[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
__________
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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
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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
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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.
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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.
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\1\ Hawaii Clean Energy Initiative Working Group Policy
Recommendations for the 2010 Hawaii State Legislative Session, November
20, 2009, p. 1.
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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