by-products. This procurement preference is 
intended to promote energy development in Indian Country by providing 
federal agencies the discretion to give tribal majority-owned business 
organizations preferred access to the Federal Government marketplace 
for electricity, energy, and energy by-products.
    Promoting tribal renewable energy development further enables 
economic development in Indian Country, and also helps meet the 
Administration goals on the acquisition and use of clean energy.
Strong Partnerships and Common Challenges
    I began my appointment by meeting with tribal leaders in their 
communities to hear first-hand about the obstacles, issues, and 
opportunities for energy development in Indian Country. During the 
eight roundtable discussions with tribal leaders that I mentioned 
earlier, we learned about these as well as the needs, priorities, and 
possible solutions related to: conventional and renewable energy 
development; transmission and infrastructure; public-private 
partnerships; energy efficiency and management; education and workforce 
development; funding and tax incentives; and leveraging, coordinating, 
and optimizing federal resources and programs. The feedback from tribal 
leaders and organizations fed into Secretary Chu's Tribal Summit in May 
2011 and the program initiatives developed by the Office of Indian 
Energy to fulfill its statutory mandates and the Administration's 
energy policy priorities.
    We also have taken time to evaluate the thrust of many of our 
programs to date, including the grants offered through the Office of 
Energy Efficiency and Renewable Energy's Tribal Energy Program. Below 
are important lessons learned we would like to highlight:

        1)  There has been considerable focus on commercial-scale 
        projects--both by DOE and in Indian Country. Commercial-scale 
        projects are typically developed to sell the electricity 
        generated into the marketplace. This focus is understandable, 
        given the revenue potential of these large scale projects. In 
        our view, however, there is a considerable opportunity in 
        community-scale and facility-scale energy generation, as well 
        as energy efficiency. Community-scale and facility-scale 
        projects are developed to provide electricity to the local 
        community (housing) or on-site (government buildings, community 
        buildings). These types of projects allow tribes to marshal 
        their resources to generate their own energy and electricity; 
        reduce and/or stabilize their energy costs; create jobs in the 
        construction, operation, and maintenance of these systems; 
        promote energy reliability and self-sufficiency; and promote 
        reservation economic development.

        2)  Key obstacles to commercial-scale energy development in 
        Indian Country include:

          a.  Cost to build projects and the financing and funding 
        options available for construction projects;

          b.  Access to transmission and the grid, and distribution of 
        the electricity generated from projects; and

          c.  Securing buyers who are willing to purchase renewable 
        energy at the cost to produce the energy.

        3)  The current commercial-scale energy development in Indian 
        Country has been almost exclusively in the purview of third-
        party developers who lease land from Tribes to build renewable 
        energy projects in Indian Country. There are three primary 
        reasons for this: (1) the current projects under consideration 
        cost hundreds of millions to build; (2) tax credit incentives 
        (which reduce the net private-sector cost to build projects, 
        and thus reduce the cost to produce electricity) promote third 
        party development and ownership by taxable entities, and (3) 
        extensive expertise--everything from siting, to transmission, 
        to finding a buyer, to negotiating a power purchase agreement--
        is needed to build commercial-scale projects.

        4)  Tribes have become more interested in community-scale, 
        facility-scale development for a number of reasons, including 
        the success of the EECBG program, state and utility companies' 
        incentives that pay for on-site generation, and reducing or 
        stabilizing costs.

        5)  The level of energy education and knowledge is still 
        lacking. This is not necessarily based on capacity; even some 
        Tribes that are very sophisticated in business practices and 
        investments lack a fundamental understanding of how the 
        renewable energy industry works. But, the impact can be most 
        challenging for Tribes that lack financial, human, and 
        technical resources to evaluate and develop energy projects on 
        their lands.

        6)  We have focused some of our efforts on the unique energy 
        situation for Alaska Native villages. Those challenges include 
        remote locations, no grid connection (for most Alaska Native 
        villages), and a harsh environment (weather and location). 
        However, Alaska possesses a large amount of renewable 
        resources, especially wind, tidal, hydro, and biomass. 
        Unfortunately, because of the environment, much of these 
        resources are ``stranded,'' meaning we cannot get them to 
        market.

        7)  In many respects, there are several issues shared between 
        Alaska Native villages and smaller tribes in the contiguous 
        states, including: remote locations (cannot access transmission 
        grids), small land bases (insufficient for commercial-scale and 
        even sometimes community-scale development), small populations 
        (they lack the human resource capacity for comprehensive energy 
        development), and scarce financial resources.

        8)  Lastly, given this information, our primary short term goal 
        has been to develop several programs to respond to the issues, 
        obstacles, and opportunities in Indian Country so that we can 
        see more implementation of successful, cost-effective projects.

Designing Programs to Meet the Challenges
    The topic of Indian energy development has been contemplated since 
the first oil wells were drilled on Indian lands in Oklahoma. Since 
that time there have been numerous attempts through laws and programs 
to add greater value to Indian economies through the use of energy 
resources. Today, the Department of Energy is arraying a number of 
resources and types of expertise to strengthen American Indian and 
Alaska Native economies through energy development.
DOE Office of Indian Energy
    My Office has recently launched several programs and initiatives to 
promote energy development in Indian Country.
    START Program. The Strategic Technical Assistance Response Team 
(START) initiative is a DOE Office of Indian Energy project aimed at 
advancing next-generation energy development in Indian Country. The 
START initiative is focused on the 48 contiguous states and Alaska. It 
is led by a technical assistance team comprised of experts from DOE and 
its National Renewable Energy Laboratory (NREL). For the 48 contiguous 
states, early-stage project development technical assistance will be 
provided through the START program to selected projects. DOE and NREL 
experts will work directly with community-based teams and tribal legal/
finance specialists to further develop market feasibility assessments; 
due diligence research, analysis, and documentation; and early pre-
development work to prepare site control, verify resource, prequalify 
off-take agreements and strategy, and produce a permitting plan.
    In Alaska, we have teamed up with the Denali Commission to 
specifically assist in the development of tribal energy planning for 
Alaska Native entities. This includes a competitive technical 
assistance opportunity aimed at:

   Reducing the cost and price of energy for Alaska Native 
        consumers and communities;

   Increasing local energy knowledge capacity, energy 
        efficiency, and conservation through training and public 
        education; and

   Increasing clean energy deployment and financing 
        opportunities for communities and utilities.

    We announced the START initiative in December 2011 at the White 
House Tribal Nations Conference, with an application deadline of 
January 15, 2012. We received 24 applications for Alaska, and 22 
applications for the lower 48 states. We currently are reviewing those 
applications.
    Tribal Leader Training. The Tribal Leader Energy Education 
Initiative is the DOE Office of Indian Energy's training program and 
curriculum for tribal leaders on renewable energy project development 
and financing, including how to build a framework for tribal project 
development and ways to identify likely projects. We piloted initial 
curriculum at the National Congress of American Indians Annual 
Convention in November 2011, and we continue to provide training to 
Tribes online via webcasts and in person at tribal conferences. In 
addition to the training curriculum, we also initiated a series of 
Tribal Leader Forums to bring tribal leaders, federal agencies, and 
industry together to have in-depth discussions about particular aspects 
of energy development. We have already held two forums--one on solar 
energy development in the southwest and one on transmission and clean 
energy integration. We are planning several more, including a 
conventional energy forum and a forum on investment and project finance 
opportunities.
    Education and Capacity Building. In addition to the tribal leader 
training curriculum, we are expanding our curriculum to address the 
need for expanded understanding by tribal financial officers, 
attorneys, and executives on project development and project finance. 
This in-depth training is designed to build capacity for the tribal 
professionals who support tribal leaders in making the key decisions on 
energy development projects.
    We also have an effort underway to create a document library and to 
put more of our training and education programs online and make them 
available on demand.
    Transmission and Electrification. Understanding the transmission 
grid, interconnection issues, and issues related to distribution of 
electricity also are critical for successful development of energy 
projects, whether commercial or community scale. We are working with 
our partners in DOE to ensure tribal participation in the transmission 
planning efforts DOE funds and participates in. Our transmission 
technical assistance program is designed to assist Tribes with 
preparing for participation in transmission planning, which will help 
them identify opportunities for their own clean energy development. As 
I mentioned above, we have already hosted a forum on transmission and 
clean energy development. We had more than 30 Tribes in attendance, 
with presentations from utilities, transmission planning authorities, 
WAPA, BPA, DOE, and other industry experts. We plan to continue to 
provide assistance to Tribes on transmission through a program that 
will focus on:

   Coordinating tribal input with national transmission 
        planning initiatives;

   Collaborating with Office of Electricity Delivery and Energy 
        Reliability (OE) and WAPA on a Pilot Tribal Transmission 101 
        Workshop;

   Collaborating with the Tribal Energy Program, OE, and WAPA 
        through a webinar series on Transmission Basics Training for 
        Tribal Decision Makers; and

   Working with OE and WAPA to map and create baseline studies 
        of transmission in Indian Country, and we also will update 
        information in a 2000 EIA report on electrification issues in 
        Indian Country.

    We also participate on the White House Rapid Response Team for 
Transmission (RRTT), an effort to improve the overall quality and 
timeliness of electric transmission infrastructure permitting, review, 
and consultation by the Federal Government on both federal and non-
federal lands.
Tribal Energy Program
    The DOE Office of Energy Efficiency and Renewable Energy's Tribal 
Energy Program was established under the Energy Policy Act of 1992 to 
implement DOE's responsibilities under that act. Since 2005, the 
program has been implementing the Office of Indian Energy's EPAct Title 
V grant authority and has been providing funding related to renewable 
energy and energy efficiency. In addition to competitive grants, the 
Tribal Energy Program offers financial and technical assistance for 
renewable energy feasibility studies and the initial steps toward 
developing renewable energy and energy efficiency projects, including 
strategic planning, energy options analysis, human capacity building, 
and organizational development planning.
    Since 1994, DOE has funded a total of 210 tribal energy projects 
and invested over $45 million. These grants primarily have funded 
resource assessment, feasibility studies, and strategic energy 
planning. Recently, grants have been awarded for pre-development, 
deployment planning, and energy efficiency projects. In FY 2011, the 
program awarded $5.6 million to 30 tribal energy assessments and 
initiatives to audit more than 200 tribal buildings and initiate 
strategies for the reduction of 30 percent in energy use in another 13 
tribal buildings. These funds also will assist Tribes in training 
tribal members, assessing clean energy options, and building energy 
organizations.
    The program also offers free technical assistance to Tribes (up to 
40 hours) which has focused much of its efforts on energy strategic 
planning, and also funds WAPA to conduct a limited number of pre-
feasibility studies on transmission capacity. The Tribal Energy Program 
has conducted annual workshops on energy development and energy 
efficiency, as well as regional workshops. Finally, the program has an 
annual conference for tribal grantees to showcase and discuss their 
projects that have been funded by DOE.
    Indian Country is bustling with energy development activity. Much 
of this activity is in the early phases and stages of development where 
Tribes are trying to determine next steps, understand their resources, 
negotiate with developers, work within their communities to develop 
support for energy development, and educate themselves. Some Tribes 
have been very successful at developing strategic energy plans and have 
some well-formed plans for energy development. Many also have begun 
actual deployment. Examples of how DOE has helped some Tribes include:

   Strategic energy planning with the Mescalero Apache and Gila 
        River Tribal communities provided by DOE's Sandia National 
        Laboratories.

   Forest County Potawatomi Tribe facility-scale development 
        through the Community Renewable Energy Deployment grant funded 
        by DOE through the American

    Reinvestment and Recovery Act of 2009 (Recovery Act) and the Energy 
Efficiency and Conservation Block Grant (EECBG).

   Delaware Nation facility-scale development through EECBG and 
        DOE state funds.

   Oneida Nation of Wisconsin Seven Generations waste-to-energy 
        project--in Green Bay with DOE state energy funding (and Bureau 
        of Indian Affairs loan guarantee).

Recovery Act Funding
    Through the Recovery Act, Congress appropriated billions of dollars 
for energy development and energy efficiency efforts. The largest 
effort was funding $3.4 billion dollars for the EECBG program. By 
statute, there is 2 percent set aside for Tribes within the EECBG 
formula grants. Under this set-aside DOE awarded $54 million in grants 
to more than 533 Tribes to create long-term energy plans, reduce energy 
use, and install clean energy projects within their communities. 
Original estimates from the Tribes indicate that under these 3-year 
projects, these funds will support more than 2,129 building retrofits, 
the installation of 1.4 MW of new wind and solar energy generation, and 
the development of more than 140 energy strategies.
    In addition, Tribes received Recovery Act funding through other 
programs. For example, the Forest County Potawatomi Tribe (mentioned 
earlier) received $2.5 million through the DOE Community Renewable 
Energy Deployment effort to help communities implement long-term 
renewable energy technologies, create jobs, and provide examples for 
replication by other local governments, campuses, and small utilities. 
The Forest County Potawatomi Tribe was the first community to complete 
their project--a rooftop solar photovoltaic installation on the Tribe's 
administration building in Milwaukee. It now serves as a showcase not 
only for Indian Country, but for other communities across the nation.
    Two Tribes--Pyramid Lake Paiute Tribe in Nevada and Pueblo of Jemez 
in New Mexico--received $5 million in grants under DOE's geothermal 
program. Both Tribes are using these funds to explore geothermal 
potential on their lands.
    Finally, the Navajo Tribal Utility Authority received a $6 million 
Smart Grid grant from OE to implement smart meters and upgraded grid 
technology.
Other DOE Office Support
    As stated earlier, one of our primary goals is to leverage existing 
DOE resources to promote and implement energy development in Indian 
Country. To that end, we have started coordinating discussions with 
several DOE offices and entities. For example, we currently are working 
with the Office of Energy Efficiency and Renewable Energy to 
incorporate Tribes into the Solar America Communities and Wind Powering 
America programs. We hope this coordination enables us to leverage the 
considerable technical assistance mechanisms developed by these 
programs for government and community leaders. These programs also have 
created educational materials by working with and learning from 
government leaders on implementing renewable energy policies and 
programs at the community level. It is our goal to leverage those 
lessons and best practices in Indian Country, so that we do not have to 
recreate the wheel and can apply proven techniques and technical 
assistance.
    To further support Tribes in clean energy and infrastructure 
development, WAPA and BPA continue to provide technical assistance and 
make training opportunities available to the Tribes in their regions. 
In conjunction with the DOE Office of Indian Energy and the Tribal 
Energy Program, WAPA is conducting a series of webinars that promote 
tribal energy sufficiency and foster economic development and 
employment on tribal lands through the use of renewable energy and 
energy efficiency technologies. The webinars will:

   Discuss methods for Tribes to evaluate and develop their 
        renewable energy resources;

   Help Tribes build the knowledge and skills essential for 
        sustainable energy projects;

   Outline a process of strategic energy planning for Tribes 
        interested in improving their energy sovereignty and local 
        economy;

   Provide renewable energy and energy efficiency information 
        for tribal decision makers; and

   Offer ways for Tribes and utilities to partner in renewable 
        energy and energy efficiency development.

    Through funding support from the Tribal Energy Program, WAPA also 
provides technical assistance to Tribes that request pre-feasibility 
studies on transmission capacity for potential commercial-scale 
development. WAPA also has worked with more than 100 tribal preference 
customers, receiving a total of 1.2 million MWh in generated 
electricity annually, ranging from 60 MWh to 182,000 MWh for different 
Tribes. WAPA has conducted two studies to specifically help Tribes 
overcome barriers to receiving federal allocation and integrate wind 
generation.
    BPA provides technical assistance to Tribes in the northwest. It 
has hosted Electric Utility System Operations training for regional 
Tribes that are developing tribal utility departments, marketing tribal 
energy resources, or developing tribal strategic energy plans. BPA also 
partners with Tribes to host a fall and spring tribal weatherization 
workshop to provide technical training assistance and networking 
opportunities for tribes who participate in the BPA low-income 
weatherization and energy efficiency program. Tribes who are served by 
public utility customers of BPA are eligible to participate.
    In June 2011, DOE announced a unique multi-year partnership between 
the American Indian Higher Education Consortium and the American Indian 
Science and Engineering Society (AISES) to bring science, technology, 
engineering, and mathematics (STEM) research and education funding to 
students at our nation's tribal colleges and universities (TCUs) and 
mainstream institutions. This partnership will provide a record-high 
amount of funding from the DOE to Indian students and tribal college 
faculty. DOE and its national laboratories' science resources will be 
integrated into the national American Indian STEM educational 
infrastructure, providing a significant contribution to the science 
education experience of American Indian students, particularly those 
pursuing careers in disciplines relevant to the DOE and its national 
laboratories.
    Through this 3-year program, American Indian students will be 
recruited to join student/faculty teams to participate in community 
energy projects on tribal lands, with the mentorship of DOE's national 
laboratories. Courses and workshops will be offered through a new 2-
week Energy Institute hosted by TCUs and the national laboratories, and 
a mentor pool of national laboratory personnel will be on hand to guide 
American Indian Research and Education Initiative (AIREI) faculty and 
student participants on education, research, and career topics. Each 
year for 3 years, AIREI will fund two student teams from TCUs and two 
student teams from mainstream institutions with active AISES chapters 
to work with DOE's national laboratories on energy research projects.
    The National Nuclear Security Administration's (NNSA) national 
laboratories have utilized their expertise to partner in scientific 
education initiatives and research projects in collaboration with 
tribal government partners. Just last week, Lawrence Livermore National 
Laboratory (LLNL) entered into a Memorandum of Understanding (MOU) with 
the Navajo Nation to provide technical assistance on the nation's 
efforts to develop renewable energy resources, clean coal technology, 
and carbon sequestration.
Setting Priorities in Fiscal Year 2013 Budget and Future Efforts
    The President's budget reflects his commitment to making the tough 
choices to reduce the deficit while investing in priorities that make 
America stronger. It's clear from the budget that America's nuclear and 
energy security are major priorities for the President. Within our 
budget we made choices and found ways to get the best value for the 
taxpayer.
    President Obama's budget for FY 2013 includes $2.5 million for the 
Office of Indian Energy and $7 million for the Tribal Energy Program. 
For the Office of Indian Energy, which is funded at $2 million in FY 
2012, this increased amount will allow us to maintain key initiatives 
while building on initiatives developed and executed in FY 2011 and FY 
2012. For example, we will continue to support the Indian Country 
Energy and Infrastructure Working Group. We will continue the START 
program to provide strategic and in-depth technical assistance to more 
Tribes in the continental U.S. and in Alaska. The additional funding 
will also allow us to expand our energy education efforts, including 
enhanced curriculum and delivery mechanisms, such as online and on 
demand e-learning education. The funding also will support more local 
or regional workshops and forums for tribal leaders and provide 
additional technical assistance on tribal energy development projects.
    We also intend to build on the many relationships and coordination 
efforts we have initiated with other federal agencies that provide 
support for energy development. Those agencies include the Department 
of the Interior (DOI), Department of Agriculture, Denali Commission in 
Alaska, Environmental Protection Agency, and the Department of 
Commerce. We have been working closely with DOI and the Department of 
Agriculture to better coordinate our grant and technical assistance 
efforts. We are participating with DOI on an interagency working group 
tasked with working on rural energy issues in Alaska. DOI also has 
joined our Alaska START program as one way to work on these issues 
together with the Denali Commission.
Conclusion
    Thank you for the opportunity to share the exciting things we are 
doing in collaboration and in partnership with Indian Country to 
promote energy development on Indian lands.

    The Chairman. Thank you very much, Ms. LeBeau.
    I want to tell the panel that your full statements will be 
placed in the record.
    Ms. Gillette, will you please proceed with your testimony?

         STATEMENT OF JODI GILLETTE, DEPUTY ASSISTANT 
  SECRETARY--INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR; 
   ACCOMPANIED BY MIKE S. BLACK, DIRECTOR, BUREAU OF INDIAN 
                            AFFAIRS

    Ms. Gillette. Good afternoon, Chairman Akaka, Vice Chairman 
Barrasso and members of the Committee. Thank you for the 
opportunity to provide the Department's statement today on 
energy resource development in Indian Country.
    The Department of Interior believes that environmentally 
responsible development of Tribal energy resources is critical 
to the economic viability of many American Indian Tribes and to 
the sustainability of many Alaska Native villages. As this 
Committee is aware, the Department holds in trust 55 million 
surface acres and 57 million acres of sub-surface mineral 
estates, and assists Tribes and Indian allottees in managing 
these lands and resources throughout Indian Country.
    Within Indian Affairs, the Office of Indian Energy and 
Economic Development, IEED, assists Tribes and allottees in the 
exploration and development of their energy and mineral 
resources while the Bureau of Indian Affairs, BIA, is 
responsible for approving industry leasing and development 
activities on Indian lands.
    In a recent report, the Department documented the critical 
role that energy and mineral development plays in Indian 
Country. For example, the BIE, Bureau of Indian Education, and 
IEED have an estimated economic impact of nearly $14.5 billion, 
85 percent of which is derived from energy and mineral 
development on Tribal lands. And this economic impact creates 
an estimated 136,000 jobs with over 120 of those jobs directly 
associated with energy and mineral development on Tribal lands.
    Last year, the U.S. GAO stated that the uncertainly in 
accruing land in trust for Tribes as a result of the Carcieri 
decision is a barrier to economic development in Indian 
Country. Since energy and mineral development is focused on 
Tribal lands, it is important to restate the Department's 
strong support for a Carcieri fix, and the Department continues 
to believe that legislation is the best mean to address the 
issues arising from the Carcieri decision.
    In addition, the President's 2013 budget request includes 
language reaffirming the Secretary's authority to take land 
into trust status for all federally-recognized Tribes. The 
Department is also cognizant that outdated regulations should 
work for Tribes and not serve as Federal road blocks. Thus, we 
have proposed new leasing regulations that streamline the 
process by which leases of Indian lands are approved, thereby 
promoting home ownership, economic development and renewable 
energy development on Tribal lands.
    These rules constitute the most significant and 
comprehensive reform to Indian land leasing rules in 50 years. 
We expect to publish final rules by June of this year.
    This reform underscores President Obama's commitment to 
empower Indian nations and strengthens their economies by 
expanding opportunities for Indian landowners and Tribal 
governments. In the last 25 years, Congress has provided about 
$83 million in funding to the Department for projects to assess 
and help develop energy and mineral resources information on 
Indian trust lands.
    Our Office of Indian Energy and Economic Development is 
working with Tribes to provide them the technical assistance 
they need from feasibility studies to the development and job 
creation phase. Since 2008, IEED has assisted Indian mineral 
owners in the negotiation of 48 Indian Mineral Development Act 
leases. These leases have the potential to produce over $20 
billion in revenue to the Indian mineral owner over the life of 
the leases through royalties and working interests.
    Energy production on Indian lands is not limited to 
production from oil, natural gas and coal. There is also 
significant potential for renewable resource development, and 
we are working with Tribes that are well-situated to 
participate in the Administration's New Energy Frontier 
initiative.
    To this end, the Department is also improving its 
coordination among the bureaus, allowing the BIA to take 
advantage of best practices that have been successful in 
developing other renewable energy projects on Federal lands. As 
a result, the Department has included Indian Country projects 
on the Department's renewable energy priority project list in 
2012, including a 350 megawatt solar project on the Moapa 
Paiute Reservation in Nevada. These projects utilize 
structured, regular calls between the cooperating agencies to 
coordinate their various processes concurrently rather than 
sequentially.
    The steps taken to address the increase in oil and gas 
activities on the Fort Berthold Reservation are another example 
of the Department's improved coordination. The IEED, BIA, BLM 
and other Department agencies have coordinated the oil and gas 
activity on the reservation. The overall goal is to expedite 
the processes within the Department and bridge lines of 
authority.
    The lessons learned from these coordinating activities will 
be applied in other areas as appropriate in both conventional 
and renewable energy development.
    This concludes my statement, and I am happy to answer any 
questions the Committee may have.
    [The prepared statement of Ms. Gillette follows:]

Prepared Statement of Jodi Gillette, Deputy Assistant Secretary--Indian 
                Affairs, U.S. Department of the Interior

    Good afternoon, Mr. Chairman and Members of the Committee. My name 
is Jodi Gillette, and I am the Deputy Assistant Secretary--Indian 
Affairs at the Department of the Interior (Department). I am 
accompanied by Karen Atkinson who is the Director of the Office of 
Indian Energy and Economic Development within Indian Affairs. Thank you 
for the opportunity to present testimony today concerning economic 
development opportunities available for American Indian and Alaska 
Native communities through energy resource development.
    The Department believes that environmentally responsible 
development of tribal energy resources is critical to the economic 
viability of many American Indian Tribes and to the sustainability of 
many Alaska Native villages. Energy and mineral development represents 
a near-term solution for many Tribes to promote economic development, 
small business, capital investment, Indian-owned businesses, and job 
creation for their tribal members.

Overview
    The Department holds in trust 55 million surface acres and 57 
million acres of subsurface mineral estates and assists Tribes and 
Indian allottees in managing these lands and resources throughout 
Indian Country. In consultation with tribes, the Office of Indian 
Energy and Economic Development (IEED) under the Assistant Secretary--
Indian Affairs have assisted Tribes and allottees in the exploration 
and development of 2.1 million acres of active and 15 million acres of 
potential energy and mineral resources. This activity includes 
collection of exploratory data and identification of energy resources, 
funding of and assisting in feasibility studies, market analyses and 
other resource development initiatives, as well as overseeing leases 
and agreements for oil, natural gas, coal and industrial mineral 
deposits located on Indian lands.
    Under the Assistant Secretary--Indian Affairs, the Bureau of Indian 
Affairs (BIA) is responsible for developing, implementing and reviewing 
bureau-wide policies, plans, processes, environmental impact studies, 
industry leasing and development activities, and other functions 
related to development and production of energy and mineral resources 
on Indian lands. The Assistant Secretary-Indian Affairs is also 
responsible for regulations related to Indian Country.
    On June 21, 2011 DOI published ``The Department of the Interior's 
Economic Contributions.'' \1\ This report documents the critical role 
that energy and mineral development plays in creating jobs and 
generating income throughout Indian Country.
---------------------------------------------------------------------------
    \1\ See http://www.doi.gov/ppa/upload/DOI-Econ-Report-6-21-
2011.pdf.
---------------------------------------------------------------------------
    Highlights include:

   BIA, Bureau of Indian Education (BIE), and IEED have an 
        estimated economic impact of $14.45 billion.

   85 percent ($12.3 billion) of this impact is derived from 
        energy and mineral development on tribal lands.

   The economic impact created by BIA, BIE and IEED create an 
        estimated 136,761 jobs.

    88 percent (120,934) of these jobs are directly associated 
        with energy and mineral development on tribal lands.

Surface Leasing Regulations
    The Department has proposed a new rule to remove federal roadblocks 
to economic development and to restore greater control to tribal 
governments in business and residential leasing, including wind and 
solar energy projects. The reform underscores President Obama's 
commitment to empower Indian Nations and strengthens their economies by 
expanding opportunities for Indian landowners and tribal governments. 
The Department published proposed rules for Federal surface leasing 
covering Indian trust lands on November 29, 2011. \2\ The public 
comment period for the rules ended on January 31, 2012. These rules 
constitute the most significant and comprehensive reform to Indian land 
leasing rules in 50 years. We included surface leasing provisions for 
wind and solar energy development in addition to other business and 
residential leasing and streamlined the process.
---------------------------------------------------------------------------
    \2\ See http://www.gpo.gov/fdsys/pkg/FR-2011-11-29/pdf/2011-
29991.pdf.
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    Provisions for wind energy leasing include a new two-step process 
whereby developers first obtain BIA approval of a short term lease 
which covers installation of equipment to evaluate the resource. This 
is followed by a second step, a wind resources lease which allows 
installation of turbines. The environmental review conducted for the 
short-term lease, which would only evaluates the impacts of the 
equipment, may be rolled into the environmental review conducted for a 
lease for full development of the project. This two-step process allows 
for quicker review for an evaluation lease and provides a basis for 
further environmental review when the wind energy equipment is to be 
installed.
    The proposed rules also set out a nationwide process for approval 
of mortgages, amendments and assignments to ensure consistency across 
BIA regions and set deadlines for BIA review. Under the proposed rules, 
appraisals of tribal land are not required unless a tribe requests 
appraisal. The tribe negotiates rentals and authorizes rates and BIA 
defers to a tribe's valuation for fair market value, thus reducing the 
time period for approval of business leases.
    We conducted tribal consultation meetings in Indian Country for the 
proposed rules, then incorporated comments and again conducted 
consultation for the proposed rules in Rapid City, South Dakota; Palm 
Springs, California; and Seattle, Washington. Following review of the 
comments and necessary revisions, we expect to publish final rules by 
June of this year.

Carcieri
    The Department strongly supports Congress' effort to address the 
United States Supreme Court decision in Carcieri v. Salazar, 129 S. Ct. 
1058 (2009). In Carcieri, the Court's majority held that section 5 of 
the Indian Reorganization Act permits the Secretary to acquire land in 
trust for federally recognized Tribes that were ``under federal 
jurisdiction'' in 1934. The decision upset the settled expectations of 
both the Department and Indian Country, and led to confusion about the 
scope of the Secretary's authority to acquire land in trust for 
federally recognized tribes--including those tribes that were federally 
recognized or restored after the enactment of the Indian Reorganization 
Act. The ability to take land into trust is critical to creating an 
environment that is conducive to economic development and attracting 
investment in Indian communities. This includes energy planning and 
improving energy development capacity. Trust acquisitions allow tribes 
to grant certain rights of way and enter into leases that are necessary 
for tribes to negotiate the use and sale of their natural resources. In 
addition, acquisition of land into trust is essential to tribal self-
determination.
    In April 2011, the United States Government Accountability Office 
(GAO) stated that the uncertainty in accruing land in trust for tribes, 
as a result of the Carcieri decision, is a barrier to economic 
development in Indian Country.
    The Department continues to believe that legislation is the best 
means to address the issues arising from the Carcieri decision, and to 
reaffirm the Secretary's authority to secure tribal homelands for 
federally recognized tribes under the Indian Reorganization Act. In 
addition, the President's 2013 budget request includes language 
reaffirming the Secretary's authority to take land into trust status 
for all federally recognized Indian tribes.

Office of Indian Energy and Economic Development (IEED)--Energy and 
        Mineral Development
    In the last 25 years, Congress has provided about $83 million in 
funding to the Department, for projects to assess and help develop 
energy and mineral resources information on Indian trust lands.
    IEED is working with tribes to provide them the technical 
assistance they need to proceed to the development and job-creation 
phase. IEED is further defining these resources by the use of detailed 
exploration, market studies, business plans, economic analysis, and 
lease negotiations that reflect the tribes' economic, environmental and 
social needs.
    This proactive approach has helped tribes to proceed with 
development and realization of economic benefits from their energy and 
mineral resources. Today, our major objective is sustainable resource 
development focusing on Indian employment and income to the Indian 
mineral owner. This goes further than resource assessment which is the 
identification of the quantity and quality of mineral resources. This 
proactive focus on resource development has provided an informed 
decisionmaking process for their resources that provides a springboard 
to the development and realization of the potential economic benefits.
    We are providing tribes with access to state-of-the-art knowledge 
and geo-scientific-based analysis of their energy and mineral resources 
to allow them to perform the following critical functions:

   strategic planning;
   formulation of economic and energy policies;
   evaluation of federal lands;
   development of sound environmental policies; and
   negotiation of sound Indian Mineral Development Act (IMDA) 
        agreements with energy and mineral industry developers.

    IEED also has accumulated a significant repository of industry-
confidential exploration data (e.g., seismic data, well data). We have 
been actively providing technical assistance to various tribes by 
purchasing, reprocessing and interpreting thousands of miles of 2D 
seismic data as well as hundreds of square miles of 3D data. These 
studies have identified numerous prospects, some of which are 
essentially ready to drill. Some of the prospects still require 
additional data collection and evaluation to more accurately identify 
exploratory and development targets. These evaluations yield prospects 
that enhance the marketability of Indian lands and results in better 
economic terms of an agreement.
    Oil and natural gas production in Indian Country has been 
significant and has even greater future potential. To date, more than 2 
million acres of Indian lands have already been leased for oil and 
natural gas development. These lands account for about 10 percent of 
the oil and natural gas production from federally regulated onshore 
acreage. Based upon the latest data available from the Office of 
Natural Resources Revenue (ONRR), production of energy mineral 
resources generated about $550 million in royalty revenue paid to 
Indian individuals and tribes in 2011 and the royalty income trend line 
is rising. As demonstrated in the chart below, since 2002, annual 
income from energy mineral production increased by more than 113 
percent and this trend is expected to continue for the foreseeable 
future.



    The economic potential of future energy and mineral resources in 
Indian land has enormous possibilities. We estimate that an additional 
15 million acres of undeveloped energy and mineral resources may exist 
on individual Indian and tribal lands, which if fully developed could 
result in billions of dollars in revenue for those tribes and 
individual Indian landowners over the period of production.
    As tribes and development companies create more sophisticated 
energy and mineral development agreements under the Indian Mineral 
Development Act (IMDA), comprehensive energy and mineral information is 
required to understand, evaluate and negotiate these agreements. By 
having a more thorough understanding of the geotechnical data and 
economic information, tribes can confidently enter into complex 
agreements knowing they have a sound economic and business arrangement. 
In addition, if a tribe wants to take advantage of the opportunity to 
develop Tribal Energy Resource Agreements with the Department, we must 
ensure that the tribe has identified resources and land title 
information, and the technical and administrative capability to develop 
those resources.
    For energy and mineral development in Indian Country, IEED provides 
advice and data concerning geotechnical, economic, and land-use issues 
to tribes and Indian landowners who are seeking to manage and develop 
their energy and mineral resources. IEED also provides assistance in 
negotiating beneficial working agreements with developers and guidance 
through the often complex and time-consuming regulatory approval 
process.
    Since 2008 IEED has assisted Indian mineral owners in the 
negotiation of 48 IMDA leases for oil, gas, renewable energy, and 
aggregate totaling approximately 2,750,000 acres and about $45 million 
in bonuses (upfront payments). These leases have the potential to 
produce over $20 billion in revenue to the Indian mineral owner over 
the life of the leases through royalties and working interests.
    The following chart provides additional information about the 
significant economic impact that energy and mineral development can 
have on reservation economies.



    IEED manages an annual grant program called the Energy and Mineral 
Development Program (EMDP) which provides grants to financially assist 
tribes and Indian allottees in evaluating their energy or mineral 
resource potential on their lands. EMDP projects may include such 
activities as:

   performing initial exploration activities and defining 
        potential targets for development;

   performing market analyses to establish production/demand 
        for a given commodity;

   providing outreach and education to tribes concerning energy 
        or mineral development issues;

   performing economic evaluation and analyses of the resource; 
        and

   promoting projects at industry conferences and to 
        prospective partners.

    With EMDP grants, tribes and Indian allottees have the ability to 
gain information and data they require to promote their lands, 
negotiate the best development agreement with partners or investors, 
and understand the economic impact to their lands. IEED solicits 
proposals from tribes, and through a competitive review system selects 
qualified projects for funding. In addition, IEED staff members provide 
technical assistance to tribal grantees, including geological, 
geophysical, and engineering reports, maps, and other data. They also 
interpret data and help negotiate development agreements. IEED staff 
also monitors those projects that receive grants to ensure that the 
best possible product is obtained for the funds allocated.
    For 2011, IEED received 61 proposals from tribes including 
renewable energy projects, primarily biomass and geothermal energy, 
oil, natural gas, coal, and minerals. The dollar amount of these 
requests totaled slightly over $15.9 million. IEED issued awards for 28 
projects totaling $4,173,500. Of the awards, seventeen were for 
renewable projects totaling $2,863,650; five were for oil and gas 
projects totaling $390,000; three were for coal projects totaling 
$437,600; and three were for mineral projects totaling $482,250. Many 
other qualified tribal proposed EMDP projects could not be funded this 
year, and those projects will be considered for funding in the next 
fiscal year.
    IEED also manages a Tribal Energy Development Capacity (TEDC) grant 
program under the Energy Policy Act, Pub. L. No. 109-58 (Aug. 8, 2005). 
The grants are designed for projects under which tribes build their 
human capacity to address issues concerning the development, 
management, environmental review, and monitoring of energy projects on 
Indian lands. In 2011, the TEDC grant solicitation received 23 
applications from 20 tribes, with a total funding request of over $3.5 
million. IEED awarded $300,000 to four tribes.

Renewable Resource Development
    Although historically energy production on Indian lands meant 
production from oil, natural gas, and coal, there is also significant 
potential for renewable resource development. Many tribes are 
interested in developing their renewable energy resources; however, the 
amount of production from renewable resources has been limited by some 
external factors. Many tribal lands located contiguous with the lower 
48 States are well situated to take advantage of a range of renewable 
energy resources. However, just because an area has a significant 
solar, wind, biomass, or geothermal resource does not always mean that 
resource development--even with tax incentives or renewable energy 
portfolios--is economically viable. Other factors such as location of 
existing transmission lines and power generation stations, and distance 
to population centers affect the development prospects of these 
resources.
    Many Indian lands have biomass energy potential, from woody biomass 
from forestlands, and bio-diesel and ethanol production from 
agricultural and silviculture waste, to the growing and use of energy 
crops. We have identified 118 reservations with a high potential for 
biomass production. In addition, tribes in Nevada, California, Oregon, 
North Dakota, and South Dakota, and Pueblos in New Mexico also have 
potential to tap geothermal energy resources and most of the Indian 
lands in the Southwest and Western United States present opportunities 
for solar energy development. We are working with several tribes to 
identify available renewable energy resources.
    One renewable energy resource, municipal solid waste, is currently 
in development by the Oneida Tribe of Wisconsin. The Tribe is pursuing 
development of a 5 MW waste to energy power plant and recycling center 
that will utilize municipal solid waste generated in Brown County, 
Wisconsin. The project, begun in fall 2010 will create up to 30 new 
full-time jobs with additional training benefits. In FY 2010, the 
Division of Energy and Mineral Development funded this project for 
$333,500 to finalize the engineering design and contracts with fuel 
sources. The Division of Capital Investment, within IEED, is providing 
technical assistance to the Tribe by assisting them in developing a 
loan proposal to seek financing for the project through our Loan 
Guaranty Program.
    IEED is addressing renewable energy potential in Indian Country as 
part of its mission to fulfill the Administration's New Energy Frontier 
Initiative. It is working on more than 50 projects on approximately 35 
reservations. IEED has identified 267 reservations with renewable 
energy potential, but the resources on these reservations have not yet 
been adequately determined. In addition to providing an assessment of 
these resources, IEED works with Indian communities and tribes to bring 
these resources into production.
    While IEED offers technical assistance and funding during pre-
development stages of renewable energy projects, the BIA is also 
involved with respect to lease approvals. The Office of the Assistant 
Secretary--Indian Affairs has created a small team of individuals with 
the goal of improving Indian Affairs' ability to provide efficient 
review and approval of renewable energy projects. This team includes a 
staff point of contact from each of the twelve BIA regions, staff from 
IEED and the Office of the Secretary. If IEED becomes aware of a 
specific project, our coordination efforts will ensure that the BIA 
regional and agency offices are fully aware of project details in order 
to expedite any required BIA actions, including any NEPA analysis. 
Similarly, if the BIA is presented with a lease or other contract for 
approval, that will be related back to IEED for their assistance in any 
lease review or NEPA analysis.
    The Department is also improving its coordination among the 
bureaus, allowing the BIA to take advantage of best practices that have 
been successful in developing other renewable energy projects on 
federal lands. As a result, the Department has included Indian Country 
projects on the Department's Renewable Energy Priority Project list in 
2012. This includes a 350 MW solar project on the Moapa Paiute 
Reservation in Nevada, which is currently undergoing NEPA analysis with 
a final decision coming this spring. The BIA has been also able to take 
advantage of additional training opportunities by matching the 
appropriate BIA regional staff with training on the renewable resource 
they are most likely to encounter in their region.
    Additionally, in order to encourage careers in green and renewable 
energy for students at BIE high schools and colleges, IEED co-sponsors 
the Indian Education Renewable Energy Challenge with the BIE and 
Argonne National Laboratory. The 2011 project challenge focused on the 
practical use of renewable energy resources and involved preparing bio-
diesel fuel and establishing purity and performance characteristics. 
Southwestern Indian Polytechnic Institute college students and Oneida 
Nation High School students submitted the winning entries. Each team 
submitted a video of their projects along with samples of their bio-
diesel fuels to Argonne National Laboratory. Representatives of the 
schools were invited to two days of meeting with Argonne scientists and 
an award ceremony.

Alaska Energy
    Alaska Native villages have a unique energy situation. While rising 
energy costs present problems for those of us who live in the lower 48, 
the consequences for Alaska Native communities, which are mostly rural, 
are alarming. The energy crisis impacts rural Alaska on both the 
individual and community level: when communities spend more on fuel, 
they spend less on key services. Many residents of rural Alaska often 
have to make difficult decisions regarding heating their homes, putting 
fuel in their vehicles, and feeding their families.
    Diesel fuel driven generators provide a majority of electricity in 
rural Alaska, especially on the Aleutian Islands where power 
transmission lines are non-existent. Because nearly all rural native 
villages generate their electricity locally using diesel generators, it 
is a balancing act each year for these communities. Diesel in Alaska is 
expensive at any time, with reported prices of around $9 per gallon.
    IEED has been approached by numerous communities for support on 
geothermal projects. The State of Alaska has completed preliminary 
surface geology mapping at many of these communities and documented the 
geothermal resources that are present. We have supported the 
communities of Unalaska and Adak on the Aleutian Islands. Both 
communities are currently generating their electricity using diesel 
fuel.
    Unalaska has thermal resources that would be an ideal candidate for 
potential steam generation. This summer, the community is barging a 
drilling rig into the area to drill a municipal water supply well. This 
rig could be also be utilized to drill geothermal wells in the region. 
The mobilization costs for bringing in equipment are extremely high so 
it would be prudent to drill multiple holes while the rig is available. 
Unalaska currently is the home to an active fishing fleet and cannery.
    Our second project area is on Adak Island, which formerly housed a 
large Department of Defense facility. The island's electrical 
generation facilities are powered by inefficient diesel powered 
generators to supply the electric needs of the 70 residents.
    There is a part-time cannery operation on the island supported by a 
small fishing fleet. In addition, the military left a 2.8 million 
gallon fuel supply tank that could potentially be used to fuel ships in 
the area and provide some job potential. The addition of geothermal 
generation would greatly reduce energy costs in the area. Numerous 
steam vents line the coast in the harbor near Adak. In addition, they 
have an extensive power line grid. At both of these communities, IEED 
proposes acquiring and processing seismic data in an effort to locate 
the ideal site for a rig to drill an exploration borehole to help 
identify the optimal site for a future power generation facility.
    We are also assessing potential wind projects that would enhance 
energy reliability for some villages. We are currently doing an 
assessment on the Pribilof Islands to determine the feasibility of 
developing a hybrid wind energy system.
    IEED is a co-chair with the Department of Energy's Office of Indian 
Energy Policy Programs (IE) on the Alaska Native Village Sub-Group 
which is part of an interagency group established to implement the 
President's Executive Order, Interagency Working Group on Coordination 
of Domestic Energy Development and Permitting in Alaska (July 12, 
2011). The primary focus of the sub-group is to evaluate and determine 
appropriate federal efforts to support energy development in rural 
Alaska and Alaska Native Villages. IEED has done an inventory of 
assistance that our office has provided in Alaska and is in the process 
of reviewing these efforts to see if any projects would benefit from 
increased coordination or technical assistance from the Department or 
our federal partners. IEED has provided technical assistance to Alaska 
Natives by assessing potential energy projects which include wind, 
hydro-electric power, geothermal, tidal, and waste-to-energy. Through 
the Alaska Native Village Sub-Group, IEED will coordinate with the 
other sub-groups--hydro-electric power, biomass, and Federal 
facilities--to coordinate technical assistance to Native communities, 
thereby leveraging our resources and expertise to provide assistance to 
Alaska Native communities through this initiative.

Fort Berthold
    In 2009, IEED implemented steps to address the increase in oil and 
gas activities on the Fort Berthold reservation. A ``One-Stop-Shop'' 
coordinating office was setup in New Town to oversee all oil and gas 
activity on the Reservation and coordinate the various procedures and 
processes that cross Bureau lines. The overall goals of IEED were to 
oversee and expedite the processes within the Department related to oil 
and gas development on Indian land and bridge management lines of 
authority to accomplish the office mission through the office of the 
Assistant Secretary--Indian Affairs.
    IEED's Division of Energy and Mineral Development (DEMD) continued 
to support the concept with technical expertise on a part time basis. 
Geographic Information System (GIS) and data management support is also 
provided by DEMD through the implementation of the National Indian Oil 
and Gas Management System (NIOGEMS) at tribal offices, BIA Agency, the 
Bureau of Land Management Field Office, and the Office of Natural 
Resources Revenue (ONRR) to ensure proper communication and 
coordination occurs between the various Departmental Agencies, the 
Mandan, Hidatsa and Arikara Nation, and individual Indian Mineral 
Owners. In addition, DEMD has hired two environmental surface 
compliance specialists, one GIS specialist, and two administrative 
support positions to meet the increased oil and gas development 
activity occurring in 2011. These positions are temporarily funded by 
DEMD until the BIA Fort Berthold Agency can determine the need for full 
time hiring.
    On June 15, 2011, IEED hosted an Oil and Gas Lease Seminar at Fort 
Berthold attended by 47 Mandan, Hidatsa and Arikara Nation members and 
oil leaseholders. The seminar taught attendees how to protect their 
lease holdings and investments, giving them an understanding of 
fundamental mineral legal issues; relevant lease clauses; how to 
negotiate leases; joining, pooling, communalization, and unitization of 
leases; and, revenue and royalty distribution. IEED also sponsored an 
Entrepreneurial Training session at Fort Berthold conducted by Jeffrey 
Stamp, a professor at North Dakota University. This capacity-building 
session, which was attended by 37 Mandan, Hidatsa and Arikara Nation 
members, focused on the core skills needed by entrepreneurs and helped 
attendees identify emerging economic opportunities, guiding them 
through the process of converting product or service ideas into a 
successful business. In September 2011, IEED awarded the Mandan, 
Hidatsa and Arikara Nation a $100,000 grant to study the economic 
opportunities resulting from the Bakken oil boom and to develop a 
reservation-wide, long-term economic development plan.
    DEMD's continued support of oil and gas development occurring on 
the Fort Berthold Reservation is required over at least the next two 
years. The level of drilling activity continues to increase from 150 
wells drilled through the end of 2010 to 200 additional wells planned 
for 2011 and 2012. That represents a doubling of work load that is 
expected to continue through 2013, with development rate leveling off 
to 100 wells per year over the next 5 years. It is expected that 1000 
wells will be drilled to initially develop the Bakken Formation and an 
additional 1000 wells to complete full development of the Bakken and 
Three Forks Formations over the next 10 to 20 years.
    This concludes my prepared statement. I will be happy to answer any 
questions the Committee may have.

    The Chairman. Thank you very much, Ms. Gillette.
    I know that some of my colleagues are limited in how long 
they will be able to stay for today's hearing, so I am going to 
ask each of the witnesses just one question then defer to my 
colleagues to ask their questions. If time permits, we will 
have a second round. Otherwise, I will submit my questions in 
writing for the record.
    Ms. LeBeau, are there any specific regulations or laws that 
Congress should review that may allow for greater collaboration 
between your office and other Federal agencies to promote the 
development of vast energy resources in Indian Country?
    Ms. LeBeau. Chairman, I am not currently aware of any that 
I can identify for you today. We will take a look at that and 
get back to you if we can identify some. But I would like to 
just point out that what is included in my written testimony, 
but what I would like to share with you now, since you bring it 
up, is we have managed to form a close collaboration with the 
Department of Interior on several initiatives, also with the 
USDA. So we are talking pretty frequently now on how we can 
better align resources, our grant solicitations and the 
technical assistance that we all have in certain areas so we 
can collaborate better.
    For our strategic technical assistance initiative, our 
START program, we have partnered with the Denali Commission for 
a very specific and targeted Alaska START program. So there are 
ways that I think we have been reaching across to our Federal 
partners to better collaborate and coordinate our resources.
    The Chairman. Thank you very much, Ms. LeBeau.
    Ms. Gillette, you mentioned, and it really caught my 
attention, that the Carcieri decision is holding Tribes back 
from developing their economies, and that you are supporting 
the Carcieri fix. Can you please elaborate on that point and 
explain how important fixing the Carcieri decision is to Indian 
energy development?
    Ms. Gillette. As my longer testimony, my written testimony 
indicates, the ability to take land into trust is critical to 
creating an environment that is conducive to economic 
development and attracting investment in Indian Country. This 
includes energy planning and improving energy development 
capacity. Trust acquisitions allow the Tribes to grant certain 
rights of way and enter into leases that are necessary for 
Tribes to negotiate the use and sale of their natural 
resources.
    The Chairman. Thank you very much.
    Senator Barrasso, your questions.
    Senator Barrasso. Thank you very much, Mr. Chairman. This 
is a fascinating conversation and discussion.
    Ms. LeBeau, in May of last year, your office hosted the 
Tribal Energy Summit and provided an opportunity for Tribal 
leaders to come together and discuss any barriers to energy 
development. What I would like to ask, in following up to the 
Chairman, is what were the main concerns that you heard at the 
Tribal Energy Summit, and what actions has your office taken to 
help follow up on some of those concerns that you heard?
    Ms. LeBeau. Thank you. Prior to the Summit itself, we did 
initiate a round of roundtables across the Country, I think we 
held nine across the Country, speaking directly to Indian 
Country, trying to get to some of that information before we 
actually got to the Summit. So feeding all of that information 
into the Summit, and then we also had specific roundtables 
where we had all of our principals of all of our program 
offices there to speak directly with Tribal leaders.
    Some of the issues that came up were that, again, the most 
commonly requested thing from the Department of Energy was 
actually technical assistance. I think a lot of Tribes, 
especially in the areas of clean energy and renewable energy, 
where you have technologies that are either emerging or they 
are less familiar with, a lot of Tribes have asked us to kind 
of wade in and give them our expert opinions and help them sort 
through technology choice and through the very complex and 
difficult area of project finance for renewables, since it is 
so dependent on tax credits and other things. So that commonly 
came up.
    The other thing that came up was a very strong interest, 
and we knew this coming into the Summit, a very strong interest 
by Tribes for Federal departments to take advantage of the 
provision of the Energy Policy Act of 2005, which allows 
Federal agencies to provide a preference to power produced by 
Indian Tribes. We are in the process of leading, at the 
Department of Energy, leading an effort amongst all of our, 
many of our offices within the Department of Energy, of coming 
up with procurement guidance to actually implement that 
provision that no Federal agency has yet to implement.
    So those two were very significant
    Senator Barrasso. Thank you very much.
    Ms. Gillette, first I want to thank you for how helpful you 
have been in the entire process and working on this area, such 
an important issue of energy development and economic 
development. Last year, the EPA enacted what was called the 
Federal Minor New Source Review Program in Indian Country. The 
rule requires that any new or modified synthetic minor source 
had to obtain an EPA permit prior to construction. And this 
pre-construction permit requirement amazingly became 
immediately effective. You had to have the permit, even though 
the process to get the permit didn't exist yet.
    And I have been hearing more and more about it. I 
understand the process to get a permit still isn't in place, 
even though you have to have the permit to start. It seems that 
the Tribes want to follow the rules, want to obey the law, but 
there is no real way that they can do so because of the EPA.
    Has your Department done an analysis of the impact this has 
had, this EPA rule, in Indian Country, and were the Tribes' 
concerns justified?
    Ms. Gillette. I think that the Tribes' concerns were 
justified, because there was not a lot of conversation about 
how it was going to be implemented. But since probably the 
summer time, and I guess between probably this fall and now the 
rule has been signed and the EPA has agreed to do a phased 
implementation. They are working closely with affected Tribes 
and have agreed to do consent agreements that would ensure that 
energy resource development isn't interrupted.
    So at this point, especially this is affecting the Fort 
Berthold Reservation, and right now, out of ten companies there 
are eight companies that have consent agreements. They have 
agreed to make sure that there is a phased process, and they 
are working closely with both the Tribes and the industry to 
make sure it is not going to be a cost factor.
    Senator Barrasso. It would have seemed to make more sense 
had the EPA come out with an application process, a way to 
fulfill the requirement, so that Tribes wanting to obey the law 
could have done it, could have done it right and then gotten 
back and started in time.
    Another issue that I hear about is processing and approving 
leases and agreements for energy development on Indian lands. 
We have heard many complaints from the Tribes that the delays 
in the approval process have been a significant impediment. I 
was going to ask about that, as well as the BLM charging such a 
high fee for an application to drill on Indian trust lands. I 
think $6,500 per permit, where a lot of fees at State levels 
are a lot less than that. Could you help us a little bit there 
on what you are seeing?
    Ms. Gillette. Sure. I am going to talk a little bit about 
the APD fees, and then I am going to turn it over to Mr. Black 
to answer the leasing question.
    We have engaged in discussions with BLM regarding the 
application of APD fees on Indian lands and options to address 
the fees. Congress established in appropriations the fees and 
the lands that they apply to. Legislation would be required to 
exempt Indian lands from the application of those fees. But we 
would be more than willing to work with the Committee and 
yourself and your office to look at ways to get to that end 
goal.
    Senator Barrasso. And Mr. Black?
    Mr. Black. Thank you, Mr. Barrasso.
    Regarding the lease approvals and some of the processes we 
have to go to, and yes, you are right, we have heard complaints 
in the past over some of the delays. A lot of them, it can vary 
from place to place on what is exactly the issue there. It can 
deal a lot with the consent requirements that are often 
required under some of the leases, reaching the majority 
consent on a highly fractionated parcel of land and getting out 
and getting those consents. Getting through the environmental 
processes in some cases can add natural delays to the process.
    Some of them are built in by statute, regulation or law 
that cause us to have certain delays. But we have been working 
pretty hard over the last couple of years to look at our 
process overall, streamlining the process. We have the proposed 
Part 162 regulations that we have out for comment right now 
that we are looking to implement, which will go a long way, I 
think, toward streamlining some of the processes, and really 
take an outdated regulation and bring it into the modern day to 
deal with a lot of the situations we have, particularly with 
the renewable energy, wind and solar area that we are starting 
to experience now.
    Senator Barrasso. Thank you, Mr. Black.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Thank you very much, Senator 
Barrasso.
    Senator Johnson?
    Senator Johnson. Ms. LeBeau, our rural Native communities 
face an added burden of inadequate transmission grids. How is 
WAPA dealing with this continued growth and interest in 
renewable energy, especially in areas where gridlines do not 
have sufficient capacity?
    Ms. LeBeau. That is a great question. I have been working 
pretty closely with Western Area Power Administration on 
exploring ways that they could outreach more to Indian Country 
in the area of transmission, particularly in regard to projects 
that are seeking transmission access and also transmission 
service across their lines. In some areas, we have actually, in 
the Desert Southwest, we have identified opportunities where 
Western Area Power is using their borrowing authority to do 
some expansions where there could be some opportunities for 
Tribal projects to get interconnected and get their energy to a 
marketplace.
    In the Great Plains, it is a little tougher. There are some 
identified projects I believe that have been prioritized and 
identified throughout the years that they are looking to do 
some expansions. But that is always contingent on their 
borrowing authority and their ability to do so through 
appropriations. So I know there is one case in particular where 
a Tribe has made their application, got in the transmission 
queue and has gotten all of their transmission agreements in 
place and executed. So we know that the process works.
    It could be quicker. So we are working on that. But we do 
have some success stories in the Great Plains on how this has 
occurred for some Tribes.
    Senator Johnson. Deputy Gillette, as you know, Tribes have 
been hindered by the bureaucratic process and red tape. I am 
glad to hear that the BIE will be improving wind energy 
leasing. With this new system, what is the estimated time that 
it will take for a Tribe to get through the approval process?
    Ms. Gillette. The provisions for wind energy leasing 
include a new two-step process, whereby the developers can 
first obtain approval of a short-term lease which covers 
installation of equipment to evaluate the resource. This is 
followed by a second step wind resource lease, which allows 
installation of turbines.
    The way that this works is we have designated time lines 
for each of those steps and the lease approval deadlines are 
something that hadn't been there in the past. And we do have a 
lot more predictability and sort of understanding of how our 
internal processes will work in lease approvals.
    Senator Johnson. I yield back, Mr. Chairman.
    The Chairman. Thank you very much, Senator Johnson.
    Senator Tom Udall?
    Senator Udall. Senator Akaka, thank you very much, Mr. 
Chairman.
    Ms. Gillette, I would like to start by asking, because I 
think it lays out things well in terms of looking at this 
overall issue of energy development on Indian lands, what is 
the Federal trust responsibility as it relates to mineral and 
energy development for Indian Tribes?
    Mr. Black. Senator Udall, with regard to the Federal trust 
responsibility on, you are basically talking oil and gas and 
subsurface minerals, we are guided by statute and regulation, 
executive orders, laws that have come around through the years 
that govern our responsibility to manage and oversee the 
development of the mineral resources out on Indian lands. That 
is in partnership many times with our other Department 
partners, BLM and the Office of Natural Resource Revenues.
    Senator Udall. And when it comes down to all these problems 
that have been described, all the Senators talking about issues 
of slow movement of leases and hurdles that they are talking 
about, is that a part of the trust responsibility and a part of 
getting through all of the statutes and laws that have been 
laid down? Is there a way to streamline that?
    Mr. Black. I think there are always different ways to 
streamline some of the processes, and we have done that in some 
ways. Some of the things that we don't have total control over 
are some of the NEPA requirements and some of the environmental 
laws that we have to comply with. And there are certain time 
frames that are just naturally built into that process.
    Senator Udall. Could you give me a couple of examples of 
where you have streamlined it?
    Mr. Black. Basically, we have worked with the oil and gas 
companies, and I am going to talk particularly to APD permits 
for that matter. That seems to be one of the biggest issues we 
ran into out in Indian Country in trying to expedite 
development of oil and gas.
    Senator Udall. Tell us all what an APD permit is.
    Mr. Black. I apologize.
    Senator Udall. No, I am just trying to get everybody on the 
same wavelength.
    Mr. Black. That is an Application for Permit to Drill. And 
that is a collaborative effort between, largely between 
ourselves and the Bureau of Land Management. Bureau of Land 
Management is actually the Department that would approve an APD 
permit out there, with our concurrence and activity and 
approval of the environmental documents. So we have worked with 
the oil and gas companies, I am looking to Fort Berthold, where 
we have had just a tremendous amount of activity over the last 
couple of years. And we have used, the oil company is working 
with them to identify certain processes where we could speed up 
working with them, having them conduct certain activities in 
the process that would help to speed up what we have to do on 
our review, standardizing some of the things that they would 
submit to our office.
    Senator Udall. And you all realize, I am sure, that when a 
Tribe makes a decision to go forward, they are doing it because 
they want economic development, they want to have the jobs. I 
hope all these Federal agencies, whether it is the Bureau of 
Land Management, some within Interior, some outside, like the 
EPA, are all working together to try to achieve that objective. 
Because as you know, we have serious unemployment problems. You 
heard from Senator Johnson talking 80 percent, I think the 
Navajo Reservation, Mr. Vice President, you will tell them, but 
I think it is ranged in the 50 percent range. Some of our 
Pueblos in New Mexico are also that high.
    I hope, President Pesata, you will let everybody know about 
the unemployment on the Jicarilla Apache Reservation.
    Mr. Black. I was just going to say, speaking to what you 
are talking about there, we have also developed some processes, 
we are developing, improving the communications largely, 
between all the partners that are engaged in the oil and gas 
activity and monitoring and oversight. That means bringing BLM 
and ONRR and BIA and OST and all the different departments 
together to really identify the issues and ensure that we are 
working together. We are not badgering each other here in this 
activity, but we are working together to try and get the 
process taken care of.
    Senator Udall. Great, thank you. And because Senator Tester 
was so generous, I am going to end a little bit early here. 
Thank you.
    The Chairman. Before I call on the next panel, did you have 
a comment to make, Ms. Gillette?
    Ms. Gillette. Yes. I just wanted to add that when it comes 
to conventional, that is why I have asked Mr. Black to 
accompany me during this session, but I am most familiar with 
renewable energy development, in that we are aware that we need 
to beef up our capacity in those areas. It is a very new part, 
within the Administration, it is a new part of what we do, and 
part of our trust responsibility. To that end, we have been 
working closely with the Department of Energy. Tracy and myself 
have regular conversations in looking at ways to get that kind 
of technical assistance and knowledge base to the folks within 
the BIA realty and environmental offices, so that those are 
better streamlined and better coordinated.
    The Chairman. Thank you very much, Senator Udall.
    Senator Tester?
    Senator Tester. Thank you, Mr. Chairman.
    I don't know whether to ask this question of you, Jodi, or 
you, Tracey. But are you familiar with a policy developed in 
the Energy Policy Act 2005, as it gives Tribes the opportunity 
to develop energy by developing Tribal energy resource 
agreements with the Department of Interior, called TERA? Okay. 
One of the things I have heard since I have been in the Senate 
is complaint, Chairman Dorgan had some members in leadership 
from the Tribes in North Dakota who talked about drilling wells 
and have energy develop all around the Reservation, but never 
ever getting in. I am concerned that that is happening, not 
just in North Dakota, but potentially a lot of other places, 
Montana included.
    One of the things that the TERA would allow, if they got 
into one of these agreements with the Department of Interior, 
it would allow them not needing approval from the Department of 
Interior. Correct me if I am wrong on that, that the Tribe 
would be able to address these business agreements on energy 
development without needing that approval from the Secretary.
    My understanding is not one Tribe has entered into a TERA. 
That sounds like a pretty good idea to me, self-determination 
and all that stuff. Can you give me any idea why not one Tribe 
has entered into it? This is seven years plus.
    Ms. Gillette. I think that you are right, this is a tool 
that Tribes can use to directly manage their energy resources 
and develop the renewable and non-renewable energy resources. 
But it also requires the Tribe to assume a greater level of 
regulatory authority and administrative responsibility. This 
may be one of the reasons that Tribes have not embraced the use 
of TERAs. We have had four Tribes informally discuss 
development of a TERA. Two of those received, through our 
regulatory process, formal meetings to consult on developing a 
TERA, and neither of those two Tribes have applied for one.
    So in the spirit of consultation, I think that would be an 
excellent question to ask the next panel, to fill out the gaps 
that I may be leaving here.
    Senator Tester. We will do that. I appreciate the 
recommendation.
    Tracey, grant programs, you talked about education and 
technical assistance. You must be aware of a ton of grant 
programs out there for Indian Country, at least some, right?
    Ms. LeBeau. Right.
    Senator Tester. I guess the question I have is, it is my 
understanding these grants are very difficult to get. We are 
austere times and I don't know if the grant programs have the 
kind of money they need for the demand that is out there.
    Is it time to have a setaside for Indian Country for some 
of these grants? That would be my first question.
    Ms. LeBeau. I think one good example could be, through the 
Recovery Act, we had the Energy Efficiency Community Block 
Grant, with the $54 million setaside for Tribes.
    Senator Tester. Right.
    Ms. LeBeau. We are in the process of collecting 
information, just kind of doing a data call on the over 400 
Tribes that we did fund through that setaside program to get a 
really good sense of how much capacity actually was built out 
there.
    Senator Tester. Okay, good.
    Ms. LeBeau. So I think as we collect and collate and 
analyze that data and kind of turn it around in the coming 
months, because some of those projects are in the process of 
winding down, I think that would be a great, that might be a 
good pilot or a good example to look at.
    Senator Tester. One of my concerns is, and I think it is 
quite obvious, we can have grant programs, but if Tribes, 
because of whatever reasons, the entity that they are, or 
whatever reasons, aren't eligible to get those grants, it 
really puts them behind the eight-ball when it comes to energy 
development. And I don't know if this has to be an act of 
Congress or if you can do it administratively, but I think we 
should be looking at that. That is my own perspective, as we go 
forward.
    I want to follow up, because I only have about a minute 
left. Senator Johnson talked about lease approvals, and you 
talked about them a little bit, Jodi, and you said that there 
were deadlines for each step. If I am not on the same level 
that you two were on, correct me, but you said that there were 
deadlines for each step. Give me an idea what those deadlines 
are. What kinds of time frames are you talking about?
    Ms. Gillette. I can guess, but I would rather not do that. 
Do you know what they are?
    Mr. Black. Basically what she is talking about, this is 
under the Part 162 proposed regulations.
    Senator Tester. Yes.
    Mr. Black. And we have implemented some processes that, 
upon receipt of the completed application and environmental 
documents, we, or the Bureau of Indian Affairs has 60 days to 
approve that lease. Otherwise, it moves forward.
    Ms. Gillette. I just want to add that it is 20 days for the 
WEELs, the Wind Energy Evaluation Leases. And I think it is 60 
days for the actual energy lease.
    Senator Tester. Are you familiar with an act that I have 
co-sponsored call the HEARTH Act, that would allow Tribes to 
make surface leasing decisions after the Secretary approves a 
leasing program?
    Ms. Gillette. Yes.
    Senator Tester. Would you support it?
    Ms. Gillette. We do support it.
    Senator Tester. You do support it. Good. That is very, very 
good. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    I wanted to follow up on the TERAs. Ms. Gillette answered, 
but Director LeBeau, do you have any ideas on why no Tribe has 
decided to use a TERA?
    Ms. LeBeau. No, I don't.
    Senator Franken. All right, well, that is that. No more 
questions.
    [Laughter.]
    Senator Franken. No, no, I will ask another one.
    Ms. LeBeau. It would be hearsay, a lot of hearsay.
    Senator Franken. Okay, well, maybe we will follow up with 
the next panel.
    Director LeBeau, at the Tribal Energy Summit your office 
held last May, Secretary Chu announced that he would be 
directing the Department of Energy to be purchasing renewable 
energy from Tribal lands when possible. Has the Department 
implemented this plan? That is my first question.
    Ms. LeBeau. Thank you. We are in the process of coming up 
with the procurement guidance for that. So as with everything 
related to procurement for the Federal Government, it is not an 
easy question to answer. It was very helpful provision in the 
statute, but one provision that did not have a lot of 
definitions and guidance to it. So we have assembled counsel 
from across the Department and we have some draft guidance that 
we are circulating and hope to get out for formal consultation 
to Tribes very soon.
    Senator Franken. What are the obstacles there? What is that 
like? Why does everything have to work that way? Why does 
everything have to be so slow?
    Ms. LeBeau. One of the tough points for procurement 
officers has been that the Act allows for procurement of energy 
at prevailing market price, but did not define what prevailing 
market price was. So in some areas, in some markets where you 
have market that is freely traded, and/or you have energy that 
is primarily fossil, maybe coal or Federal hydro power, they 
were having to look at prevailing market prices, possibly what 
could we get, if I went out into the energy markets today and 
procured competitive energy, I might get it at 2 to 4 cents, 
when a solar project might be coming in for substantially more 
than that.
    So we are providing some guidance to those procurement 
officers on kind of how to better zone in on what a better 
comparable is. That was one very sticky issue.
    Senator Franken. Okay, that just doesn't seem that hard to 
solve. It really doesn't. I mean, that seems like something, if 
you really wanted to solve that right away, you could solve 
that right away.
    Ms. LeBeau. I think part of the challenge has been from the 
very high level to define those and other issues in the statute 
for those procurement officers, because they don't necessarily 
have the discretion to make those kinds of calls at the field 
level. And a lot of the procurement that occurs at our 
facilities are at the field level.
    Senator Franken. Okay, well, if they don't have the 
authority to make that call, who does? You say at the field 
level?
    Ms. LeBeau. So the guidance is coming from the headquarter 
level. So they will have kind of a, I guess a better checklist 
and guidelines. So when these projects, these proposals do come 
in, it is a more accurate comparable.
    Senator Franken. Okay. It just doesn't seem like there is a 
sense of real urgency there. Is that fair for me to interpret 
it that way, or am I not just understanding?
    Ms. LeBeau. I think the other challenge has been, there 
wasn't a lot of guidance and there is a lot of other Federal 
acquisition rule issues. We had to walk through all of those 
regulatory and statutory requirements for procurement and 
harmonize everything. And the other issue too has been, it is 
not a bad issue, it is just an issue, is working with our power 
marketing administrations to also get their input on how to 
deliver some of these energy, these possible energy generation 
products to our Federal facilities. Because a lot of times you 
don't have Tribes that are really sitting on our Federal 
facilities themselves to directly transmit it onsite. They have 
to transmit it.
    Senator Franken. Okay. This just seems to me, and maybe I 
am being really unfair here, that this is a good example of how 
things don't get expedited that are good things in the Federal 
Government. And that I don't think we would have won World War 
II if we had behaved this way. I think it is a good thing for 
the Energy Department to be making sure that we are purchasing 
energy from Indian Country and if last May, you are announcing 
that you are doing that, it should be happening by now. Thank 
you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Franken.
    I want to thank the first panel very much for your 
responses. It certainly will be helpful to us and to the Tribes 
as we move along here. So I want to thank you for being here 
and I would like to invite the second panel to the witness 
table.
    Thank you very much.
    Serving on our second panel is the Honorable Rodney 
Bordeaux, President of the Rosebud Sioux Tribe, from Rosebud, 
South Dakota; the Honorable Levi Pesata, President of the 
Jicarilla Apache Nation, located in Dulce, New Mexico; the 
Honorable Thomas ``Stoney'' Anketell, who is a Councilman of 
Fort Peck Assiniboine and Sioux Tribes in Poplar, Montana; Ms. 
Michelle Kauhane, Deputy to the Chairman of the Department of 
Hawaiian Home Lands in Kapolei, Hawaii; and Rex Lee Jim, Vice 
President of the Navajo Nation in Window Rock, Arizona.
    Welcome to all of you on this panel, and President 
Bordeaux, will you please proceed with your statement?

  STATEMENT OF HON. RODNEY BORDEAUX, PRESIDENT, ROSEBUD SIOUX 
                             TRIBE

    Mr. Bordeaux. Good afternoon, Chairman Akaka, Senator 
Johnson, Senator Tester.
    On behalf of the Rosebud Sioux Tribe, I am very honored for 
this opportunity to testify on the energy development in Indian 
Country.
    Rosebud Sioux Tribe is located in south central South 
Dakota and comprises over 40,000 enrolled members, and 
encompasses over 900,000 acres. Recent U.S. Census data 
measures our area as the second poorest county in the Nation.
    However, what that economic data does not measure is our 
proud history, spirit, our resilience and tremendous potential. 
This is what I would like to talk about today.
    Since 1999, the Rosebud Sioux Tribe has been investigating 
and developing our wind resources here on Tribal lands. In 
March of 2003, we commissioned the first ever commercial wind 
turbine on Tribal lands in the United States. The 750 kilowatt 
wind turbine, called the Akicita Cikala, which is the Little 
Soldier, is named after our late Tribal Chairman, Alex 
Lunderman.
    Today we have two major projects underway in wind 
development. In 2003, we were awarded a $441,000 grant from the 
Department of Energy to develop a 30 megawatt wind farm called 
the Owl Feather War Bonnet Wind Farm. One of the major issues 
that we had at the outset was the Bureau of Indian Affairs 
taking 18 months to approve the lease. That is a major 
impediment for us.
    In 2008, we engaged Citizens Energy Corporation of Boston, 
Massachusetts, to develop a 190 megawatt wind farm in Mission, 
South Dakota. We are approximately 65 percent complete on the 
permitting. We did a preliminary system check on the WAPA 115 
kilovolt line that runs right to the project area and found out 
there is only 190 megawatt capacity on that line left. If we or 
anybody else in southern South Dakota wanted to build more wind 
farms in the area, we couldn't unless WAPA upgrades their 
existing systems.
    In our land base, we have identified lands that can support 
up to 1,000 megawatts of wind development. But unless the grid 
is improved, there can be little or no pre-development work as 
the pre-development is very costly. The pre-development cost 
for the 190 megawatt wind farm was about $3 million, and of 
that, a DOE grant allowed us to get $1.5 million of that.
    As South Dakota is known for being the Sunshine State, we 
have huge, huge potential for solar development also. We feel 
that WAPA and DOE should look at its trust responsibility with 
the Tribes and develop policy to purchase power at market price 
for Tribal projects as a priority. The taking of our ancestral 
homelands on the Missouri River to provide energy to a growing 
Nation has never, we have never really been compensated for 
that. This would show the world a true act of trust 
responsibility from the Federal Government.
    From 2003, wholesale power costs from Basin Electric upon 
our local utilities had risen about 115 percent. And rate 
increases for the consumers since 2009 have risen by 47.5 
percent. This, combined with the cutbacks in our Low Income 
Home Energy Assistance Program, has placed a tremendous strain 
on our people. I regret to say that we have people making 
decisions between having electricity or having something to 
eat.
    Our intent is to use revenue stream from these commercial 
projects to assist our people in purchasing residential 
renewable energy devices that would assist in lowering their 
energy bills and also build businesses and produce jobs around 
this sector. We also plan to develop a distributed generating 
system throughout the reservation, using community wind and 
hydro systems scattered throughout the reservation.
    In the northern part of our reservation, thanks to a BIA 
grant, we have drilled two deep 3,500 foot geothermal wells, 
artesian water. And we are going to use that to heat our White 
River Health Care, which is our nursing home and our day care 
center, located in White River, South Dakota.
    The sacred hoop of renewal exists, and we humans need to 
understand it and to embrace this philosophy. These are 
renewable energy resources that are given to us in every moment 
of every day, for our children's sake to the future of all 
mankind. This is a teaching that needs to be brought forward 
for all of mankind. Renewable energy is the future of all 
people on this earth. The United States Government needs to 
embrace this future fully and support programs to promote this 
industry.
    In summary, the Rosebud Sioux Tribe makes the following 
recommendations. Number one, investments must be made to 
existing power lines so that we can use our great renewable 
energy resources. Number two, incentives must be made available 
to private energy buyers to purchase energy from Tribal energy 
sources. Number three, Federal buyers of energy, such as WAPA, 
should be made to source as much energy as possible from Tribal 
lands, provided the Tribe is willing to develop its energy 
resources.
    Number four, enact legislation to expedite lease review 
processes at the BIA as well as enact provisions for Tribes to 
review their own lease agreement in the true spirit of 
sovereignty. And lastly, extend the production tax credit for 
another five years.
    Again, I thank you for this opportunity, Mr. Chairman.
    [The prepared statement of Mr. Bordeaux follows:]

 Prepared Statement of Hon. Rodney Bordeaux, President, Rosebud Sioux 
                                 Tribe












    The Chairman. Thank you, Mr. Bordeaux.
    The Honorable President Levi Pesata, please proceed with 
your testimony.

  STATEMENT OF HON. LEVI PESATA, PRESIDENT, JICARILLA APACHE 
                             NATION

    Mr. Pesata. Good afternoon, Chairman Akaka, Senator 
Johnson, Senator Tester.
    My name is Levi Pesata, I am President of the Jicarilla 
Apache Nation. We have about a million acres of trust land in 
rural north central New Mexico within the San Juan Basin with 
approximately 4,000 Tribal members, unemployment rate of about 
35 percent and median income of about $35,000.
    We rely on our oil and gas resources to provide 
governmental services to our Tribal members and to those non-
Tribal members living on the reservation. We have been involved 
in the oil and gas industry for about 60 years. Throughout this 
time, we have encouraged and fostered development of our 
reservation while protecting our sovereignty.
    In 1982, we won a major sovereignty ruling in the U.S. 
Supreme Court which recognized our inherent sovereignty to 
regulate and tax on our own reservation. However, another 
Supreme Court case permitted the State of New Mexico to also 
tax oil and gas production on our lands. This has led to dual 
taxation, which I will touch on a little bit later.
    Today I would like to focus on the oil and gas issues. 
First, on compliance and enforcement matters. With 
approximately 2,000 miles of gas gathering pipeline and roads 
servicing this industry, we have major challenges in inspecting 
and monitoring the wells. We have issues in measurement and 
pipeline system and road maintenance.
    As stewards, we are paying close attention to BLM's draft 
rules on hydraulic fracturing. Fracking requires a large amount 
of water usage and the recycling of chemically treated water. 
Full disclosure of the chemicals used in these amount are key 
issues in this process.
    Moving on, we have an intergovernmental advisory committee 
to evaluate various energy proposals. From a business 
perspective, we aim to maximize current lease acreages, 
increase drilling and pay out on existing wells successfully. 
We want to drill deeper wells and develop horizontal drilling 
opportunities. We are also strengthening our oil and gas 
production company. We have our own company called Jicarilla 
Apache Energy Company, in which we are building new 
opportunities to develop jobs on the Reservation.
    Let me briefly make five other points. First, a truly 
coordinated BIA, BLM and ONRR system that works for the Tribe 
is critical to compliance enforcement and auditing and other 
collection issues that face Indian Tribes with oil and gas. 
This meets the Federal responsibilities owed to us as mineral 
owners.
    Second, based on our first-hand experience with bankruptcy 
issues, which we have had several of them this past year, this 
is new to Indian Country and Congress mus clarify that any 
assignment or assumption of Indian oil and gas leases be 
reviewed, renewed and approved both by the Tribal owner and the 
BIA.
    Third, on our split mineral estate issue, which is detailed 
more in the written testimony, Congress needs to make Interior 
obey the laws to fully review and approve leases and to secure 
Tribal consent, which is very important, and approval of all 
such leases.
    Fourth, Congress needs to address the dual taxation 
problem. It is unfair and it cripples Tribal economies. The 
creation of a Federal tax credit would help fix this problem. 
It would stimulate Tribal economies and boost domestic 
production and decreases and reliance on foreign fuels. Some 
time back, when Senator Domenici was still here, he did 
introduce such a bill, but it did not pass.
    Finally, my written statement addresses the weak 
electricity distribution system we have on our reservation. We 
are working toward establishing our own energy company to 
provide electric power to our communities, so that we can 
continue our development and increase opportunities on the 
reservation.
    That completes my statement, and I will be happy to answer 
any questions.
    [The prepared statement of Mr. Pesata follows:]

  Prepared Statement of Hon. Levi Pesata, President, Jicarilla Apache 
                                 Nation

I. Introduction
    On behalf of the Jicarilla Apache Nation (``Nation''), I am Levi 
Pesata and I serve as President of the Jicarilla Apache Nation. I would 
like to thank the Committee for convening this hearing to discuss 
Indian Energy Issues. The Nation is a Federally recognized Indian Tribe 
located in north-central New Mexico. Eighty-five percent of the Tribal 
population resides on the Jicarilla Apache Reservation (Reservation), 
mostly in the town of Dulce, which serves as our Tribal headquarters. 
We have a Tribal population of nearly four thousand members and our 
Reservation consists of approximately one million acres of trust land. 
We have been blessed with abundant Natural Resources such as oil and 
gas, timber, water, and fish and wildlife. Fortunately, our Reservation 
was not subjected to the disastrous Allotment Policy initiated in the 
19th Century. As a result, we do not face the difficult checker-board 
jurisdictional challenges encountered by those Tribes and individuals 
whose lands were broken apart (and in many instances lost) as part of 
that Federal Policy. Certainly, this consequence has benefitted our 
energy development initiatives over the years. Yet, given our extremely 
rural location, the considerable public health and welfare needs of our 
people, as well as the fact that we provide governmental services not 
only to our Tribal members but for those living near or travelling 
through our Reservation, the Nation has a heightened need to generate 
revenue to provide essential governmental services on our Reservation 
as well as to the surrounding rural region. Thus, we rely heavily on 
the development of our natural resources, primarily our oil and gas 
resources, to raise revenue to fund our government and provision of 
essential governmental services. Through these lens, I am pleased to be 
here today to discuss our Nation's primary energy issues.

II. Background
    As noted above, our Nation heavily depends on our oil and gas 
production as the primary means of generating governmental revenue. Our 
Reservation is located in the San Juan Basin, a well-known prolific 
source of oil and gas production for over 70 years. Oil and gas 
development began on our Reservation in the 1950's, under the leasing 
authority of the Secretary of the Interior pursuant to the Indian 
Minerals Leasing Act of 1938 (IMLA). Throughout those early years, the 
Secretary negotiated and entered into oil and gas IMLA leases on the 
Nation's behalf, leaving us with a modest royalty interest in the 
development and production of our oil and gas reserves. In the 1970s 
and 1980s the Nation became more active in the development of our 
resources and won a significant legal ruling in the U.S. Supreme Court 
in 1982. In that seminal case, Jicarilla Apache Tribe v. Merrion, the 
U.S. Supreme Court recognized our inherent right to regulate our lands 
and resources within our Reservation, and upheld our sovereign 
authority to impose our own severance tax on the production of our oil 
and gas resources. That same year, Congress passed the Indian Minerals 
Development Act (IMDA) which authorized Tribes to negotiate energy 
deals directly, though subject to Secretarial approval. The tremendous 
impact of the Merrion case coupled with the enactment of the IMDA 
provided our Nation and other Tribes powerful resources and tools to 
expand on our energy development initiatives.
    Today, we have approximately 377,000 acres of our Reservation under 
production, approximately one-third of our Reservation land base. 
According to our internal reports, our total hydrocarbon production 
consists of 302,000 Barrels of Oil and 32 BCF of natural gas, which 
breaks down to approximately 80 percent in natural gas production and 
20 percent in oil production. There are about 2,150 active wells on our 
lands and 700 wells that have been plugged/and abandoned. To support 
development and production, there are over 2,000 miles of gas gathering 
pipelines and roads on our Reservation. While a sizable portion of our 
Reservation is subject to oil and gas production activities, the Nation 
has been diligent in designating and protecting pristine areas, as well 
as sacred sites, and spiritual and culturally sensitive areas from 
disturbance.
    There are currently 26 current Record Title/Operators, 132 active 
IMLA leases, and 12 active IMDAs which accounts for approximately 550 
companies with Operating Permits to conduct oil and gas business on our 
Reservation. Every non-Tribal employee working on our Reservation is 
required to register with and obtain a work permit every year from our 
Department of Labor (DOL). The Nation's DOL issues over 15,000 work 
permits annually associated with oil and gas activities. Of the 
estimated 15,000, it is estimated that 2-3 percent constitutes 
Jicarilla Tribal Members.
    Presently, approximately 90 percent of the Nation's government 
operations are funded with revenues stemming from production of our oil 
and gas resources. Thus, it is imperative to maximize oil and gas 
resource revenue by requiring compliance with Federal and Tribal laws 
and regulations as well as full and timely payment of royalties and 
taxes. At the same time, incentives such as Federal tax credit and 
other Federal resources (such as additional staffing and financing 
opportunities) are necessary to support the development of a robust 
energy industry on Indian lands. Certainly, maximizing our revenues and 
protecting our leases will allow the Nation to continue to provide 
essential governmental services to Tribal Members, and others working 
and residing on our Reservation.
    To that end, the Nation's Oil & Gas Administration (OGA) is our 
regulatory compliance arm. OGA is lead by a Director who manages 16 
employees organized in 7 divisions. OGA also has a lead role in 
evaluating various proposals and energy deals submitted to the Nation. 
The OGA directly interacts and coordinates with the Bureau of Indian 
Affairs (BIA) and Bureau of Land Management (BLM) on regulatory 
matters. The Nation's Revenue & Taxation Department (R&TD) oversees the 
collection of royalties and taxes on production of our oil and gas 
reserves. Through the R&TD, the Nation has developed an extensive 
auditing program which has operated for many years in collaboration 
with the Office of Natural Resources Revenue (ONRR) (formerly the 
Minerals Management Service). Together, the agencies of the Nation have 
provided the Nation powerful regulatory and auditing resources to 
achieve the goal of maximizing revenues while protecting our lands and 
valuable oil and gas reserves.
    In addition, the Nation established the Jicarilla Apache Energy 
Company known as JAECO as a Section 17 Federally chartered corporation 
which is wholly owned by the Nation. The Nation's primary intent in 
establishing JAECO was to become the Nation's oil and gas production 
``operating arm'' that could evaluate and develop existing and new 
acreage for enhancement of production potential. Furthermore, the 
Nation also sought to provide opportunities for JAECO to evaluate 
existing lease acreages that come available for possible acquisition 
through a confirmed sale or bankruptcy proceedings. The overall intent 
has been a positive for the Nation, though JAECO's progress has been 
somewhat stymied in this process due to lack of financing. In summary, 
there are meaningful and viable opportunities for the Nation through 
JAECO especially if there are significant financing opportunities to 
support its initiatives.
    Looking forward in expanding and enhancing our efforts to maximize 
revenues from production of our oil and gas resources, we intend to 
pursue the following initiatives:

   Continue to update, digitize and improve the Lease Record 
        Management System so that we can more accurately and 
        efficiently track and monitor all of the production on our 
        Reservation;

   Update Environmental Review Documents such as Environmental 
        Assessment and Environmental Impact Statements to address 
        current and future potential impact from increased drilling and 
        development;

   Maximize and expand development potential of current IMLA 
        and IMDA lease acreages, increase drilling and payout on wells, 
        pursue and achieve successful drilling in deeper depths, and 
        develop successful horizontal drilling opportunities;

   Continue our collaborative efforts to provide a unilateral 
        enforcement of lease activity by collaboration with Federal 
        Regulatory Agencies such as BIA and BLM, as well as expedite/
        streamline the processing of IMDAs, assignments, plans of 
        development, applications for permit to drill (APD), and right-
        of-way (ROW) agreements, for example; and

   Increase marketing of the Nation's oil & gas resources.

III. Summary of Federally Related Energy Issues
    In addition, the Nation would like to bring a set of other issues 
to the Committee's attention which relates to our Federal partners and 
agencies:

A. Indian Oil and Gas Exploration and Production
    The Nation continues to experience challenges with oil and gas 
lease compliance primarily due to the large amount of acreage under 
lease and/or production, the number of wells in service, the extensive 
gas gathering systems operating throughout the Reservation, the large 
number of operators and related vendor service providers on the 
Reservation, to name a few. Under these circumstances, there is an 
acute need for additional BIA and BLM regulatory oversight including 
enhanced Federal coordination with the Nation and increased funding to 
fully support Tribal regulatory needs.
    As discussed above, oil and gas leasing activity on our Reservation 
is conducted in accordance with the IMLA or the IMDA. Through these 
laws, Congress created a statutory fiduciary relationship, whereby the 
government acts as a trustee for the Tribes in the context of mineral 
leasing of Tribal trust resources. Accordingly the three separate 
agencies within the Department of Interior (``Department'') have 
jurisdiction over Indian leasing: the BIA, the BLM, and the ONRR. The 
Nation exercises concurrent regulatory jurisdiction with these Federal 
agencies over oil and gas leasing activities, and the Nation imposes 
and collects Tribal severance taxes.
    Yet, though we have made tremendous progress through the years 
working with our Federal partners, the Nation believes there is room 
for improvement as far as coordination among the Nation and the Federal 
agencies in management and regulation. The Nation requests that 
Congress exercise oversight to consider a reform of current policies, 
procedures, practices and systems of the Department of the Interior, 
the BIA, the BLM, and the ONRR in order to ensure the proper and 
efficient discharge of the Secretary's trust responsibilities regarding 
oil and gas leasing on our Reservation.

B. Bankruptcy Declarations by Oil and Gas Lessees
    The Nation is concerned about the bankruptcy filings involving 
entities that hold or assert rights to IMLA leasing interests covering 
thousands of acres on our Reservation. In some cases, it is apparent 
that these bankruptcy filings apparently have been pursued as a means 
to circumvent Federal and Tribal laws. The Nation has already been 
involved in several bankruptcy proceedings to protect our interest in 
these IMLA leases. To address this alarming circumvention of Federal 
law and regulations, the Nation proposes that legislative or 
administrative fixes be put into place. Specifically, the law should be 
made clear that prior to any assignment or assumption of Tribal oil and 
gas leases, especially in the context of bankruptcy cases, both the 
Tribal mineral owner and the BIA must review and duly approve. A 
related issue is compliance by industry and enforcement by the BIA. It 
is important that Congress protect the integrity of IMLA leases by 
ensuring that Federal and Tribal oil and gas regulatory authority is 
not diminished through bankruptcy filings.

C. Hydraulic Fracturing
    A burgeoning issue in natural gas production is the practice of 
hydraulic fracturing, also known as ``fracking''. We are also 
experiencing this development on our lands. BLM has provided the Nation 
its draft regulations on fracking, which would also apply on Tribal 
lands. The Nation has been involved in these discussions and is aware 
of both the concerns raised about environmental and water resource 
contamination and of overlapping and potentially burdensome Federal, 
Tribal, and state regulations. We continue to watch this closely and 
plan to file comments on BLM's draft regulations.

D. Split Mineral Estate Development
    An important aspect of Energy Development on our Reservation is to 
protect the integrity of the Nation's sovereignty and control of its 
lands and the development of its resources. This aspect extends to the 
development of the split mineral interests on our Reservation. As noted 
above, our Reservation was not subject to the Allotment Policy and Law 
and therefore we retain 100 percent of the surface and mineral estate 
of our original Executive Order lands. However, the Nation subsequently 
purchased several large ranches adjacent to the Reservation and such 
lands and minerals were taken into trust and added to the Reservation. 
One particular ranch was taken into trust subject to a split mineral 
estate.
    As background, in 1985, the Nation purchased a 55,000 acre ranch 
contiguous to our northeastern boundary. At the same time, we purchased 
an approximate undivided 25 percent interest in and to all oil, gas, 
and other minerals owned by the seller, who held 75 percent of the 
mineral estate. A third party entity holds the other 25 percent of the 
mineral interests. In November 1987, the Nation conveyed the surface 
lands of this property to the United States, to be held in trust. In 
December 1987, the Nation conveyed its interest in the mineral estate 
to the United States. On or about March 10, 1988, pursuant to 25 U.S.C. 
 465, the United States accepted these conveyances and approved the 
trust status of the surface lands and the Nation's undivided interest 
in the subsurface mineral estate. On or about September 1, 1988, 
pursuant to 25 U.S.C.  467, the United States added the surface lands 
and the Nation's undivided interest in the subsurface mineral estate to 
the Reservation. See, Proclamation of Certain Lands as Part of the 
Jicarilla Apache Reservation, 53 Fed. Reg. 37355-02 (Sept. 26, 1988).
    In 2006, more than twenty years after the Nation purchased the 
ranch and eighteen years after the United States took into trust the 
surface lands and mineral interest the Nation purchased, the owner of 
the majority mineral interest entered into a lease with a third party 
for mineral development. The lease was not reviewed by the Nation or 
the BIA even though it purported to lease the Nation's trust lands and 
its undivided trust mineral interest.
    Incidentally in July of 2006, the Solicitor's Office of the 
Department of the Interior essentially determined that neither the 
Nation nor the United States could ``stop'' development, which has led 
to a confusing opinion which created more questions than answers. In 
particular, the Solicitor's opinion ignores Supreme Court decisions, 
which clearly hold that Indian trust land cannot be leased or otherwise 
encumbered without the approval of Congress. Congress has passed 
statutes which provide such approval subject to important protections, 
such as the IMLA and the Indian Reorganization Act. The fundamental 
reason for these laws is that the United States holds title to Indian 
trust land, and therefore, the United States must protect the 
beneficial interest of the Indian nation. The Nation requested the 
Solicitor to rescind or modify its legal opinion and further requested 
to meet directly with the Solicitor. Our requests were not granted, 
though the law is clear that both Federal approval and Tribal consent 
are required prior to any development or encumbrance of Tribal trust 
minerals. Congress should exercise its oversight authority over the 
Department of the Interior to ensure that these important and 
fundamental principles are fully adhered to, especially in our case 
where we have worked so hard to protect reservation lands.

E. Dual Taxation of Oil and Gas Production in Indian Country.
    Following our victory in the Merrion case, the Supreme Court 
considered another case arising from our Reservation which involved an 
oil and gas company's challenge to the imposition of the New Mexico Oil 
and Gas Severance Tax for activities on the Reservation arguing that 
those taxes were preempted by the State and Tribal regulatory schemes. 
In that case, States were granted permission to impose severance taxes 
on non-Indian activities involving the on-reservation production of 
Indian oil and gas reserves in the 1989 United States Supreme Court 
decision Cotton Petroleum v. New Mexico, 490 U.S. 163 (1989), which 
established a dual taxation burden on Tribal non-renewable trust 
resources.
    Three years later, Congress acknowledged the problem with this type 
of dual taxation. In the Energy Policy Act of 1992, Pub. L. 102-486, an 
Indian Energy Resources Commission (``Commission'') was established. 
Among several other objectives, the Commission was to (1) develop 
proposals to address the dual taxation of the extraction of mineral 
resources on Indian reservations; (2) develop proposals on incentives 
to foster the development of energy resources on Indian reservations; 
(3) identify barriers or obstacles to the development of energy 
resources on Indian reservations, (4) make recommendations designed to 
foster the development of energy resources on Indian reservations and 
promote economic development; and (5) develop proposals on taxation 
incentives to foster the development of energy resources on Indian 
reservations including, but not limited to, investment tax credits and 
enterprise zone credits.
    In June 2001, the Nation attempted to address the dual taxation 
issue working with our then senior Senator, Pete Dominici, who 
introduced S. 1106, a bill to provide a tax credit for the production 
of oil or gas from deposits held in trust for, or held with 
restrictions against alienation by, Indian Tribes and Indian 
individuals. A year later, the National Congress of American Indians 
passed Resolution #BIS-02-060 to include S. 1106 in the National Energy 
Bill during conference between the United States House of 
Representatives and the United States Senate. However, the proposed 
bill was referred to the Committee on Finance, and was not passed into 
law.
    To date, the issues the Commission was to address have not been 
fully addressed by either the Commission or Congress. As Tribes 
increase their economic development efforts, issues with dual taxation 
also increase. Dual taxation is an impediment and deterrent to economic 
development on Indian trust and restricted land. Dual taxation of 
Tribal oil and gas reserves creates an adverse economic environment 
which impedes self-determination and strong economic development in 
Indian Country. The United States Congress has the power to address the 
dual taxation of Tribal non-renewable resources by providing a Federal 
tax credit for the production of Tribal resources, much like the one 
Senator Dominici introduced in the 107th Congress.
    It is important to note that the State of New Mexico enacted a 
state severance tax credit for producers who developed new wells after 
1995. This is an important incentive to address the dual taxation 
issue. However, it is also important to note that many of the existing 
wells on the Nation's lands were placed in service prior to 1995, and 
that many other States with oil and gas producing Tribal lands do have 
similar law in place.
    Thus, the enactment of a Federal tax credit for the production of 
oil and gas produced on Indian lands would be helpful in addressing 
this problem. The creation of such a tax credit would not only address 
the dual taxation of Tribal non-renewable resources, but would also 
help stimulate Tribal economies, and contribute to the United States 
energy policy of boosting domestic production to decrease reliance on 
foreign production. It is truly ironic that, as America seeks greater 
energy independence and undertakes hazardous energy sources such as 
nuclear energy and off-shore drilling, Federal law burdens the 
development of safe Native American energy resources with dual 
taxation. This must end.
    We respectfully request an opportunity to work with you to craft a 
provision outlining Federal tax credit for the production of oil and 
gas produced in Indian Country.

F. Electricity Transmission and Distribution Needs
    The final important energy issue the Nation would like to raise 
with the Committee is our ongoing efforts to address the weak 
electricity distribution system that serves our Reservation, which has 
long afflicted our people with rolling blackouts and has suffered from 
longstanding load capacity deficiencies.
    For decades the Nation has struggled with an unreliable source of 
electric energy. Sadly, the lack of reliable energy has had a direct 
impact on the quality of life of Tribal members and has slowed down and 
deterred the growth and business development opportunities. Years of 
negotiation with the local electric cooperative that serves the Nation 
via a 26 mile 24.9kv distribution line has not changed this unfortunate 
situation. After years of study, the Nation has elected to construct 
its own 115kv transmission line, a line that will provide a reliable 
source of electric energy for years to come. Perhaps just as important, 
the line also has sufficient capacity to permit the Nation to 
facilitate the transmission of electric energy for other power 
providers across the state of New Mexico.
    Most recently, the Nation has undertaken and accomplished the 
following tasks, all with an eye towards electric energy independence:

   In January of 2011 the Nation contracted with Public Service 
        Company of New Mexico (PNM) to complete a System Impact Study 
        to evaluate the Nation's proposed 115 kV transmission line;

   PNM completed the System Impact Study and issued its 
        findings in June 2011. No adverse findings were noted;

   On September 9, 2011 the Nation passed a resolution 
        authorizing and implementing the next phases of the Nation's 
        project, including continued discussions with PNM regarding 
        siting and interconnection agreements and authorizing the 
        appraisal of the local electric distribution system;

   On October 18, 2011, the Nation, by Ordinance, authorized 
        the creation of the Jicarilla Apache Nation Power Authority;

   In October 2011, the site of the physical interconnection 
        and location of the switch station of the proposed 115kV line 
        with PNM's 345 kV line was identified and blessed with Tribal 
        leaders and local dignitaries;

   In November of 2011, the Nation put the local electrical 
        cooperative on notice of its intent to acquire its electric 
        distribution assets located on Tribal lands;

   In December of 2011, the Nation submitted its draft Cultural 
        Resource Survey for a Proposed Power Line Easement on the 
        Jicarilla Apache Reservation in Rio Arriba County, New Mexico 
        to the BIA; and

   In January 2012, the Nation filed comments with the New 
        Mexico Public Regulation Commission addressing the Commission's 
        concerns about FERC Order 1000 and the planning of inter-
        regional transmission projects in the regional Southwest.

    Going forward, the Nation continues to communicate with both PNM 
and the local co-op on a weekly basis in an effort to coordinate the 
construction and interconnection of its proposed 115kV transmission 
line and the acquisition of a distribution system by Spring 2014. As 
our project progresses, we will also continue communication with our 
New Mexico Congressional Delegation and this Committee regarding 
related Federal issues and support that needs to be addressed to bring 
this project to fruition.

IV. Conclusion
    In closing, the Nation appreciates the opportunity to appear before 
this Committee and provide testimony on this extremely important 
subject. We look forward to working with the Committee to address these 
pressing Energy issues.

    The Chairman. Thank you very much, Mr. Pesata.
    Councilman Anketell, will you please proceed with your 
statement?

STATEMENT OF HON. THOMAS ``STONEY'' ANKETELL, TRIBAL EXECUTIVE 
  BOARD MEMBER, ASSINIBOINE AND SIOUX TRIBES OF THE FORT PECK 
                          RESERVATION

    Mr. Anketell. Thank you, Mr. Chairman.
    My name is Thomas ``Stoney'' Anketell, and I serve as a 
member of the Tribal Executive Board of the Assiniboine and 
Sioux Tribes of the Fort Peck Reservation. In this capacity, I 
serve as Chairman of the oil and gas committee of the Tribal 
Executive Board.
    Tribal Chairman Floyd Azure and my fellow Tribal Executive 
Board members send their best wishes and thanks to Chairman 
Akaka and the Committee for holding this important oversight 
hearing on energy development in Indian Country.
    I also want to give special recognition to my Senator, Jon 
Tester.
    I have spent a great deal of my career focused on Tribal 
energy development, particularly oil and gas development. Prior 
to serving on the Tribal Executive Board, I worked for the 
Federal Government, BIA oil and gas leasing, as well as in the 
private sector. Having viewed energy development from three 
sides, I have a good sense of what is and what is not working 
in Indian Country.
    I want to share a little about Fort Peck. My reservation 
lies within the western part of the Williston Basin, which 
includes many oil-producing formations, including what is 
commonly known as the Bakken Formation and the Three Forks 
Formation. Since the 1950s, a major part of the Tribe's economy 
has been based on oil and gas development.
    Over the last two decades, oil and gas development on the 
Reservation has tapered off significantly. This is about to 
change. The development of horizontal drilling techniques 
allows for better access to known oil and gas reservoirs in the 
Bakken and Three Forks Formations on our reservation. These 
reserves were previously inaccessible using conventional 
drilling techniques.
    This represents a once in a lifetime opportunity for my 
Tribes: working in close collaboration with our Federal trustee 
to use our natural resources to create jobs and spur 
sustainable economic development to erase the high rates of 
unemployment and poverty on our reservation. Because despite 
our best efforts over the past decades to develop our natural 
resources the difficult of tapping these reserves, along with 
the challenges of dealing with multiple jurisdictions, have 
made it difficult for the Tribes to address the needs of our 
reservation. We can and must do better. But this will only 
happen if our Federal trustee works with us to avoid the 
mistakes of the past.
    We are particularly concerned about the long delays in 
processing mineral leases and other critical energy development 
documents, which often frustrates our energy development plans 
and serves only to push oil and gas and other types of energy 
and mineral development off the reservation.
    Time is money to energy producers. Federal inaction can 
often be as bad as wrong action, and we have fond instances 
where the BIA has simply failed to carry out its trust 
responsibility by waiting months and even years to act on 
mineral leases, appraisals, requests for drilling permits and 
other documents which require prompt action.
    Just as time is money to the energy producers, money is 
money to energy producers. If the cost of on-reservation energy 
production is much higher than the cost of off-reservation 
energy production, energy producers will naturally locate where 
it is less expensive to operate. Federal permit fees and other 
energy development costs should not be higher on Tribal lands 
than they are on State lands.
    To address our concerns, the Tribes ask that Congress work 
with Tribal leaders and the Administration to develop new 
legislation to, number one, establish review and approval times 
for Federal action on Indian Mineral Development Act 
agreements, leases, drilling permits and well-site permits. 
Number two, exempt Indian and Tribal trust lands from Bureau of 
Land Management drilling fees and reduce Federal fees for other 
energy Development permits to bring them more in line with 
similar fees on State fee lands.
    Number three, correct the double taxation of energy 
development on Tribal lands. And number four, provide special 
block grant funds to address the infrastructure needed for 
well-planned and coordinated energy development. Number five, 
ensure that bid deposits and other funds owed to Tribes and 
allottees are placed in interest-bearing trust accounts. And 
finally, number six, to better promote the development of wind 
and other renewable energy resources in Indian Country.
    Finally, Tribes are entrusted with protecting their 
homelands for the next seven generations. Thus, as we consider 
positive job creation and economic development opportunities, 
we have a corresponding duty to ensure that these projects are 
carefully planned and studied to ensure that they do not put 
our sacred sites at risk or otherwise imperil sacred trust we 
have to preserve our homelands for future generations.
    I thank the Committee for the opportunity to present this 
testimony. Thank you.
    [The prepared statement of Mr. Anketell follows:]

Prepared Statement of Hon. Thomas ``Stoney'' Anketell, Tribal Executive 
Board Member, Assiniboine and Sioux Tribes of the Fort Peck Reservation

I. Introduction
    My name is Thomas ``Stoney'' Anketell, and I serve as a member of 
the Tribal Executive Board of the Assiniboine and Sioux Tribes of the 
Fort Peck Reservation. Tribal Chairman Floyd Azure and my fellow Tribal 
Executive Board members send their best wishes and thanks to Chairman 
Akaka and the Committee for holding this important oversight hearing on 
energy development in Indian Country. I have spent a great deal of my 
career focused on tribal energy development, particularly oil and gas 
development, and am pleased to be here today to share my testimony.
    I hold a degree in petroleum land management from Rocky Mountain 
College in Billings, Montana. For fourteen years, I worked for the 
Department of the Interior in the Bureau of Indian Affairs (BIA) Realty 
and Mineral Development Divisions. Following my time at the BIA, I 
worked for several years in the private sector for Hunt Petroleum, ETO 
and Exxon Mobile. In this capacity, I assisted these companies in a 
cooperative effort with the Three Affiliated Tribes to bring major oil 
development to the Fort Berthold Reservation. Last but not least, I 
have served on the Fort Peck Tribal Executive Board for over 7 years 
and have experienced firsthand the challenges Tribal leaders face as we 
try to create jobs and increase sustained economic development on our 
Reservation. Having viewed energy development from the tribal, federal 
and private sector, I have a good sense of what is and is not working 
in Indian Country.

II. The Opportunities and Challenges of Energy Development on the Fort 
        Peck Reservation
    The Fort Peck Reservation consists of over two thousand square 
miles of land in northeastern Montana. The Assiniboine and Sioux Tribes 
and individual Indians own about 1 million acres of land. Over 6,700 
Tribal members and non-member Indians live on the Reservation, along 
with over 3,200 non-Indians. We have been developing oil and gas 
reserves on our Reservation since the early 1950s.
    The Fort Peck Reservation lies within the western part of the 
Williston Basin, which includes many oil producing formations, 
including what is commonly known as the Bakken formation and the Three 
Forks formation (see attached chart). Since the 1950s, a major part of 
the Tribes' economy has been based on oil and gas development. In the 
1950s, the Tribes began to lease substantial amounts of tribal mineral 
lands to non-Indian companies for oil and gas development. In the oil 
boom of the 1970s and early 1980s, we asserted much greater control 
over this process, insisting on increased royalty rates for new tribal 
leases, entering into service contracts where the Tribes hired a 
private company to explore and develop tribal oil and gas for our own 
benefit. We also imposed a tribal severance tax on energy development. 
During the early 1980s, tribal revenues from oil and gas lease rents 
and royalties came to over $8 million in some years. Over the last two 
decades, oil and gas development on the Fort Peck Reservation has 
tapered off significantly. This is about to change.
    The development of horizontal drilling techniques allow for better 
access to known oil and gas reservoirs in the Bakken and Three Forks 
formations on our Reservation. These reserves were previously 
inaccessible due to the low porosity and low permeability of the Bakken 
and Three Forks rock formations containing the oil and gas, which made 
it difficult to extract the product using conventional vertical 
drilling techniques. The oil and gas is essentially trapped in the 
dense rock formation and cannot be extracted merely by drilling 
downward. Instead, the oil and gas must be released through horizontal 
drilling and a process called hydraulic fracture stimulation or more 
commonly ``fracking.'' An April 2008 USGS Report determined that 
horizontal drilling and fracturing techniques could provide access to 3 
to 4.3 billion barrels of recoverable oil in the Bakken formation 
alone. In 2011, Continental Resources Inc., declared that the ``Bakken 
play in the Williston Basin could become the world's largest discovery 
in the last 30-40 years.'' Continental estimates the Bakken and Three 
Forks collectively hold 24 billion barrels of potentially recoverable 
crude oil equivalent--20 billion in oil and 4 billion in natural gas. 
While much of the recent Bakken play has focused on reserves in North 
Dakota, it is now moving back to Montana and to the Fort Peck 
Reservation in particular.
    This represents a once in a lifetime opportunity for our Tribal 
government--working in close collaboration with our Federal trustee--to 
use the bounty of our natural resources to create jobs and spur 
sustainable economic development to erase the persistently high rates 
of unemployment and poverty on our Reservation. Despite our best 
efforts over the past decades to develop our natural resources in an 
economically and environmentally sustainable manner, the difficulty of 
tapping these reserves, along with the challenges of dealing with 
multiple jurisdictions, have made it difficult for our Tribal 
government to make a significant dent in the unemployment and poverty 
that still plague our Reservation. We can and must do better, but this 
will only happen if our Federal trustee works with us to avoid the 
mistakes of the past.
    Like most reservations in Montana, our Reservation was opened to 
homesteaders a century ago, with trust and fee lands interspersed in a 
``checkerboard'' ownership pattern. Consequently, the development of 
lands and resources within our Reservation is subject to oversight from 
many federal, state and tribal agencies and laws. If done properly and 
with respect for tribal sovereignty, Federal Government oversight and 
regulation should not unduly impede energy development or infringe on 
the proper exercise of Tribal governmental authority on our 
Reservation. Unfortunately, our experience has taught us that federal 
involvement is not always helpful, particularly in the field of energy 
development.
    Federal and state agencies often do not coordinate well with one 
another or with Tribal agencies. This leads to long delays in the 
approval of required paperwork and in the implementation of tribally-
beneficial energy development policies. While there are many excellent, 
highly motivated officials in the Department of the Interior (DOI) and 
the Department of Energy (DOE) working to provide useful technical 
assistance to Tribes, too often this technical expertise does not make 
it down to the BIA Regional Offices and Agencies on the reservations. 
BIA Regional and Agency staff often do not have adequate technical 
expertise in the complex field of energy development, and they do not 
always appreciate that ``time is of the essence'' when it comes to 
energy development.
    The Fort Peck Agency's long delays in processing mineral leases and 
other critical energy development paperwork often frustrate our energy 
development plans and serve only to push oil, gas and other types of 
energy and mineral development off the Reservation. In fact, BIA 
approval of oil and gas leases can take so long that Indian probates 
have been known to open and close before any BIA action is ever taken. 
Time is money to energy producers. Federal inaction can often be as bad 
as wrong action, and we have found instances where the BIA has simply 
failed to carry-out its trust responsibility by waiting months and even 
years to act on mineral leases, appraisals, requests for drilling 
permits and other documents requiring prompt action.
    Just as time is money to energy producers, money is money to energy 
producers. If the costs of ``on-reservation'' energy production is much 
higher than the cost of ``off-reservation'' energy production, energy 
producers will naturally locate where it is less expensive to operate. 
We have already seen this pattern in the Williston Basin and do not 
want to see it continue. Federal permit fees and other energy 
development costs should not be vastly higher on tribal lands than they 
are on state lands. By and large, the market should decide these costs 
and fees, not federal bureaucrats.
    The United States must do a better job of honoring its trust 
obligation to all Tribal nations in the field of natural resource 
development. As discussed in the recommendation section below, DOI and 
DOE policymakers should work together to place knowledgeable oil and 
gas development experts at every BIA Agency where Tribes are actively 
working to develop oil production in the Bakken and Three Forks 
formations. These locally-based experts could help the BIA Agency staff 
improve their turn-around time for required approval of a wide-range of 
energy-related documents. These experts should also be qualified to aid 
Tribal leaders and BIA officials in planning for (and identifying 
funding resources for) the critical transportation infrastructure 
needed to support energy development in a safe manner. We have 
witnessed the damage created on the Fort Berthold Reservation to the 
tribal road systems when oil production truck traffic increased rapidly 
with no corresponding increase in the transportation infrastructure 
needed to support it. Roads were destroyed and lives were lost in 
preventable traffic accidents.
    Congress and the Administration have important roles to play in 
helping all Tribes gain the benefits of sound and sustainable 
development of the Bakken and Three Forks formations. Congressional 
support for reservation-based transportation infrastructure, road 
maintenance and traffic safety program funding are critical to the safe 
and efficient development of the Bakken and Three Forks oil fields. 
Energy development activities also need to be coordinated with law 
enforcement officials, employee training center directors, 
environmental protection officials, school superintendent and housing 
programs directors so that the great crush of new people and economic 
activity on the Reservation does not overwhelm the Tribes' limited 
governmental resources in these areas. Fort Peck Tribal members must 
also be adequately trained and equipped for jobs in the oil industry.
    Greater federal funding assistance and technical support for the 
tribal law enforcement, housing, environmental, career training and 
educational programs will help us ensure that the many positives that 
come from sound energy development are not overshadowed by the negative 
consequences of traffic congestion, traffic safety concerns and 
environmental damage.
    Our Tribal government is entrusted with protecting our homelands 
for the next seven generations. We have a duty to our ancestors to 
ensure that the land they fought to preserve for us is maintained in a 
culturally and environmentally sound manner to sustain our people for 
generations to come. Thus, as we consider the positive job creation and 
economic development potential of Bakken energy development or other 
major projects such as the Keystone XL Pipeline, we have a 
corresponding duty to ensure that these projects are carefully planned 
and studied to ensure that they do not put our sacred sites at risk or 
otherwise imperil the sacred trust we have to preserve our homelands 
for future generations. I discuss these recommendations below in more 
detail.

III. Detailed Recommendations for Improving Reservation-Based Energy 
        Develpment
    This hearing is timely and important. I believe the specific 
recommendations set out below will ensure that Tribal nations--indeed 
the entire Nation--will be in a better position to capitalize on the 
great economic and job creation opportunity presented by the Bakken and 
Three Forks oil plays. These recommendations will also help Tribal 
nations become engines of economic growth in the broader field of 
energy development--including renewable energy development--for the 
benefit of all.
    First and foremost, Congress should work with Tribal leaders and 
the Administration to develop new legislation to: (1) establish maximum 
review and approval times for federal action on Indian Mineral 
Development Act (IMDA) agreements, leases, drilling permits, well-site 
permits and other required paperwork; (2) exempt Indian and tribal 
trust lands from Bureau of Land Management (BLM) drilling fees and 
reduce fees for other energy development permits and paperwork to bring 
them more into line with similar fees on state fee lands; (3) correct 
the double taxation of energy development on tribal lands; (4) provide 
special block grant funds to address the transportation, housing, law 
enforcement, environmental and employment training needed for well-
planned and coordinated energy development; (5) ensure that bid 
deposits and other funds owed to Tribes are placed in interest-bearing 
trust accounts; and (6) promote access to transmission lines to unlock 
the potential development of wind and other renewable energy resources 
in Indian Country.
    Second, given that the passage of new legislation will take time 
and is uncertain at best in an election year, this Committee and the 
senior DOI and DOE policymakers present at this hearing should engage 
the key federal agencies, including the BIA, to take immediate action 
now to implement the recommendations and correct the problems I have 
indentified in this testimony. These corrective actions are explained 
below.

A. Improve Technical Capacity and Responsiveness at the Fort Peck 
        Agency
    The Fort Peck Tribes are leading the effort to prove that the 
Bakken Reserve is not limited to North Dakota. In the last year, the 
Fort Peck Energy Company (FPEC), which is the Tribes' energy 
development arm, has drilled two horizontal wells. We expect to 
fracture these wells in the next two weeks to determine their 
production capacity. This venture will provide much needed revenues for 
the Tribes and employment opportunities for our members, as well as 
support for America's energy independence. However, in undertaking this 
initiative, the Tribes and FPEC have encountered some serious issues 
regarding the capacity and technical expertise of BIA officials to do 
the job that federal law requires the BIA alone to do.
    In addition to the length of time it takes for the BIA Agency to 
act on leases, permits and other paperwork, a great area of concern is 
the deficiencies within the BIA's Realty Division. Specifically, there 
is not a certified realty appraiser at the Fort Peck Agency. 
Consequently, the BIA's assessed values for rights-of-way and well-pad 
sites are sometimes 300 percent what they should be. For example, the 
FPEC paid $15,000 each for the two well-pad sites we expect to fracture 
soon. This price may be consistent with the amounts now paid in North 
Dakota, where major development activities are already ongoing, but it 
is inconsistent with normal appraising practices in a place where oil 
has not yet been located in paying quantities. FPEC paid this fee under 
protest because it did not have the luxury of time to dispute the BIA's 
actions. Available drilling rigs are in high demand and difficult to 
get so FPEC had to secure the well-pad sites even though it strongly 
disagreed with the BIA Agency assessment. This is but one example of 
our Federal trustee charging a tribally-owned corporation an improper 
assessment due to a lack of oil development expertise and appraisal 
experience.
    We have encountered the same difficulty in securing rights-of-way 
(``ROW'') for oil exploration activities. We are aware of one company 
that has cancelled its plans to develop two wells on the Fort Peck 
Reservation because the BIA Agency staff insisted on a ROW fee in 
excess of $28,000, which is far more than would be paid off-
reservation. While it is of course important that allottees and our 
Tribal trust lands receive fair compensation for ROW usage, it is 
equally important that appraisals are not so unfair or arbitrary that 
they discourage legitimate oil exploration activities. In my view, 
these fees were arbitrary and were based on the unreasonable judgment 
of BIA personnel who are not trained appraisers. This lack of technical 
expertise discourages energy development on the Fort Peck Reservation 
because potential developers fear they will be subjected to arbitrary 
fees and costs they do not encounter off the Reservation.
    Private business interests have often complained to the Tribal 
Executive Board that they do not like to deal with BIA Agency staff who 
too often seem uninterested in working with private companies in a 
fair, timely and efficient manner. I worked for the BIA for many years 
at the Fort Peck Agency, so please understand that I have no interest 
in being unnecessarily critical of the BIA Agency staff. The motives of 
these hard-working individuals may well be good, but more must be done 
to enhance the technical capacity and expertise of Fort Peck Agency 
staff in the areas of energy development, land use and ROW appraisals.
    Senior DOI and DOE officials should work together to place highly-
motivated, well-trained technical staff at the Fort Peck Agency and all 
other BIA Agencies located on Indian reservations within the active 
Bakken and Three Forks formation oil plays. These teams would be 
similar to the ``one-stop'' technical assistance team established on 
the Fort Berthold Agency and should include not only trained oil and 
gas lease specialists, but also a ROW specialist, a trained appraiser, 
and a geologist with oil and gas development experience. More than any 
other single recommendation, I believe this action will help seize this 
once-in-a-lifetime economic development opportunity for the Fort Peck 
Tribes, for other Tribes in the region and for our Nation as a whole.
    To ensure rapid turnaround times for critical energy development 
permits and other required paperwork, I also propose the following 
mandatory timelines:

   IMDA agreements which now take over six months to process 
        should be reviewed and approved within two, or at most three 
        months.

   Oil and gas leases which currently take up to a year to 
        process should be reviewed and approved within one month.

   Applications for a permit to drill (APDs) which currently 
        take up to six months to process should also be reviewed and 
        approved within one month.

   ROW documents that now take many months to process should 
        also be approved within one month.

   Communitization agreements should be reviewed and approved 
        within two months.

    Along these same lines, I also recommend that additional federal 
resources and effort be provided to speed up the work on critically 
important cadastral surveys for the Fort Peck region.
B. Reduce BLM Drilling Permit Fees and Other Unnecessarily High Federal 
        Fees
    Another disincentive to drilling on Indian allottee and tribal 
trust lands is the $6,500 that the BLM charges for a permit application 
to drill on federal land, including Indian and tribal trust lands. In 
FY 2010, Congress increased this fee from $4,000 to $6,500. In theory, 
this fee is intended to cover the BLM's cost of processing the drilling 
permit application. However, the fee is highly disproportionate to the 
$75 that the State of Montana charges to process the same kind of 
permit on State fee land. I see no good reason for the BLM fee to be so 
high on Indian and tribal trust lands and doubt Congress even 
considered the potential negative impact on oil and gas development in 
Indian Country when it made this change in the law. I ask Congress to 
correct this mistake and exempt Indian and tribal trust lands from the 
BLM fee so that the Fort Peck Reservation does not continue to be an 
island of poverty and missed opportunity in a sea of prosperous oil and 
gas development in our Region.

C. Ensure That Lease Bid Deposits are Placed in Interest-Bearing Trust 
        Accounts
    I also seek Congressional support for legislation--or at a minimum 
renewed pressure for administrative action--to ensure that bid deposits 
for oil and gas lease sales on Indian and tribal trust lands are once 
again held in interest-bearing accounts. Historically, bid deposits 
were held in interest-bearing trust accounts and, upon Secretarial 
approval of the lease or contract, both the principal and interest were 
paid to the Tribal and individual Indian landowners. However, DOI 
policy changed several years ago despite our strong protests. Now, DOI 
holds bid deposits and other advance payments made by successful 
bidders in noninterest-bearing federal accounts until the lease or 
contract is approved by the Secretary.
    As noted above, it can unfortunately take months and sometimes even 
years for a successful bidder to secure BIA approval of a mineral 
lease. Consequently, these bid deposits sit idle in federal accounts 
without earning interest for the beneficial land-owner, whether a Tribe 
or an Indian allottee. By the time the funds are finally paid to Tribes 
and individual Indian landowners, the value of the bid deposit has been 
eroded by inflation.
    In my view, DOI's current practice is illegal and contrary to the 
federal trust responsibility. Our Tribal leadership has discussed this 
matter with senior BIA and DOI Office of Trust Fund Management 
officials, but they have responded by stating that they do not believe 
they have the statutory authority to place these funds at interest. At 
the same time, these officials agreed that bid deposit funds should 
start earning interest once the successful bidder is selected, and that 
Tribes and individual Indians should not bear the costs of the time 
that it takes for the BIA to review and approve leases.
    Although I believe DOI has sufficient legal authority and a clear 
trust obligation to place bid deposit funds at interest now, 
legislation mandating it would solve the problem once and for all and 
avoid future litigation over DOI's improper handling of these funds.

D. Eliminating the Problem of Dual Taxation
    The Fort Peck Tribes were one of the first Tribes in the country to 
institute a severance tax on oil and gas development on our 
Reservation. However, the 1989 U.S. Supreme Court decision in Cotton 
Petroleum Corp. v. New Mexico, 490 U.S.163 (1989) allows States to tax 
certain activities by non-Indian companies on Indian and tribal trust 
lands. When Cotton applies to allow States to impose taxes in addition 
to Tribal taxes, economic activity on tribal lands is discouraged. 
Tribal and State taxes are owed for energy development activities in 
Indian Country where only State taxes must be paid for energy 
development elsewhere. This double taxation creates a serious 
disincentive to energy and mineral development on Tribal lands and is 
inconsistent with well-established federal policies designed to promote 
Tribal economic development and self-sufficiency.
    Our Tribal government has long urged Congress to overturn the 
poorly decided Cotton decision and to bar State taxation of commercial 
activities on Indian and tribal trust lands, but Congress has 
repeatedly failed to act. Therefore, the only way we could avoid the 
disadvantage Cotton creates was either to forego our right to tax 
energy development on Reservation lands altogether or seek to enter 
into an innovative tax sharing agreement with State of Montana.
    As an example of our Tribes' leadership in this area, I am pleased 
to report that the Fort Peck Tribes reached an historic tax-collection 
and tax-sharing agreement with the State of Montana on March 25, 2008. 
While we are pleased with this agreement and believe it presents a 
model for other Tribes to follow, we also continue to believe it is a 
poor substitute for congressional action. Simply put, the Cotton ruling 
was wrongly decided. I ask Congress once again to pass legislation 
returning full taxing authority to Tribal governments for commercial 
activities on Indian and tribal trust lands.

E. Eliminating Barriers to Wind Energy and Other Renewable Energy 
        Projects
    The Fort Peck Tribes believe further development of wind energy is 
an important part of America's energy independence. Montana is one of 
the five windiest states in the union and the Fort Peck Reservation in 
northeast Montana presents one of the greatest opportunities for wind 
energy development in the entire State. With the support of DOE and 
other federal agencies, the Fort Peck Tribes spent many years 
researching and quantifying our wind energy resources, and we know that 
the potential energy that can be derived from wind power is 
considerable. With proper support from the Federal Government and 
better connections to transmission lines on the national energy grid, 
we could attract reputable business interests to partner with us to 
develop commercially viable and sustainable wind energy projects on the 
Fort Peck Reservation.
    Unfortunately, we and many others in Montana who wish to develop 
their wind energy resources are severely hampered by ever-changing 
national energy policies and by a lack of inexpensive and accessible 
transmission line capacity. Tribal wind energy projects cannot get off 
the ground if there is no commercially viable way to get our abundant 
wind power to energy consumers. Many of the transmission lines in 
Montana were built and are maintained by the Western States Power 
Authority (WAPA), a federal agency. In 2005 Congress directed the 
Secretaries of the Army and the Interior to conduct the Wind and 
Hydropower Feasibility Study (WHFS), which was completed in 2009, to 
determine the feasibility of blending wind generation with hydropower 
on the Missouri River, and to evaluate tribal wind generation. While 
the WHFS concluded that a 350MW Tribal Wind Demonstration Project was 
not feasible, it recommending studying facilities under 300MW and 
indicated that WAPA believed economic risk could be mitigated through 
the development of a 50MW facility, if authorized and funded prior to 
2015. Unfortunately, neither WAPA, nor Congress has undertaken the 
development of a Tribal Wind Demonstration Project. Congress should now 
take action to authorize and fund a Tribal Wind Demonstration Project, 
at Fort Peck, and others throughout Indian country, as its next step in 
obtaining American energy independence.

F. Developing Environmentally and Culturally Sustainable Energy 
        Projects
    Finally, related to our interest in wind energy development is our 
foundational belief that all economic development projects must be 
undertaken in ways that protect and enhance our Tribal homelands, 
sacred sites and cultural resources. We fully support job-creation 
initiatives and economic development opportunities that allow us to 
develop our natural resources and improve the quality of life for our 
Tribal members. However, all of our development efforts must be 
balanced with our sacred commitment to preserve our Tribal homelands 
and to protect the spiritual and cultural heritage which our ancestors 
suffered so much to preserve for future generations. The people 
residing on our Reservation need clean land, water, and air in order to 
live and work in a healthy environment. In addition, ranching and 
farming are vital industries on the Fort Peck Reservation so they too 
must be able to coexist and thrive alongside energy development. 
Otherwise, we have simply promoted one important Tribal industry at the 
expense of others, which would make no sense, economic or otherwise.
    As a Tribal government, we endeavor to support only those 
initiatives that are done in a manner that is backed by sound science 
and that minimizes potential adverse impacts to our Tribal lands and 
resources. We are uncertain whether the Keystone XL Pipeline falls in 
this category. While we realize there are many potential economic 
benefits to the Keystone project, we are deeply concerned that the 
proposed pipeline route currently runs under the Missouri River. The 
Missouri River is the source of our drinking water and provides 
countless benefits to our Tribal members and others residing on our 
Reservation. We are well aware of the recent oil spill in the 
Yellowstone River and the harm that spill caused to the surrounding 
area.
    Moreover, while I have suggested improved technical capacity and 
responsiveness within the Federal Government, as well as a reduction in 
certain fees that I believe should be decided by market conditions, I 
do not suggest the elimination of federal oversight over any projects 
that have an impact on Indian trust resources and sovereign Tribal 
governments. We ask the Committee and Congress to give careful 
consideration to the interests of those that may be adversely impacted 
by the Keystone project and to uphold the federal trust responsibility 
owed to Indians.
    I thank the Committee for the opportunity to present this 
testimony.

    The Chairman. Thank you very much, Councilman, for your 
testimony.
    Ms. Kauhane. will you please proceed with your testimony?

 STATEMENT OF MICHELLE KAUHANE, DEPUTY DIRECTOR, DEPARTMENT OF 
              HAWAIIAN HOME LANDS, STATE OF HAWAII

    Ms. Kauhane. Aloha, Chairman Akaka, members of the Senate 
Committee on Indian Affairs.
    The Chairman. Aloha.
    Ms. Kauhane. My name is Michelle Kauhane, and I thank you 
for the invitation and opportunity to provide testimony on 
behalf of the State of Hawaii Department of Hawaiian Home 
Lands. Our State agency is responsible for the administration 
of the Federal land trust established by Congress through the 
Hawaiian Homes Commission Act of 1920, establishing 
approximately 203,000 acres of trust lands throughout Hawaii 
for the homesteading of Native Hawaiian people, similar to the 
trust lands established under the Indian Allotment Act for 
residential, farming and pastoral purposes.
    Today I will provide you with a brief overview of energy 
development in Hawaii, highlight two of the energy development 
projects currently happening on our trust lands and offer four 
recommendations to increase energy development on these lands.
    First, a brief overview of energy development in Hawaii. 
Hawaii is the only State within the United States that is 90 
percent dependent on imported fossil fuels for its energy. 
Hawaii has untapped indigenous, renewable resources that can be 
utilized, including wind, solar, geothermal, wave energy, 
biomass, hydroelectricity and ocean thermal energy conversion. 
The lands in the Hawaiian Home Lands trust host many of the 
robust energy sources that can contribute to a clean energy 
future with a clear opportunity to be at the forefront of 
energy development in the State.
    As a Federal land trust administered by State government, 
we must work with Congress, with the Department of Energy and 
with the Department of Interior to advance energy development 
to benefit the Hawaiian Home Land trust, our State and the 
Nation. While we have only begun to understand the vast 
opportunities, I will highlight two examples of energy-related 
projects, one that is complete and one currently underway.
    First, the Kaupuni Residential Subdivision, completed last 
year. In January 2011, the Department of Hawaiian Home Lands 
hit a major milestone with the development of 19 homes in 
Kaupuni Village in Wai'anae on O'ahu. Kaupuni was the first 
LEED-Platinum single family affordable housing subdivision in 
the Country, achieving a net zero project with a holistic, 
sustainable community plan for families who reside within the 
community.
    Second, a commercial grade solar farm currently under 
development by Native Hawaiians residing on the island of Kauai 
in Anahola. DHHL is currently engaged in a very unique and 
exciting partnership being co-developed by a non-profit utility 
cooperative and the Homestead Community Non-Profit Development, 
made up of residents who reside in the community of Anahola. It 
represents the first time a solar farm is being pursued with 
Hawaiian homesteaders as a huge part of the development team. 
Prior to this, most of the lands are leased out and developed 
by third parties, whereas this project, our homesteaders are at 
the forefront.
    Aside from the $62 million 12 megawatt solar farm being the 
single largest solar farm being developed in the State, the 
benefit to the local homestead community has been cornerstone 
strategy that includes cultural and environmental protection, 
employment and small business opportunities, energy revenue 
sharing for the community-based project, and of course, the 
mentoring of Native Hawaiians on the development team.
    Beyond these projects, potential resources on Hawaiian home 
lands also include hydro, geothermal, wind and many others. 
What we know from just the initial energy-related projects 
pursued in the last three years is that the potential is real 
and achievable.
    The Department of Hawaiian Home Lands makes four 
recommendations to increase energy development on our trust 
lands. First, the implementation of SUTA to access capital and 
tax credits. Implementation of SUTA as eligible criteria in 
existing and key Federal programs will have a positive impact 
across the Nation.
    Number two, technical assistance to increase Native energy 
capacity and collaboration. Technical assistance and capacity 
building are vital tools to the development of energy resources 
in trust land areas.
    Third, energy transmission and infrastructure capital. We 
recommend Federal investments in smart grid technologies 
dedicated to trust land areas. And fourth, a streamlined and 
transparent land use policy. Successful energy development 
requires low-cost capital, excellent partners and clear land 
use policies that honors the trust status and original intent 
of our Hawaiian Homes Commission Act.
    Tribal and Hawaiian Home Lands holds some of our Nation's 
most precious energy resources and remain some of the most 
underserved areas across the Nation. With specific attention to 
the development of Federal energy policy dedicated to trust 
land areas, the potential of Native lands in playing a 
significant role in our Nation's energy future becomes 
possible.
    Chairman Akaka, I thank you for the opportunity to 
participate this afternoon.
    [The prepared statement of Ms. Kauhane follows:]

Prepared Statement of Michelle Kauhane, Deputy Director, Department of 
                  Hawaiian Home Lands, State of Hawaii

    Aloha Chairman Akaka, Vice-Chairman Barasso and Members of the 
Senate Committee on Indian Affairs.
    My name is Michelle Kauhane, and I thank you for the invitation and 
opportunity to provide testimony on behalf of the State of Hawaii, 
Department of Hawaiian Home Lands (DHHL). Our state agency is 
responsible for the administration of the federal land trust 
established by Congress through the Hawaiian Homes Commission Act of 
1920 (HHCA), establishing trust lands for homesteading by the native 
Hawaiian people similar to trust lands established under the Indian 
Allotment Act of 1906 for residential, farming and ranching of eligible 
American Indians.

Hawaiian Trust Lands Under the Hawaiian Homes Commission Act
    Since Hawaii's overthrow as an independent nation and the 
subsequent annexation to the United States, one of the most significant 
federal policy achievements for native Hawaiians was the enactment of 
the HHCA. It began as a resolution in the territorial government in 
Hawaii, and advocated by the territory's congressional representative, 
Prince Jonah Kuhio Kalanianaole. Similar to other land allotment acts 
of that era for Alaska Natives and American Indians, the HHCA 
established a land trust of approximately 200,000 acres of land located 
in every county in the state, to provide land for residential, 
agricultural and pastoral homesteading. In addition, the HHCA 
encourages economic development on trust lands through land licenses 
for commerce and public purpose development.
    The Act was incorporated into Public Law 86-3, the Hawaii Statehood 
Act in 1959, as a condition of statehood, which required the new state 
government to administer the Hawaiian Home Land trust with federal 
oversight by the Department of Interior and Congress. DHHL and its 
administration of the land trust is governed by a 9-member Hawaiian 
Homes Commission appointed by the Governor of the state of Hawaii. Its 
Director, a member of the Governor's cabinet, also serves as the 
Chairman of the Commission. In short, DHHL is a state agency managing a 
federally created land trust to reconnect native Hawaiians to their 
ancestral lands in Hawaii.

Self-Determination of Native Hawaiians
    In Hawaii, we do not refer to our Native peoples as tribal members 
or Indians, although it is clear that Congress intended the inclusion 
of Native Hawaiians in the federal policies of self-determination. The 
most common terminology most understood in the islands to represent 
native Hawaiians eligible for the HHCA land trust, are ``beneficiary'' 
or ``homesteader''. Moreover, the lands in the Hawaiian Home Land trust 
are referred to as ``homesteads'' rather than reservations. For the 
purposes of our testimony, these terms will be used to describe native 
Hawaiians and land areas under the HHCA, which was enacted by Congress 
during a policy period of the Federal Government wherein land trusts 
and Native allotment programs were commonly established for Native 
peoples in Indian Country and Alaska. The HHCA was an extension of 
those policies, as well as the federal policies of self-determination 
that have been well documents over the last century.
    For the beneficiaries of the HHCA, self-determination and self-
governance is expressed through the existence of beneficiary 
organizations governed by beneficiaries or homesteaders themselves. 
These organizations, called homestead associations, have existed for 
decades, and have representative leadership through democratically 
elected processes for each homestead land area on differing islands 
within the state. Just as tribes are powerful partners with the Federal 
Government, homestead associations are vital to our state's success in 
implementing the tenets of the HHCA as Congress intended.

Energy Development in Hawaii
    Hawaii is the only state in the United States that is 90 percent 
dependent on imported fossil fuels for its energy. \1\ Not only is the 
state dependent on fossil fuels for transportation, but approximately 
75 percent of Hawaii's electricity is generated utilizing imported 
fossil fuels. The volatile price of oil, therefore, has a tremendous 
impact on Hawaii's economy and its rippling effect is felt by every 
Hawaii resident and business. Families all across the state are paying 
a disproportionate share of household income on utilities. Businesses 
are inhibited by soaring energy costs, tamping down on growth and the 
availability of equity capital to expand.
---------------------------------------------------------------------------
    \1\ Hawaii Clean Energy Initiative Working Group Policy 
Recommendations for the 2010 Hawaii State Legislative Session, November 
20, 2009, p. 1.
---------------------------------------------------------------------------
    While it would be simplistic to view the State of Hawaii's 
situation as isolated, our energy dependence on fossil fuels directly 
impacts national security given Hawaii's strategic location in the 
Pacific Ocean. We serve as host to four major military installations 
for the United States Army, Air Force, Marines, and Navy as well as the 
headquarters for the United States Pacific Command (USPACOM), the 
combatant command focused on the Asia-Pacific region. Hawaii's energy 
and food security is therefore a national priority that cannot continue 
to be ignored.
    State government, federal agencies and the energy industry are 
working together more than ever to bring an energy independent reality 
to Hawaii and its Pacific location. Hawaii has untapped indigenous, 
renewable resources that can be utilized, including wind, solar, 
geothermal, wave energy, biomass, hydroelectricity, and ocean-thermal 
energy conversion. In 2008, the State of Hawaii signed a Memorandum of 
Understanding (MOU) with the U.S. Department of Energy to address this 
situation, and set the goal of 40 percent generation from renewable 
energy sources and 30 percent increase in energy efficiency based on 
projected energy use levels in 2030. The Hawaii State Legislature has 
enacted a Renewable Portfolio Standard and an Energy Efficiency 
Portfolio Standard to reflect these goals, which are commonly referred 
to as a goal of 70 percent clean energy in 2030.
    While Hawaii has robust renewable resources, the lands upon which 
these types of projects can be developed are limited given zoning and 
urbanization constraints. The lands in the Hawaiian Homes land trust 
host many of the robust renewable resources that can contribute to 
Hawaii's clean energy future with a clear opportunity to be at the 
forefront of energy development in the state.
    As a federal land trust administered by state government, we must 
work with the Congress, with the Department of Energy, with the 
Department of Interior, to advance robust energy development to benefit 
the Hawaiian Home Land Trust, our state and the nation.

Examples of Energy Projects on Hawaiian Home Lands
    The Hawaiian Homes Commission established an adhoc Energy Committee 
to bring focus to energy development and to encourage maximum 
participation of DHHL and homesteaders. While we have only begun to 
understand the opportunities, following are just a few examples of 
energy related projects that have been completed, underway or in 
preliminary evaluation:

         Kaupuni Residential Subdivision. In January 2011, DHHL hit a 
        major milestone with the award of 19 LEED-Platinum homes at the 
        Kaupuni Village in Wai`anae, O`ahu. Kaupuni was the first LEED-
        Platinum single-family affordable housing subdivision in the 
        country, achieving a net-zero project for families living in 
        the homes constructed.
         With private business constructing the project, DHHL planned 
        the subdivision and qualified families to purchase the homes on 
        residential land awards as defined under the HHCA. The Kaupuni 
        project represents federal, state and local partnerships, as 
        well as public and private industry partnerships to explore and 
        implement a net-zero project approach. This pilot project will 
        be a key informant to additional housing development projects 
        across the state.
         Commercial Grade Solar Farms by Energy Developers. There are 
        at least four solar farms being developed on Hawaiian Home 
        Lands by a variety of local and national solar developers. DHHL 
        designates land for development, and developers capitalize the 
        project, work with utility entities to purchase power, and 
        construct and operate the solar farms. An important aspect of 
        solar projects on Hawaiian trust lands, has been the 
        implementation of beneficiary consultation and the inclusion of 
        a benefits agreement that encompasses homestead priorities into 
        projects on the front end.
         Commercial Grade Solar Farm by Native Hawaiians. One of these 
        projects is a one-of-akind partnership, being co-developed by a 
        non-profit utility cooperative (the Kauai Island Utility 
        Cooperative) and a homestead community development nonprofit 
        representing four different Hawaiian homestead associations 
        (Homestead Community Development Corporation). It represents 
        the first time a solar farm is being pursued with Hawaiian 
        homesteaders as part of the development team.
         The project will produce a 12MW solar farm, the single largest 
        in the state of Hawaii, with estimated development costs of $62 
        million. The project is eligible under the federal 1603 Energy 
        Tax Credit Incentives, combined with state of Hawaii 
        incentives, to bring a total of $24 million to the project. The 
        USDA Rural Utility Service is a key source of debt capital, 
        with low interest rates, which combined with the federal and 
        state incentives make the project possible and delivers cost 
        savings to an entire county of rate payers. In addition, the 
        economic impact and benefit to the local homestead community 
        has been a cornerstone strategy that includes but is not 
        limited to cultural and environmental protections, employment 
        and small business opportunities, energy revenue sharing for 
        community based projects in the region and the all-important 
        mentoring of Native Hawaiians on the KIUC development team.
         Agriculture to Energy Projects. One of the exciting areas of 
        energy development on Hawaiian Home Lands is in the cross 
        utilization of homestead farming and ranching that connects 
        food production to energy production. On Hawaii Island, 
        homestead leaders are exploring the use of Hawaiian Home Lands 
        to revitalize agriculture and ranching through the connectivity 
        of producers to local markets, post harvest waste to energy 
        development, and building pipelines of next generation farmers 
        and ranchers. The project highlights include a Veteran to 
        Farmer program to engage veterans in the agricultural industry, 
        the development of post-harvest facilities to improve financial 
        returns on farming, and generate methane energy produced by an 
        anaerobic digester that utilizes green waste, creating low cost 
        energy. The project is in very preliminary phases, but has 
        attracted the attention of Department of Defense officials due 
        to its energy generation aspect, as well as food security it 
        can provide to military installations in the Pacific.
         Consumer and Business Solar Retrofits. One of the areas of 
        energy development that DHHL has focused on with homestead 
        communities and local Native Hawaiian community development 
        nonprofits is the retrofit of households, public facilities and 
        businesses located on Hawaiian Home Lands. The imperative is to 
        retrofit existing structures to increase monthly family 
        disposable income, create cost savings for business, and for 
        Hawaiian Home Land areas to be at the forefront of energy 
        transformation in our state. We believe that we must make bold 
        moves to even the playing field with more affluent populations 
        by creating opportunities for homestead areas to leave the 
        electrical grid. Over a 2-year period, our partner, the Council 
        for Native Hawaiian Advancement (CNHA), has installed 200 solar 
        water and photo voltaic systems on households and business 
        facilities, with additional capital leveraged through the U.S. 
        Treasury CDFI program to deploy additional capital in our low 
        to moderate income neighborhoods.

    Beyond residential energy efficiency projects, agriculture to 
energy, and solar farms, potential resources on Hawaiian Home Lands 
also includes hydro, geothermal, wind and many others. What we know 
from just the initial energy related projects pursued in the last 3 
years on Hawaiian trust lands, is that the potential is real, and 
achievable. We also know that energy development is economic 
development, creating real jobs inside our home land areas.
Recommendations to Increase Energy Development on Trust Lands
    Hawaiian Home Lands, like Indian reservations and Alaska Native 
villages, are unique trust land areas that require federal land trust 
knowledge in any energy development partnership as well as excellent 
partnerships with federal agencies such as the Department of Energy, 
the Department of Interior and the Treasury Department at a minimum. We 
offer the following recommendations and input to the Committee to 
create a positive environment for energy development on trust lands:

         1. Implement SUTA to Access Capital and Tax Credits. Congress 
        codified the term, Substantially Underserved Trust Areas (SUTA) 
        (9 USC 936(f)), in the 2008 Farm Bill (P.L. 110-246). SUTA 
        lands utilize the definition of trust lands that have been used 
        since 1992 as part of the Native American Veteran Home Loan 
        program. SUTA lands are trust lands defined to be any lands 
        that: (1) is held in trust by the United States for Native 
        Americans; (2) is subject to restrictions on alienation imposed 
        by the United States on Indian lands (including native Hawaiian 
        homelands); (3) is owned by a Regional Corporation or a Village 
        Corporation, as such terms are defined in section 3(g) and 3(j) 
        of the Alaska Native Claims Settlement Act, respectively (43 
        U.S.C. 1602 (g), (j)); or (4) is on any island in the Pacific 
        Ocean if such land is, by cultural tradition, communally-owned 
        land.
         The U.S. Department of Agriculture (USDA), through the Rural 
        Utility Service (RUS) is authorized to provide grants and loans 
        at rates as low as 2 percent to support the construction, 
        acquisition or improvement of infrastructure on SUTA lands. 
        This is a vitally important tool that recognizes that efforts 
        to increase access to capital should include trust lands as a 
        category in addition to low-income and rural communities.
         One immediate action that can be taken which would yield 
        significant positive impact not only on trust lands in Hawaii 
        but throughout the nation would be to make SUTA lands 
        automatically eligible for New Market Tax Credits (NMTC) 
        administered by the U.S. Treasury Department. The NMTC program 
        is one of the most successful federal programs in bringing 
        private investment capital to underserved communities. Making 
        SUTA lands automatically eligible for the NMTC program would 
        have no cost to the U.S. government and would advance the 
        incentives and awareness of economic development opportunities 
        by capital markets.
         Implementation of SUTA as eligible criteria in existing and 
        key federal programs will have a positive impact across the 
        nation, since 35 states in the country have Tribes and/or 
        congressionally established trust lands.

         2. Technical Assistance to Increase Native Energy Capacity & 
        Collaboration. Technical assistance and capacity building are 
        vital tools to the development of energy resources in trust 
        land areas, and the economic self-determination of all Native 
        peoples. Active participation by Homestead Associations, Indian 
        Tribes and Tribal Corporations leads to project development 
        efficiencies, best practices in operations and maintenance, and 
        economic multipliers to invest in education, healthcare, job 
        creation, etc in trust land communities.
         It is a positive cycle that serves trust land areas, 
        surrounding communities, state economies and national 
        priorities. We recommend strengthened and regional Technical 
        Assistance funding awards to Tribes and Native Hawaiian 
        Organizations to focus on energy development on trust lands in 
        their respective states.
         We further recommend the coordination of federal agencies in 
        bringing Native Hawaiian, Alaska Native and American Indian 
        leaders together for consultation and training sessions, which 
        provide outstanding opportunities to be exposed to best 
        practices in other areas of the country, and solutions 
        developed by others to address unique trust land challenges. 
        One of the missed opportunities that can be avoided is the 
        power of knowledge sharing among Native leaders that is made 
        possible through opportunities to collaborate and learn 
        together. This is particularly true for Native Hawaiians that 
        are often separated from their counterparts in Indian Country.

         3. Energy Transmission & Infrastructure Capital. Lack of 
        infrastructure or upgrades to aging infrastructure and energy 
        grids to develop trust land areas continues to be a primary 
        challenge in transforming our energy dependency from fossil 
        fuel based to renewable and clean energy. We recommend federal 
        investments in smart grid technologies dedicated to trust land 
        areas, as well as targeted investments in upgrading and 
        expanding transmission improvements, including roads.
         We further recommend the coordination of federal agencies such 
        as the Department of Interior, Energy, Transportation, HUD and 
        USDA, to identify existing federal programs that support energy 
        infrastructure development that are under-utilized by trust 
        land communities. Again, the addition of the SUTA definition to 
        the income and rural criteria used in most federal programs 
        would ensure that trust land projects are included as 
        priorities.

         4. Streamlined and Transparent Land Use Policies. Successful 
        energy development requires low cost capital, excellent 
        partners and clear land use policies that honors the trust 
        status and original intent of the HHCA. We recommend engagement 
        by federal agencies, such as the Department of Interior, to 
        share its best practices and pitfalls with DHHL learned over 
        decades of Indian trust land management, including its Tribal 
        Consultation methodologies and public comment processes through 
        the federal register. Further, that the DoI, Office of Native 
        Hawaiian Relations collaborate with the Bureau of Indian 
        Affairs to publish energy project profiles of projects under 
        development on Hawaiian home lands and Indian reservations as 
        well as land use policies and procedures that work well, and 
        that could be improved.
         Just as we are anxious to learn from American Indian and 
        Alaska Native projects located around the country, we welcome 
        the opportunity to share the innovations being developed on 
        Hawaiian Home Lands in Hawaii to advance energy independence, 
        economic development and the generation of clean and renewable 
        energies.

Conclusion
    Chairman Akaka, Vice-Chairman Barrasso, Members of the Indian 
Affairs Committee, I thank you for the opportunity to participate this 
afternoon. The aboriginal, indigenous peoples of Hawaii are no 
different than those of other states in the country--adept, scientific, 
and practitioners of lifeways that utilize natural resources in a 
responsible, balanced, and common-sense manner, practices that have 
sustained our collective peoples for thousands of years.
    Tribal and Hawaiian Home Lands hold some of our nation's most 
precious energy resources, and remain some of the most under-served 
areas. With specific attention to the development of federal energy 
policy dedicated to trust land areas, the potential of Native lands in 
playing a significant role in our nation's energy future becomes 
possible. Access to capital, implementation of the SUTA definition in 
federal program eligibility, dedicated technical assistance resources 
and infrastructure investments, along with streamlined land use 
policies are areas that this committee can champion to create a new 
reality in energy development.
    We would welcome members of the Committee to visit our home lands 
along with constituents from Indian Country to engage in a dialogue of 
possibilities and opportunities.
    Thank you for the invitation to present testimony and to share the 
work of Native Hawaiians in energy development on the trust lands of 
the HHCA.

    The Chairman. Thank you very much, Ms. Kauhane.
    Now I call on Vice President Rex Lee Jim for your 
testimony. Please proceed.

  STATEMENT OF HON. REX LEE JIM, VICE PRESIDENT, NAVAJO NATION

    Mr. Jim. Chairman Akaka, Ranking Member Barrasso and 
distinguished members of the Committee, thank you for the 
opportunity to testify before you today concerning energy 
development on Tribal lands.
    Our Nation needs to foster regional economic development to 
see us through these tough economic times. Unfortunately, 
unlike most States, the Navajo Nation and indeed, many other 
Tribal nations, face significant regulatory burdens placed on 
us by the Federal Government. I will focus my testimony on the 
regulatory hurdles preventing us from successfully developing a 
sustainable economy.
    Large energy projects provide the cornerstone of economic 
development. They infuse local economies with dollars earned 
from high-paying jobs and draw in businesses that serve these 
flourishing communities. In addition to jobs and business 
development, these projects provide the revenues the Navajo 
Nation uses to develop infrastructure and deliver social 
services.
    It is these revenues that will allow the Navajo Nation to 
stand on its own. However, the same government that forced us 
onto reservations now punishes us further because our lands are 
subject to Federal regulation that suppresses Tribal energy 
development. Perhaps the greatest hurdle to energy development 
in Indian Country is the applicability of the NEPA to Tribal 
lands and resources. Indian Tribes do not hold legal title to 
Tribal trust lands, which are titled to the Federal Government.
    BIA approval of Tribal leases and rights of way establishes 
a major Federal action triggering NEPA and the EIS/EA process. 
The Navajo Nation recognizes that Congress has taken action to 
relive the NEPA burden with Tribal energy resource agreements. 
However, even though the Navajo government has been developing 
the capacity to take advantage of the TERA, we still need 
assistance. We urge Congress to provide funding for Tribal 
capacity building.
    The Navajo Nation is also seeking an avenue for Tribal 
energy development free of the NEPA process by amending 25 
U.S.C. Section 415(e) to authorize the nation to issue mineral 
leases without Federal approval. It would be helpful for future 
NEPA exceptions for Tribes to have more express language 
exempting Tribal actions from NEPA compliance.
    As a result of the treatment of Indian lands as Federal 
lands for purposes of NEPA compliance, the status of Tribal 
trust lands creates additional hurdles for development not 
present on Tribal fee lands. Tribal fee lands are still subject 
to State and local taxation and regulation. This circumvents 
Tribal jurisdiction over Tribal lands.
    Congress should consider developing a new land status for 
Tribal trust lands that is not Federal title and would allow 
Tribes to develop their own land tenure systems for economic 
development purposes. Such a change in status should ensure 
that Tribal lands remain free of State taxation and regulation.
    Additionally, certain parties believe that the Federal 
Government has the right to determine the value of Tribal lands 
and resources. Congress should clarify through legislation that 
the value of Tribal lands and resources shall be determined 
solely by the responsible Tribe.
    Finally, the Navajo Nation urges Congress to recognize the 
unique situation of Indian Tribes as similar to that of 
developing nations in the international community and prevent 
Federal agencies from imposing regulatory requirements on 
Tribes that are more stringent than required by Federal law. 
For example, the Desert Rock energy project would have been the 
cleanest coal-fired power plant in the U.S., but it was 
derailed by overzealous regulation by EPA and DOI, requiring 
the Navajo Nation to implement unproven and prohibitively 
expensive technologies.
    A further example of EPA's over-regulation is the recent 
requirement under the Regional Haze Rule and MACT for SCRs. 
This technology is unreasonable and unnecessary, as far cheaper 
existing technologies are available that satisfy EPA's 
objectives.
    Congress should consider legislation requiring the least 
costly regulatory requirements on Tribes, consistent with 
Federal law. The unreasonable requirements of Federal agencies 
costs Tribes essential jobs and revenues. The way to accomplish 
economic self-sufficiency is to minimize Federal involvement in 
Tribal energy development and maximize Tribal decision-making.
    Thank you.
    [The prepared statement of Mr. Jim follows:]

 Prepared Statement of Hon. Rex Lee Jim, Vice President, Navajo Nation

    Chairman Akaka, Ranking Member Barrasso, and distinguished members 
of the Senate Committee on Indian Affairs. Thank you for the 
opportunity to testify before you today concerning energy development 
on tribal lands. The Navajo Nation and the United States are at a 
crossroads: high unemployment, deteriorating or non-existent 
infrastructure, a lack of capital investment, and a need for low cost 
power have come together as the nation faces some of the worst economic 
conditions since the Great Depression. Our nation needs to foster 
regional economic development to see us through these tough economic 
times. Unfortunately, unlike most of the states of our great union, the 
Navajo Nation faces significant regulatory burdens placed on us by the 
Federal Government that hinder development. In terms of energy 
development, the most onerous of these regulations come from the 
Environmental Protection Agency, but we are also burdened by the 
regulations from many federal agencies. My testimony this morning will 
address the conditions we face on the Navajo Nation, our plans for 
future energy development, and the regulatory hurdles preventing us 
from successfully developing a sustainable economy.
    The Navajo Nation has approximately 300,000 members, with nearly 
200,000 members living on more than 27,000 square miles of Navajo land. 
Fifty-five percent of our people are unemployed and nearly 50 percent 
live below the federal poverty line. Our annual per capita income is 
approximately $6,800, more than 40 percent of Navajo's live without 
water services or electricity, and 90 percent lack natural gas. 
However, in the face of this poverty the Navajo Nation is rich in 
natural resources. We have abundant renewable energy resources such as 
solar and wind, substantial oil and natural gas reserves, and nearly 
150 years of low cost coal.
    The Navajo Nation is seeking to leverage all of our available 
assets to spur economic development. Economic development requires the 
presence of land, water, power, and human capital. The Navajo Nation is 
blessed with land, water, and a young and dynamic workforce. The power 
component of this recipe for success has two pieces, the power needed 
to run businesses, and the tax and royalty revenues that can be 
realized from power generation.
    Studies have shown that a sustainable economy requires that dollars 
circulate a minimum of three times within a region. Currently, the 
majority of dollars earned by Navajos are spent in the towns and 
business that border the reservation because the Navajo Nation lacks 
basic businesses. Large energy projects provide the cornerstone of 
economic development by infusing local economies with dollars earned 
from high paying jobs, and drawing in the subsidiary businesses that 
serve these flourishing communities. In addition to jobs and business 
development, these projects and the communities that thrive around them 
raise the tax base and royalties from which the Navajo Nation can draw 
to develop infrastructure and provide social services. It is these 
revenues that will allow the Navajo Nation to be independent from the 
Federal Government and stand on its own.
    To that end, the Navajo Nation has a multi-pronged approach to 
develop these cornerstones of economic self-sufficiency. The Navajo 
Nation recently created an energy task force and has signed an MOU with 
the U.S. Department of Energy's Lawrence Livermore Laboratory and is 
developing a comprehensive energy strategy that will take into account 
all of the Navajo Nation's energy assets.
    On the renewable energy front the Nation is developing four 
projects that capitalize on our abundant wind and solar resources: (1) 
a 500 Mega Watt (MW) wind farm on the Boquillas Ranch in Seligman, AZ; 
(2) a 500 MW wind farm in the Grey Mountain chapter in Cameron, AZ; (3) 
a 200 MW wind farm in the Black Mesa chapter in Kayenta, AZ; and (4) a 
large scale solar project which we are currently reviewing solar 
intensity data to pick the best possible site.
    While we look forward to maximizing our available renewable 
resources, our most abundant, valuable, and stable resource is the vast 
coal deposits that lie within the Navajo Nation. Coal is, and for the 
foreseeable future will continue to be, the best source of low cost 
energy in the United States. We are continuing to explore alternatives 
to coal fired power plants such as the Desert Rock Energy Project that 
crumbled under the weight of EPA and DOI regulations and review. 
Projects such as Desert Rock would have been the cleanest pulverized 
coal-fired power plant in the country. This new cleaner technology 
would have set new standards of achievable control technologies across 
the spectrum, and brought in thousands of jobs and more than $1.5 
billion in revenue to the Navajo Nation. With the tide clearly against 
pulverized coal fired power plants, we are also reviewing several coal-
to-liquid plants that could convert coal to diesel or other needed 
industrial products. Unfortunately, the EPA's hostile view towards any 
further coal development makes attracting much-needed capital patterns 
to these projects difficult. The Navajo Nation must find solutions to 
utilizing its vast coal resources.
    Native Nations have struggled to find avenues for economic 
development to provide for their people. For decades we have been 
trapped by government mandates to lead lives of poverty and government 
dependence. Now several tribes have realized that their resources can 
provide the avenue to economic self-sufficiency they have always longed 
for. However, now we find that the same government that forced us on to 
reservations now punishes us further by forcing stifling federal 
regulation because our lands, while held in trust for our benefit, are 
subject to federal oversight. As such, the Federal Government is the 
face of poverty on tribal lands, and no department is more responsible 
for this today than the EPA.
    Perhaps the greatest hurdle to energy development in Indian Country 
generally is the applicability of the National Environmental Policy Act 
(NEPA) to the use of tribal lands and resources. Indian tribes do not 
hold legal title to tribal trust lands, which are titled to the Federal 
Government. Accordingly, the Bureau of Indian Affairs (BIA), the 
federal land manager for tribal trust lands, generally approves tribal 
leases and rights-of-ways (ROWs) for tribal energy projects. In other 
words, BIA approval of tribal leases and ROWs constitutes a major 
federal action thereby triggering NEPA, and the concomitant EIS/EA 
(SPELL OUT) (absent a categorical exclusion). The Navajo Nation 
recognizes that Congress has taken action to relieve the NEPA burden 
for energy development in Indian Country pursuant to the 2005 Energy 
Policy Act, which provides for Tribal Energy Resource Agreements 
(TERAs). Under a TERA, a tribe is essentially pre-authorized by the 
Federal Government to make its own leasing and ROW decisions for energy 
projects, as long as they comply with an environmental review process. 
Unfortunately, even for the Navajo Nation, which has a sophisticated 
tribal government, including a Minerals Department, Fish and Wildlife 
Department, Historic Preservation Department and Tribal Historic 
Preservation Officer, and an Environmental Protection Agency, the 
Navajo Nation does not yet have the capacity to undertake a TERA. 
Consequently, we urge Congress to provide funding for tribal capacity 
building so that the purposes of the 2005 Energy Policy Act in regard 
to tribal energy development can be realized.
    The Navajo Nation is also seeking an avenue for tribal energy 
development free of the NEPA process by seeking amendments to 25 U.S.C. 
 415(e) to authorize the Navajo Nation to issue mineral leases without 
federal approval. By Navajo Nation Council Resolution CAU-35-11, 
attached hereto as Exhibit A, the Navajo Nation approved the above 
proposed amendments which have been introduced in the House of 
Representatives by Representative Young of Alaska in Section 11 of H.R. 
3973. The Navajo Nation is simultaneously seeking approval of its 
General Leasing Regulations from the Secretary of the Interior pursuant 
to  415(e), and would be able to immediately assume leasing authority 
over mineral leases if H.R. 3973 is passed by Congress. The Nation 
therefore asks for your support, and potentially one or more Committee 
members' sponsorship of equivalent Senate legislation. As a final NEPA 
concern, it may be helpful for future NEPA exceptions for tribes, such 
as those described above, to have more express language exempting such 
tribal actions from NEPA compliance.
    As mentioned above, Indian lands are treated as federal lands for 
purposes of NEPA compliance. As a result of that federal ownership, the 
land status of tribal trust lands causes additional hurdles for 
economic development that are not present, for example, on tribally 
owned fee lands. In the case of tribally owned fee lands these are 
still subject to state and local taxation and regulation, which 
additionally circumvents what, should be inherent jurisdiction over 
tribal lands. In the long run, Congress should consider developing a 
new land status for tribal trust lands that is not federal title, and 
which would allow tribes to develop their own land tenure systems for 
economic development purposes. Any such change in land status should 
ensure that tribal lands remain free of state taxation and regulation.
    Of additional concern certain parties believe that the Federal 
Government has the right to determine the value of tribal lands and 
resources, including for leases and ROWs. Consistent with the sovereign 
status of Indian tribes and the federal policy for tribal self-
determination, Congress should clarify through legislation that the 
value of tribal lands and resources should be determined solely by the 
responsible tribe.
    Another hurdle to energy development on the Navajo Nation is the 
imposition of dual taxation by states and tribes. The Navajo Nation is 
situated across three different states and faces the complexity of 
dealing with three distinct state tax regimes. In situations where 
state taxes are applicable on the Nation, the Navajo government is 
placed in a situation whereby if the tribe imposes its tax regime, it 
effectively discourages economic development, including energy 
development on the Nation, and if it does not impose taxes, it 
diminishes its capacity to generate needed government revenues and 
provide government services. Accordingly, and in recognition of the 
sovereignty of Indian tribes and the inherent right of tribes to tax, 
see, e.g., Kerr-Mcgee v. Navajo Tribe of Indians, 471 U.S. 195 (1985), 
the Nation urges the Congress to clarify the inapplicability of state 
tax regimes where they may adversely affect economic development on 
tribal lands.
    Finally, the Nation urges Congress to recognize the unique 
situation of Indian tribes as similar to that of developing Nations in 
the international community, and prevent federal agencies from imposing 
regulatory requirements on tribes and tribal resources that are more 
stringent than required by federal law. For example, the Nation's 
Desert Rock Energy Project, which was slated to be the cleanest coal 
fired power plant in U.S. history, was essentially derailed by 
overzealous regulation by U.S. E.P.A. requiring the Navajo Nation to 
implement unproven and prohibitively expensive technologies. As a 
further example, U.S. E.P.A is requiring Selective Catalytic Reduction 
(SCR) technology for Best Available Retrofit Technology (BART) under 
the Regional Haze Rule (under the Clean Air Act) for San Juan 
Generating Station. U.S. E.P.A. has also proposed SCR technology in a 
draft rule for BART for Four Corners Power Plant, located on the Navajo 
Nation and utilizing Navajo coal, as well as in a Notice of Advanced 
Proposed Rulemaking for Navajo Generating Station, also located on the 
Navajo Nation and using predominately Navajo coal. U.S. E.P.A.'s 
requirement for SCRs is unreasonable and unnecessary to meet the 
requirements of the Regional Haze Rule, meant to be phased in over 
decades, as there is currently far cheaper existing technology which 
would meet the requirements of phase one of the Regional Haze Rule. 
Congress should consider legislation requiring U.S. E.P.A. and other 
federal regulatory agencies to implement the least costly regulatory 
requirements on tribes and tribal lands that are still consistent with 
federal law. The stringent requirements of federal agencies now 
affecting tribes costs tribes not only the ability to develop 
economically, but impacts existing royalties and lease rentals, and 
most importantly critical jobs and the government's ability to provide 
services.
    There is only one way out of the trap of poverty and federal 
dependence, to allow and encourage Tribes to stand on their own and 
develop their own sustainable economies. In times of decreasing federal 
budgets this imperative is even more pronounced. The only way to 
accomplish this objective is to get the Federal Government out of the 
way and allow the Tribes to make their own decisions. The Navajo Nation 
is ready. Give us the opportunity.
    Attachments

    
    
    
    
    
    
    
    

    The Chairman. Thank you very much, Vice Chairman Jim.
    I am going to hold my questions for now and defer to 
Senator Tester for him to ask his questions.
    Senator Tester. Thank you, Mr. Chairman. I certainly 
appreciate that. That helps me out a bunch.
    I will start with the Montanan in the crowd. Stoney, I 
appreciate your testimony and I also appreciate your level of 
expertise you bring to the panel. I didn't know that you worked 
in the private sector, BIA and now a councilman. That is good.
    You said some things during your testimony that I would 
like to flesh out a little bit. Long delays in processing 
mineral leases, months, years. I did talk about TERA, I think 
Mr. Jim talked about TERA a little bit, too. Can you give me 
some ways we can help streamline the processing of mineral 
leases? It shouldn't take months and years. If it takes longer 
than it does on off-reservation land, that is certainly where 
the development is going to flow.
    I don't even know how long it takes off reservation lands 
at this point in time. Could you give me some sort of idea what 
we could do and maybe what the differences are right now, if 
you can tell me that, how long it takes? And by the way, are 
those oil rigs you have on your tie?
    Mr. Anketell. Yes.
    Senator Tester. Okay, I just wanted to point that out for 
the crowd.
    [Laughter.]
    Senator Tester. Give me an idea of the difference between 
off-Reservation development and on-reservation development and 
maybe some things we could do.
    Mr. Anketell. Yes, Senator. The problem with the Bureau of 
Indian Affairs and the long time frames that it takes to get 
leases approved and other documents is that they are 
understaffed. The agencies are underfunded. And I just hate to 
be blunt here but, under-qualified people are put in very 
important positions. If an oil company was to embark on oil and 
gas development, they certainly wouldn't put a farmer in charge 
of their oil and gas leasing department.
    Senator Tester. Come on, really?
    [Laughter.]
    Senator Tester. No, go ahead, you are right. You are 
absolutely correct.
    Mr. Anketell. We need technical experts in key positions. 
And the problem is that we may have an IHS employee transfer to 
the realty department. Then our CS person is now sitting as a 
superintendent. I believe that you should work your way up 
through realty, which is the branch of the Bureau of Indian 
Affairs that is in charge of oil and gas leasing. There should 
be years of experience behind people in key positions in oil 
and gas, and they are out there.
    On the fee land, you knock on the door of a farmer's house 
and you can lease up to 5,000 acres in one day. With Tribal and 
allotted leases, Tribal can go pretty fast, as there is only 
one owner. But the allotted leases, you may have to hunt down 
literally hundreds of people, and small, minute percentages, 
and you have to get over 50 percent to be able to get the lease 
approved and then be able to drill.
    So what happens when the BIA is inundated with leases and 
you don't have the proper staff or the proper expertise in that 
office, what happens is that you may have somebody that signed 
an approved consent form, that person may pass away and it gets 
to be a probate. So the superintendent can still sign for a 
probate. But once the probate closes, now you have a whole 
bunch of new heirs that you have to go find.
    So if it takes a year or more, there may be two or three 
instances where a probate closes and a whole new set of heirs 
are now required to sign, so that the superintendent can 
approve those leases.
    So time is of the essence. I also want to stress that if my 
land, and I have signed a consent form, and it is submitted to 
the BIA for approval and they don't get to it for a year or two 
or even three, which is the case at Fort Peck, that ties up my 
land for eight years, not five. The standard lease for a BIA 
lease is five years. But if it is sitting in the BIA waiting to 
be approved and it is down on the bottom of a pile of leases, 
then essentially the Federal Government is tying up my land for 
eight years, not five. That is grossly unfair, in my opinion.
    Senator Tester. I appreciate the comments. Just to let you 
know, I am sure the BIA is watching this, so they probably 
agree with part of what you are saying. The fact is, I think 
your perspective on understaffed, underfunded, and potentially 
even under-qualified are strong points.
    I want to talk about TERA a little bit, because Jodi 
Gillette said it would be a good idea, and I agree with her. 
This isn't directed at anybody specifically, although Rex Lee 
Jim talked a little bit about TERA in his remarks.
    If you want to talk about it, you can; if none of you feel 
comfortable talking about it, that is fine, too. Can you tell 
me why it is not being used at this point in time? And it is 
not directed at anybody specifically, anybody who wants to talk 
to it can. With no Tribes in this Country utilizing TERA, there 
must be a reason for that. Go ahead, Rex Lee Jim.
    Mr. Jim. Thank you, Senator Tester. The Navajo Nation is 
very interested in pursuing a TERA as a way of removing the 
Federal Government from our development of Tribal energy 
resources. However, the TERA process requires the existence of 
significant capacity in terms of both institutional capacity 
and staffing. Even though the Navajo Nation has a sophisticated 
regulatory structure with institutions and tough environmental 
laws, we still need help in fully developing our capacity.
    So we urge Congress to provide grants to help in those 
areas.
    Senator Tester. That would be good. We do need to have some 
collaboration to figure out how we can make it work. Because it 
was set up back in 2005, I believe is when it was done, and it 
is still non-functional. We need to work together to figure 
that out. I would be interested in doing that in a big, big 
way.
    I have a lot of other questions that may take up--one more. 
Levi, you talked about disclosure of the fracking fluid. I 
know, and I have heard both sides of this equation, I have 
heard that there are no contaminants in it, nothing to worry 
about and then I have heard folks say there are big things to 
worry about.
    I guess the question I have for you, if you made a request 
to the companies for disclosure and have they turned you down?
    Mr. Pesata. On the fracking issue, on Jicarilla, what our 
concern is basically is the chemical content that is used for 
fracking. We are concerned about water contamination. And like 
you say, there are two sides to the story. I think it is kind 
of a sensitive issue, because even the State of New Mexico, my 
home State, does not have a position on fracking. Although it 
is coming to the forefront more and more, I understand the BLM 
draft regulations that are coming out is asking for something 
like prior approval before using a fracking mechanism on any 
well, and also kind of a follow-up.
    I believe that it is still an issue, because whatever 
chemicals they are using are not disclosed. Regardless of which 
way this issue goes, I think it is important, because there are 
health issues on the reservation, for rural residents, they 
come down with cancers and different kinds of medical problems, 
which really does not correlate with the general environment 
and some of the health issues that are inherent in that 
environment.
    So it is an issue, I believe, that needs some disclosure.
    Senator Tester. I would agree with that. I think that one 
of the things that bothers me about this, and make no mistake 
about it, and Stoney, you talked about it, I think without the 
fracking process we wouldn't be able to access the Bakken. So 
it is important that we keep those options open. On the other 
side of the coin, if there is nothing in it that we need to be 
worried about, why hasn't it been disclosed? That really is 
part of the equation.
    I know there are trade secrets involved and all that, but I 
have told folks in the industry that, quite honestly, the 
fracking process, there is information on both sides of the 
fracking fluid, there is information on both sides, and they 
need to get some good research out there so we can make good 
decisions.
    Thank you all for your testimony, I very much appreciate 
it.
    The Chairman. Thank you. Thank you very much, Senator 
Tester.
    I have a question for each of you. I want to deal with 
particular parts of energy.
    President Bordeaux, your Tribe is a producer of wind 
energy. What advice could you offer other Tribes hoping to 
develop their wind energy?
    Mr. Bordeaux. Mainly getting an investor, getting a good 
company that you can trust, do a lot of due diligence on them. 
One of the major problems we have is the power purchase 
agreement and finding that investor and attracting the 
business.
    Another major factor that we are having is, as Mr. Jim 
mentioned too, is the State taxation of trust lands. That is a 
huge problem. We think it is illegal, they impose what they 
call a nameplate tax on our trust lands. And it is completely 
illegal, and it has happened on Navajo, it is going to happen 
everywhere. It is going to be an issue you have to face.
    But the problem that really started that was basically 
coming across Indian Country, because there is a lot of 
development of wind energy in South Dakota, the taxes are 
driving wind energy Development away in South Dakota. They are 
all over in Minnesota. So that is a major problem. So you are 
going to have to watch out for the State.
    And the Federal Government needs to assist us in that 
effort, and getting the resources. It is good that the DOE is 
helping out, the BIA is helping out. But the imposition of 
illegal taxes by the State, that is a major problem. And doing 
the studies, adequate studies that make sure that you have 
that, and the environmental.
    Even with the Bureau, they are talking about their leasing 
regulations and stuff, and I would like to agree with my 
colleague from Fort Peck, you get adequate personnel, trained 
personnel, knowledgeable personnel in the BIA leasing offices, 
they are not adequately funded. We need to fund the local BIA 
offices to a capacity where they can make these decisions and 
get qualified people in there.
    Most of the money that is taken away from the agency level 
either ends up in the area offices or here in Washington. And 
it needs to be down at the local level where all the action is, 
at the reservation level.
    The Chairman. Thank you for sharing.
    President Pesata, your Tribe is a leader in oil and gas 
production. What advice could you offer the Tribes who may wish 
to develop their resources?
    Mr. Pesata. Mr. Chairman, I think a lot of the 
recommendations that were given by the presenters here are very 
important. I think that consent must be very important. I think 
the cooperation of the agencies that I have mentioned, BIA, 
BLM, ONRR and so forth, must all work together to provide 
adequate information before any lease is signed.
    As we proceed through oil and gas development I believe 
that it has been mentioned here that some of the forms and 
documents used for oil and gas leasing are so outdated that 
they need to be revised. I think they need to mention some of 
the things that I have mentioned, like the bankruptcy issues on 
how to deal with that as you proceed through this. I think a 
lot of the oil and gas companies are using bankruptcy right now 
to circumvent some of the Federal laws that are available to 
protect Indian oil and gas and other energy leasing on our 
reservations.
    So what is said here I think is very pertinent to the 
hearing today, Mr. Chairman.
    The Chairman. Thank you.
    Councilman Anketell, what would being better enabled to 
develop wind energy mean to your people? You have mentioned to 
us many of the problems, the delays of leases and so forth, 
that you are experiencing at the present time. I thought I 
would ask you about something that enabled you to develop wind 
energy and what it means to your people.
    Mr. Anketell. Thank you for the opportunity, Mr. Chairman.
    On the Fort Peck Reservation, we developed a feasibility 
study in 1997 to determine the feasibility of wind energy on 
the Fort Peck Reservation. We got a quarter of a million dollar 
grant from the Department of Energy, hired Bechtel to do a 
total feasibility study on this.
    We do have Class 6 winds. What would the benefit be to us 
is, I have always envisioned, if we have enough transmission 
capacity to get it off the reservation, then we could sell the 
power to a utility and still have enough left over to provide 
free electricity to our Tribal membership. That still is a goal 
of mine. We need the transmission capacity to be upgraded along 
the high line.
    If we do, it would provide a tremendous benefit to our 
people, because of the extreme weather that we suffer. Our 
winters may get as low as 40 below zero Fahrenheit. It gets as 
high as 110 degrees in the summer. So we have huge swings in 
temperature. So we have a large need for the energy, either to 
heat our homes or to cool them in the summer. What an ideal 
thing we would have if we had a wind farm that would allow that 
as a benefit to our people.
    So I hope that answers your question.
    The Chairman. Yes. We want to share what you have learned 
that may help other Tribes, as they seek to use this type of 
energy. So thank you very much for that.
    Mr. Anketell. Thank you, sir.
    The Chairman. Ms. Kauhane, why is the substantially 
underserved trust area definition, better known as SUTA, maybe 
you could explain that also, why is that important to the 
development of energy in Hawaii?
    Ms. Kauhane. Thank you, Senator. For Hawaii, the first 
community that comes to mind and why SUTA is important, 
Substantially Underserved Trust Areas, as defined in the Farm 
Bill of 2008, if some of our trust lands, if we implement the 
SUTA definition to automatically include any of the trust lands 
with that definition, it would bring in Federal programs, 
resources, attract new capital and credits to our trust lands.
    One example in particular, new market tax credits. In Kona, 
we have 10,000 acres that are prime for solar renewable energy 
PV farms. But because it is so close to the tourist 
destination, it doesn't fit within the census track. Therefore, 
we can't attract private capital through new market tax 
credits.
    But if we implemented the SUTA definition, all of our trust 
lands, whether they are close to the destination for the 
traveler or not, it would allow us to attract capital and tax 
credits, private capital in the form of tax credits on our 
trust properties.
    The Chairman. Thank you. Other Tribes can benefit by it, 
and the idea is to look for available money that can help you 
develop these energy systems.
    Ms. Kauhane. Yes.
    The Chairman. So thank you very much for sharing that.
    Vice President Jim, your Tribal lands are geographically 
positioned to become a great producer of solar energy. Can you 
tell me what obstacles stand in your way in developing solar 
energy?
    Mr. Jim. Well, Chairman Akaka, it really comes down to land 
issues. We have huge land, but we have land regulations in 
place where one individual who has a permit to graze land can 
say no and stop the whole development. So we need to revisit 
those BIA regulations of how we deal with land and if we change 
that and allow for a different process, then we will be able to 
develop more. And as indicated, if somebody passes on, the next 
generation might say no to it. So we need to change those laws.
    And the other is capital capacity. Any time you need to 
start something, you do need money. So we do want to do 
business with private firms. We call that strategic partnering. 
When we want to do that, the whole idea of double taxation, it 
all comes into place. So businesses shy away from that.
    And not only that, but when businesses come in, and we 
spoke to this earlier as well, that is the land status, they 
know that it is not owned by the Navajo Nation. And if they 
invest so much into it, and for some reason, either the Tribe 
or someone defaults on it, on the loans or whatever is in 
place, they are not able to get to the land. So they shy away 
from that as well. And if they built something and they might 
end up losing it.
    So these are some of the critical issues that we need to 
address.
    The Chairman. Well, you can certainly help other Tribes 
think about the possible obstacles that you have experienced in 
trying to build solar energy.
    I have a question for all of you on the panel. Many of you 
alluded to the high unemployment rate in your communities. My 
question to you is, do you have any estimates as to how many 
jobs could be created, could be created with energy 
development? President Bordeaux?
    Mr. Bordeaux. Mr. Chairman, just for our 30 megawatt wind 
farm, we probably had 100 jobs for construction initially for 
about six months, four to five permanent for the O&M. For the 
larger 190 megawatt, we are talking about 200 jobs for 9 to 12 
months, construction, and then 15 to 20 permanent jobs. Value-
added jobs, hopefully the construction business startup. The 
Tribe does not have a concrete or construction company. That 
would need to be developed. We are in the infancy stages on 
that.
    What we are also looking at is to, with the revenue from 
the wind farm, is to develop more small businesses on the 
reservation and try to attract our dollars, and encouraging our 
people. Because 80 cents out of the dollar leaves the 
reservation to surrounding communities. If we have more 
businesses on the reservation, we can spend that dollar locally 
and create more jobs.
    So primarily small business development and Tribal 
contracting business also. Thank you.
    The Chairman. Thank you.
    Mr. Pesata?
    Mr. Pesata. Mr. Chairman, we are primarily involved in oil 
and gas, that is probably about 90 percent of our revenue to 
operate our government. We have approximately 15,000 employees 
that are non-Tribal on the reservation from the oil and gas 
industry. And a very small percentage of that goes to Tribal 
member.
    The reason for that is it is very hard to get into the oil 
and gas industry, even though we have attempted to get 
programs, even from the high school level where we can have 
some training for young people on the reservation. It seems 
like we are not making a whole lot of headway.
    So right now, with our new agreements that we have with the 
oil and gas activity coming into the reservation, we are trying 
to make that a part of the agreement, so that we can put more 
jobs onto the reservation. I think that if we can get that, as 
we move along eventually, we can pick up, I think, maybe close 
to 1,000 jobs that we can add to our employment force. I think 
that is very important, we are trying to focus on that.
    Some of the other local activities, we have some small 
businesses and enterprises, like gaming operations on the 
Reservation. But that doesn't employ a whole lot of people. So 
we still have a problem, we are still struggling to get more 
people to work. Thank you.
    The Chairman. Thank you very much, President Pesata.
    Councilman Anketell?
    Mr. Anketell. Mr. Chairman, I think that if we were to get 
our energy house in order, which my Tribe is making every 
effort to do so, we could eliminate the unemployment rate, the 
high, unusually high unemployment rate of our reservation. 
First of all, we, through strategic partnerships, have drilled 
the first two Bakken wells on our reservation. In fact, they 
are being fracked, one of them is being fracked as we are 
speaking today. It started Monday. It takes about a week to 
frack it. Then they are going to move to the second well and 
frack that.
    And this is all Tribal. This was a Tribal initiative, we 
went out and got the leases. We formed the partnerships and are 
a very active participant in developing our own oil and gas 
resources. It is called Fort Peck Energy Company.
    So I am really proud of that, that we took the initiative 
to drill two wells that were many millions of dollars each.
    I want to just briefly touch on a problem that exists in my 
area, my part of the world. And that is that there is so much 
new production coming online through the Bakken that oil 
pipelines are at full capacity. They are having to transfer the 
oil out of the region by rail cars or by any which way they 
can. They are paying huge fees to get it into pipeline; instead 
of being offered a premium they are paying a premium to get it 
to the nearest refinery.
    So with that extreme need, we are developing a refinery on 
Tribal land within our reservation, on an old refinery site, so 
we can clean it up. It is a brownfield by the EPA standard, it 
is a brownfield. And the only way really to economically clean 
it up is to refine the products that are floating on top of our 
groundwater. We will pump it out of the ground, refine it, sell 
it and use the revenues to further clean up this 110-acre piece 
of land that the old Kemco refinery sat on.
    So I think it is the first of its kind, where we are not 
taking new land, pristine land and turning it into a refinery. 
We are talking about brownfield land we are turning into a 
refinery. With that comes jobs, jobs and more jobs. Because oil 
exploration is not labor-intensive, but the refining process 
is. And many, many jobs go along with it, like mechanics, truck 
drivers, et cetera.
    So I would ask for strong Federal support in our efforts 
to, when we endeavor to move forward on this refinery project, 
it is in the infancy stage. But the land has been purchased, we 
are moving forward. So that will take our 65 percent 
unemployment rate and take it down to practically nothing.
    I would urge this Committee to help us in our endeavor to 
get a refinery online. The first one in the United States since 
1976, there has not been a new refinery built. Thank you, sir.
    The Chairman. Thank you for that report.
    Ms. Kauhane.
    Ms. Kauhane. Thank you, Chairman.
    I can speak to the project that we are currently partnering 
with the homesteaders and the community utility co-op in 
Anahola. And that particular, it is a 12 megawatt farm. Total 
cost of that project is at $62 million, $24 million of that 
coming from 1603 credits through the DOE program under ARRA. It 
will create about 125 jobs while the farm is being developed 
and put into operation.
    But I think more importantly for Anahola and that 
community, because the community is at the forefront of that 
project, not only will they have the short-term jobs through 
the process of development, but we have community benefit 
agreements in place, where the community then gets to do the 
maintenance of the grounds and have other longer-term jobs for 
the area after the project is done in the construction phase.
    I would also like to say for the record that what is very, 
very exciting in listening to all of the panelists and how 
powerfully important clean energy is to Tribal lands across our 
Nation is that it is really the true essence as Native people 
to be self-sufficient, that we have opportunities because of 
our land base and our land asset to take charge of our destiny 
and create jobs, both on and off homesteads. I think it is 
powerfully important, we thank you for this hearing as we take 
a look at all the needs around energy. Mahalo.
    The Chairman. Thank you, Michelle Kauhane.
    Vice President Jim?
    Mr. Jim. Thank you, Chairman Akaka. The Navajo Nation has 
more than 300,000 members, nearly 200,000 of them live on 
Navajo. And we have a 55 percent unemployment rate, with nearly 
50 percent living below the Federal poverty line.
    We also have about $2.5 billion coming through Navajo and 
85 percent of that goes off Navajo to border towns. Only 15 
percent remains. We are working to reverse that, so that 85 
percent remains and the 15 percent is going off to border 
towns.
    One way of doing that is to develop our own energy, because 
when we do that, we are also creating jobs on Navajo, so more 
and more people will stay on Navajo and spend more money there. 
We do not have an estimate, but we estimate that the Desert 
Rock project alone would have been over 1,000 permanent jobs, 
at the plant and in the mine, and 2,000 construction jobs. That 
was just one project.
    We also estimate that for every energy job created, three 
subsidiary jobs are created to support the energy jobs. So that 
is just one project that we have on Navajo. So if we had 
several projects similar to this going on, we would be creating 
quite a bit of jobs. Thank you.
    The Chairman. Thank you very much.
    It is good to hear of these possibilities. I want to wish 
all of you well in your pursuits and your endeavors in energy 
across the United States.
    I want to thank our witnesses for participating in today's 
hearing. Enabling Native communities to develop their energy 
resources helps them develop their economies and provide for 
their people, as has been mentioned. It also creates jobs in 
rural communities throughout the United States for both Natives 
and non-Natives alike, while reducing dependency on foreign 
energy sources.
    I look forward to continuing to work together with my 
colleagues on these issues, so that we may implement policies 
that improve Native energy development. You have given us 
possible areas to work in here in the Congress. Because we want 
to continue to hear from you, please remember, the hearing 
record is open for written testimony for the next two weeks. 
You may send in your testimonies to us.
    This has been an interesting hearing, and it is good to 
hear of what you are doing out there. I hope that what we have 
heard in here will be the basis of developing greater programs 
throughout the Nation and energy for the indigenous people of 
our Country in Indian Country, Alaska and Hawaii.
    So mahalo nui loa, thank you very, very much. This hearing 
is adjourned.
    [Whereupon, at 4:25 p.m., the Committee was adjourned.]


                            A P P E N D I X

            Prepared Statement of the Crow Tribe of Montana

I. Introduction
    The Crow Nation welcomes this opportunity to share our views and 
concerns about energy development in Indian Country. The Crow Nation's 
energy resources are abundant and the financial stability of our Tribe 
is wholly dependent upon them. The Crow Nation is uniquely positioned 
to contribute to the energy independence of our country.
    We applaud this Committee's leadership in reviewing how Tribal 
energy development can be facilitated so as to fully contribute to 
national energy security. Over the years, Congress has attempted to 
make investing in tribal business attractive to private business, for 
example, in 1993 Congress provided tax incentives to help ``level the 
playing field'' for tribal projects to compete with similar off-
reservation projects. We see a necessary role for legislative 
intervention to ensure that Tribes can use our resources to the benefit 
of our people and all Americans by creating jobs directly and 
indirectly by providing raw materials and energy. The vast energy 
opportunities in Indian Country and the economic value of such 
resources not only to the Tribes that own them, but to the nation as a 
whole, must be freed from needless regulatory burdens. Eliminating 
obstacles to energy project development, along with providing 
incentives to create jobs in Indian Country to produce energy 
resources, will build additional national capacity to create even more 
jobs in the national economy. This is an opportunity that cannot be 
missed.
    In this testimony, we describe the extent of the Crow Nation's 
coal, oil and natural gas, hydropower and wind energy resources and the 
existing and planned facilities and projects utilizing these resources. 
We also discuss the obstacles to increasing the development of these 
resources and the solutions we propose to reduce the obstacles. With an 
estimated 3 percent of the nation's coal resources, as well as with 
preliminary estimates of significant oil, natural gas, and wind 
reserves, the Crow Nation is well positioned to provide the secure and 
dependable domestic energy resources that our national economy needs. 
And our energy resources will provide good jobs as we further develop 
them.

II. Crow Energy Resources
Land and Population
    The Crow Nation is a sovereign government located in southeastern 
Montana. The Crow Nation has three formal treaties with the Federal 
Government, concluding with the Fort Laramie Treaty of May 7, 1868. The 
Crow Reservation originally encompassed most of Wyoming (including the 
Powder River Basin) and southeastern Montana. Through a series of 
treaties, agreements and unilateral federal laws over a 70 year span, 
Crow territory was reduced by 92 percent to its current 2.2 million 
acre area.
    In addition to this substantial land loss, the remaining tribal 
land base within the exterior boundary of the Crow Reservation was 
carved up by the 1920 Crow Allotment Act. In 1919, prior to the 
Allotment Act, there were already 2,453 allotments, consisting of 
482,584 acres. By 1935, there were 5,507 allotments, consisting of 
2,054,055 acres (218,136 acres were alienated from tribal ownership by 
1935). The Big Horn and Pryor Mountains were not allotted and still 
remain reserved for the Crow Nation and its citizens.
    According to more recent Bureau of Land Management Reports, the 
land statistics have shifted: 45 percent Crow allotments; 20 percent 
Crow Nation trust land; and 35 percent non-Indian fee land. In sum, the 
pattern of surface ownership generally is ``checkerboard'' with 
interspersed Crow Nation trust and fee lands, Crow allotments (held in 
trust for individual Tribal member owners), and non-Indian fee lands. 
The statistics show limited success of the Crow Nation in reacquiring 
lost lands, but the reality is a much larger pattern of continued loss.
    Today, there are more than 13,000 enrolled citizens of the Crow 
Nation, with approximately 8,000 of those residing within the exterior 
boundaries of the Reservation. Additionally, a recent study indicates 
that the tribal population will exceed 20,000 citizens by 2015, which 
will add further stress to our fragile developing economy, and sharply 
increase the level of basic human services needed by our population. 
Our goal is to invite more of our citizens to return home to live and 
resume tribal relations, but we must be able to offer tribal members 
solid opportunities to hold stable and meaningful employment, homes, 
and educational opportunities. Our current unemployment rate is 47 
percent according to BIA statistics. The Crow Nation has always 
emphasized higher education and we currently have more than 400 annual 
applications for higher education assistance. Because of federal 
funding limitations and internal budget constraints, however, we can 
only fund 90 students each year.
    In addition to providing financial support for education, we have a 
separately chartered tribal college (Little Bighorn College, ``LBHC'') 
that started operations in 1981. LBHC has graduated over 300 students 
to date. LBHC graduates are employed on and around the Crow Reservation 
in a variety of positions including teachers' aides, computer 
technicians, office managers and administrative assistants. At least 
sixty have completed bachelor's degrees and are pursuing professions in 
education, social work, human services, science, nursing, technology, 
accounting and business. As we move forward in developing our energy 
resources, our own college can help to provide our citizens with 
training in new fields for expanded job opportunities, including 
vocational-technical courses to support energy development.

Minerals, Past and Present
    The Crow Nation has an opportunity to develop tribal resources 
because the 1920 Crow Allotment Act, as amended in 1968, reserved all 
minerals, oil and gas on any lands allotted under that Act for the 
benefit of the entire Tribe in perpetuity. Today, although some 
checkerboarding of mineral rights also exists on the Crow Reservation, 
subsurface mineral acres are owned primarily by the Crow Nation. For 
example, in the southeast corner of the Reservation, 1.3 billion tons 
of recoverable coal are wholly owned by the Nation. The larger portion 
of natural resources within the Reservation boundaries are recognized 
but remain largely untapped.
    The Crow Nation has developed a limited amount of its resources, 
typically with royalty (and some tax) revenue received as the lessor. 
Although the Crow Nation pursued some oil and gas development between 
the 1920s and 1950s, more recent natural gas development has been 
hampered by lack of pipeline infrastructure and the Federal Application 
for Permit to Drill (APD) fee. Most of our governmental revenue is 
derived from our 38-year relationship with Westmoreland Resources, Inc. 
Over that period, the Absaloka mine has produced about 150 million tons 
of coal and is the largest private employer within the Crow 
Reservation.
    The Crow Nation has very substantial undeveloped mineral resources. 
Our coal resources exceed 9 billion tons. We have been exploring our 
oil and gas reserves, and preliminary estimates indicate that they are 
significant. In addition, we have large deposits of industrial 
minerals, such as limestone and bentonite. Finally, preliminary data 
suggests that we have class 5/6 wind energy as well as other renewable 
resources. The Nation is currently in talks with various companies 
regarding the development of these untapped resources, but barriers 
have slowed or prohibited significant progress.

III. Crow Energy Projects

A. Absaloka Mine
    The Absaloka Mine, owned and operated by Westmoreland Resources 
Inc. (WRI), is a 15,000-acre single pit surface coal mine complex 
located near Hardin, Montana and the Crow Indian Reservation. WRI mines 
coal leased from the Crow Nation pursuant to two different coal leases. 
The mine shipped its first coal in 1974, and has been a steady and 
reliable source of coal to its customers, and revenue to the Crow 
Nation for a continuous 37 year period. The Absaloka Mine was expressly 
developed to supply Powder River Basin coal to a group of Midwestern 
utilities, including Xcel Energy's Sherburne County Station near 
Minneapolis, Minnesota. The mine also enjoys a proximity advantage to 
these customers relative to its main competitors. Over the years, it 
has also sold coal to several other upper Midwest utilities as well. 
Coal is shipped via a 38-mile rail spur to the main line of the 
Burlington Northern Santa Fe Railroad near Hysham, Montana. WRI is 
currently evaluating a substantial investment in the construction of a 
westward bound railroad connection to facilitate coal transportation to 
explore west coast and export coal sales opportunities.
    The Absaloka Mine can produce up to approximately 7.5 million tons 
of coal annually, and has produced over 172.6 millions of tons over its 
life. WRI annually pays substantial production taxes and coal royalties 
to the Crow Nation; $9.9 million of taxes and $9.1 million of royalties 
were paid in 2010. These royalties and taxes amounted to 25 percent of 
the gross revenue of the mine last year. These taxes and royalties are 
representative of the mine's financial contribution over the past 
several years. The significant portion of the Crow Nation's non-Federal 
revenues come from the Absaloka Mine. In 2010, these revenues accounted 
for nearly two-thirds of the Nation's non-federal funds budget. WRI 
employs a variety of skilled, managerial, professional, and hourly 
employees, with an annual average salary of over $62,000 and a total 
annual employment expense of approximately $16 million dollars. The 
Absaloka Mine is the largest private employer of Crow Tribal members on 
a reservation that struggles with an unemployment rate that exceeds 47 
percent. More than 70 percent of the mine's 163 member workforce 
consists of Crow Tribal members and affiliates. Without question, the 
Absaloka Mine is critical to the Crow Nation's financial independence 
now, over the past 37 years, and well into the future.
    The Absaloka Mine continues to struggle financially with 
competition from the larger Powder River coal mines, and with the 
competitive advantage provided to Powder River coal through the impact 
of a price differential created by sulfur (SO2) emissions allowances 
under Title IV of the Clean Air Act. The competitiveness and the 
continued operation of the mine has been significantly facilitated by 
the tax benefits made possible by the Indian Coal Production Tax 
Credits (``the ICPTC'') included in the 2005 Energy Policy Act and 
beginning in 2006. The ICPTC neutralized the coal price differential 
related to the SO2 emission allowances. Without the ICPTC, the Absaloka 
Mine would have ceased to operate, thereby ending a substantial revenue 
source for the Crow Nation. The recent unplanned outage of the 
Sherburne County # 3 unit, which burns almost exclusively Crow coal, 
will put further pressure on the viability of the Absaloka Mine (and 
the Tribe's finances), by cutting production in half for many months. 
In addition, 35 percent of the Mine's workforce have been furloughed 
until the unit is repaired and brought back into service. Continuance 
of the ICPTC is critical to the future of the Absaloka Mine and the 
stability of revenue and jobs for the Crow Nation.
    The Crow Nation is proud of its 37-year partnership with 
Westmoreland on the Absaloka Mine. The Crow Nation seeks to ensure the 
continued economic viability of the Absaloka Mine, as the Tribal 
revenue and jobs that it provides are an overriding imperative for the 
Nation and its citizens.

B. Many Stars CTL Project
    The Crow Nation has been working since 2008 to develop a very 
significant Coal-to-Liquids (CTL) project within the Crow Indian 
Reservation called the Many Stars CTL Project. The Project will consist 
of a new surface coal mine and a proven direct coal liquefaction 
process plant that sequesters CO2, uses less water and is more 
efficient than conventional indirect coal liquefaction projects 
operating in the world today. This clean-coal technology based project 
offers the best opportunity for the Crow Nation to monetize our 
currently stranded, lower-quality coal assets and is a critical 
economic necessity for the Nation. The CTL project will also provide a 
critically needed key domestic energy source to the United States and 
help reduce America's dependence on foreign oil.
    However, due to the recent economic downturn and investor concerns 
about future government policy towards CTL, greenhouse gases, and 
uncertain permitting requirements to allow carbon sequestration, this 
project has been struggling to move forward. Even with the currently 
robust commodity market for transportation fuels, project risk due to 
historical uncertainties with such commodity markets is still a 
deterrent to investors. The Tribe is currently seeking a new industry 
partner for the Many Stars project, and remains committed to developing 
an advanced coal conversion project for the long-term utilization of 
our coal with full carbon dioxide capture and sequestration.
    The Many Stars CTL Project will target conversion of up to 2 
billion tons of Crow coal over the life of the project, initially 
producing 6-8,000 barrels of liquid products per day and ultimately 
expanding to produce up to 50,000 barrels or more of liquid products 
per day. The Crow coal would be converted to ultra-clean fuels, such as 
synthetic jet fuel and diesel fuel at an estimated yield of 1.5 to 2 
barrels of liquid product per ton of coal. Thus, when considered in 
traditional oil and gas terms, this project has the opportunity to 
responsibly develop and monetize a world-class 3-4 billion barrel 
oilfield.
    For the Crow people, the success of the Many Stars Project is 
absolutely critical to end decades of poverty and create the long term 
economic viability of the Crow Nation, and to provide for the long-term 
monetization of our vast coal resources. The first phase of the 
integrated surface mine and CTL plant could create up to 2,000 jobs 
during an initial three year construction period with the expectation 
that a significant portion of these jobs would continue as the plant is 
expanded during the subsequent 10-15 years. The number of permanent 
operations jobs is expected to grow from 250 to 900 upon the 
commencement of initial operations of both the mine and plant. The jobs 
created by this project would include high level positions, such as 
engineers and managers, as well as skilled trades (mechanics, 
electricians, welders). In addition, income generated by the project 
could serve to support the Nation's severely underfunded education and 
health care programs and support the development of key infrastructure 
on the Crow Reservation to improve the lives of its citizens.

C. Other Crow Coal Development
    For many years, members of the Crow Nation have watched a nearly 
continuous stream of unit trains cross the Reservation every day on the 
BNSF Railway, carrying someone else's coal to market. The Nation has 
active plans to develop several billion tons of ultra-low-sulfur coal 
located in the southeastern portion of the Reservation, for markets 
that the Absaloka Mine is not well-positioned to serve. These markets 
could include exports to Asia, which are currently constrained by port 
terminal capacity on the west coast, as well as difficulty in 
permitting new coal terminals generally.

D. Oil and gas Development
    During 2005-2008, the Crow Nation leased substantial areas of the 
Reservation for oil and gas exploration and development, using Indian 
Mineral Development Act agreements. Unfortunately, the independent oil 
and gas companies who leased these lands did not discover any 
conventional oil plays like the Bakken formation in northeastern 
Montana and North Dakota. Instead, the conventional oil exploration 
work under these agreements resulted in dry holes.
    This leasing activity did prove the existence of substantial 
shallow natural gas reserves on the Crow Reservation. In August, 2009, 
Ursa Major (an independent oil & gas company from Oklahoma) began 
delivering the first Tribal natural gas into the interstate pipeline 
system from the northeastern portion of the Reservation. Further full-
field development of Ursa Major's gas field has been slowed by low 
natural gas prices, coupled with the $6,500 per well APD fee charged by 
the BLM.
    Following the crash in oil prices and the credit markets in late-
2008, the industry's interest in leasing Crow oil and gas lands 
evaporated, and most development plans were suspended. Recently, we 
have begun to see some renewed interest, as evidenced by drilling plans 
for this year on a heavy oil prospect in the Pryor area on the western 
portion of the Reservation, but the $6,500 APD fee currently in place 
reduces the interest of potential developers.
    The Nation will continue to pursue oil and gas development, knowing 
that there are substantial natural gas resources on the Reservation, 
trusting that the current heavy oil prospect will prove economic, and 
hoping that our luck will improve on locating other conventional oil 
resources.

E. Wind Energy
    The Crow Reservation encompasses areas with a significant potential 
for wind energy development. The Crow Nation has, with the assistance 
of the Division of Energy and Mineral Development through Department of 
Interior, compiled wind data for the past several years, which 
indicates a steady and reliable Class 5/6 wind resource in several 
areas of the Reservation. The most significant resource areas are also 
located in direct proximity to existing transmission lines, and are 
relatively easily accessible using existing paved highways and 
secondary roads. The wind resource areas encompass lands held in a 
variety of ownership patterns, including tribal trust, individual 
tribal member allotments (many of which are highly fractionated), and 
non-Indian fee lands.

F. Hydropower
    In 1958, the United States condemned over 5500 acres of Crow 
Reservation lands for building Yellowtail Dam. Yellowtail Dam became 
operational in 1966. The dam generates over a half billion kilowatt 
hours of power per year, even during drought conditions. To date, the 
power generation revenues have exceeded $600 million dollars. Although 
the Crow Nation did receive a few million dollars for the land taken to 
create Yellowtail Dam, the Crow Nation has never received any payment 
from the ongoing revenue from power generation.
    The recent Crow Water Rights Settlement Act of 2010 grants the 
Nation exclusive rights to develop and market hydropower from the 
Yellowtail Afterbay Dam (immediately downstream from the main Dam). 
Based on previous Bureau of Reclamation studies, the Yellowtail 
Afterbay should support the economic development of a small, low-head 
hydropower facility with an estimated capacity of 10-15 Megawatts. The 
Nation is currently conducting a preliminary feasibility study to 
confirm that potential, and to evaluate transmission and marketing 
opportunities. Our study should be complete in a few months, and 
provide the necessary information to finance and construct the 
hydropower facility within the next two years.
    The Nation is considering using this hydropower production to 
supply the local rural cooperatives that provide electric power to the 
Reservation, to replace their current supplies of low-cost Federal 
hydropower which will no longer be available in a few years. It also 
appears that the Afterbay hydropower development could improve water 
quality in the blue-ribbon trout fishery on the Big Horn River.

IV. Obstacles to Continued Development of Crow Energy

A. Laws and BIA Procedures Impeding Energy Development
    Despite the fact that the Crow Nation has substantial resources, 
numerous practical problems arise from the previously described 
history. The Crow Nation and our energy development partners have 
experienced, and continue to experience, systematic problems in trying 
to create energy development and the new jobs that would be associated 
with that development. The Bureau of Indian Affairs (BIA) consistently 
creates barriers and delays to resource development.
    For example, for an oil and gas lease approved by the Nation in 
January of 2005, development did not begin until September of 2007 
because of an extremely slow BIA approval process. Within the approval 
process of that lease, an inventory of Tribally-owed net mineral acres 
was reported as 94,000 acres. However, after the lessee expended large 
amounts of time and money reexamining mineral title information, an 
additional 50,000 net Tribal mineral acres was identified and 
confirmed. An error of this magnitude would be simply unacceptable in 
many contexts, but in our experience it is not surprising and is far 
from unique.
    BIA records for surface and mineral ownership are often erroneous, 
missing and out of date. These problems cause significant delay in 
preparation of environmental documents and overall land records 
necessary for business transactions. The BIA lacks the necessary 
staffing to provide accurate information on Reservation surface and 
mineral ownership, and to resolve additional questions that arise. It 
is extremely difficult to compete with off-reservation development 
because of these problems. Many companies view this, in addition to all 
other problems, as another prohibitive cost of doing business within 
the Crow Reservation.
    Recent BIA procedures have made it increasingly difficult to carry 
out exploration programs for energy and other minerals on the 
Reservation. For example, coal exploration involves drilling core holes 
with a truck-mounted drilling rig to verify the quantity and quality of 
coal, which take only a few days to drill, are accessed by existing 
undeveloped roads, and are fully reclaimed after completion. The BIA 
now requires full appraisals approved by the Office of the Special 
Trustee prior to obtaining consents from the allotted surface owners to 
drill the core holes and even to cross other allotments to reach the 
drill sites. These procedures, along with environmental assessments, 
result in long delays in exploration programs that could otherwise be 
completed in a matter of months.
    The obstacles posed by these procedures are even more prohibitive 
for other mineral exploration, such as bentonite, which require a large 
number of auger samples that have even less environmental impact and 
involve much smaller amounts of recoverable minerals.
    Finally, apart from the costs and delays caused by BIA staffing 
shortages and unnecessary procedures, laws that limit the duration of 
commercial leases on Tribal lands also impede development of large 
long-term projects such as the Many Stars CTL project. Many of these 
obstacles could be addressed by Congressional legislation such as the 
Indian Energy bill developed last year by the Senate Committee on 
Indian Affairs and introduced last session.

B. Inability to Plan on Continued Availability of Federal Income Tax 
        Incentives
    There are several current federal tax incentives for economic 
development in Indian Country, including an accelerated depreciation 
provision, an Indian wage tax credit, and the Indian Coal Production 
Tax Credit. However, the accelerated depreciation and wage tax credit 
both have substantial limitations that severely limit their usefulness 
for major Tribal energy development projects.
    More importantly, all of these tax incentives will expire again 
this year, and in the past they have been extended only one year at a 
time. For major Tribal energy projects, such as a coal mine or a CTL 
project with 6-10 year development lead times, the inability to rely on 
the continued availability of these incentives means that they cannot 
be factored into the economic evaluations that are necessary for 
investment decisions.
    As further explained below, permanent extensions and appropriate 
modifications to these existing tax incentives would facilitate jobs 
and economic development, particularly energy development, on the Crow 
Reservation and for all of Indian Country.

C. The BLM ``APD Fee''
    Beginning with the FY 2008 Appropriations Act for the Department of 
Interior, Congress required the Bureau of Land Management (BLM) to 
charge a $4,000 fee to process every Application for Permit to Drill 
(APD) on the federal and Indian lands on which it supervises oil and 
gas development activity. The APD Fee has since been increased by 
subsequent appropriations legislation to $6,500 for each new well. The 
Crow Nation has continually protested the application of this fee to 
tribal lands, and has sought relief in numerous ways, but to date, no 
solution has been reached.
    This $6,500 fee compares to drilling permit fees of less than $100 
off the Reservation in the State of Montana. Obviously, it is a 
disincentive to explore for oil and gas on Indian lands compared to 
off-reservation State and fee lands. As indicated above, it has been a 
major factor in the suspension of additional natural gas field 
exploration and development on the Crow Reservation by our partner, 
Ursa Major, who also holds leases outside the Reservation. The APD fee 
is a particular burden for the type of shallow (less than 1500' deep), 
low-producing gas wells being drilled by Ursa Major. The cost of 
completing those types of wells is less than $150,000 each, so the APD 
Fee represents a large portion of the capital investment necessary to 
bring additional wells into production.
    The APD Fee also discourages efficient development and slows 
exploration efforts. For exploratory ``wildcat'' drilling where success 
is not a sure thing, the developer can only afford to get permits for a 
couple of wells at a time, see if they hit gas, and if so, file APD's 
for a couple more and repeat the cycle. Without the high APD Fee, the 
developer would be able to obtain many permits and immediately drill 
additional wells if the first ones are successful. Considering the lead 
time for issuance of the drilling permits (60-90 days), the APD Fee 
causes delays of up to a year developing a handful of new wildcat 
wells, in addition to adding tens of thousands dollars of non-
productive costs that limit the Nation's ability to charge taxes and 
royalties on the future production.

V. Proposed Solutions

A. Federal Tax Incentive Legislation

1. Indian Coal Production Tax Credit
    The 2005 Energy Policy Act provided the Indian Coal Production Tax 
Credit beginning in tax year 2006, based upon the number of tons of 
Indian coal produced and sold to an unrelated party. ``Indian coal'' is 
coal produced from reserves owned by an Indian Tribe, or held in trust 
by the United States for the benefit of an Indian Tribe, as of June 14, 
2005. The tax credit is calculated by totaling the number of tons of 
Indian coal produced and sold, then multiplying that number by $1.50 
(for calendar years 2006 through 2010). For tax years between 2010 and 
December 31, 2012, the total number is multiplied by $2.00.
    The origin of this production tax credit began with the goal of 
neutralizing the impact of price differentials created by sulfur 
(SO2) emissions allowances, thereby keeping Indian coal 
competitive in the regional market. Without the credit, the Crow's 
Absaloka mine would have lost its supply contract and likely been 
closed in 2005, which would have had a devastating impact on the Nation 
given that this mine provides a major portion of the Nation's 
government's operating budget. The tax credit has worked to keep the 
mine competitive and open. While the threat to the viability of Crow 
coal sales from emission allowance pricing has passed for the time 
being, other threats to coal sales continue. The loss of sales to the 
Sherburne County # 3 power plant, a major customer, presents a serious 
challenge in the short term. The ICPTC allows Crow coal to compete 
better in the regional market. Making this tax credit permanent 
provides the Nation with a basic level of security in the volatile 
energy markets, in addition to creating future opportunities for 
expanded sales and revenue back to the Nation.
    Now, in 2012, this tax credit remains critically important to the 
current operation of the existing Absaloka Mine and provides sufficient 
incentive to help us attract additional investment for future energy 
projects to diversify the Tribe's income sources. In order to protect 
existing operations and encourage growth, the Indian Coal Production 
Tax Credit should be made permanent, should be allowed to be used 
against alternative minimum tax, the placed-in-service date should be 
extended for at least 10 years, and the requirement that the coal be 
sold to an unrelated person should be deleted to allow and encourage 
facilities owned, in whole or in part, by Indian Nations to participate 
and benefit from the credit.

2. Accelerated Depreciation Allowance
    Included in the Omnibus Budget Reconciliation Act of 1993, Pub. L. 
103-66, 107 Stat. 558-63, codified at 26 U.S.C. 168(j), 38(b), and 
45(A), are two Indian reservation-based Federal tax incentives designed 
to increase investment and employment on Indian lands. The theory 
behind these incentives was that they would act in tandem to encourage 
private sector investment and economic activity on Indian lands across 
the United States. Neither incentive is available for gaming-related 
infrastructure or activities. The incentives--an accelerated 
depreciation allowance for ``qualified property'' placed in service on 
an Indian reservation and an Indian employment credit to employers that 
hire ``qualified employees''--expired on December 31, 2003, and have 
been included in the short-term ``extenders packages'' of expiring tax 
incentives since that time.
    Energy projects require significant equipment and physical 
infrastructure, and involve the hiring of large numbers of employees. 
Crow is not alone in our resource holdings; for several Indian nations, 
estimates of proven and undeveloped energy resources on Indian lands 
suggest that revenues to tribal owners would exceed tens of billions in 
current dollars. As the energy development market improves and the 
federal programs enacted in the 2005 pro-development energy law, the 
Indian Tribal Energy Development and Self-Determination Act (Pub. L. 
109-58), energy-related activity on Indian lands will increase 
substantially in the years ahead.
    Unfortunately, one-year or two-year extensions of the accelerated-
depreciation provision do not provide an incentive for investment of 
new capital in Indian country for significant energy projects. 
Development of major projects generally takes a decade or longer. 
Investors need certainty that the benefit will be available when the 
project initiates operations in order to factor that benefit into their 
projected economic models, as well as investment decisions. A permanent 
extension would address this problem, making the incentive attractive 
to investors in long-term energy projects on Indian lands.
    As currently written, the depreciation allowance could be 
interpreted to exclude certain types of energy-related infrastructure 
related to energy resource production, generation, transportation, 
transmission, distribution and even carbon sequestration activities. We 
recommend that language be inserted to statutorily clarify that this 
type of physical infrastructure expressly qualifies for the accelerated 
depreciation provision. In proposing this clarification, it is not our 
objective to eliminate non-energy activities that might benefit from 
the depreciation allowance. Indeed, if adopted, the language we propose 
would not discourage other forms of economic development in Indian 
country.
    By providing this clarifying language and this permanent extension, 
the accelerated depreciation provision will finally accomplish its 
purpose--enhancing the ability of Indian nations to attract energy 
industry partners to develop long-term projects utilizing the vast 
Indian resources available.

3. Indian Employment Wage Credit
    The 1993 Act also included an ``Indian employment wage credit'' 
with a cap not to exceed 20 percent (20 percent) of the excess of 
qualified wages and health insurance costs that an employer pays or 
incurs. ``Qualified employees'' are defined as enrolled members of an 
Indian tribe or the spouse of an enrolled member of an Indian tribe, 
where substantially all of the services performed during the period of 
employment are performed within an Indian reservation, and the 
principal residence of such employee while performing such services is 
on or near the reservation in which the services are to be performed. 
See 26 U.S.C. 45(c)(1)(A)-(C). The employee will not be treated as a 
``qualified employee'' if the total amount of annual employee 
compensation exceeds $35,000.
    As written, the wage tax credit is completely ineffective for high-
paying energy industry jobs, and does not attract private-sector 
investment in energy projects within Indian country. The provision is 
too complicated and private entities conclude that the cost and effort 
of calculating the credit outweighs any benefit that it may provide. We 
therefore propose that the wage and health credit be revised along the 
lines of the much-heralded Work Opportunity Tax Credit, which is less 
complicated and more likely to be used by the business community. We 
propose retaining the prohibition contained in the existing wage and 
health credit against terminating and rehiring an employee and propose 
to alter the definition of the term ``Indian Reservation'' to capture 
legitimate opportunities for employing tribal members who live on their 
reservations, even though the actual business activity may be off-
reservation. This amendment would allow the Indian Employment Wage 
Credit to more effectively fulfill the purpose for which it was 
originally enacted.

B. Eliminate the BLM APD Fee on Indian Lands
    The current APD fee of $6500 is a hindrance to the Crow Nation's 
goal of developing its oil and gas resource. The disparity between the 
cost for drilling on tribal lands under federal jurisdiction versus 
lands under state jurisdiction prevents any meaningful economic 
development of the reserves existing on the Crow Reservation. The 
Federal Government should not, through its' trust responsibility, 
charge administrative fees that prohibit or render economically 
inefficient, the development of tribal trust assets. Indian lands 
should be exempted from BLM's APD fee.

C. Need for Government Support for the Many Stars CTL Project
    Several CTL projects have been announced in the U.S.; however, all 
of these projects are struggling due to the high financial commitment 
needed to plan and implement these projects in an uncertain economic 
and energy policy environment. Investors and banks are reticent to fund 
``first of a kind'' projects, even though the technology has been 
proven commercially in other countries and in demonstration plants here 
in the United States. As a comparison, China is moving forward rapidly 
in the CTL sector, with 12 sites already producing at commercial 
demonstration scale of 4-8,000 barrels per day with four commercial 
projects nearing start of construction at capacities up to 80,000 
barrels/day.
    Based on the foregoing, the following key actions are crucial for 
the viability of the Crow's Many Stars CTL Project:

   Grant the Department of Defense and other federal agencies 
        the ability to enter into long-term, guaranteed fixed-price 
        contracts that will underpin the commercial framework needed 
        for these types of long-term CTL projects;

   Extend the expiration date of the current 50-cents per 
        gallon alternative fuel excise tax credit for a definitive time 
        period rather than year-to-year extensions as has been done 
        recently. Since it could take roughly 6-10 years for these 
        types of projects to become fully planned, implemented, and 
        operational, investors are concerned that the incentives will 
        expire before the plant starts up. Consider providing the tax 
        credit for a period of 10 years following start-up for those 
        projects starting construction prior to 2015.

   Support a twenty percent (20 percent) investment tax credit 
        for each CTL plant placed in service before the same future 
        date, and/or allow 100 percent (100 percent) expensing of 
        investments in the year of capital outlay for any CTL plant in 
        operation by the same future date.

   Support DOE and DOD alternative fuel development programs as 
        part of a comprehensive energy policy that supports the full 
        spectrum of energy technologies and provides a level playing 
        field for developing new innovation in clean coal technology to 
        meet national environmental goals.

   Remove general uncertainty in energy policy that will 
        provide investors confidence to support new innovation and 
        major investment in the clean coal sector. We have been told 
        repeatedly that policy uncertainty with respect to clean coal 
        support equates to paralysis in trying to move the Many Stars 
        CTL Project forward with new investors.

VI. Conclusion
    Given our vast mineral resources, the Crow Nation can, and should, 
be self-sufficient. We seek to develop our mineral resources in an 
economically sound, environmentally responsible and safe manner that is 
consistent with Crow culture and beliefs. The Crow people are tired of 
saying that we are resource rich and cash poor.
    We respectfully request your assistance in setting the foundation 
to make our vision a reality. We have been working to develop our 
energy resources and to remove obstacles to successful development. We 
hope to build a near-term future when our own resources, in our own 
hands, provide for the health, hopes and future of our people.
    It is critical that Congress act to protect Indian nations' 
sovereignty over their natural resources and secure Indian nations as 
the primary governing entity over their own homelands. This will have 
numerous benefits for the local communities as well as the Federal 
Government. The Crow Nation has been an ally of the United States all 
through its history.
    Today, the Crow Nation desires to develop its vast natural 
resources not only for itself, but to once again help the United States 
with a new goal--achieving energy independence, securing a domestic 
supply of valuable energy, and reducing its dependence on foreign oil. 
Many members of the Crow Nation are veterans of the United States Armed 
Forces and we have a special understanding and respect for what it 
could mean to our sons and daughters in coming years if all of our 
energy needs were met here at home.
    It is time for the Crow Nation to begin realizing its true 
potential as a domestic energy producer. However, our vision can only 
become a reality with your assistance. We strongly feel that events in 
the Congress during 2012 will have a decisive impact on realizing our 
vision.
                                 ______
                                 
   Prepared Statement of Hon. Irene C. Cuch, Chairwoman, Ute Tribal 
     Business Committee, Ute Indian Tribe of the Uintah and Ouray 
                              Reservation

    Chairman Akaka, Vice Chairman Barrasso, and Members of the 
Committee on Indian Affairs, my name is Irene Cuch. I am the Chairwoman 
of the Business Committee for the Ute Indian Tribe of the Uintah and 
Ouray Reservation. The Ute Indian Tribe consists of three Ute Bands: 
the Uintah, the Whiteriver and the Uncompahgre Bands. Our Reservation 
is located in northeastern Utah. Thank you for the opportunity to 
provide testimony on energy development in Indian Country. My testimony 
will focus on the barriers the Tribe faces in developing its energy 
resources and legislative solutions to those barriers.

I. Energy Development of the Ute Indian Tribe
    Energy development has long been an important part of the Tribe's 
Reservation economy. Production of oil and gas began on the Reservation 
in the 1940s. Over the past 70 years, production has been ongoing and 
went through a few periods of expansion. Today, the Tribe is a major 
oil and gas producer. The Tribe leases about 400,000 acres for oil and 
gas development. We have about 7,000 wells that produce 45,000 barrels 
of oil a day. We also produce about 900 million cubic feet of gas per 
day. And, we have plans for expansion. The Tribe is currently in 
process of opening up an additional 150,000 acres to mineral leases on 
the Reservation with an $80 million investment dedicated to 
exploration.
    The Tribe relies on its oil and gas development as the primary 
source of funding for our tribal government and the services we 
provide. We use these revenues to govern and provide services on one of 
the largest reservations in the United States. Our Reservation covers 
more than 4.5 million acres and we have 3,175 members living on the 
Reservation.
    Our tribal government provides services to our members and manages 
the Reservation through 60 tribal departments and agencies including 
land, fish and wildlife management, housing, education, emergency 
medical services, public safety, and energy and minerals management. 
The Tribe is also a major employer and engine for economic growth in 
northeastern Utah. Tribal businesses include a bowling alley, a 
supermarket, gas stations, a feedlot, an information technology 
company, a manufacturing plant, Ute Oil Field Water Services LLC, and 
Ute Energy LLC. Our governmental programs and tribal enterprises employ 
450 people, 75 percent of whom are tribal members. Each year the Tribe 
generates tens of millions of dollars in economic activity in 
northeastern Utah.
    The Tribe takes an active role in the development of its resources 
as a majority owner of Ute Energy which has an annual capital budget of 
$216 million. In addition to numerous oil and gas wells, Ute Energy 
teamed with the Anadarko Petroleum Corporation to establish and jointly 
own the Chipeta gas processing and delivery plant in the Uintah Basin. 
The Tribe recently approved plans for Ute Energy to become a publically 
traded company. This investment will allow us to expand our energy 
development and increase revenues.
    Despite our progress, the Tribe's ability to fully benefit from its 
resources is limited by the federal agencies overseeing oil and gas 
development on the Reservation. As the oil and gas companies who 
operate on the Tribe's Reservation often tell the Tribe, the federal 
oil and gas permitting process is the single biggest risk factor to 
operations on the Reservation. This process is primarily managed by the 
Department of the Interior (DOI).

II. Administrative Efforts to Promote Indian Energy Development
    The Tribe is working directly with the Administration to improve 
oil and gas permitting on the Reservation and has also provided 
Congress with legislative solutions to the barriers we face. The Tribe 
takes this issue very seriously because the number of permits that the 
Federal Government is able to process and approve is directly related 
to the revenues the Tribe has available to serve its members.
    The Tribe is working with the Administration on its own and as a 
part of the Coalition of Large Tribes (COLT) to improve the oil and gas 
permitting process. Last November the Tribe hosted a tour of its oil 
and gas development on the Reservation for Del Laverdure the Principal 
Deputy Assistant Secretary for Indian Affairs, Juan Palma the State 
Director of the Bureau of Land Management (BLM), staff of the Utah 
Congressional Delegation, and other advisors and staff.
    The purpose of the tour was to provide the agency officials with a 
perspective on the scope of the Tribe's energy development so that they 
could better understand the Tribe's needs for an efficient oil and gas 
permitting process. We provided information about the permitting 
processes to the agency officials and we are working with them to 
streamline the process and improve their permitting capacity.
    As former Senator Dorgan highlighted, the Bureau of Indian Affairs 
(BIA) uses a 49 step process to approve a single oil and gas lease. 
Overall that process includes the following general steps:

   5 Day Posting of Proposal;
   Obtain Permission to Survey;
   Field Staking;
   Onsite Inspection;
   Develop Site Specific Environmental Assessment (EA);
   Application for Permit to Drill (APD) and Application for 
        Right-of-Way (ROW);
   Review and approve ROW and APD; and,
   Construct ROW and Commence Drilling Operations.

    In addition, the processing of an oil and gas permit must comply 
with a number of federal laws and regulations, including:

   Indian Leasing Laws and Regulations;
   Indian Rights-of-Way Laws and Regulations;
   the National Environmental Policy Act (NEPA);
   the National Historic Preservation Act or Section 106 
        Process;
   the Endangered Species Act; and,
   potentially, the Clean Air Act.

    The Tribe estimates that an oil and gas permit could be processed 
through these steps in about 90 days. Indeed, on the Fort Berthold 
Reservation in North Dakota where DOI utilizes a ``virtual one-stop 
shop'' to oversee and streamline permitting, we understand that oil and 
gas permits are processed in about 60 days. On our Reservation the 
actual time it takes a typical permit to process is about 480 days--
more than one year.
    The Tribe is working with the Administration to find the resources, 
staff, and expertise needed to efficiently oversee oil and gas 
development on the Reservation. The first step is to get good 
information on the status of the permits. Unfortunately, the approval 
process is so complicated this information is difficult to obtain.
    In June 2011, DOI's Office of Indian Energy and Economic 
Development found that there were 1200 backlogged permits. In January 
2012, the BLM Field Office in Vernal, Utah reported that it had 245 
permits pending in its system. Also in January, the Tribe's Energy and 
Minerals Department reported that it had 10 permits pending. Specific 
information is needed for the permits pending with the BIA. The 
processing of permits needs better tracking. The number of permits 
pending in the system on any given day should not be greater than the 
number of permit applications submitted over a two month period, and no 
matter what the number is, permits should not be in the system for 
longer than 60 to 90 days.
    The second step is to find the staff and expertise for the BIA and 
BLM to efficiently process permits. As discussed in more detail below, 
the Tribe supports the ``one-stop shop'' concept and believes that 
permitting on the Reservation would benefit from a ``one-stop shop.'' 
The Administration has suggested other options such as detailing 
employees to areas with high permitting needs or using permitting teams 
that would rotate among the local agencies to clear back logs.
    The Tribe's ability to expand its oil and gas development is 
dependent upon a solution to the current permitting delays. For 
example, the Tribe understands that oil and gas companies operating on 
the Reservation are currently limiting operations based on the number 
of permits the agencies are able to process. In particular, companies 
are limiting the number of drilling rigs they are willing to operate on 
the Reservation.
    Drilling rigs are expensive operations that move from site to site 
to drill new wells. Oil and gas companies often contract for the use of 
drilling rigs. Any time a drilling rig is not actively drilling a new 
well it amounts to an unwanted expense. Consequently, oil and gas 
companies will only employ as many drilling rigs as permit processing 
will support. On our Reservation, the Tribe understands that some oil 
and gas companies who are currently using one drilling rig would 
increase their operations to three drilling rigs if permit processing 
could support this increase.
    One example of this is the Anadarko Petroleum Corporation's 
operations on the Reservation. Anadarko reported that it needed 23 well 
locations approved per month in 2011 and beyond, but in 2010, their 
permits were approved at a rate of 1.7 per month. Anadarko informed the 
Tribe that unpredictable approvals of permits forces the company to 
alter its operational plans at the last minute and often results in the 
company temporarily moving its operations off the Reservation to State 
and private lands. With consistent and reliable permit approvals, the 
Tribe is hopeful additional drilling rigs will move on to tribal lands 
and increase the revenues available for the tribal government, members, 
and investments.

III. Legislative Efforts to Promote Indian Energy
    The Tribe is also working with Congress to improve the oil and gas 
permitting process. First and foremost, Congress needs to provide the 
BIA with sufficient budgets to support Indian energy development. The 
BIA needs to hire additional staff to process environmental reviews and 
needs to hire staff with energy expertise. In addition, Congress needs 
to pass laws that improve the permitting process and ensure that tribes 
have the authorities necessary to support Indian energy development.
    The Tribe has participated in the development of Indian energy 
legislation in the 111th Congress and the current Congress. Last May, 
the Committee held a listening session on Senator Barrasso's draft 
Indian energy bill. At that listening session and in response to the 
draft bill, the Committee asked tribes to submit legislative ideas that 
would facilitate Indian energy development. In response to your 
request, the Ute Tribe developed 32 legislative solutions to overcome 
barriers and improve the management of Indian energy resources. We 
submitted these proposals to you and your staff last July. Then, last 
October, Senator Barrasso introduced S. 1684, the Indian Tribal Energy 
Development and Self-Determination Act Amendments of 2011, with 
Senators Akaka, McCain, and Hoeven as cosponsors.
    The Tribe supports S. 1684 and believes that it is a good start. We 
ask that you review the Tribe's solutions and expand the bill to 
address more of the barriers that we face in managing our energy 
resources. I have attached the Tribe's 32 legislative solutions to this 
testimony so that they will be part of the hearing record.
    In particular, the Tribe asks that the Committee support the 
creation of Indian Energy Development Offices to improve both 
traditional and renewable energy permitting. As former Senator Dorgan 
and many in Congress have noted, the oil and gas permitting process is 
a bureaucratic maze of federal agencies. Indian Energy Development 
Offices would bring all of the agencies into the same room and would 
streamline permit processing. These agencies could then work 
collaboratively to eliminate backlogs and delays in approving leases, 
rights-of-way, and applications for permits to drill.
    Former Senator Dorgan referred to these offices as one-stop shops. 
There are 3 one-stop shops already in Indian Country. There is one at 
Navajo, in Oklahoma, and a virtual one-stop shop on the Fort Berthold 
Reservation in North Dakota. Former Senator Dorgan reported that the 
one-stop shop at Fort Berthold helped to increase oil and gas permit 
approvals by 4 times.
    On our Reservation, the Ute Indian Tribe needs 10 times as many oil 
and gas permits to be approved. Currently, about 48 Applications for 
Permits to Drill (APD) permits are approved each year on the 
Reservation. The Tribe and its business partners estimate that about 
450 APDs will be needed each year as the Tribe expands its operations. 
The Tribe believes that a one-stop shop is the best way to get the BIA, 
the BLM, and other federal agencies working efficiently with the Tribe 
to manage the high level of permitting needed on the Reservation.
    Just as important, the BIA, BLM and other federal agencies that 
oversee the permitting process do so without the staffing and expertise 
needed to fully support Indian energy development. A one-stop shop 
would encourage the Department of the Interior to hire staff with 
Indian energy expertise. The BIA may be the most important federal 
agency responsible for supporting Indian energy development, yet there 
are only a handful of BIA employees with energy expertise. Congress 
needs to provide the authority and budgets so that the BIA can hire 
energy experts.
    The Tribe also believes that we need to remove as many 
disincentives to energy development on Indian reservations as we can. 
For example, the fees that the BLM charges for oil and gas activities 
on Indian lands are a disincentive to Indian energy development and 
encourage developers to move just over the Reservation boundary to 
private lands where there are no BLM fees. In the case of shallow 
wells, these fees may make development completely uneconomical. In 
addition, when the Tribe is developing its own resources, it is 
outrageous that the Tribe's federal trustee would charge us for 
performing its trust responsibility. The BLM should be prohibited from 
charging fees for oil and gas activities on Indian lands.
    We also need clarifications in the law to encourage energy 
development and other economic activities. Legislation should clarify 
that Indian tribes retain their inherent sovereign authority and 
jurisdiction over any rights-of-way they have granted. Over the last 30 
years, jurisdiction over rights-of-way has been treated differently by 
various federal courts. Each time an issue arises, another federal 
court undertakes a new examination. This leads to uncertainty in the 
law and a lack of dependability about the rules that apply on a right-
of-way. This hinders our ability to develop energy resources because 
all parties need certainty in the law.
    The law should also be clarified to ensure that tribes can raise 
needed tax revenues to support and oversee energy development. 
Currently, federal courts allow other governments to tax energy 
development on Indian lands. This limits and even prevents tribes from 
earning tax revenues from development on our lands. Without tax 
revenues, tribal infrastructure, law enforcement, and other services 
cannot keep up with the burdens imposed by energy development, and we 
remain dependent upon funding from the Federal Government.
    The Tribe is encouraged that amendments to the Tribal Energy 
Resources Agreement (TERA) program are being discussed by the 
Committee. The Tribe supports many of the changes to the TERA program 
that Senator Barrasso included in his Indian energy bill, S. 1684. 
These changes are intended to improve the TERA application process and 
make TERA's more useful to tribes. In addition, the Tribe asks that 
changes include a limitation on the number of times DOI can force a 
tribe to revise a TERA application. DOI should be limited to requesting 
one-revision of a TERA application and if DOI requires any additional 
changes they should have to provide a reason why the change was not 
requested the first time.
    Finally, the Committee should not overlook the important role of 
the Department of Energy (DOE) could be playing in the management of 
Indian energy resources. In general, DOE ignores Indian tribes in its 
programs and in setting national energy policies. The relatively new 
Office of Indian Energy Policies and Programs is making progress, but 
tribes are left out of the vast majority of DOE programs. The Committee 
could hold an entire oversight hearing on the lost opportunities. 
Tribes need full access to existing DOE programs for energy loan 
guarantees, energy efficiency, weatherization assistance, and renewable 
energy research and development.
    At a minimum, DOE should be including tribes in federal energy 
efficiency and weatherization programs. The Federal Government provides 
about $100 million every year to fund these programs at the state 
level. This funding should go to those who need it most, but for 
decades these programs have ignored the needs of tribes. The Tribe asks 
that these programs be expanded to include set-asides for tribal 
governments. These programs would help tribes reduce energy costs and 
manage energy use in government buildings and reservation homes.

IV. Fracing Rule
    The Tribe would also like the Committee to monitor BLM's decision 
to develop regulations for hydraulic fracturing (fracing) activities on 
public lands. We are concerned with the process by which BLM is 
developing its regulations as well as the impact it will have on the 
oil and gas industry on the Reservation.
    First, BLM apparently considers Indian lands to be ``public lands'' 
and plans to apply its fracing regulations to Indian lands. Indian 
lands are not public lands. Indian lands are for the exclusive use and 
benefit on Indian tribes. The BLM's oversight of activities on our 
lands is in fulfillment of the BLM's trust responsibility to the Tribe. 
The BLM should not apply its public interest standards to our lands. 
The Tribe requests that the Committee and Congress pass legislation 
that would prevent Indian lands from being swept into laws and policies 
for public lands.
    Second, BLM is not fulfilling its obligation to consult with Tribes 
on its draft regulations. To date, BLM has hosted a handful of 
informational meetings throughout the West. The BLM has been describing 
these meetings as tribal consultation. An informational meeting 
describing to tribes what BLM plans to do is not tribal consultation.
    Effective tribal consultation is sitting down at the table with 
tribes to discuss the proposed regulations and its effects on tribes. 
This has not happened even though consultation is necessary for the BLM 
to understand how its proposed regulations may affect tribes 
differently than others. The Tribe requests that the Committee inquire 
with BLM regarding its plan for ensuring that tribal concerns are 
considered in the development of any regulations.
    For example, because of the Tribe's reliance on oil and gas 
revenues to fund government activities, provide services to members, 
and invest in local businesses, any change in oil and gas regulations 
is of great significance to the tribal government and economy. If the 
BLM's new fracing regulations create a disincentive for companies to 
develop energy on the Reservation, the Tribe would suffer a 
disproportionately greater impact than others. At a minimum, BLM should 
explain how it is going to mitigate for this disproportionate impact.
    Third, according to the draft regulations the BLM provided at a 
meeting in Salt Lake City, Utah, the BLM plans to look at three key 
issues pertaining to the fracing process: wellbore integrity, 
disclosure, and flowback water. We know of no incidents on tribal lands 
that would precipitate federal regulation of these issues.
    Fourth, the proposed rule would require prior approval from the BLM 
for all well stimulation activities. This additional time required for 
BLM staff to review a proposed fracing job only adds to delays oil and 
gas companies on the Reservation face--delays that have economic 
consequences. Requiring BLM approval for fracing jobs adds to the 
burden of an already short-staffed BLM Field Office. As stated above, 
there is currently a backlog of APDs and adding an additional burden on 
BLM staff will only worsen the problem.
    Oil and gas operators seeking permits to drill on Indian and public 
lands already undergo an extensive environmental review process before 
they can begin drilling activities. This process has become lengthy, 
time consuming and costly, so much so that there is a backlog of 
hundreds of permits to drill applications not having been acted upon by 
our local BLM Field Office.
    In addition, the Environmental Protection Agency (EPA) and other 
federal agencies are currently conducting scientific studies on 
fracing. BLM regulation is premature in advance of the EPA study, and 
BLM has offered no justification for proceeding with this new 
regulation without the benefit of these studies. Without clear 
demonstration of a problem with the fracing process, we feel the BLM 
regulation is putting the horse before the cart.

V. Minor Source Rule
    While EPA's Minor Source Rule, to date, has not had a significant 
impact on the oil and gas industry on our Reservation, we understand 
that it has impacted some of our sister tribes. We feel it is unfair 
that the EPA decided to move forward with the implementation of this 
rule. As a starting point, EPA did not engage in meaningful tribal 
consultation prior to finalizing the rule and subsequent publication in 
the Federal Register. Any agency action without meaningful consultation 
impacts us greatly.
    EPA issued its final rule for ``Review of New Sources and 
Modifications in Indian County'' in July 2010. To ensure that economic 
development was not adversely affected, EPA delayed implementation of 
much of the rule for three years while it hires the necessary staff and 
develops its permitting process. However, one part of the rule took 
effect almost immediately, the Synthetic Minor Source Rule (SMSR).
    Despite Congressional and tribal pleas to EPA to halt the 
implementation of the SMSR part of the rule, the EPA decided that it 
could not wait and implemented it. EPA implemented the rule despite not 
knowing what the SMSR permit should look like or exactly what it should 
contain. To date, EPA has yet to share with industry what a SMSR permit 
should look like and what is should contain.
    We ask that this Committee and Congress inquire with EPA as to why 
it decided to implement a rule it does not have the resources to 
implement. In addition, we ask this Committee and Congress to pass 
legislation that would make the SMSR part of the rule not operable 
until September 2013 in order for the EPA to develop its permitting 
process fully.

VI. Conclusion
    I would like to thank Chairman Akaka, Vice Chairman Barrasso and 
members of the Committee for the opportunity to present this testimony 
on behalf of the Tribe. The Tribe stands ready to work with the 
Committee to find ways to eliminate barriers to Indian energy 
development. The current barriers have a direct effect on the Tribe's 
revenues, our ability to invest in the future, and the services we are 
able to provide our members, our children and grandchildren.
    Towaok (Thank You)
                                 ______
                                 
  Prepared Statement of Hon. Randy King, Chairman, Shinnecock Indian 
                                 Nation

    Good afternoon Chairman Akaka, Vice Chairman Barrasso, and Members 
of the Committee on Indian Affairs. My name is Randy King. I am the 
Chairman of the Shinnecock Nation Board of Trustees. Thank you for the 
opportunity to provide this testimony for the Committee's Oversight 
Hearing on Energy Development in Indian Country.
    The Shinnecock Nation's Reservation is located within the 
geographic boundaries of Suffolk County, New York--on Long Island. The 
Nation has maintained its existence on Long Island as a self-governing 
nation with a land base that it has exercised jurisdiction over since 
time immemorial. Despite this long history, the Nation was only 
recently acknowledged by the Federal Government. This circumstance has 
resulted in a situation where the Nation bore all the burdens and 
responsibilities of governing its land base without the support of 
federal resources that other tribes utilize.
    Federal acknowledgement opens up new opportunities for the Nation 
to provide for the critical needs of its communities, including 
implementation of energy development and efficiency measures. The 
Nation is facing impacts from climate change, growing energy costs, and 
the need to provide jobs for its members. In order to provide long-term 
economic opportunities for our members, protect our Reservation 
homelands, and address the imminent challenges of climate change, the 
Nation must plan for its energy future. We have already begun by 
working to partner with local organizations, including a potential 
project with Stony Brook University, to develop and implement renewable 
energy projects that will benefit both the Nation and the surrounding 
communities.
    Since the Nation gained federal recognition status, it has worked 
to build its sovereign capacity and self-governing infrastructure to 
better serve its tribal members. The Nation now has the ability to 
apply for federal grants to support and expand land use planning, 
environmental protection, health and safety, energy sovereignty, and 
economic self-sufficiency. Prior to now, the Nation has never been able 
to take advantage of federal assistance programs that many tribes 
utilize. The Nation plans to use this new opportunity to meet the needs 
of its members in the area of energy development by examining options 
for energy self-sufficiency, and economic development, including 
training and jobs for tribal members, as well as energy efficiency 
programs.
    According to the economic characteristics data set from 2005-2009, 
the U.S. Census Bureau reports that a significant portion of the tribal 
membership is unemployed, underemployed, or in need of employment. This 
percentage does not include tribal members who are living off the 
Reservation, and want to come home to raise their families within their 
traditional community. In 2003, more than 70 percent of Shinnecock 
citizens lived in Suffolk or Nassau County on Long Island or in one of 
the boroughs of New York City, all approximately within a two-hour 
drive of the Reservation. The Nation is faced with the challenge of 
developing and promoting energy projects that will provide benefits to 
all its members both on the Reservation and off. In order to meet this 
challenge the Nation must be able to create and implement sustainable 
energy projects that benefit the Reservation and surrounding area.
    Because the Nation's Reservation is geographically limited and 
surrounded on three sides by water, we have an acute sense of the 
growing threat of climate change and the need to plan for our energy 
future. The Nation's energy planning includes developing sustainable 
energy projects that will serve the immediate needs of the Nation, and 
longer term adaptive measures that will be needed in the face of 
climate change impacts over time. Energy independence will play a 
critical role in meeting these challenges. In order to be self-
sufficient and sustainable as a Nation, the Shinnecock people will need 
to have sound reliable sources of energy. This includes not just 
generation resources, but also energy efficiency and weatherization 
measures that will help the Nation control energy costs for itself and 
its members.
    Environmentally sound energy development and the promotion of 
tribal energy sustainability would dramatically and positively impact 
the Shinnecock tribal economy by creating revenue through the sales of 
clean energy and, potentially, carbon credits, into the regional 
economy. Our effort to gain energy independence would promote the long-
term security of our communities, provide a major regional economic 
boost, and provide a test-case in clean energy development that can 
assist the Department of the Interior (DOI), the Department of Energy 
(DOE), and other tribal communities seeking examples of successful 
tribal energy management and renewable energy development.
    The Nation intends to implement its energy planning through a 
potential partnership with Stony Brook University's Southampton Campus 
to develop a hydrokinetic project. This project would allow a research 
facility to be put in place off the coast of the Nation's Reservation. 
Tribal members and the University will be able to gain practical 
engineering experience and electric market experience in the 
development of the project. Hydrokinetic power offers a clean reliable 
domestic source of energy that could have far reaching benefits not 
only for Shinnecock, but for all coastal communities.
    The Nation supports the Committee's interest in promoting Indian 
energy development, and generally support's Senator Barrasso's Indian 
energy bill, S. 1684. Promoting Indian energy and tribal management of 
energy resources is consistent with the Nation's energy planning and 
goals described above. S. 1684 makes a handful of important changes, 
but much more is needed. In addition to what is already in S. 1684, the 
Nation requests that the Committee include additional changes needed to 
overcome barriers to Indian energy development.
    As a newly acknowledged tribe, the Shinnecock Nation needs support 
for land into trust, tribal permitting processes, and restructuring of 
renewable tax credits. We ask the Committee to consider including 
provisions for incentives for development of offshore technologies, and 
an expedited fee to trust process for lands where energy projects are 
intended to be developed.
    The need for energy security and a sound domestic energy supply 
justifies an expedited fee to trust process for tribal energy projects. 
This does not negate or resolve the current issues many tribal nations 
face in the wake of the Carcieri decision. We believe resolving the 
Carcieri problem through adoption of a Carcieri fix will significantly 
assist tribal nations in moving forward with social welfare and 
economic development projects such as new more efficient housing, and 
renewable energy projects.
    Below, we provide some specific examples of how changes in law and 
additional tools for tribal governments would help us manage our energy 
resources and provide long-term economic resources for our communities. 
We ask that the Committee consider taking action on these ideas and 
include them in S. 1684 or any other Indian energy legislation being 
developed by the Committee.
    First, the Nation appreciates the work of Committee member Senator 
Murkowski to support hydrokinetic projects by sponsoring a bill, S. 
630, which will improve marine and hydrokinetic renewable energy 
research and development. However, the bill should include Indian 
tribes and Alaska Natives as eligible entities for grant funds to 
implement hydrokinetic test facilities. Currently, the bill does not.
    The Nation requests that the Committee include the provisions of S. 
630, and include tribes in those provisions, in any Indian energy 
legislation moving through the Committee. In the alternative, if the 
Senate plans to move S. 630 on its own or part of a larger national 
energy bill, the Nation asks that the Committee and Senator Murkowski 
ensure that Indian tribes and Alaska Natives are included in the list 
of eligible entities. The Nation is seeking an equal opportunity to 
apply for such funding and participate with other entities on Long 
Island as an equal partner for implementation of a hydrokinetic 
project.
    Second, the Nation also has an opportunity to purchase a number of 
tracts of land on eastern Long Island that could be utilized for the 
development of a solar power facility that would bring clean and 
reliable energy to Long Island. Currently, there are transmission 
constraints on Long Island that have impacted the ability for the 
eastern end of the Island to have reliable power. The Nation's plan to 
acquire the lands and develop a solar facility on eastern Long Island 
would help meet New York State's renewable portfolio standard and also 
provide local power without the constraints of wheeling power from 
other areas which would promote the reliability of electricity for the 
Nation and Long Island.
    In addition, this potential project is consistent with Governor 
Cuomo's Energy Highway concept as it creates new clean sources of power 
to meet the needs of Downstate New York, while providing skilled jobs 
for tribal members and revenue for the Nation. This provides a win-win 
for both the Nation and the State of New York, allowing for a 
beneficial partnership that can be built on for future tribal energy 
projects in New York. However, in order to move forward with the 
proposed solar project, the Nation will need to acquire the land and 
have it placed into trust. The Nation recommends that the Committee 
develop legislation that would require DOI to expedite fee to trust 
applications for tribal energy projects.
    Third, the Committee should consider exempting energy projects in 
Indian country from some DOI approvals, or allowing tribes to take over 
certain approval processes. While the Tribal Energy Resource Agreement 
(TERA) program from the 2005 Energy Policy Act already allows tribes to 
do much of this, the TERA program requires tribes to take over most or 
all of the permitting. Very few tribes have the resources to completely 
take over energy permitting.
    Instead, the Nation asks that the Committee recognize that every 
tribe is at a different place in its capacity to oversee energy 
projects and alternatives should be available for tribes to take over 
some DOI approvals, but not necessarily the entire energy permitting 
process. The Committee should consider exempting or allowing tribes to 
take over approval processes for appraisals, leases, rights-of-way, 
environmental reviews, and any other discrete parts of the energy 
development process. Having these options available will allow tribes 
to develop energy expertise and permitting capacity in manageable 
steps.
    Fourth, the Nation aspires to make President Barack Obama's 
Executive Order on ``Stewardship of the Ocean, Our Coasts and the Great 
Lakes'' a reality and plans to examine its opportunities for 
development of ocean energy technology, which will be a monumental step 
towards energy security and conservation for the entire Northeast 
Region. In order to be successful in this pursuit, the Nation will need 
to have the ability to permit such facilities, and have access to 
federal programs and funds that promote the development of offshore 
energy projects.
    On July 19, 2010, President Obama signed the Executive Order and 
established a National Ocean Policy to ensure the United States' 
coasts, oceans and lakes are ``healthy and resilient, safe and 
productive . . . so as to promote the well-being, prosperity, and 
security of present and future generations.'' Exec. Order No. 13547,  
2. The Executive Order contemplates direct participation by tribal 
officials in the promotion of this policy, as well as tribal 
collaboration with state and Federal officials, with the goal of 
developing and implementing regional coastal and marine spatial 
planning that includes assessment and consideration of offshore 
renewable energy technologies.
    The Nation intends to participate in the process and pursue the 
potential for clean renewable ocean energy development; including both 
the aforementioned hydrokinetic project, as well as examining the 
potential for offshore wind projects. The Nation asks that the 
Committee help to make sure that tribes are included in programs and 
legislation supporting offshore energy projects.
    Fifth, the Nation looks to the Committee and Congress for support 
in the development and implementation of sound energy policies that 
will be able to promote environmentally friendly energy resources, and 
economic opportunities. An environmentally sound and predictable order 
for development on the reservation would allow the Nation to move 
forward with implementation of much needed energy projects, and, in 
turn, provides certainty for those considering investing in the Nation 
from an economic stand point, as well as for government agencies 
considering awards to the Nation for energy programs.
    The Nation has struggled for more than three decades for its 
rightful place as a federally recognized Indian tribe, and it now needs 
to focus on the long-term sustainable development of tribal resources. 
It is critical that Congress adopt policies that will allow for Indian 
tribes to meet our long-term goals by ensuring that federal programs 
designed to promote development of renewable power projects include 
Indian tribes as beneficiaries, and that policies supporting tribal 
permitting of such projects on tribal land be in place.
    The Nation is confident that tribal members and the surrounding 
communities will mutually benefit from environmental conservation, 
economic self-sufficiency and job creation that would come from a more 
streamlined tribal permitting process, expedited fee to trust 
applications for energy projects, and full access to grants, loan 
guarantees and tax credits used to advance energy technology and 
promote energy development. The Nation believes that the renewable 
energy mandatory purchase requirements of state and federal agencies 
are only going to increase. The Nation hopes to be a part of this 
growing market while at the same time promoting environmentally 
positive energy resources, as well as providing resources to assist 
coastal communities in climate change adaption measures.
    Sixth, as the Nation increases its energy activities, our tribal 
government will need to use the same tax revenues as other governments 
use to staff our energy programs, finance energy projects, and oversee 
tribal infrastructure. We need Congress to ensure that tribes can raise 
needed tax revenues. Without tax revenues we will not be able to 
develop the infrastructure necessary to manage and oversee our energy 
resources.
    Seventh, tribes also need to be able to take advantage of renewable 
energy tax credits. These tax credits have become essential to 
financing renewable energy projects and lowering the cost of the energy 
produced. Tribes need to be able to monetize these tax credits or share 
them with a private energy partner. Without the ability to utilize 
renewable energy tax credits tribes will be priced out of the market.
    Eighth, Congress should open up federal energy efficiency and 
weatherization programs to tribal participation. For decades the 
Federal Government has helped state governments manage their energy 
costs by providing around $50 million a year in energy efficiency 
funding. Tribal governments need the same support.
    Congress should also require DOE to send weatherization funding 
directly to tribal governments. Currently, DOE sends the money to state 
non-profits and tribes barely see a dime. Despite its trust 
responsibility, DOE does not even know how much funding tribes receive. 
This funding should go to those who need it most, but for decades DOE 
has ignored the needs of reservation homes.
    Finally, we support many of the other comments and suggestions made 
by tribes at this hearing. Like many tribes, the Nation is interested 
in exercising self-determination over its energy resources. To do this, 
we need Congress to reform laws that stand in our way, include tribes 
in all federal energy programs, and ensure that tribes can exercise the 
full range of governmental authorities needed to develop the physical 
and legal infrastructure to support energy development.
    I would like to thank Chairman Akaka, Vice Chairman Barrasso and 
Members of the Committee on Indian Affairs for the opportunity to 
present this testimony on behalf of the Nation.
                                 ______
                                 
 Prepared Statement of Hon. Tex G. Hall, Chairman, Mandan, Hidatsa and 
            Arikara Nation of the Fort Berthold Reservation

    Good afternoon Chairman Akaka, Vice Chairman Barrasso and Members 
of the Committee. My name is Chairman Hall. I am the Chairman of the 
Mandan, Hidatsa and Arikara Nation (MHA Nation). I am honored to 
present this testimony.
    The MHA Nation has long been working with both the Senate Committee 
on Indian Affairs and the House Subcommittee on Indian and Alaska 
Native Affairs to advance Indian energy legislation. In the 110th and 
111th Congresses, the MHA Nation was fortunate to participate and 
present testimony at two Indian energy hearings held by former Senator 
Dorgan. In the current 112th Congress, the MHA Nation is again an 
active participant.
    In May of 2011, the Committee held a listening session on Senator 
Barrasso's draft bill the ``Indian Tribal Energy Development and Self-
Determination Act Amendments of 2011.'' At that listening session the 
Committee requested that tribes submit proposals to overcome barriers 
to Indian energy development. On July 18, 2011, the MHA Nation 
submitted 31 proposals. I have attached those proposals to my written 
testimony for inclusion in the official hearing record.
    In addition, I testified in April of 2011 as a part of an Indian 
Energy Oversight Hearing before the House Committee on Natural 
Resources' Subcommittee on Indian and Alaska Native Affairs. MHA Nation 
also testified before the Subcommittee on February 15, 2012, on 
Congressman Don Young's ``Native American Energy Act,'' H.R. 3973.
    In my prior testimony before the Senate and the House, I have 
described how the Fort Berthold Reservation is located in the heart of 
the Bakken Formation which is the largest continuous oil accumulation 
in the lower 48 states. In 2008, the United States Geological Survey 
estimated that the Bakken Formation contains between 3 billion and 4.3 
billion barrels of oil. Today, the Bakken Formation is the most active 
oil and gas play in the United States.
    MHA Nation is actively promoting the development of our energy 
resources. Our resources provide us with a substantial opportunity to 
ensure that our members have good jobs, can heat their homes and 
provide for their families. We are interested in developing our 
resources in a responsible manner that will maintain our homelands and 
provide long-term economic security for our Reservation communities.
    However, almost one year later, the MHA Nation continues to work on 
many of the same issues raised in our prior testimony, including: 
streamlining the oil and gas permitting process, insufficient federal 
staffing, and the Environmental Protection Agency's recent decision to 
require air permits for oil and gas wells on our Reservation. We are 
beginning to wonder whether our testimony is doing any good. While 
there have been some improvements, each day brings a new challenge and 
the level of federal support is often in question.
    Of all of the challenges, the biggest issue we face is the 
inequitable division of tax revenues with the State of North Dakota. 
Under current law, states can tax energy companies on Reservation 
lands. Because of these state taxes, we cannot raise enough of our own 
tax revenue to provide the infrastructure needed to support and 
regulate the growing energy industry. We need Congress to affirm the 
exclusive authority of tribes raise tax revenues on the Reservation so 
that we can rely on the same revenues that state governments use to 
maintain infrastructure and support economic activity.
    Without the ability to raise sufficient tax revenues, the 
increasing oil and gas activity is taking a tremendous toll on the 
Reservation. For example, we need to maintain roads so that heavy 
equipment can reach drilling locations, but also so that our tribal 
members can safely get to school or work. I have attached to my 
testimony two pictures that show how the industry has devastated our 
roads.
    We also need to provide increased law enforcement to protect tribal 
members and the growing population of oil workers. And, we need to 
develop tribal codes and employ tribal staff to regulate activities on 
the Reservation. For example, we developed a code to prevent dumping of 
hazardous waste, but we also need to hire staff to enforce the code.
    Our tribal government works every day to provide the stable 
foundation needed to promote energy development on our Reservation. 
But, the laws and policies of the United States force us to do this 
with one hand tied behind our back. It is not a fair fight and our 
Reservation homelands are suffering the consequences.
    To avoid double state and tribal taxation on energy development 
that would have driven energy companies off the Reservation, we were 
forced into a lopsided tax agreement with the State. Three years later, 
the State is sitting on surpluses while we struggle to make ends meet.
    I am not talking about small state surpluses. Recent reports show 
that in the current fiscal year the State will have a $1 billion budget 
surplus and created a $1.2 billon impact trust fund to put money into 
an investment account for infrastructure needs. The MHA Nation has 
current needs and our tax revenues should not be going into a North 
Dakota investment account.
    We actually agree with what Governor Dalrymple said earlier this 
year, ``The number one priority is to keep up with infrastructure. 
growth cannot continue if we do not keep up with all of the impact that 
happens on communities out there.''
    Apparently, the Governor was not talking about tribal communities. 
In 2011, the State of North Dakota collected in excess of $60 million 
in tax revenue from oil and gas development on my Reservation, but 
State reports document that it expended less than $2 million toward the 
maintenance of on-Reservation roads and infrastructure and all of that 
was on the state and county roads. In 2012, projections are that the 
State will make nearly $100 million in tax revenues from oil and gas 
development on the Reservation.
    The need to raise tax revenues is directly related to MHA Nation's 
ability to exercise self-determination in the development of our energy 
resources. We agree with self-determination policies and the need to 
eliminate bureaucracy, but, without the taxes revenues that other 
governments rely on, tribal governments will never have the staff and 
resources to effectively run permit programs. This is especially true 
in the complicated field of energy development.
    Without laws that support tribal taxing authority, MHA Nation will 
always be subject to bureaucratic delays by the Bureau of Indian 
Affairs (BIA) and the Bureau of Land Management (BLM). MHA Nation will 
also be dependent on federal budgets for Indian roads and law 
enforcement. To put an end to this problem, Congress should clearly 
affirm the exclusive authority of tribal governments to tax activities 
on Indian lands. Where the State provides services on the Reservation, 
the State can be fairly reimbursed out of tribal tax revenues.
    In addition to this important taxation issue, the MHA Nation needs 
many other changes to the law to support energy development on the Fort 
Berthold Reservation. Senator Barrasso has introduced a bill, S. 1684, 
the Indian Tribal Energy Development and Self-Determination Act 
Amendments of 2011, that addresses a few issues, but much more is 
needed. The MHA Nation asks that the Committee look to the past few 
years of Indian energy hearings, roundtables, and legislation for 
legislative text and ideas that tribes have long supported.
    Ideas that should be included in Indian energy legislation are:

   We need changes to the Department of the Interior appraisal 
        process, including a deadline for making a decision on an 
        appraisal, so that energy projects do not get held up by 
        bureaucratic decisionmaking.

   Legislation should require the BIA and BLM to standardize 
        lease numbers to improve permitting.

   Participants in the environmental review process for an 
        energy project on Indian lands should be limited to the 
        affected area.

   Legislation should eliminate fees that the BLM charges for 
        the oversight and management of Indian trust oil and gas 
        resources.

   Formal authority should be provided for Indian Energy 
        Development Offices, or ``One-Stop Shops,'' to co-locate all 
        the federal agencies involved in permitting energy projects on 
        Indian land which would streamline permitting, and force the 
        BIA to hire staff with energy expertise.

   Legislation should clarify tribal jurisdiction over 
        Reservation activities and any rights-of-way granted by an 
        Indian tribe to eliminate uncertainty created by the Courts and 
        encourage business development.

   We need changes in law that will allow Indian tribes to 
        become full participants in the renewable energy industry by 
        providing tribes will the ability to monetize tax credits, or 
        the ability to share those tax credits with a private investor.

   Congress should also provide the Western Area Power 
        Authority (WAPA) with the ability to treat tribal power as 
        federal power so that tribal energy projects can utilize the 
        existing WAPA transmission grid to get our energy to the cities 
        that need it.

   Legislation should open up the approximately $50 million in 
        federal energy efficiency programs to tribal participation so 
        that tribes can get the same support that state governments get 
        to manage their energy costs through energy efficiency 
        measures.

   Legislation should also require the Department of Energy 
        (DOE) to send weatherization funding directly to tribal 
        governments and provide opportunities for weatherization 
        training to increase the number of energy auditors in Indian 
        country.

    I want to thank Chairman Akaka, Vice Chairman Barrasso and the 
members of the Committee for the opportunity to highlight the most 
significant issues the MHA Nation faces as we promote and manage the 
development of our energy resources. We ask that you consider 
legislation to address many of the issues we have described.





                                 ______
                                 
 Prepared Statement of the National Congress of American Indians (NCAI)
Introduction
    The National Congress of American Indians (NCAI) is the oldest and 
largest national organization of American Indian and Alaska Native 
tribal governments. Since 1944, tribal governments have gathered as a 
representative congress through NCAI to deliberate issues of critical 
importance to tribal governments. NCAI is pleased to submit testimony 
for the Senate Committee on Indian Affairs to supplement the oversight 
hearing on ``Energy Development in Indian Country.''
    NCAI thanks the Senate Committee on Indian Affairs (Senate 
Committee) for their sustained attention to the matter of tribal energy 
and their dedication to finding legislative solutions to make this 
important sector of tribal economies viable. NCAI also appreciates the 
long-standing commitment of the Senate Committee in working, in a 
bipartisan fashion, to address key challenges in Indian Country.
    An NCAI resolution regarding energy development is attached. PDX-
11-072, describes the tribal energy issues most important to tribes and 
supports the Indian Tribal Energy Development and Self-Determination 
Act Amendments (S. 1684). In this testimony, NCAI would like to outline 
support for and views on S. 1684 as well as key provisions that NCAI 
would like to see added.

1. Analysis of Current Law and Regulations
    The barriers to tribal energy development have been discussed at 
length during round tables and hearings conducted by the Department of 
Energy (DOE) and the Senate Committee on Indian Affairs. Examples of 
barriers include cumbersome bureaucratic processes, such as the 
requirement that tribes and tribal businesses obtain the approval of 
the Secretary of the Department of the Interior (DOI) for almost every 
step of energy development on tribal lands, including the approval of 
business agreements, leases, rights of way and appraisals. Other major 
barriers include tribes' and tribal businesses' lack of access to 
financing and transmission, and unfair treatment regarding Application 
for Permit to Drill (APD) fees as applied on tribal lands.

2. Enacting S. 1684 Would Reduce or Eliminate a Variety of Barriers to 
        Tribal Energy Development
    Title V of the Energy Policy Act of 2005, the ``Indian Tribal 
Energy Development and Self-Determination Act of 2005,'' (the ``Energy 
Policy Act of 2005'') provides for tribal energy self determination 
through the creation of tribal energy resource agreements (TERAs). 
Tribes have not found TERAs in their current form to provide a suitable 
means of achieving energy self determination. Both the Senate Committee 
on Indian Affairs and the House Subcommittee on Indian and Alaska 
Native Affairs are currently considering legislation that NCAI believes 
would remedy the barriers to tribal energy development in the Act.

A. Tribal Energy Resource Agreements (TERAs)
    Senate bill S. 1684, the Indian Tribal Energy Development and Self-
Determination Act Amendments, seeks to amend the existing TERA process 
established by the Energy Policy Act of 2005. The fact that, to date, 
no Indian tribe has successfully navigated the burdensome TERA process, 
attests to its need for procedural revisions. S. 1684 streamlines the 
criteria for approval by setting time limits for the approval process, 
as well as shifting the burden from the tribe to the federal agency to 
disapprove an application for a TERA, of course necessitating that the 
tribe meet several core criteria. After demonstrating sufficient 
capabilities, tribes would be able to proceed without the DOI 
Secretary's review for leases, business agreements and rights of way. 
NCAI believes the amendments provided in S. 1684 would streamline the 
TERA process significantly and allow tribes to better use of 
legislation which Congress intended they make use of but which, to 
date, has not helped tribes develop critical energy resources.

B. Tribal Energy Development Organizations (TEDOs)
    S. 1684 also provides for a new approach to tribal energy 
development with the introduction of Tribal Energy Development 
Organizations (TEDOS). Rather than form a TERA with Interior, a tribe 
will be able to form a Tribal Energy Development Organization that may 
include partnerships with other entities. TEDOs, wholly owned by the 
tribe, will be able to develop tribal energy resources with reduced DOI 
oversight. NCAI supports this provision as an option for tribes 
desiring to exercise their self-determination over energy development.

C. Agency Collaboration (DOE and DOI)
    NCAI also supports the S. 1684 mandate for collaboration between 
the DOI Office of Indian Energy and Economic Development (OIEED) and 
the DOE Office of Indian Energy Policy and Programs (OIEPP) on matters 
involving tribal energy development. Tribes would greatly benefit from 
the combined process expertise of OIEED and the technical expertise of 
OIEPP. Recognizing the value of the technical expertise that DOE, 
through OIEPP, has to offer, NCAI strongly recommends mandating that 
DOE make its expertise available to tribes in the same manner S. 1684 
mandates DOI provide technical assistance. OIEPP is making critical 
strides to leverage the immense expertise of DOE to address the 
challenges facing tribal energy development and NCAI believes it is 
imperative that this work continue regardless of any potential change 
in administration.
    NCAI also supports the provision of S. 1684 that expands the DOE 
loan guarantee program to include the Tribal Energy Development 
Organizations (TEDOs). This is an essential part of financing that 
needs to be available to tribal energy development entities.
    With enactment of S. 1684, tribes will be poised to move into the 
energy sector with greater sophistication and self-determination. This 
legislative action is crucial to increasing tribal ownership and 
control over their own natural resources, and helping ensure those 
resources help provide for the future of Indian Country.
    As mentioned earlier, the members of NCAI have passed a resolution 
to express support of S. 1684 (attached). This resolution also 
expresses the need for transmission access, the elimination of APD fees 
and the importance of making tax and finance options accessible to 
tribes.

3. Additional Key Barriers to Energy Development Identified in the NCAI 
        Resolution
    The NCAI resolution states opposition to any Application for Permit 
to Drill (APD) fees levied by the DOI Bureau of Land Management on 
tribal land because the APD fees create a significant disadvantage by 
burdening costs of exploration on tribal lands relative to the costs 
for exploration on neighboring lands. The NCAI resolution also 
recognizes the benefit of making tax incentives for renewable energy 
projects that are tradable and assignable for use by tribes and 
improving transmission access.
    Tribes are commonly interested in developing their renewable energy 
resources for the benefits of air and water quality. However, due to 
their tax-exempt status as sovereigns, use of federal tax incentives 
for renewable energy projects is becomes a complicated issue. NCAI 
would like to see the renewable energy tax credits made assignable and 
tradable to help tribal renewable energy projects gain traction with 
real world investment and finance entities. Similarly, NCAI would like 
to see Section 17 Corporations, which are federally-chartered 
corporations formed under Section 17 of the Indian Reorganization Act 
(IRA), become statutorily eligible for the 1603 Treasury grants for 
renewable energy, regardless of appropriations levels for that program.
    Finally, for tribes to fully realize the scope and benefits of 
energy development on tribal lands, tribes need access to electric 
transmission. NCAI recommends an amendment to make the Energy Policy 
Act of 2005 binding so that power marketing administrators offer 
technical assistance to tribes seeking to use high voltage transmission 
lines. NCAI would also like to see federal power procurement leveraged 
for the benefit of tribal power producers.

4. Indian Coal Production Tax Credit
    The Indian Coal Production Tax Credit (ICPTC) has helped tribal 
coal development remain competitive to ensure that much-needed revenue 
remains in place for tribal governments. Specifically, the Crow Nation 
relies on the ICPTC to stay in business due to the price differential 
imposed on coal with higher sulfur (SO2) emissions. This 
price differential was created by Title IV of the Clean Air Act and 
neutralized by the Indian Coal Production Tax Credit established in the 
2005 Energy Policy Act.
    The 2005 Energy Policy Act included the Indian Coal Production Tax 
Credit, which began in tax year 2006 but unfortunately sunsets December 
31, 2012. ``Indian coal'' is coal produced from reserves owned by an 
Indian Tribe, or held in trust by the United States for the benefit of 
an Indian tribe, as of June 14, 2005. The tax credit is calculated by 
totaling the number of tons of Indian coal produced and sold, then 
multiplying that number by a factor. The Energy Policy Act 2005 
provides a factor of $1.50 per ton between 2006 and 2010 and $2.00 
between 2010 and December 31, 2012.
    NCAI believes that the Indian Coal Production Tax Credit should be 
made permanent and allowed for use against the alternative minimum tax. 
Additionally, the requirement that the coal be sold to an unrelated 
person should be amended to allow and encourage facilities owned, in 
whole or in part, by Indian nations to participate and benefit from the 
credit.

5. Carcieri Fix
    NCAI supports a legislative fix to the Supreme Court's 2009 
decision in Carcieri v. Salazar. The Carcieri decision erodes the trust 
responsibility of the Federal Government and harms future tribal energy 
development by creating uncertainty for investors and challenging the 
authority of the Department of the Interior to take land into trust for 
tribes. Tribal governments require trust land on which to develop their 
resources including energy. NCAI supports a legislative fix to the 
Carcieri decision that does not exclude Alaska Native tribes.

6. Statutory Assertion of Tribal Taxation Authority
    Energy development provides critical revenue needed by tribes to 
provide governmental services to tribal members. Legislative action, 
affirming Indian tribes' inherent taxing authority over tribal lands 
would enable revenue from energy development to be fully invested in 
quality-of-life improvements for tribal members rather than being 
diminished by state taxation.

7. Small Scale Energy Implementation
    NCAI recommends the creation of legislation to support 
implementation of small scale renewable energy. This would be 
particularly helpful for Alaska Native villages that pay extremely high 
prices for heat and power. Small scale renewable energy can reduce and 
stabilize energy bills by using wind and solar resources. The DOE 
Tribal Energy Program has facilitated the planning and initial 
implementation of small projects all over Alaska and the United States 
and these projects help greatly with high utility costs, often in very 
innovative ways.

Conclusion
    NCAI appreciates the Committee's attention to S. 1684 and urges 
timely action so that a long awaited tribal energy bill can be passed 
during this session. NCAI supports S. 1684 but would also like to see 
the provisions described in this testimony included to make the next 
tribal energy legislation a comprehensive solution to the challenges 
facing tribal energy development.
    Attachment

    
    
    
    
                                 ______
                                 
      Prepared Statement of Tri-State Generation and Transmission 
                           Association, Inc.

    Tri-State Generation and Transmission Association respectfully 
submits the following testimony with supporting documents for inclusion 
in the record.
    The town of Dulce, New Mexico, located on the Jicarilla Apache 
Nation Reservation, is served by a 24.9 kV electric distribution line. 
As early as 2004, management from Northern Rio Arriba Electric 
Cooperative, Inc. (Nora) identified the need to increase capacity of 
the electric service to Dulce and worked with the Jicarilla Nation 
(Jicarilla) to secure the right-of-way to build a 115 kV transmission 
line from Chama, New Mexico to Dulce. Nora requested permission to 
build a 115 kV transmission line and planned to operate it at 69kV 
initially. In April 2008, The Jicarilla contacted Nora management to 
inform them that the Tribal Council had approved a resolution to allow 
construction of a 69 kV transmission line and substation. Nora 
management responded that the 69kV approval needed to be changed to 115 
kV as previously discussed to correspond with all planning and 
engineering work done. The Jicarilla representative went back to the 
Tribal Council several times to request the change.
    Finally, on November 7, 2009, Nora received a letter (Attachment 1) 
from the Jicarilla dated October 19, 2009 stating that The Jicarilla 
Legislative Council enacted resolution 2009-R- 359-06 on September 28, 
2009 thereby confirming that the Nation had elected to construct the 
portion of the 115 kV transmission line on the Jicarilla Apache Nation 
Reservation from Dulce to the Reservation boundary in lieu of granting 
Nora an easement for Nora's construction of a 115 kV line. The letter 
indicated that the Jicarilla would own those facilities constructed on 
their land and interconnect those facilities to the Nora system south 
of Chama. A copy of resolution 2009-R-525-09 is included as Attachment 
2. The letter referenced the wrong resolution. The resolution and 
letter indicated the nation was preparing a draft contract to provide 
for a long term lease of the constructed facilities to Nora and Tri-
State for the purpose of delivering energy to the cooperative members 
on the reservation. Nora management agreed with the proposal and 
expected construction by the Jicarilla to begin immediately.
    By 2009, the existing distribution circuit had reached its capacity 
during peak loads so Nora, the Jicarilla, and Nora's power supplier, 
Tri-State Generation and Transmission Association, Inc. (Tri-State) 
reached an agreement to install a temporary 2 MW generator for 24 
months at a site selected by the Jicarilla in Dulce to serve the 
increasing load. That generator was energized for commercial service on 
February 3, 2010 and remains there today. The 24-month term was agreed 
to under a revocable permit from the Department of the Interior, Bureau 
of Indian Affairs as a stopgap measure while final negotiations were 
completed on the right-of-way for the 115 kV transmission line from 
Chama to Dulce.
    To date, the Jicarilla have not constructed the transmission line 
and have indicated verbally and through their attorney that they now 
intend to secure transmission service from Public Service Company of 
New Mexico with a new line from the south and to begin negotiation with 
Nora to discuss acquisition of existing electric distribution 
facilities. The Jicarilla's attorney produced an unsigned tribal 
resolution at a meeting on September 9, 2011 stating so. With that 
discussion, Nora requested formal notice of the Jicarilla's position 
and plans regarding the transmission line and Nora's facilities located 
on the Reservation. To date, no formal notice has been provided. The 
twenty-four (24) month generator agreement expired and was extended 
even though its original purpose was frustrated (temporary service 
while the 115 kV Chama-Dulce line is constructed). Tri-State and Nora 
continue to serve the cooperative members in the area through the 
existing circuit and with the temporary generator. However the nature 
of that generator is temporary and it is imperative that the Jicarilla 
formally notify Nora of their intentions. Nora and Tri-State have stood 
ready to serve the needs of its cooperative members in the Dulce area 
but all efforts have been frustrated.
    Attachments

    
    
    
    
    
    
                                  
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